I think I know what is at the base of all our financial troubles. We don't feel we have to save money ahead to buy things, and it has become all too easy to have instant satisfaction by buying with credit cards.
Somewhere along the line we stopped saving up ahead of time for the things we wanted. When I was growing up in the 1930s in Fairfield County CT everyone knew down to their bones it was unethical to owe for anything except real estate, such as a home, or a business. If you wanted a car or a washing machine or new clothes, you paid cash for them. Only really poor and needy people ran tabs on things.
In 1943 I married a sailor from North Dakota when I was in the WAVES, and we lived in a brand new and very small navy apartment right outside the back gate of the base in Milton FL. He left the furnishing of the apartment up to me. I started out buying one piece of furniture at a time as I could afford it. He became impatient, and without consulting me, he borrowed a convertible and came back with a livingroom suite and other stuff piled high in the backseat, and he had charged all of it. I was shocked! I would have bought second-hand stuff and paid cash. My whole life ever since has been based on charging things. I owe my soul to Sears and Roebuck, and they don't even provide me with a wish book any more.
I am not alone. I think it was right after WWII ended that so many people started to rely on a charging things, and when the ATM card came along all brakes were off. Gradually regulations were eased or cancelled, and the financial world came to count on the gullible public. They used unethical, and probably unlawful means to get unqualified people to sign up for variable interest sub-prime real estate loans. Now we are all going to pay for that corporate greed with a $7 billion bailout bill - no, Nancy Palosi calls it a ‘buy-in bill. The taxpayer is going to be an ‘investor' in all those bad mortgage loans.
I have often made resolutions to make regular payments into a savings account, but never seem to be able to leave the money there. Ever the optimist, I excuse myself thinking things will be better for me to start such a plan ‘next year.' Guess what - things don't get better, they just keep getting worse.
Now I'm thinking of investing in EE bonds again, even if it would be a hardship. There isn't going to be a better time to start. Things are only going to get worse for the rest of my life. If I had continued buying E bonds years ago when I had them deducted from my pay, I would have a nice, safe nest egg put away. I know they give poor interest, but I would have ‘saved money'.
During WWII, the government encouraged us strongly to buy government bonds. The nation needed cash, and that was one way they got it, and everyone won in the end.
I'd like to hear some reasons why saving money in government bonds wouldn't still be a good idea now. I think small, and it seems to me that it's one way for the little guy to get ahead, and also help the nation's economy at the same time.
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Comments: 23
We have borrowed money occasionally through the years to buy our house, and to finance other large purchases like cars, but we always paid them off as fast as we could.
Today, I am happy to say, we have ZERO debt and a nest egg to carry us through to the end, we hope. But there is no money-back guarantee. We thought we were secure...then the "financial meltdown" came along, and turned everything upside down.
We have seen a significant erosion of our IRA's in the past few months, and we no longer feel confident that we have enough in our kitty to "see us out."
There is no safe haven in these tumultuous days. Everyone must watch national and world events, and take actions to protect their investments. Even putting it all in the mattress could result in ruin. The dollar is no longer king, and could get wiped out in a New York minute.
Life is indeed interesting.
Most people I know replace things that still serve their purpose, just because a newer version came out, a style changed, or somebody else bought a better one. I think we (as a society) needed a big shake up. But I am very sad that it has to come at the expense of some people who are simply trying to eat, keep a roof over their heads, and pay the doctor bill.
Sandy - I have always had good intentions to save and pay cash for things, but I had a lot of bills left after my first husband died, then I squandered money drinking with my second husband. I have also had family members to help, but I'm going to make a big effort to change my ways now that it's almost too late.
As I write I am watching the market go down in Japan. It's Monday there. Britain has nationalized a big financial institution. If Congress dilly-dallies or fails to agree to pass the bill, the American stock market will be interesting tomorrow. There really isn't any assurance that the run-of-th-mill congress people will pass the bill. If nothing gets done,
I'm wondering how long there will be any cash around to buy necessities. I am thinking of taking my monthly annuity deposits out in cash on the 1st of the month, and pay my bills by postal money orders. Checks might not work. Our whole financial system is liable to fail, or at least that is how the purveyors of bad news have made me think. If that happens we may be on a bartar system.
I guess I'll go to bed and read my Anne Tyler book, "The Amateur Marriage".
Clarke - The low value of the dollar is already bring overseas tourists to bring their Euros and Yen here to shop at bargain prices, and all our experts can do is print more money backed by air making things worse.
Ron - I'd like to have been there when you insisted on paying cash for your car.T hat must have made you feel 9 ft tall. As for that medical bill, all you can do is plug along paying what you can to show good faith.
With all my life of being in debt, I have always maintained a good credit rating. Recently when I had to come up with $8oo for a family member I discovered the loan amount on one credit card had been raised $1,000 without me even asking. For the second need I used Sears where I have hardly spent a cent in years. At Sears the saleslady urged me to apply for a Gold card because the interest was lower. I did, and it was instantly implemented. When the card came in the mail this week it appears I now have two Sears cards and two monthly bills. Another mistake.
Low returns would also be my concern with government bonds. After reading the article I jumped over to savingsbonds.gov, but I could not find the interest rate on the EE.
Does anyone know what these are earning?
Ruth - you need to enroll is some automated or direct deposit savings plan - EE bonds or something else. Since you have not been able to save on your own, you need to got out of your own way.
You may find that once you have a nest egg, it will start a virtuous circle. You may find it easier to avoid debt and get out of any remaining debt.
Re EE bonds: We used to buy bonds, but the interest rate was really low, not much better than putting the money in a mattress. Today, with the crashing dollar, anything you have that is denominated in dollars is going down. Of course, it's not going down as fast as stocks and mutual funds, but the interest rate on CD's or Money Market funds...or worse yet, bank savings accounts...probably does not keep up with the loss of value in the dollar.
Gold or Swiss Francs are probably the best bet, I suppose, but I have never been comfortable with investing in precious metals.
The whole system is based on being indentured and I don't like that.
It seems like every time I have a sizable amount in there, we have an emergency, and we have to drain it.
I am taking another look at our budget this week. I want to up our personal savings to 10%, and find a way to make that work weekly. I think we can do it... we just have to tighten our belt. We already stopped using credit cards, but we are still paying them off. A great post, and something we should all consider and remember.
Minimum deposits, IMHO, are one of the things that make it difficult to establish an account. I've talked with a lot of people who can save little (but want to save what they can), but are stymied by an inability to open an account that will not eat up principal in fees.