Right up front, it’s important to know that I’m not a contestant for the title of Mr. Totally Financially Prepared.
I imagine those who are in the running for such an honor are the kind of people who save the wrapper from a lollipop, so that when they only get halfway through it they can keep it to finish later on.
Now, that’s a bit extreme, but if reflects a certain mentality about being prepared that is escaping a significant number of Arizonans, according to a new report. More on that in a minute.
Now, in my case, I had good influences.
My grandmother and great aunts told stories about living through the Great Depression. Even nearly 50 years later they were carefully comparing supermarket prices to see which one was a dime cheaper for a pound of ground beef or a bag of produce.
They would have endured torture before any of them would have used a credit card.
Until I was laid off myself many years later did I understand their decades of thrifty ways long after the economy improved. During the Depression everyone knew people who lost jobs if they didn’t lose their own. Back then, it wasn’t a choice to try to stretch a bag of beans or rice for an entire week. You lived it once, you feared it happening again, no matter what the stock market or the real estate market did.
We are just getting through a Great Recession. While it has been nothing like the 1930s, it has been tough enough for many of us, even for those who kept their jobs during the recent financial crisis, to critically look at our lifestyles and make changes.
For a while, things had been improving. I remember seeing statistics of a few years ago showing that as a nation, as the recession went on we went from having an aggregate negative savings rate, the worst of all the world’s developed nations, to a positive one.
But statistics reported by the Cronkite News Service’s Connor Radnovich in the Tribune last week show a significant number of Arizonans aren’t saving, and not because they’re at the bottom of the economic ladder.
Radnovich’s story was about the Corporation for Enterprise Development reporting that 25 percent of middle-income families in this state have less in savings than it would take to pay all household expenses for at least three months, a benchmark for determining whether a household can weather a short-term loss of income.
In other words, not having enough in the bank isn’t just an affliction affecting the very poor, the CED’s director of state and local policy told Radnovich, saying the 25 percent figure is for Arizona households whose annual earnings are between $52,000 and $87,000.
Radnovich also wrote that the report also found the credit card debt load of a typical Arizonan is more than $12,000, about 12 percent higher than the national average.
Each family’s circumstances are different, and for every person cavalierly tapping further into his or her credit card debt limit to pay for vacations or that must-have 37th pair of shoes there are many others who must do so to pay their utility bills.
But this report says that too many of us aren’t listening to their grandparents. The Great Depression keeps receding into history. My grandmother and my great aunts have passed away, but if they’re looking in on me now, they might feel relieved that the kid finally got it.
I still have plenty of room to improve. Not too many of us can swear on a stack of Suze Orman’s books that they’re looking seriously at their saving and spending and doing the most that they could.
If the recent economic crisis has taught us anything, it is that economies are cyclical, not linear. Things don’t keep going up forever (or down, thank goodness). We can hope that market forces and proper, limited regulation will help prevent catastrophes. But neither the market nor regulation helped much last time.
It’s really up to us. We middle class folks have to resist inner voices telling us to just go for it, as in that strange car commercial with a small second head that pops out of a guy’s neck at the dealership to musically urge him to buy now. We have to quiet insistent children in store aisles. We have to stop worrying about what the neighbor just bought.
Yes, Wall Street has to clean up its act, too. But we can’t be pointing fingers at them if we’re making personal financial decisions as bad on our scale as theirs were on theirs.
Read Tribune contributing columnist Mark J. Scarp’s opinions here on Sundays. Reach him at mscarp1@cox.net.
chatmandu002 posted at 1:16 pm on Sun, Feb 10, 2013.
Mark,
After many years of welfare and entitlement programs most of the people have been convinced that the big government will take care of their needs and they don't have to worry about saving anything or being prepared.
Arizona Willie posted at 5:10 pm on Sun, Feb 10, 2013.
It was a lack of regulation that brought this recession on.
Republicans whined and cried for years that regulations harmed their business and they bought enough Congressmen that they got the minimal regulations that did exist removed.
And they had a field day.
They cheated and lied and forged till their fingers were cramping.
They hired people to forge foreclosure documents they had so many.
Never listen to a Republican who wants to remove regulations.
remo303 posted at 12:23 am on Mon, Feb 11, 2013.
Actually, Az wet-willie, it was an abundance of Democratic officials who brought about the initial reduced standards for housing qualification. Remember when Jesse Jackson and others threatened to sue lenders, followed the Clinton DOJ (led by Manet Reno) unless the loosened lending standards to include just about anyone?
Those enforcements led the the derivative bubble, which led to a large part of the fiscal collapse (which everyone likes to blame on GWB).
Now the Democrats are back at it again.
The only thing subjective about the history of the credit collapse is the POV of the liberals.
downtownresident posted at 2:24 pm on Mon, Feb 11, 2013.
remo303 ,
Your Tea party influenced mind washing is not correct!!!!
Clinton deregulated commercial banks. The mortgage fiasco was brought about by dishonest mortgage bankers, not commercial banks.
chatmandu002,
Let me guess, that'd be the 47% of those alluded to by Mittens, right? Even that's not MOST of the people.
Go fish for more lies, both of you.
chuckles3 posted at 2:24 pm on Mon, Feb 11, 2013.
More finger pointing by commentators. Bottom line: Naive Americans spent too much because credit was too easy to get and mortgages were too easy to get. They never had any money to save. They had credit and home equity loans-this gave the illusion of wealth and a lifestyle they could not afford to live. It is easy to live beyond your means when the banks are telling you it is ok to do so.
Once they got a mortgage, for a long time the value of the house went up and they used the ghost equity to continue to finance their new lifestyles. Then it all crashed.
Also, most Americans obviously seem to think having credit card debt is an ok thing, when it is a huge financial detriment. That diznee vacation is something to save for, not charge on the visa at 14% or more interest.
I learned my lessons in my twenties. Most never learn.
chuckles3 posted at 2:25 pm on Mon, Feb 11, 2013.
Ha told me I was spam because I mentioned the mouse company. Changed the spelling.
Rich posted at 8:21 pm on Tue, Feb 12, 2013.
Spend when others save, save when they spend. The world is currently filled with the most wonderful bargains.
Cerulean posted at 9:49 pm on Tue, Feb 12, 2013.
Mark, I agree, people need to learn to live within their means.
“Sometimes imagination grows too luxuriant. Sometimes reason grows too austere.”
David Brooks
mnjcpa posted at 7:33 am on Sat, Feb 16, 2013.
Cerulean - that's interesting when you're fully in support of Obama that is spending America in to oblivion.