One of my cousins recently attended an event at a suburban church and I tagged along. I’m amoral and omnivorous. I’ll go to any house of worship on the odd chance I might actually learn something useful – and I often do. And I meet a lot of really nice people along the way. But mostly I like to explore the landscapes other people inhabit. Church provides an intimate glimpse into what people are thinking and feeling in a particular location.
I was immediately impressed with how much this church looked and functioned like a shopping mall. The size, shape, and general construction of the buildings and surrounding parking lots were indistinguishable from a large retail center. I spent more time than I probably should have trying to figure out which denomination it was. Catholic? Definitely not. Lutheran? Not exactly. Baptist? Meh. Mormon? Nope. It was a generic all inclusive Christian arrangement that celebrated the lack of any specific affiliation. Come and worship. We take all kinds. And enjoy the ample free parking and food court while you’re here. There was a well populated Christian school, a substantial auditorium, and all manner of programs and facilities. It was a highly successful suburban version of Big Box Jesus.
The event my cousin was attending wasn’t strictly religious in nature. It was more of a collection of speakers who each preached a version of financial independence with a Christian slant. The majority of the attendees were suburban women like my cousin looking to start or improve an independent business venture.
A borrower is a slave to his master. A thousand heads nodded. Always set aside 25% of everything you earn. The congregants listened intently. Start small and build up incrementally. There were biblical parables about prudence leading to abundance. Knowing smiles of agreement followed. There were some folksy stories about the misguided foolishness good people often stumble into. Laughs ensued from the audience. I liked these people.
But then I looked out at the parking lot. How many people paid cash for their cars? I explored the subdivisions all around the church. How many people bought their suburban homes with cash? How many people are capable of setting aside even a sliver of savings on a regular basis ever. How many people bought their clothes and shoes and had their hair done with a credit card that got rolled over into a big ball of vague but gradually mounting debt? How many people are approaching middle age and still paying off student loan debt?
I understand the dynamics of contemporary accounting. Carrying mortgage debt provides a substantial tax advantage. Using “other people’s money” at a low interest rate to invest in an asset that consistently rises in value is smart and frees up cash to be deployed in other more productive ways. Putting cash into savings is inefficient since it sits in a bank earning near zero interest these days. Stock values keep rising so investing in equities is a no brainer.
You can’t go around wearing thrift store clothes and sporting a bowl haircut and expect to be taken seriously in a professional business setting. You don’t want to drive around in an old clunker and put your family at risk when you could have the latest safety and reliability features of a newer car bought on credit. If you can buy that car with a home equity loan and get the tax deduction, all the better. Everything about respectable modern life is predicated on people spending a certain amount of money in a very specific way that is nearly impossible to achieve on a cash basis. And that set of arrangements is in direct conflict with the traditional virtues of frugality, saving, and self reliance. Big Box Jesus takes Visa, Mastercard, and American Express.
This particular suburb is still very much in the aggressive growth phase of development. Everything is shiny and new. Did the developers build this town on a cash basis? No. It’s built on an Everest of commercial debt. How many of the people at the church earn their living selling real estate, or cars, or brokering mortgages, or refinancing people’s obligations, or helping them manage their stock portfolios? How many people are critically dependent on other people buying their products or services on credit? One way or another… almost everyone.
Is the city paying as it goes for infrastructure with funds set aside for maintaining and replacing all the pipes, pumps, and pavement when they wear out? Are pensions fully funded? Will this development pattern generate enough taxable value as it ages to support and maintain all the critical public infrastructure of schools, police, and fire protection? I’ve spent a lot of time exploring the municipal finances of towns all over the country for years. They’re all functionally insolvent beyond a certain not-too-distant point.
What all these practices and institutions need – what they can’t function without – is constant growth based on ever more leverage and debt. This can’t go on forever. Sooner or later there’s going to have to be a day of reckoning when the whole house of cards comes down. If I were a religious man I’d start praying right about now. Instead, I actually do what the preachers say. Pay cash, live below your means, save for the future, and opt out of the situations that trap you in a dysfunctional living arrangement with no future.
John Sanphillippo lives in San Francisco and blogs about urbanism, adaptation, and resilience at granolashotgun.com. He's a member of the Congress for New Urbanism, films videos for faircompanies.com, and is a regular contributor to Strongtowns.org. He earns his living by buying, renovating, and renting undervalued properties in places that have good long term prospects. He is a graduate of Rutgers University.