50 years comin’
I read recently that all our current economic troubles, from the Great Recession of 2008 to our tumultuous stock market of these past weeks, stems from debt.Debt in the personal and governmental and worldwide theatres.Debt as indulgence.Debt that began in the mid-1960’s when Bank of America released the first credit card (ultimately, Visa) to young Boomers.So, who wouldn’t spend easy money?
Twenty years later, in the mid-1980s, it became politically and financially important for banks and governments to prevent recessions, so they created low interest rates, creating lots of cheap money.
Twenty years later, mid-2000’s, found us with a debt habit and low interest rates, to which the Banks, seeking their own reward from new “financial products,” added low credit criteria on home mortgages, which increased the wealth of those Banks writing the mortgage papers, as they were paid on volume and not on the quality of the loans.
Without bringing too much drama around these facts that we already understand, here is where we are:the tumble began 3 years ago and continues, with little reassurance that the Wizards behind the Curtain can get us home to Kansas.Poor Toto!
Tactics & Attitudes
So, some ideas and attitudes I’d like to share on a new defensiveness against further and future economic downturns.These might be good tactics for you.
If you are one who craves stuff, this discipline may be difficult.But it can be learned.My father, a successful, self-made entrepreneur, taught me that I couldn’t have something I couldn’t pay for.He didn’t even have a mortgage, buying our beautiful home for cash.Now that may fly in the face of your tax games, but you can adjust for tax shelters.The secret?Don’t go into debt for anything you cannot cover if the loan fails, or that you cannot do without.
Live within your means.
There is a great freedom that comes from owing nothing to nobody.Without seeming either old-fashioned or conservative (I am neither), there is great freedom of choice in not being beholden (now there’s an old-fashioned word!) to the Big Bank, the Government, the landlord, or your brother.
Don’t believe the Big Institutions have your best interest at heart.
Banks, insurance companies, the government don’t care about you or your individual woes.Each is driven by its own bottom line:to make profits, to avoid claims (and therefore make profits), and to get re-elected (and therefore to gain power, for good or no).If you look calmly at the motivation of any institution, you will learn to protect yourself.You will not be indebted to the Bank, because it can call your loan at any moment, and will only lend you money when you don’t really need it and can prove you can pay it back.You will take painstaking steps to document what you own that the Insurance Company claims to be covering (because if the claim comes due, they will want detailed proof you owned it all, in order to pay).When you vote—yes, you should vote every time as you get the government you elect – do not listen to the rhetoric, look at the voting record.Do those votes reflect what you believe in?
Protect yourself from Carpetbaggers and Flimflam men
There will always be cons who want to take you.It’s the nature of some folks.And usually they are charming.And there are always Carpetbaggers, who swoop into a trouble zone or a market sector or a devastated community to take advantage of an easy opportunity, usually to your disadvantage.Try to remember, the most charming person can be a theatrical persona, if you do not know him (or her).And also remember, if a deal is too good to be true, it likely isn’t.
Save for the next crisis
Just like avoiding the credit card interest fees and other kinds of debt, I know it can be difficult to put money aside.It takes discipline, and the understanding that a consistent small amount creates significant accumulation over time.Truth is, you don’t know when the next economic or industry crisis will hit.And if you see it coming, you can do some avoidance or damage control, but you probably can’t prevent it or fix it.You can only take care of you and yours, and a buffer of capital solves a lot of problems, and creates freedom and new options that do not exist without the buffer.Make a simple savings plan and stick to it.
Keep your sense of humor
Now, I don’t mean to say the world is full of bad guys.There are lots of wonderful people and companies and institutions and causes in the world.And there are lots of con men and self-interested players at the world table.The wider world is full of every sort of person.
Keep your sense of humor.A charming flimflam man can be great company, as long as you keep your wallet, or, if working for them, get paid in advance before you begin.Banks and insurance companies and governments serve their purpose, but they care more about their own self-interest than they do about yours.You can make all these factors work for you.Just enjoy your life without inviting control of it from the Others.