But Steve this is the point.
Up until this recession the AVERAGE (meaining most Americans)
had a negative savings rate (I believe up until 2007 it was -2%)
Had an average credit card debt of 9000 bucks.
So why are we acting all shock and shaken. These are average statistics. so now all of a sudden people on welfare are the big problem? Gimme a break.
Americans have been living la vida loca for decades now AND the interesting thing is last month banks have announced that consumer loan borrowing and spending was up. Translation: we are back to our spending ways (although a lot of analyst believe it's because more people are putting necessities on credit cards). Last year, in the middle of a recession according to time magazine we racked up over 5 billion with a b on credit card debt. translation: even though we can't afford it, darn it we deserve a happy Christmas. Now we have the nerve to vent that some smuck on welfare is causing our economic downfall? Really? Americans shopped until they dropped over the holidays in the middle of the worst economic downturn since the depression and the family at the food bank is the problem. ROTFL.
As a previous poster said, nothing is going to change because we have not taught our kids financial responsibility and they won't teach their kids. The mantra here has always been and seems to still be "that new ipad is way more important than putting money in your savings".
You're right that this problem didn't happen overnight. We've had loads of warning, and it's very easy to identify portions of the problem: Easy credit, the belief that things would never decrease, lack of personal responsibility. Today's serious economic problems have been brewing about 30 years; they're not going to blow over in a year or two.
So, you think she is a cheater because she drives an expensive car with a hospital parking sticker on it? Have you followed her to her job? Do you really know if she still works for the local hospital? Have you seen her there? Maybe she lost her job. Even if she does, maybe she's one of those high paid receptionists. Or maybe she is a volunteer like you and the hospital provides her with free parking. My point is that you just don't know her situation and why she is using a food pantry. You are assuming that she is a cheater. It's hard enough for folks to use a food pantry, they don't need the volunteers like you looking down their nose at them because they are not judged to be worthy enough for help.
Yeah, sure. It's possible that the "cheater" is driving her sister's car, she needs the food to feed her six children, etc., etc., etc. Those exceptions do exist, someone at the grocery store really is using food stamps to buy a birthday cake for the last birthday a toddler will ever have, and someone's fancy nails were paid for with a gift certificate given by a wealthy friend, etc., etc., etc . . . but
usually what appears to be true is actually true.
The 'personal responsibility' position is just a deflection from reality, though; it works on an individual scale but not on a societal scale. Focusing on the people who overspend is easier than facing the very real fact that we now have an economy structured in such a way that consumer spending is the main driver of growth but relatively few jobs that pay enough to generate consumer spending without debt, and arguing for personal responsibility merely distracts from the fact that wages continue to fall while essential costs of living continue to rise.
If we actually succeeded in raising a generation that knows how to live on less than they earn we'd see a major depression. Our economy needs the debt-driven spending of the last decades to grow and prosper, and the temporary loss of that spending was a big factor in the recent recession.
You're right that the economy has changed, but this isn't the whole truth either. The world isn't hopeless. People who want to "make it", can still do so -- though perhaps not in the way they expect.
I'm thinking about my grandmother's stories about her early married years. She and my grandfather both had college degrees (unusual for our area and for the time period). He'd been working (teaching high school) for several years and had some money saved, but when they were first married, they rented two rooms in someone's house. She cooked on a hot plate. They lived there about a year and a half 'til they could build their own small house. That was typical for their generation. They lived within their means.
Yes, the world has changed, but today we've accepted that if we can't have what we want, it's okay -- even essential -- to borrow to get it.
Of course, personal responsibility isn't the whole story: We also need to bring industry back to America. We need to start producing items that the rest of the world wants. Yes, that brings up a whole different set of problems.
But I think all of that is a separate issue from personal responsibility, though not totally separate. Obviously, if people continue to spend more than they earn, it helps the economy in a way - just not a good way. I'm just not convinced that people living within their means would be a bad thing for society.
Yep.
I think since we're this far off topic, I throw my $.02 into that subject. I believe that folks living outside their means may have grown the economy, but it's also what made it unstable & succeptible to the housing bubble of 2008. When gasoline suddenly shot up over 4 bucks, people who were living at or beyond their means were suddenly hit with an extra $400, 500, or more every month to spend and they were unable to do so. So, everything came crashing down. Had we all had that money set aside, we could have survived that time.
Yes, people who overspent -- for decades -- have artifically inflated the economy. It's not like we didn't see this coming. Economists have been saying since I was a child that the middle class was disappearing, that huge retirement problems were on the way, and other things that have now come to pass.
Living within your means doesn't mean you are no longer a consumer. It just means you don't spend more than you earn. You still buy groceries. You still put gas in your car. You still go on vacations. You still go out for dinner, get new clothes, put your kids in dance class and have your hair done. You just do it within the limits of your income.
If our economy in the long term requires that we all (or most of us) continue to live beyond our means and spend more than we earn, I really worry where that is leading us.
Right. Too many people see economic discussions as black or white, yes or no. The reality is that a happy medium is where most of us should be . . . but we Americans aren't all that good at moderation.
Buy groceries, but buy store brand and watch for sales.
Buy gas, but try to combine your errands and cut down on unnecessary driving.
Go out to dinner every other week instead of three times each week.
Have your hair done, but do it at Great Clips instead of at the mall.
Consume, but do it within your means.
But that's the thing - when you have stagnant or declining wages coupled with rapidly increasing costs of things like food, gas, health care, and heat living within one's means often does mean avoiding being a consumer in as many ways as one can. If people started living like they did a couple of generations ago - cooking at home, growing gardens, mending clothing, repairing appliances, driving the same car for a decade or more, vacationing at state/national parks and packing food, etc. - the pace of job loss and wage decline in our society would accelerate exponentially.
I do worry where this is headed in the long run. I don't see the lack of basic respect for the value of a day's work changing, nor do I see our "service" economy developing into something more sustainable. But right now it is clear as day that if everyone lived the way most of us budget boarders live our entire nation would be in a very serious economic crisis that would dwarf any of the "bubble" collapses.
I agree that we have a mess right now; however, I don't see that "well, we're screwed anyway, so we just have to keep doing what we're doing" is a reasonable answer. Instead, we need our government, our leadership, to make it possible/favorable for Americans to bring back industry. We need to build more non-service oriented jobs. To some extent, that leadership, the spark for that goal, must come from the government.
Well said
Going out to dinner is not going to help you save any money. Make a peanut butter and jelly and call it a day!
