Dwindling Incomes the Problem? We Think NOT!
We ran across an interesting article the other day and thought it might be a great way to start off this adventure in blogging. It's a perfect example of what is going wrong in the world today with personal finances. Let's look at part of the article.
The article begins by discussing how mean income has declined since 2000.
Ignoring what might be the cause of a declining median income, we see that people are making less money depending on which age group they are in. So, what do people do when they make less money than before? What do you do? The intelligent answer, the obvious answer is spend less money. You aren't making as much so you spend less. Seems obvious, right? WRONG!
One thing that sours working Americans is the feeling that they're losing spending power. After a recent speech, White House Deputy Chief of Staff Karl Rove fielded a question about why median income in the United States has declined since 2000, the year President Bush took office. Mr. Rove cited an increasingly youthful work force, with its generally lower overall pay, as the main cause. His implication: Aside from those low-wage earners, real income is on the rise or holding steady among older age cohorts.
That observation raised a red flag for researchers at the Economic Policy Institute, a labor-oriented think tank. The EPI believes that Mr. Rove has his facts skewed. Between 2000 and 2004, the institute finds, income fell an average of 3.6 percent for six of seven age groups ranging from "15" to "65 and up." Only the 55-64 group, representing just 15 percent of households, saw incomes rise--a modest 2.4 percent. The EPI also hits Mr. Rove's suggestion that more households are headed by young wage-earners. It finds, on the contrary, that the share of households headed by workers younger than 44 is down 2.3 percent since 2000.
Moronic! This isn't just dangerous, this is fiscal suicide. It goes beyond that as well. Not only are we destroying ourselves financially, we are destroying our lives. This kind of debt is what breaks homes, destroys relationships, brings on depression and a myriad of other difficulties. Why is this happening? Before reading that last paragraph, any normal person with half a brain would say that when you make less you spend less. Yet, that isn't what we as Americans are doing. Instead we are putting ourselves into bondage to those we get the money from, banks, credit card companies and other loan institutions. It's just insanity. Unfortunately, 99% of us don't know any other way to live. We've been taught that debt isn't bad and it is important to have the latest computer, stereo, entertainment center, etc. etc. etc.
Yet Americans are so disinclined to "do without" that curtailing the spending habit seems to be a last resort. Instead, many of us opt to increase personal debt. Federal Reserve statistics show that Americans, at the dawn of the Bush presidency in 2000, were keeping their consumer debt to 96.8 percent of overall disposable income. Five years later, Americans' total debt is 127.2 percent of their income.
Many of us, quite clearly, have chosen to spend well beyond our means. Dangerous.
It's all so deceptively easy and those who control the money we are borrowing just keep sucking us in. Credit cards and their "priceless" memories makes it seem that we aren't living if we don't spend what it takes for a few fleeting moments of pleasure. Even our bank just sent us an advertisement to get a 'youth credit card' for our children so they can learn to use credit wisely. GAHHHH!!!!
Folks, this isn't about learning how to manage our debt. It's time to get out of debt, completely. It's time to teach our kids and those around us that 'net worth' is more important than 'credit rating' when determining value.
This is what we are going to be talking about as we continue to blog. It's far past time for us to wake up and realize we've been duped! It's time to get out of debt and start living abundantly. It's time for people to realize that no matter how much or how little you make, the first step to being financially independent and debt free is changing the way we think. People think if they just made a few more dollars each paycheck, all would be fine. WRONG! Unless thought processes are changed, that money would be spent and gone without our even noticing it. Think winning the lottery is going to solve your problems? NO! Not unless you change your thinking. Studies have shown how lottery winners many times have it all spent and are back in debt within years of their winning.
Thinking Abundantly and living Abundantly. That's what it's all about. Go back and read that paragraph quoted from the article above. Spending 127.2% of income. That is the problem. It's not how much money you make that really makes the difference, it's how much money you keep! The cure? A massive change in the way we think. If this doesn't happen soon, this nation is in for some serious problems in all aspects of life. Time for you, each of you, to take a serious look at yourself and see if you are part of the problem or the solution and decide today to change the way you think and act about money!