Vincent Vega
Rock n' Roll Doggie ALL ACCESS
Man, I WISH I could have the kind of life the people you met in Montana had (to a point. I don't need a super-expensive flashy car, but I would love to be able to pay to go to university and travel when and where I could and have enough money for my family to not have to worry about not having enough for necessities or luxuries).
That's the point, many don't have the money, yet don't want to not buy things they want to have. So they incur debts.
Sometimes you can't avoid it. When I was in Australia, I shortly had to go into the reds before the next payments came, but I knew it would be paid off immediately. I don't know how high interest is on credit card debt in the US, but with most German banks it's about 12%. That's pretty prohibitive.
I've been in Montana from mid-August through mid-December of 2008, and then stayed for another month in the US visiting some interferencers and some nice cities in the country. It was a great time. Had lots of fun and made nice friends over there.
But, at the same time, not having to pay or paying so very little for education allows one to be "debt-averse" and save to pay cash for things like cars. There definitely is some amount of opportunity involved, even here in the US among my peers when people brag about having no debt it's usually because their parents paid for their college and helped them with their first home. We pay a car loan on our van and the original balance of the loan was only a fraction of one year's cost of attending college for either of us. We could live in a mansion and travel the world on what we pay towards student loans each month. I am not complaining about it b/c that was the choice we made to get the education we wanted, but student loans are absolutely our top monthly expense and will be for quite some time. The same could be said of my parents and what they paid for my K-12 education. Sure they would not have had a mortgage or had to take a few years to pay off a vehicle if they weren't paying $7k per kid, per year on blue collar salaries. Believe me, I do not enjoy debt in any form nor would I ever choose it but these days, very few people can work enough hours during college making enough to pay for it.
If I didn't have student loans I would never have to buy on credit and incur debt. As it is I do not have a credit card and besides my student loans (which I've never once been late on) our only other debt is the auto loan. I could pay the auto loan in full in a few months without the student loans and I could afford a home mortgage double my current rent.
It's certainly valid points, though I must say, even though here in Germany education is almost free of costs, there is still a visible difference in the approach to spending. First of all, as I could see in Missoula, and it doesn't need to be true for every other city, the incentive to get a car was much greater. The public transport was pretty poor, with small busses who run infrequently, and as a pedestrian it was no fun. We sometimes went to the one shopping area, and to get to the shops on the other side you had to cross some streets. It took ages as the traffic lights for pedestrians were very poorly programmed. So you'd see cars go by from one street three times before you could make it to the next island. It become quite apparent that they didn't want you to walk. So more students get a car. In Germany, if you live in a city, you have less of an incentive to buy one. The students who do get one, as I said, tend to get cheap used cars. They cost way less than $10,000. Most students get cars they can pay in cash. In Montana, to drive a jeep, Hummer H3 or similar, brand-new was not a rare sight.
Same with consumables and electronics. So either, a lot more of the students were richer than I thought, or their parents had a reasonable income, or they just didn't care about the debts.
There's just that kind of a difference, where on the one side you have an expensive education system and students who afford all kinds of luxuries, and another system which is relatively cheap, yet students also consume less (of course, in both countries you'll also see the opposite case, there's no absolutes).
Here, when you are done with your education, and you have a steady income, you start buying more expensive cars where you take out a loan for, and you start building your own house, again on credit. But as a student, it's just greatly uncommon to go into debt. If you haven't got a high enough income, you don't buy stuff you don't have the money.
I would say that the disposable income of a student in the US is not that much different from that of a student in Germany, in general. I think there's rather some other factors at play why consumption is so much different. One, the overall attitude to consumption. Germans like to treat themselves to nice things, but overall consumption here is lower. And two, I would argue, if you have a system where it's more or less normal to incur a massive amount of debt at a relatively young age, ie. you have to take out huge loans on your education, your overall attitude towards debt, and paying off debt becomes different. You just see it more as a given, something that comes with being student.
But if you live in a "system" where living on money you don't have is more uncommon, you tend to hesitate more to incur that kind of debt.
The first time I got a credit card was when I applied for the working holiday maker visa in Australia. My parents didn't have one (my mother still hasn't gotten one), and I needed it because it was the only means of payment for the visa. Also, we were told that in Australia it's more common to pay with cards, and it's cheaper to withdraw money from your bank account at home via credit card. But when I was in Australia, I mostly paid by cash. Reason was, I simply wasn't used to using a card for paying at the supermarket, and I heard of enough backpacker who went over there, for the first time in their lives used credit cards, and before they realised they spent all their money. Because it's so simple. Here a few bucks, there a dollar, and then paying for some trip, consuming a little more etc. With the exchange rate of 1:1.60 Australia also seemed attractive to just get stuff. When you always use cash, you just see your $50 not getting smaller and smaller. You see how your money leaves you. If you use a card, you don't see it. And if you are not used to it, you might not realize how much you really spend. Until you receive a notice that you reached your card's limit. And then you are in trouble.