Out of Control Spending: What Does It Take to STOP?

Physician's Money Digest, April 2007, Volume 14, Issue 4

Dr. Brennan was rich.At least that was whateveryone thought. His private practice was bustlingwith patients, and his sports car made quite the impression.His new home was custom built, his vacationswere extraordinary, and he spent his weekends at themall buying beautiful things. But, Dr. Brennan was hidinga secret; he was in debt and his chance for financialstability was fading fast.

Can there be any doubt we live in an era of excess?Compare your childhood to your children's lifestyle.How important have brand names become? Has musicturned into marketing? How much television—andcommercials—does your family watch? How muchtime do you spend shopping? Eating out? Planning yournext major expenditure? What is the square footage ofyour home? How much is your monthly credit card bill?Do you consider a luxury car, spa visits, a time-share,and/or country club membership as necessities?

Facing an Affluenza Epidemic

If even one of these questions made you wince,you're not alone. And frankly, the odds are highlystacked against you. A healthy economy depends onconsumption, and extremely savvy marketers are diggingdeep into your psyche to ensure you—and yourchildren—keep spending. But somehow it has all spunout of control on both a moral and financial level. Theoverconsumption phenomenon has become so rampantthat various books, articles, and TV shows have examinedthe issue, dubbing it "affluenza," "sudden wealthsyndrome," and "luxury fever."

Prodigal Sons & Material Girls: How Not to Be Your

Child's ATM

While overconsumption affects all financial strata,the tendency can be magnified in the affluent. "It's verymuch exacerbated," comments Nathan Dungan, authorof . "For people of wealth, the biggest nemesisis time, the equalizer is money." Social circles canalso be problematic, Dungan says, such as the parentwho throws the $400,000 Sweet 16 party. "You createa pattern of one-upping that becomes complicated."

It might all seem ridiculous if we weren't actually sovulnerable. It's far too easy to equate money—andthings—with happiness, which then becomes a slipperyslope, Dungan says. For physicians, this relationshipcan be particularly complex due to the nature oftheir careers. Most start off lean and mean by necessity."For physicians, the big sacrifices early on are timeand money," Dungan says. It isn't until later that theybecome financially comfortable, but this is often intheir 30s, when other friends are way ahead. "Theywant to play catch-up," Dungan says. "...it's a fairlynormal reaction after a state of deprivation?. I canfinally buy a new car, a bigger house."

Prescribing a Realistic Cure

There's often another difference between physiciansand those who sought financially lucrative careers. "Ihaven't met a lot of physicians who say ‘I'm going intothis to make a lot of money,'" Dungan says, who hada number of physician clients as a financial advisorwith Lutheran Brotherhood (now Thrivent Financialfor Lutherans). Instead, the decision usually stemsmore from wanting to make a difference. "It's part oftheir DNA, they have the ‘sharing'gene as part of whothey are," he comments. But adds, "You get so quicklycaught up in the homes and the traveling?this wasa conundrum for [my physician clients].?The$64,000 question is: How do you maintain the spiritof altruism as your financial situation changes?"

It may seem an easy answer, but it's not. Worklonger hours to afford the best education for your childrenor take time off to make it to their baseballgames? Buy the great new set of golf clubs because it'sone of your few indulgences or send a bigger check tothe Katrina fund because you know there are peoplewith nothing? Fly to the tropics for desperately neededrelaxation or spend a week with Doctors WithoutBorders? The answers go beyond simple decisionsabout time and finances.

"What you do with money is an extension of whoyou are and what you believe," writes Dungan in hisbook. "?It's about bringing consistency to your heartand your wallet?. Defining our values, especially as itrelates to money, is a forgotten art."

Physician's Money Digest

"Introspection can be a great friend," Dungan tells, "?awareness is 60% to70% of the deal." In his book, Dungan lists 25 questionsto ask yourself on topics such as credit cards,spending, and family issues. Specifically: Do you use acash card more than once a week? Is your mortgagepayment more than 30% of your income? Do youhave a garage, basement, or attic filled with stuff youdon't use? Do you at least weekly give in to yourchild's request for a purchase?

Dungan relates diagnosis and recovery from overconsumptionto the practice of medicine. "Just drawthe parallels," he says. "What you put in your bodyvs how you choose to spend." And start slow. Pickjust one or two things you'd like to change in thenext 3 to 5 months.

Tough for the Little Guys

Remember, while it's challenging for an adult intoday's world to reject hypermaterialism, it's evenharder for children. As most parents know, andDungan confirms, kids under age 20 spend 5 timesmore than their parents did at the same age; 40% oftoys carry some sort of licensing agreement with a televisionshow, movie, or athlete; cell phones are fashionstatements; and brands can determine your identity."Today, every young person is at risk of growing upwith underdeveloped values and overdeveloped expectations," Dungan writes. So when you shift yourspending habits, you're also helping to send an importantmessage. "You can't teach or model healthybehavior unless you do it yourself," Dungan says.

"Taken seriously, well-defined values will be yourrock of Gibraltar in the quicksand of consumerism," Dungan says. He recommends involving the wholefamily in "the art of slowing it down." Yet he realizesthat parents face an uphill battle. He uses the exampleof college welcome kits—most of which contain creditcard applications. People would be outraged if thekit contained a fifth of tequila, "yet you can get yourselfinto just as much trouble with a credit card," hesays. To combat such influences, parents must be vigilant.Discuss financial topics as they relate to familyvalues. Conduct blind taste tests with foods so kidslearn to be smart about brand advertising. When achild demands an item they know you can afford, tellthem "that's not in our value system," Dungan says.

Keep in mind, Dungan says, that the happiest people"have a deep sense of connection to communityand a commitment to give back in time and money." He adds, "Once you are grateful for what you have?you want less."

By the Numbers

•Nearly two thirds of all credit card holderscarry balances and pay finance fees each month, withthe average balance rising to $4956 at the end of2005. (Monthly Review, 2006)

•Unpaid credit card balances totaled $838 billionby the end of 2005. (Monthly Review, 2006)

•Between 1994 and 2004 consumption grewfaster than national income. (Monthly Review, 2006)

•Women will spend more than 8 years of theirlives shopping. (Daily Mail, 2006)

•The credit card industry took $11 billion inincome from late-payment fees in 2005. (www.creditcards.com, 2006)

•The rate of personal savings in the United Stateswas -0.5% in 2005. (www.creditcards.com, 2006)

•2.39 million US households filed for bankruptcyin 2005, which is a 12% increase over 2004. (www.creditcards.com, 2006)

Getting Your Spending Under Control

In 1997 PBS aired a show titled "Affluenza," a coproductionof KCTS/Seattle and Oregon Public Broadcasting.Although this program was produced a decade ago, thebleak picture it paints of Americanspending habits is still accurate.Likewise, the supplementary Website (www.pbs.org/kcts/affluenza)offers some helpful tips to combatconsumerism. It suggests askingyourself the following questionsbefore you buy:

  • Do I really need it?
  • Can I afford it?
  • Could I borrow one?
  • Do I have one that could be fixed up or repaired?
  • How long will it last?
  • Am I prepared to maintain it?
  • What are all the costs over its lifetime?
  • How long will I have to work to pay for it?
  • Are the resources that go into it renewable?
  • Is it recyclable?
  • Finally, give yourself a 48-hour "cooling off" periodto think about it before you buy (30 days for a majorpurchase).

Other helpful practices, accordingto the "Affluenza" site, include:

  • Avoid the mall.
  • Become advertising savvy.
  • Don't be sucked into buyingwhat you don't need.
  • Volunteer for a school or communitygroup.
  • Splurge consciously.
  • Stay in.
  • Make a budget.

And remember that each dollarrepresents precious time in your lifethat you worked. Are you spendingmoney in ways that fulfill you?Instead of fixating on people who have more than you,pretend the Joneses are the thriftiest, least wasteful peopleon the block. Then try to keep up with them.

Sign up for a biweekly syndicated column fromNathan Dungan, author of Prodigal Sons & MaterialGirls: How Not to Be Your Child's ATM, and find hisShare-Save-Spendâ„¢tools for financial sanity at www.sharesavespend.com. Take a quiz, learn interestingfacts, discover helpful tips, find teachers' guides, andprint out a viewer's guide of thought-provoking questionsat the Affluenza Web site, www.pbs.org/kcts/affluenza. The television program "Affluenza," producedby John de Graaf and Vivia Boe, is available for purchaseat www.bullfrogfilms.com or by calling 800-543-FROG.