Economic Ineptitude

Since the economy has been playing for the spotlight the last few months, I figured I would chime in with a few cents worth of opinion. People are feeling the credit crunch, foreclosures are rising, food prices are soaring, gas of course is beyond comprehensible anymore, and people just do not have spare spending money anymore, let alone bill paying money. What can be done? Not a whole lot really since the problem has many different sources and a bail out by the federal government would just cure the issue now only to have it reappear in the future. The only way to cure the issue is to change consumer spending habits along with limiting the amount of credit available.

Consumers are used to having what they want, when they want it, at whatever the cost. Creditors were readily available for almost anyone with a credit score it seemed and they all “fought” for the consumers by offering various low percentage loans, zero percent interest payment bonanzas, and sometimes, giving away money just because they felt the collateral was worth the risk. Well, both of these issues have to change before anything good can come out of this impending fiasco. Consumers have to learn how to say no to themselves. Say no to the latest gadget. Say no to the latest car. Say no to spending excess amounts on things your family does not truly need. Creditors need to learn how to say no also. They need to say no to high risk loans. They need to say no to zero percent interest loans. They need to say no to collateral that is risky.

Now, I’m not saying that we should just dry up our economy and create a stagnant, no-growth situation and dive into a depression era sort of spending and lending ideal. What I am saying is that people have to retake control of their lives at the lowest level. Same goes for the lenders. I’m including myself in this boat. Everything is great when the money comes in and possessions are nice to have, but enough is enough. Creditors love to hand out lots of loans because the banking industry was in high gear with lots of acquisitions and mergers happening. Make the books bigger. Make a larger return when you get bought. It’s a nice tradeoff, in the short run, if people pay their bills. So, we have consumers willing to buy almost anything because it makes them feel better and we have lenders willing to shell out the money to almost anyone because they have alternative motives to do so.

That leads to an excessive spending cycle, which we are paying for now. However, that is now coupled with the costs of staple living items increasing beyond pay rate raises. This is how come we see ourselves falling into an economic disaster where people can’t afford to own a home, feed their family, or even afford to go to work. Have you thought about that? Some people are in a situation where it COSTS them money to go to work. It’s a very sad state of affairs we are in. I’m sure there is a level of income that isn’t affected as of yet, but for the middle class and below, we are definitely affected by the current economic issues. When you have talk shows on television telling people their most important bill to pay is their house payment and the rest are “pay if you got the money” bills, that’s a problem. People are scared and rightfully so. There just isn’t enough money at middle class and below anymore.

The extra money we used to have is gone via food costs, gas costs, credit card rate increases, and mortgage rate increases. On top of that, throw in rising costs for energy like electric, heating oil, and even water. Where does it stop? It seems like the roller coaster is out of control on the way up the tracks and not down. Well, up the tracks as in price increases. If we as the consumer take back our ability to say no to ourselves, we can free up some extra money, maybe enough to get us over the hump. That’s a huge maybe because we can’t say no to the staples of life. We HAVE to pay money to live. If these staples continue to increase beyond the average person’s means, then we are in for far worse than just an economic slowdown. Millions of people in fear of losing their home will give us a very unstable and toxic environment. Our country’s morale will decrease and some people will resort to doing “whatever it takes” to keep a semblance of control in their lives.

Higher crime rates can result. Families taking on multiple jobs (assuming the jobs exist) results in less family time which in the end, leads to broken homes, upset children, and strained relationships. It’s not a very rosy picture is it? I’m not a pessimist, but I’m a realist. We have to realize there are things that we can change ourselves, that’s the first step. The next steps are voting for politicians who will create appropriate legislation that will protect our country from economic disaster. When was the last time you saw a politician getting forced out of their home because they couldn’t make a payment? When was the last time you heard of a politician voting down a bill that included a pay raise for them. When was the last time you heard of a bill being sent to the President enforcing term limits on political seats? You get the idea. Our Congress has done next to nothing to protect the middle to lower class. Tax breaks and cuts are great, but as that happens, our local taxes are going up. It doesn’t help if it just shifts money from federal to state coffers.

What I propose is that we take the first step. Control our spending to things of necessity. Limit demand for superfluous items, this will in turn drive costs down and eventually supply down forcing necessary transport and manufacturing to items that people actually demand; food, housing, and other staples of life. The increased business entering the “newly” demanded product arena will increase supply, drive prices down to a reasonable level and create a much more stable economic position. I’m not saying that we limit ourselves to nothing more than an existence with no happiness. What I am saying is that you don’t need that latest compact disc, you don’t need that latest movie, you don’t need that pay per view event, you don’t need that latest cell phone, and the list could go on forever. Ninety nine percent of the time, there is a cheaper alternative to the “need to have” item. We are sold on name brands. I would rather have a cheap brand and a house than to have the name brand and moved out on the street.

I’m sure you all get the idea I am proposing. Please control, not end, your desire to spend money on extraneous things in your life. Doing so will give you peace of mind and a better outlook on your checkbook. If we can get enough people to change their habits and get the help of our government, our future would be brighter than it has ever been. Actually think before you spend. Spend like your families groceries depends on it. Spend, but be thoughtful.