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Shrink the economies January 6, 2009

Posted by fetzthechemist in Uncategorized.

An interesting editorial in the San Francisco Chronicle caught my eye this morning. It said the various bailouts and stimuli packages were not the cure for the economic woes. The contention was that these were at best bandaids and at worse fixes for a money-addicted society.

I have to agree. The economics of twenty or more years ago said that you budgeted, you saved up for things you wanted, you bought only what you could afford. A credit card was not the same as an ATM debit card. One created debt while the other was spending money you had.

People got into keeping up with the Jones, then surpassing that and believing that every person had to live an upper middle class or wealthy lifestyle. No planning, no budgeting allowed. Buy an expensive house; drive a luxury car; vacation every year in Cancuin, Mazatlan, Hawaii; have all of the latest electronic toys even though you already had last year’s model – last year’s? (how so out of style!)

People making $30K to $40K per year were living like it was $130K to $140K. Credit card debt more than a year’s earnings? Not a problem – just get a few more credit cards. A mortgage payment over half your income? Not a problem – just get a second mortgage.

People need to rethink their lifestyles. It is not about not using your credit card, it is realizing that credit is debt. Only buy what you can pay off. Paying the minimum balance is not staying even.

A house is not an investment first. It is a place to live first. You accrue the wealth by longer times than a year. Saving for your kids’ college or for your own retirement are part of the scheme. You do it longer term or you do without.



1. andrew - January 7, 2009

Thanks for this great post, i like reading your blog, I enjoy it … keep the good work 🙂

2. Bill Cash - January 16, 2009

I just stopped by your blog and thought I would say hello. I like your site design. Looking forward to reading more down the road.

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