When Sean Cooper, a 30-year-old Toronto resident, paid off his $255,000 mortgage in slightly more than three years, he apparently expected the universe to give him a big pat on the back. Why else allow the Canadian Broadcasting Corporation to film him last month, dressed in a suit and bowtie, taking a lighter to his mortgage papers in front of a restaurant, surrounded by a group of cheering friends?
The universe had a different notion.
While he was torching his bank documents, Cooper stumbled into one of the craggier personal-finance fault lines of our age. How much can we pin the ugly financial situations of individuals to their own behavior—and how much should we blame them on the greater economic environment around us?
Cooper, a financial analyst earning $75,000 (Canadian) a year, purchased a suburban Toronto home when he was in his mid-20s. He did not, he said, want a mortgage to turn into a “life sentence.” Lots of people feel that way. But Cooper actually decided to take action.
Cooper moved into the basement of the home so he could rent the main part. Meals often consisted of Kraft Macaroni & Cheese, plus some inexpensive fruits and vegetables. His one vacation was a bus trip to Wisconsin. He didn’t go to the movies. He wouldn’t have had time. He took on not one but two extra gigs, working sometimes as much as 100 hours a week. A vegetarian, he even made the ultimate sacrifice—he took a job in the meat department of a supermarket.
“There’s no denying he has some valuable insights for anyone who owes money,” the CBC opined.
In the literature of personal finance, stories like Cooper’s can be read as secular homilies. We don’t have to follow them literally. Instead, they’re meant to inspire us to improve our present behavior. Surely you too have a luxury you can give up so you can pay down your mortgage or save more for retirement. This is the so-called Latte Factor, the idea that we’re frittering away money on small luxuries that could be put to better use elsewhere. We encounter these tales everywhere—when an elderly relative tells us how she survived the Great Depression or when a talk-show host like Dave Ramsey tells listeners to eat “beans and rice, rice and beans” until they pay off their credit card bills.
But this time, many readers and viewers of Cooper’s quest didn’t want to hear it. True, Cooper didn’t succumb to lifestyle inflation, that bugaboo of personal-finance gurus everywhere. But how could he? As commenters were quick to point out, he didn’t have much of a life at all.
“See everyone? All you have to do is become a literal slave and almost work yourself to death if you want to pay your mortgage,” one person wrote. “We’re not all single with no kids,” wrote another. Others questioned why they were even reading the piece at all. “You know they passed labour laws to not have this be the example right?”
If anything, Cooper deserves our pity, not our scorn. So why the anger? In both the United States and Canada, we revere our penny pinchers. Perhaps as a result, economic downturns forever bring predictions that consumers will see the error of their ways. The Great Recession has been no different. “[T]he clampdown on spending appears to be more than a sharp but temporary downturn of the economic cycle,” Newsweek claimed in 2009. “[I]t seems to herald a much broader shift: the end of a way of life based on freewheeling consumption fueled by easy credit and the wealth effect of ever-rising asset values.”
This sort of stuff is catnip in hard times. The media and other organs of popular culture toast epically thrifty individuals like Cooper and amplify advice for living with epic frugality, all of which suggests that we, as a society, might have avoided our economic suffering had we lived more righteously. Time dubbed Suze Orman “the Queen of the Crisis” after she went on Oprah and told the audience, “You bought homes you couldn’t afford. You took equity out of your homes to buy other thing you couldn’t afford. You leased your cars. You bought new cars. You went on vacation. You bought clothes. You spent money like it was going out of style.” Her solution? “Can we start looking at keeping our car for 10 years, rather than getting a new one every three?” Or take the pseudonymous blogger Mr. Money Moustache. A Canadian living in Colorado, he’s acquired something of an online cult following for writing about how he and his family are living on less than $30,000 annually.
These sentiments aren’t unique to the Great Recession and its recovery. In Thrift: The History of A Cultural Movement, Andrew Yarrow describes efforts during the Gilded Age to promote proper financial living. Income inequality was soaring, but then, as now, everyone from politicians to philanthropists promoted right financial living as the way to get ahead. The United States Treasury Department created and distributed guides teaching thrift to schoolchildren. “Thrift brings you up the ladder; waste brings you down,” one lesson read.
But if a downturn lasts long enough, people will eventually realize they’ve been had. There is, it turns out, only so much budgeting can accomplish. As a result, the Great Depression all but ended the first thrift movement. By 1935, even the chairman of something called the National Thrift Committee admitted there was “no use talking thrift to persons who had nothing to be thrifty with.”
So Canada. Like in the United States, the economics of the post-2008 world have been less than kind. Our neighbor to the north currently has a personal savings rate of around 4 percent, lower than the United States’ rate of 5.6 percent. Household debt is at record highs. For Canadians this is a huge falloff—in the early 1980s, the Canadian national savings rate was just shy of 20 percent, more than double the United States’ at the same time. The current state of affairs is occasioning no small amount of national hand-wringing and moralizing. A poll conducted earlier this year by the BMO Financial Group found 40 percent agreeing they should be saving more money. “Canadians dreaming of retirement, but not actually saving for it,” read one recent headline.
At the same time, housing costs in major Canadian cities—as in the United States—are on steroids. The economy, on the other hand, isn’t doing so hot. Last week the CBC reported that the suicide rate in Alberta increased by 30 percent for the first six months of 2015 as measured against the same period in the prior year. One suspected culprit, according to the news organization? Surging unemployment as the oil boom ends. In another BMO Financial Group poll, 58 percent admitted they were putting off financial goals because of monetary setbacks.
Perhaps the reaction to Cooper says many are ready to enter the next stage. In the United States, the Fight for 15, which started as an almost quixotic campaign, has now turned the minimum wage into a presidential campaign issue. In Canada, the Liberal Party headed by Justin Trudeau won the recent election at least in part by promising to boost infrastructure spending and cut taxes for the middle class.
Ultimately, many of us want more than inspirational stories of sacrifice and pluck. We want change. Even Cooper admits parsimonious living can only take him so far. He recently spent $1,000 on a new wardrobe. His new crusade? He’d like a girlfriend. “Mortgage-Free Guy Looking for a Single Frugal Girl,” a post on his website now proclaims. “Contrary to popular belief, I don’t eat Kraft Dinner at every meal.”