I wanted to write today about our financial situation as Americans and on a global scale. It seems that everybody is having a rough time (well not "everybody") during these times. Our declared unemployment rate is at 17% and rising, and our national deficit is the highest it's ever been in our history as a nation. All around the world, there are riots due to loss of benefits, lower wages, and high unemployment rates. Some say the economy is going up, but the situation is getting worse in my opinion. I would consider myself an optimistic person -the best way to describe my outlook would be as a realist looking at the world through an optimistic lens. I hope things may happen and I work towards them, but I also know that there are limitations on what can be accomplished.
With all of that said, I want to hit a couple points. The first is "Benefits." I hate the word "Benefits." I hate everything the word implies in our modern society. I hate what it does to people and I hate what people expect from "Benefits."
I remember in high school we had the great Californian grocery store strike. The grocery stores all decided that the times were getting tougher, financially speaking, and decided that the health insurance benefits that they were giving to all of their employees had to go. Grocery store employees had become so accustomed to receiving health insurance with their job that they all went on strike and blocked off the doors to the grocery stores.
Why did I mention all of that? I am tired of this notion that by simply performing an hourly job, that we are all entitled to benefits. Health insurance, dental, and all the works should come with an hourly job? If I work for an hourly rate at the grocery store or at Target or Wal*Mart, what am I doing for the company or my community that is so vital that I am deserving of benefits? If I'm a rocket scientist, or a teacher, or a fireman, or a soldier, or something that serves the community, I would believe that benefits would most likely be in order, but not for just an hourly job. And yes, it is job discrimination, I am discriminating which jobs serve our community verses the jobs that really just deserve having a full bill of benefits.
I believe in the age-old American "self-made" spirit, that we are not deserving of anything, we should just get as much education and training as we can and earn our way up the ladder of society. We shouldn't demand free hand outs or demand that somebody pay for our health bills and insurance, we should go out and earn it.
It seems that the idea of actually earning something these days is dying away. I know it may be hard to contemplate and understand for those that feel that we are entitled to free things, but we must earn what we have and the "benefits" that we get. I believe that a great range of jobs should come with benefits for both the worker and their family, but there are also jobs that should not come with a full range of benefits. Working at the grocery store or as a cashier somewhere are two main examples I can think of. I am also not "ok" with McDonalds workers getting benefits either, but there are some that believe they are "entitled" to benefits because they flip burgers.
My Grandmother, like many other immigrants to this country, came through Ellis Island from England and was dumped off on the streets of Brooklyn with only $57 American dollars in her pocket and no connections. Through hard work, stead-fast determination, and an unwavering desire to succeed, my Grandmother and countless immigrants like her eventually earned success. She never demanded that somebody pay her health bills and neither should we. The Founding Fathers never felt that they were entitled to anything, in fact they believed they should be free from their host country to earn their own success and happiness on their own.
Whoever controls the debt controls the power. Debt and the accumulation of debt has become a huge trend in today's society. Credit cards are the worst sources of debt for most Americans suffering with debt. I myself also have debt. I have no credit card debt, I don't even have a credit card, and I will never get one, no matter what happens. I have loan debt that I used to pay for my education, but the money I used was an investment for my future and do not see it in the same light as credit card debt. But regardless of the situation, I do have debt but I have a plan to pay it off and it is an investment for my future.
The way credit cards are supposed to work is you are supposed to use a credit card to buy things that you can actually afford by the end of the month. At the end of the month, when you gather all of your finances and pay checks, you use them to pay off whatever debt you gathered on your credit card for that month. You did not have the money at the time of purchase, but by the end of the month or by the time you get your paycheck, you pay off whatever you spent on the credit card and you are back to being debt-free.
Credit cards can also be used in time of emergency, an example would be if your car needs an expensive repair then you can put it on the card and work your way at paying it off over the course of several months or so, however fast you can pay it off.
WHAT ACTUALLY HAPPENS
What actually happens with most credit card users is completely different and worse. Some people charge all kinds of things on the card, letting the debt balance build up overtime to incredible amounts. It's so easy to charge things on the card and not worry about it till later. The problem is, by the time "later" rolls around, interest has compounded and the actual cost the buyer must pay to cover old expenses is much higher than it would have cost to just pay it upfront in the first place. With interest, the amount owed gets worse. Every month, credit card companies send a "suggested" bill of how much the consumer should pay. If the consumer listens to this "suggested" rate, then it will take quite a while to pay off the actual debt. The best thing to do in that situation would be to pay more than the suggested bill to get ahead and avoid paying more interest than you absolutely have to. I'm not an Econ and Business major, but I know enough about how this stuff works to believe in one principle:
PAY AS YOU GO
"Pay as you go" is not new to America or American politics. It is my personal philosophy in terms of my personal finances (besides college loans of course). I don't buy anything unless I have the money to buy it and extra money to cover unexpected charges that could occur (such as emergencies and such). I will go without for weeks on end to make sure I do not borrow credited money to pay for things. I am not the best with money, but this is my sacred rule and my "golden rule" in terms of spending.
I think that more people should adopt the "pay as you go" philosophy, and I think if more people were concerned about "pay as you go" instead of buying the latest and greatest "whatever" then we'd have a lot less debt. The problem is that nobody is perfect and not everybody is concerned about their finances. Not everyone is a financial consultant, not everyone knows what's best to do with their money, and people make mistakes. I think it's worse now because people are saving money as much as they can, so a lot of money is not out in the market it's sitting in banks or under mattresses. If it's not sitting in a bank then the bank is loaning it out to people, making the problem worse. When you deposit money into a bank the bank sends most of your deposit right back out by loaning it to someone for some type of loan. This way, the bank "invents" money and makes interest off of loaning out your money. In turn, the bank pays you some interest on a yearly rate to "compensate" you for your donation to their monetary revenue. Last I remember from Econ 101, banks must keep 10 to 15 percent of your deposit, the rest they can loan out (and they do), but it varies by law and location.
WHAT TO DO?
I would recommend adopting "pay as you go" as your personal philosophy. Don't be in anyone's debt because whoever controls the debt has the power. They have power over your decisions and their power is enormous on a global scale. If you must be in debt, only do so as an investment for something greater down the road, and make sure you have a legitimate plan for paying off said investment. Try to save a little money in case your car does break down or there are emergencies. On the other hand though, don't be afraid to put money back into our economy. I shop at "mom and pop" shops whenever I can to help their businesses and put money back in our community's economy. Also, don't be afraid to put money in the bank. Some people save money under their mattress or in a closet or something, but if the house burns down then the money goes with it. Most banks are FDIC insured against things such as robbery up to $250,000 per an account, so that's plenty of guaranteed security for your money. Also, talk to a financial consultant. Most banks offer them for free, just be careful because they also are trying to suggest bank-supplied services, but beyond the advertising they do have sound advice to offer.
In terms of parenthood, don't have a million kids. I was reading about a family that just had their 20th child. The parents aren't rich but they aren't poor either, they have as many kids as they can financially support. I think it's irresponsible to bring a child into this world if you know you cannot financially handle them. Stuff does happen, but ultimately we control the act that causes pregnancy and if you don't want or can't afford children then abstain from sex, it's that important.
I'm not an expert, but I think if we all just take some responsibility and not buy things we can't afford, then I believe we will have less debt and ultimately help the economy.