Financial literacy is an issue that should command our attention because many Americans are not adequately organizing finances for their education, healthcare and retirement. -Ron Lewis (1946-), 7 term member of the US House of Representatives.
Okay everyone…hold on to your hats while I give you a few staggering Federal Reserve Statistics about what is really going on with average Joe and Jane consumer:
Consumer debt in the United States is approximately $2.6 trillion or $8,500 for every man, woman and child that lives in the U.S.!! By the way, that does not even include mortgage debt!
37% of consumer debt is revolving/credit card debt, 63% is non revolving/car loans/boat loans/student loans!
The Federal Reserve’s financial obligations ratio, a measure of how much after tax disposable income goes to paying off mandatory financial obligations, as of June 2008, stood at 17.82% for homeowners and 25.98% for renters!
The number of credit card holders is projected to grow to 176 million by 2010!
Americans own approximately 1.4 billion credit cards or 9 cards per cardholder!
Credit Card debt is expected to grow to 1,091 billion by 2010!
All right enough! I can’t even take it as I’m writing this…it’s completely staggering and unnerving and I’ll tell you why! Our Gross Domestic Product is comprised primarily of consumer activity! I know I have written about this before (See: http://freethinkingtools.com/?s=Sharpen+Your+teeth) but we have only scratched the surface! While talking to a local business owner the other day it hit me! Forget about the Bernie Madoff Ponzi scheme! What about the big one being perpetuated by our whole economy! Like Bernie’s victims, we have fallen completely under the ether with all of our financial thinking! Our desire to consume leads us to clamor for more credit availability…how will we be able to start our businesses without a loan we cry?! How will the underprivileged and uneducated survive without a loan?! If we don’t bail out the financial institutions that helped us get out of control then all of this credit will be gone and we’ll stop consuming…then what? Or how about just printing a whole bunch of paper money and putting more of it on the street so we can keep on spending!
I’m not sure about you but for me hearing this is like jumping into an icy cold shower after being all cuddled up in my nice warm blanket of financial denial! And hey let’s get real…there are plenty of SMART people that have no consumer debt! These are people that actually live below their means, save and invest conservatively! The thing that kills me is that we are all sitting around waiting for some trickle down effect that is supposed to come now that we have a bailout and a new President! I wish him and all his administration the best but do you really think that he can make a major change in your life? Many of you have run small, medium or even large companies…you tell me how easy it is to make a major change in your business…how about one of the largest businesses in the world…the U.S. government!
If you know me then you know that this is NOT a doom and gloom piece because I’m just not wired that way! However, I am a student of common sense and simple wisdom and the easy conclusion here is that it starts with us! I don’t care what side of the aisle you sit on politically or if you even believe in either aisle! It does not matter…the plain and simple fact is that we are out of control and we need to make real changes…not on a macro level, rather a micro level: that means you the individual! Break it down…do you know why?! Because it matters!
Go ahead and tell me it does not…but then look around and realize the pain the majority is in because they can’t even make ends meet! I guarantee you that one of the root causes for divorce and drug/alcohol abuse is financial distress! Why? Because there is not enough financial training! We teach our kids to be great thinkers and stimulate their brains with Reading and Math but do we even encourage them to apply those skills to the world of personal finance? How about the failure rate of small businesses? Why is it so high? Because nobody teaches these well intentioned entrepreneurs to know their numbers! And yes I’ve been plenty guilty myself…this is a live and learn rant! I can’t believe as a real estate agent coach how many times I consult with a client that has absolutely no clue as to where they stand financially! So here’s the wake up call and the action step: PULL THE FINANCIAL ALARM! IT’S AN EMERGENCY! You MUST know your numbers! You MUST take control of your financial rudder…there is NO ONE coming to bail you out…EVER! I’ll leave you with this thought: Have you ever known someone who grew up during the Great Depression or was taught by those people and you thought they were cheap? They weren’t cheap at all! They just knew how bad things could really get when the walls come tumblin’ down!! Learn from them before they are all gone!
Tags: Motivation, Self Improvement
Leave A Reply (8 comments so far)