Economic woes

Every conference we hear the same important lesson: live frugally. We are counseled to save our money and have a few months of expenses saved up, live within our means, don't go into debt except for important things like a home, education, and sometimes a car. We are counseled to have food storage and prepare ourselves for tough economic times.

I like the saying, and I'm probably not saying it right, "Fix it up, wear it out, make it do, or due without." I'm not good at it, but it is good counsel. We hear this, but when are we going to get it? Who cares what someone else has, if we can't afford it, we can't have it. We've become obsessed with instant gratification and the thought of saving up for something seems old fashioned to our generation. (I say we assuming I'm not the only person that spends when I shouldn't, but if you aren't one of them, just don't count yourself as a "we".)

During this past election we heard a lot of excuses and finger pointing for who got us into this mess. It was blamed on the big wigs on Wall Street, predatory lenders, corrupt execs, and everyone other than the common person.

The real blame for a lot of this mess comes from the people that signed their names on debts they could not afford. No one forced them to spend tens of thousands on credit card debt, then roll that into a home equity account and then buy a big house they couldn't afford. I know that lenders gave out loans people couldn't afford, but it is the consumer's job to figure out what is within their budget. Lenders take a snap shot of a person's financials and give them an approved amount, but from what I've seen it's usually much higher than what people can really afford. Lenders don't know our spending habits, how much we eat out, or our shoe fetishes and wasteful spending. They say what they think the person can afford and leave it up to them to be responsible enough to make the right choice. Unfortunately, a lot of people don't want to wait, they want it all now.

So much has happened as a consequence of the housing market crash. Foreclosures and bad loans have now caused some large banks and financial institutions to go bankrupt, and crippled many others. All of this happened because people bit off more than they could chew and didn't fulfill their obligations.

Please don't think I'm being holier than thou, we have cc debt, student loans and plenty of mortgages, and we now need to re-evaluate and be smarter. We've always had a budget, we just haven't always followed it. Since all this has happened I've had to be better with our wants vs. our needs. I really wanted a cute new coat last week, but I already have five. Someday I can have six, but right now I need to be content with the relative abundance I already have. I have a big closet full of clothes and although they might not all be new and fashionable, I don't need anything new right now. (although I really want a new cashmere sweater from Ann Taylor :-)

Another thing we've been hearing for years is the need to get our food storage up. Hopefully we can do this before it becomes a necessity. I'm bad at this one and need to get better.

Rather than looking to the new President for a bailout, Americans need to bail themselves out and be smarter starting today. Kids need to be taught economics early in life, but unfortunately some kids just see irresponsible parents and do the same. I remember one time when I worked at Wells Fargo I asked a tween kid if he wanted to open a savings account and he looked at me like I was crazy and said he didn't need one. As I helped his mom I could see where that came from. Parents need to teach their kids about money management, and it needs to start early.

I hope we're forced into being a more cash based society, because it will force people to live within their means more, but I guess we'll see. I think credit is great and really helpful, but people don't seem to be responsible with it.

For a while economics experts were positive about the financial state of the nation and world, but things have gotten progressively worse. Rather than being frugal and saving we're now forced to "spend" ourselves out of a recession to save our capitalistic society. (I like capitalism)

I just wanted to vent, because all of this placing the blame on everyone else is getting on my nerves. If you can't afford it Americans (including me) you can't have it. We work hard to have what we do and when someone defaults on a loan, cc or other obligation, we all pick up the tab.