Americans have too much debt. That is self-evident. More importantly, there has been a change in the culture to where debt is acceptable and even bankruptcy and foreclosure have lost much of their stigma. A Wall Street Journal article today profiled a woman who is buying a second house in her neighborhood with the purpose of defaulting on the mortgage on her first house. Her credit will be shot, but she will have a house with a much cheaper mortgage (as house prices have fallen greatly in her area).
But the current mortgage crisis is only the pinnacle of the problems with our debt-accepting culture. See the new report by the American Interest, a think tank. They fault credit cards, payday lenders, and especially state lotteries for encouraging spending and debt and discouraging savings. It is amazing to me how much low income households spend on lottery tickets. It is galling how the states take from the poorest and then give it back in welfare, food stamps, and section 8 housing assistance. In the taking the government discourages savings and in the giving it discourages work.
It is time for Americans to learn that it is good to save. Having a nice car is not going to bring you happiness. Having a 4,000 square foot house isn’t going to bring you contentment. But I can assure you that being debt-free and having enough money saved up to not worry will make for less stress, a lower risk of divorce, and more happiness and satisfaction.
Here! Here!
Yes it is time that we stop digging ourselves into the bottomless debt pit! But the challenge is that many people really, honestly, do not know how. So many people are using spending as a way to deal with the problems that they are exeriencing in life. They don’t realize that the vicious cycle that they are in will never be broken, and is often passed down through generations, unless they are the one that break the cycle. And although it is not impossible, often it is not easy.
Be well.
Very good advice. It is really not hard to follow. We seems to have decided we just deserve all sorts of toys even if we can’t afford them. It is not very tricky to understand if you don’t have the cash you shouldn’t buy whatever it is. And you should save up some money for a day when you may have expenses you didn’t plan for. You can still live amazingly well in the United States today doing this. You just have to stop thinking you need to emulate the lifestyles of the rich and famous.