Maxed Out and In Debt We Trust: The Curse of a Wealthy Age?

This review was published originally in cinekklesia on July 7, 2007.

Debt is an ambiguous topic. I don't know of anyone who says that debt is an unalloyed good, that we should seek to increase it—at the personal or national level—in all circumstances, and that paying off one's debts is immoral. On the other side, some folks may say that any and all debt is bad. However, few people are completely debt-free: whether it be a home mortgage, car loans, student loans, or credit cards, it seems that almost all of us is indebted to someone at some point in time.

Our level of indebtedness, of course, has become a topic of great concern. The national debt has been a political issue for years, but recently, consumer debt has begun to draw the national spotlight, as we hear stories of individuals and families struggling under the weight of numerous credit cards. Two recent (2006) documentaries seek to tackle this issue: James D. Scurlock's Maxed Out and Danny Schechter's In Debt We Trust. Both profile people who have reached the brink of financial ruin, feature interviews with relevant figures (e.g., activists, bankruptcy lawyers), and chastise creditors for making their wares, well, too easy to obtain.

(If you only have time to watch one of these documentaries, then Maxed Out would be your better cinematic choice, since it is more polished. I also liked In Debt We Trust, but it clearly was a lower-budget production — which, admittedly, might not be a bad thing, given the nature of its topic.)

While both movies briefly discuss the national debt, along with personal debt like mortgages, their primary targets are credit cards and payday loans. These latter industries come in for particular scorn due to the ease with which they award high-interest credit. If not all debt is created equal, then one could say that home mortgages and student loans are "good" insofar as they help people to build equity and improve their employment prospects, while credit-card debt is "bad" because it usually doesn't serve a long-term purpose (after all, credit cards are often used for "frivolous" purchases).

According to the documentaries, by making credit so easy to obtain, credit-card companies effectively exploit the average person's poor financial literacy, while trapping him/her in a never-ending cycle of debt. After racking up thousands of dollars in credit-card charges, the debtor is unable to clear his/her account and thus, is forced to make minimum payments for years (perhaps until death). After all, if one has to choose between paying the rent and paying off a credit card, the former necessarily takes precedence (unless, of course, the debtor doesn't mind being homeless).

What is most interesting about both films is what they imply (perhaps unconsciously) but never explicitly state: as all debts are not created equal, neither are all debtors. While middle- and upper-middle-class folks who can't control their consumer urges may find themselves under a pile of credit-card bills, the poor easily can find themselves in the grip of seedy payday lenders: those who front money under extremely onerous conditions. By definition, the poor have fewer financial options (e.g., many don't have enough money to maintain a minimum balance at a traditional bank) and quickly can find themselves in desperate situations — and thus, easy targets of payday lenders.

The two "types" of consumer debtors highlight a problem with both documentaries. The poor deserve more sympathy since their indebtedness arises—in part, if not mostly—from the simple fact that they have few resources. In addition, those who find themselves in debt due to (as a friend of mine puts it) "negative shocks" (e.g., large, unexpected medical bills) also deserve sympathy. However, what about those who are in debt due to frivolous spending or an inability to hold off on purchases until they can pay in full? What about those who insist on adding an extra 1,000 square feet to their new home or who opt for an SUV in lieu of a compact? Do they not, in some sense, deserve less sympathy? Perhaps they, too, should receive compassion, as did the Prodigal Son who squandered his inheritance (see Luke 15:11-32), but on a practical level, should we chastise credit-card companies for the failures of the American middle class? What about that "personal responsibility" thing? Both movies briefly touch upon that question but ultimately shrug it off in favor of legislative solutions.

So, how should we handle debt? Years ago, a friend of mine noted that one could strictly interpret Paul's exhortation to "owe no one anything, except to love one another..." (Romans 13:8, NRSV) and thus, insist that all debt is morally wrong. However, if one does so, then he/she must eschew, well, all debt: if you can't pay for a house in cash, then rent; if you can't pay for tuition, then stay out of college; if you can't afford a car, then walk or take public transport. Using credit cards is also verboten: even if you plan to pay off the balance at the end of the month, there is no guarantee that you'll be able to do so. There is nothing wrong with this interpretation; in some sense, it is the best one. However, those who propose it must live it consistently, or their perspective will prove hollow and hypocritical.

Less stringent is the view that while debt may not be intrinsically bad, it should be avoided and/or reduced (especially by those with means). Buying a smaller house or car (and thus, taking out a smaller loan) is probably a more responsible option and leaves more resources available for other things (like, say, charity). Burdening oneself with fewer financial constraints also lessens the probability of worry taking a disproportionate share of our emotional and spiritual lives (see Matthew 6:25-34). If debt is not an intrinsically bad thing, it certainly should not be categorized as "good."