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Dollars and Sense: Just say ‘no” to non-essential spending


Today our U.S. Representatives voted not to approve a $700 million bail-out for Wall Street and Corporate America, responding in part to a backlash of newly energized American “Joe Average” angry over executive pay, the mortgage crisis, and rocketing debt (personal and Iraq war-related). The time to start worrying, though, began when the balanced budget of the Clinton era was sacrificed on the altar of political expediency and oil profits in the post-911 panic.

Like many Americans, I’ve been following the financial roller coaster ride that is Wall Street and the American financial system, though I may have been following it longer than most. Years, in fact.

In recent weeks I’ve corresponded with a New England friend who, after years of fiscal nonchalance and escalating debt decided to straighten up and become fiscally responsible. It took him five years or so to pay down all his debt, establish a fiscal net worth in savings and investments — and keep it that way. He’s the first to admit “it’s not easy.”

The first rule of thumb, he says, is pay down your debt. The second rule of thumb is “if you can’t pay for it, don’t buy it.” It doesn’t get more straightforward than that, unless you live in a culture like ours in which you are primed to consume beyond your means. Keep up with the Joneses until you both sink. It’s been the American way for some time now.

Today I read numerous stories of average Americans being hit by stock market losses, foreclosure notices, and credit card companies that are suddenly jacking up the interest rates on even their best customers…in one case, the credit rate jumped from 7% to 26% overnight. Insanity. Especially if those credit cards have been funding an overextended lifestyle.

Like many Americans, I am feed up with executives with multimillion/paychecks and even more in the “severance” packages or golden parachutes and the corporate windfall profits that seem to be built on the back of our consumerism.

Unlike many Americans, I also have developed little patience for those who play the “keep up…” game and overshoot their means by virtue of those little plastic credit cards. Unlike many Americans, I have little patience with those who can’t take the time to figure what a mortgage will really cost before they sign on the bottom line with black ink destined to turn red.  Playing Devil’s advocate, a friend today said “many people are not aware or savvy enough” to understand the (mortgage) process; some lenders have prodded them into signing things they don’t understand, or persuaded them to go for more than they can afford. If you don’t understand a contract, whether it is for a camera, a big screen TV, a car or a house, ask someone who knows (that includes consumer organizations). Read the fine print. Ask for details. Be specific. How much will it really cost? My mother would have said “If it seems to good to be true, it probably is.”

Some of my friends laugh at me because I “pay cash.” I have a system that works, and it starts with the essentials of housing, utilities, and food; internet access is important (school), cable TV is not. Anyway, anything I want to see I can view online, including TV shows and movies, which makes cable irrelevant. I use the local library as an alternate resource. When the essentials are covered, I can then do two things: (1) set some money aside and (2) maybe, maybe, treat myself to a movie, a lunch, or something. I have a “wish list” of things I’d like to have, and when I have the money saved, I get them. Time has an interesting way of reshaping that wish list; often when it comes time to buy, the priorities have changed. And that’s okay. Either way, I am not going into debt. The only true wild card is that of medical care/emergency.

The refrain of the past few weeks in America begins with the words “recession” and the really scary word, “depression”; it has also included terms like “thrifty” and “conservative.” At the core of solutions to fiscal crisis, both the latter words are apt. It is not necessary to keep up with the Joneses. It is not necessary to have the latest X-Box. It is not necessary to buy every new movie on DVD. (Main Street may not like it but it is survival of the fiscally fit.) It will not kill you to eat at home and eat leftovers from time to time (in fact, it will probably be better for you if you prepare healthy food at home). It will not kill you to plan your travel in a way that uses the least amount of gas. It will not kill you to add a sweater and, as the cold weather approaches, turn the thermostat down a degree or two or three, put an extra blanket on the bed. It will not kill your children if you spend less than $500 apiece on them for Christmas.

I know that the main idea of the experts is too pump more money into the economy to remain solvent, to money fluid and flowing, to keep business alive. It is a fine walk that is shuffling around the world; foreign markets are not immune. I also know that as consumers, and American economic survivors, it is essential to become frugal, and rethink many aspects of our lives. All things move in cycles over varying periods of time. Relief will not be easy, and will require hard and probably painful decisions.

We have been lax in minding our personal business, extravagant in meeting excessive “wants,” and deserving of chastisement for failing to teach our children and their children the value of thrift, of wisdom of savings, the reward of  “earning” something rather than impulsively paying with plastic and promissory notes.

It is a lesson that starts at home, long before it works its way to Main Street and on to Wall Street.  As a country, we’ve earned a failing grade in economics. As we move through this pick-up-stick economic game all we can do is survive and learn from it, redevelop old-fashioned skills.

My mother also said something about “the school of hard knocks.” Translation: experience is great teacher. Translation: Don’t spend what you haven’t got or can’t afford.


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