Without getting sidetracked by politics (not the focus of this blog), it is still important to be aware of the potential disaster in the path of anyone who lets government attempts to stimulate the economy divert them into unsound spending habits.
In general, governments appear incompetent, at a minimum, when it comes to recognizing the cause of our economic woes and the appropriate steps needed to fix the problems.
Even the casual observer knows that the root of our current economic woes has been overspending on the part of individuals and government. But instead of correcting this problem and encouraging individuals to become responsible managers of their money, governments focus on trying to get people to spend more. And they do the same themselves.
I don’t know how to get legislators to become responsible, grown ups when it comes to the public purse. Even those who claim to be focused on it seem to be moral/ethical cowards when it comes to taking meaningful action.
However, many individuals are choosing to become responsible, intelligent decision makers when it comes to their personal finances. You and I can be among them.
The fundamental rule is simple. Don’t spend money you don’t have! If you suddenly have a large drop in income, do whatever it takes to avoid incurring additional debt. Sell your extra car. Move into a smaller house. Anything. But make the adjustments you need to live within your means.
Hopefully the so called stimulus bills are fading away in our national political scene in America. But to the extent they haven’t, we need to ignore attempts to bribe us into buying a car or home we can’t afford just to get a government kickback. Only if the decision would be wise without a “stimulus” (from a government or a store rebate) should we even consider buying anything at any time.
Bad, self-destructive behavior is no better because we get paid a few bucks for doing it if in the long run it does more harm than good. And that is the secret to success. Think long term. Think about what your decisions mean about next year, not next week.
By avoiding overspending now, and even saving a few dollars even when we don’t have many, we will soon be moving ahead rapidly. Then we will be able to take advantage of good financial opportunities when they do arise.
