Step 3 – This is where it gets complicated.
We need to look long term for solutions to this crisis, beyond this current financial cycle, beyond the bears and bulls and far into the future. This is a many-faceted problem. One legislative act, one plan, one bail out is not a real solution.
I think we all recognize that we are a nation of consumer gluttons. Our appetite for consumables is insatiable. We gorge ourselves on product and purchase, always shopping and shopping, never satisfied, never really enjoying anything for very long. All we can think about is what are we going to buy next? We gulp it down and look for the next thing to purchase. It is a joyless, empty cycle. And it is killing us.
Add to that scenario that money is an emotionally ridden issue and that so many of us don’t understand beans about financial management and you’ve got a recipe for a very toxic stew.
What Can Government Do?
A few things come to mind, but I would love to add your ideas to the list.
No pork please. The Bail Out Bill needs to be a single issue bill. Nothing unrelated to the bail out should be in this bill. No pork please.
The deplorable practices of the credit cards companies need to be illegal. Every week I get blank checks from my credit card company. I immediately feed them to my shredder. I resent that I have to own a shredder. I do not like having to worry about what happens to my blank checks when the mailman has a bad day and puts them in the wrong mailbox.
Yesterday I got an email from a reader saying that several times a week her three-year-old gets a credit card application. Another reader said her son at college is beset with credit card applications. Mailing out unsolicited credit card applications contributes to identity theft and other abuses of credit. It’s reckless and it’s irresponsible and it needs to stop. In order to get a credit card, one should have to present oneself in person at the bank. Period. You can go here to alert your senator to this issue.
Pro Bono. I think there is a segment of the population who needs a little help getting a mortgage. As doctors and lawyers and all professionals do, the mortgage industry needs to do a percentage of pro bono work in helping these people get suitable mortgages. If there had been no profit in providing people mortgages they couldn’t afford, we wouldn’t be in this mess.
What Can You Do?
Take personal responsibility. Learn to manage your money and live within your income. My husband is amused that I of all people would be writing a post about finances. The truth is I hate thinking about money, it bores me to tears, but it has to be done. Antique Daddy does the bulk of our money management, but I keep up with it too because it is my obligation and responsibility as a partner in my marriage. It is unwise for women to abdicate their financial responsibility to their husbands and it is wrong not to share in the burden. Women need to have a hand in and be aware of the family finances.
Don’t revolve credit, never ever. Credit cards are a great financial tool if you pay them off in full at the end of every month. If you can’t do that, cut up your credit cards because you shouldn’t have them.
Don’t buy a new car. This one kills me because Good Gravy! – I love me some new car smel! It’s a concession I have made to my uber-financially responsible husband. I have not had a new car since the year before I met him. To be sure, I have a nice car and a car I love and a car that is paid for. It’s just not new or anywhere near new, but it’s a small price to pay for the financial security that I enjoy.
Work towards having a years worth of income in savings. I’ve heard some say 4-6 months is enough, but trust me, in this economic clime, a year is better.
Save something for retirement every month. You cannot start too young. Even if you are only 20-years-old you are not too young to start saving for retirement.
Teach your children about money every day in some way. There are many many ways to do this.
Several readers asked what I think about allowances. Certainly allowances are one way to teach financial responsibility and a noble work ethic, but I don’t think it’s the only way. I think each family needs to figure out what works for them.
I prefer to “hire” Sean for certain jobs, which he can either accept or decline, which gives him a little power. Or if he wants something in particular, he can ask me if I have any work he can do to earn whatever it is that he wants. That works better for us than an allowance at this point.
If you are going to do an allowance, you have to be consistent and stay on top of it for it to be effective. I don’t want to be a supervisor and have to keep up with what work has been done or not done because I would end up doling out money when no work was done and then it becomes an entitlement and that defeats the whole purpose of earning money. If you like charts and you can stay on top of it, the allowance system is great.
Be different! Opt out of the culture of consumerism! Be the weirdo in the neighborhood who refuses to participate in the keeping up game. It’s fun!
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Check out these sites written by people smarter than me about this kind of stuff:
Dave Ramsey – His bail out plan is a little more detailed and thought through than mine. Dave’s got no fancy financial secrets or investment methods, just good common sense – my kinda guy.
I also like Suze Orman too because she’s plain spoken and direct and passionate about money management!
Several readers said ING Direct was a great site for helping kids learn about finances.