We Know How to Spend Money

Over the past year, I’ve tried to enlighten myself a great deal on the topic of personal finance. Sadly, my interest probably started when a buddy from church gave me a copy of Dave Ramsey’s Total Money Makeover book as a “wedding gift.” I say “sadly” not because I don’t like Dave Ramsey’s advice. On the contrary, his down-to-earth, traditional, blue-collar approach to personal money managing appeals to me greatly, but the way he presents his advice reminds me of the way my middle school basketball coach tore into me one time about attempting a chest pass when I should have used a bounce pass to avoid an interception. So, I’m a little ashamed that I like Dave Ramsey so much...the same way I’m ashamed that I like Uncle Kracker’s music. (Please don’t tell anyone I like Uncle Kracker.)

Now, a year later, Ashley and I operate on somewhat of a strict budget, we’ve got our money spread around in different accounts here and there, and I receive an e-mail each week from Morningstar to try to keep abreast of the dynamics of the stock market. I’ll never be an expert in all this junk, but I do want to take advantage of some of the great information that’s out there...especially at a time when our country in enduring this “financial crisis.”

I don’t want to rehash this whole market meltdown thing. Plenty of websites do that already. The main points are that some of our largest financial institutions have made a series of horrible investment decisions and that these unwise decisions are going to take a toll on the entire populace through trickle-down effects. Some examples of these effects could be guessed at quite readily. Because loans have been defaulted on, people who give out loans are going to tighten up on their qualifications for giving them out. Because there’s not as much money being exchanged, the Fed will lower interest rates to try to encourage borrowing. Because the government has decided to bail out multiple financial institutions, Americans will feel some increased tax burden. Good luck to McCain or Obama, whoever has to deal with that situation next year.

As a side note to this whole breakdown, I believe, as I thought from the beginning, that the bail out package is a mistake. It is a quick fix to stabilize an economy that’s gone down the wrong path for far too long. It’s like trying to repair an established psychological disorder through coercion instead of through counseling and medication. We're treating the symptoms, but the causes are deep and ingrained.

America has nearly made an Olympic sport of consumerism. Indeed, I think our habits of getting and spending are a psychological disorder. The condition extends from inner city ghettos all the way to ritzy suburbanites, from rural Mississippi to Wall Street. It may take repeated attempts, a new try with each new paycheck, but we simply must learn to live within our means. Until we do that, as individuals and as a society, we will be victims...victims of greed, of unscrupulous businesspeople, of false investment hopes, of the lure of consumerism.

No winners exist in our current financial cesspool. But the ones who are going to weather the storm the most comfortably are those who have established an adequate amount of funds in conservative investments—savings accounts, bonds, and some money market accounts—and who have not entangled themselves inextricably in debt—car notes, bad mortgages, and credit cards. And, of course, these individuals will need to have already learned some of the habits of living within their means from paycheck to paycheck. If they haven’t learned that yet, they will soon enough when they’re in over their head and don’t qualify for the next loan.

Until the economy heals itself (which will take much longer now that we’ve voted to bail out these corporations), perhaps we can take time to help heal our lifestyles. Maybe we’ll put off getting the iPhone even longer until the student loans are paid off. Maybe the old tv is fine for right now, but we’ll definitely take some time to work toward getting a new one. Our financial wounds won’t heal until we learn to live within our means. Our means can rarely buy us everything we want, but there’s rarely an end to everything we want anyway. Unlike our wants, our funds are limited