Update 11/14/16 – We are all capable of not looking at the bigger picture, myself included. Yes, I believe that people need to be responsible for their finances and not take on more debt that they can reasonably handle. But, there are larger forces at work here not to be dismissed so easily. What should have happened is that the financial industry should have been better regulated so they can’t take advantage of people. Good decisions come from knowledge and a comprehensive financial education of the American people should have been enacted. People can’t improve without learning how to do so. To expect people to spontaneously understand finance is unreasonable. Education isn’t a luxury, it’s an investment society makes unto itself and public education, all the way up, should be publicly funded for the good of society. Getting an education shouldn’t burden people with lifelong debt. I am going to leave the post below in its entirely to remind myself to do a better job at being objective, compassionate, and looking at the bigger picture.
Ok, so maybe not everyone. Among those who have posted on the “We Are the 99%” Tumbler, I read some very heart breaking stories about people who have truly gotten the short end of the stick. But I think there are a lot of stories that aren’t exactly being shared. Less tragic stories about people who didn’t have bad luck but rather made bad decisions.
I’ve only heard a few people mention anything about responsibility. Lots of finger pointing and lots of woe is me, but not very many people saying that they could have been a little smarter about their finances, or life decisions.
Ten, or even five years ago, most people didn’t think they would have to worry about the long term. Money, by way of loans, seemed infinite. Employment also seemed infinite. But, neither is now or has ever been infinite. Nothing is. And thinking that anything is infinite, is very, very dangerous.
The phrase “money does not grow on trees” is old fashioned but true. 100 years ago, it was unlikely that you bought anything, except your house, on credit. Anyone who lived through the depression of the 1920s could tell you, saving for a rainy day was very important. Growing up, my parents constantly reminded me to never spend more than I could pay off in one month. Never carry more debt than equal to one paycheck. Never, except for your mortgage. We never had a new car, we never had the latest technology, we never went on expensive vacations and we rarely went out to eat but aside from a few bumps in the road, we always had a place to live and food to eat.
In college I got my first credit card. Did I have to take financial counseling first? No. Was the limit set in tune to what a typical college student has for spending cash? No. I probably would have been OK if the limit had stayed fairly low but every six months, up and up it went. And every six months I maxed it out because I was foolish and naive, plain and simple. Eventually, I did get it under control but not until after some growing pains. I wish I could say I learned my lesson and practiced financial responsibility perfectly from there on out but I have struggled with a budget my entire adult life.
A lot of this trouble has to do with immediate gratification, specifically in terms of shopping. With credit it is so easy to buy things and think about the consequences later. Way too easy. It’s very dangerous to be able to act without thinking things out first. Do I really need this shirt? This latte? This car? This vacation? How many times have we told ourselves, “oh I’ll just treat myself, I’ll just charge it. Everyone else is doing it too.” Pleasures before responsibilities, buying things I want before I make sure I have things I need, which is OK if you can rely on readily available credit to make up the difference.
But everything adds up, really fast. How many people really keep track? How many people write down what they spend, methodically, and make sure they stick to a budget they made before temptation struck? Every time I write things down and I keep track, I am able to keep the budget under control. Every time I get lazy and don’t do it, it falls apart, without fail.
We’ve always managed to pay off our debts, eventually, or at least somewhat keep up with the payments. We’ve also had help. But not everyone is so lucky. Some people had medical misfortune. Some people are alone. They are desperate and had absolutely no choice. However, plenty of people spent beyond their means. Through negligence or ignorance, they bought things they couldn’t afford and when misfortune struck or when the bill was due, they defaulted. That default had to get spread around and now we’re all paying for it, either with rising interest rates for those of us who are paying our debt down, or destitution for those who can’t. The worse it gets, the more people go from being able to pay, to not being able to pay, and the rates increase more. As more things get more expensive, companies close, people get fired, more debt gets defaulted on, and so on. It’s been a horrible domino effect.
I am so very sorry. I have not been as responsible as I could have been. I have been wasteful and careless. For that, I am just as much to blame as the CEOs, and the corporations, and the banks. I am an adult. I now have to live with the consequences. As of today, that means living as disciplined as possible, making as many sacrifices as possible, and making good on my promise to pay back. I am so lucky that all I have to deal with is what should be normal, adult responsibility anyway.
Hopefully, the 99% will illustrate why it’s important for everyone to be responsible about their finances. Because that credit card or loan you defaulted on, that bankruptcy you filed, has likely cost you, someone else, or possibly many people, their dreams. You didn’t hurt the 1%. You hurt your neighbors, your friends, and your family.
A situation as messed-up as the current economic status requires change on many, many fronts. However, the changes that we can make at home immediately, to be more responsible and thoughtful with our personal finances, are the easiest because we control ourselves.
I am one of the 99% (and a citizen of the dying middle class) and my new personal financial mantra is, “Think first. Don’t make it worse.”