Americans are addicted to debt. This is evident, as the latest figures show. According to the Federal Reserve Consumer Credit Report, as of April 2009, the average household had $8,329 in credit card debt. This seems to be a downward spiral from which we can never recover. Becoming financially stable has taken the place of the “pursuit of happiness” in the hunt for “the American dream” of yesteryear. This monstrous beast seems insurmountable as it accumulates faster than we can control it…or does it?
There are many ways to confront, admit to, and choose the wisest course to overcome that addiction. We now know that we were indoctrinated, or programmed to adopt the overspending mindset. We also now know that it has become a cancer that has rotted our financial stability from within. By admitting we do know these things prepares us for the first step toward alleviating and ending overspending.
The key is changing our mindset. But, what is a mindset, anyway? According to Webster, mindset is a set of beliefs or a way of thinking that determine somebody’s behavior and outlook.
It can be so embedded that concrete could not move it! We feel it’s ours, what defines us. We’ve gone for years, holding on to it like it was a matter of life or death. That to think about changing our mindsets would be like giving up our souls. It clings so fast to us that it seems to be a magnetic pull over common sense.
The economic crisis has made us realize that our present mindset may not have been such a good concept for us to live by and guard like our life depended on it. We also realize that not only are we in debt but may be jobless and losing our homes, as well. This in itself should be enough of a wakeup call to release the magnet. Here is a before and after scenario showing how to release the magnet and feel elated in the process.
Scenario: Any class family of 4: Before adopting positive attitude adjustment: Breadwinner earns a decent income. And wife’s job allows them more spendable income. They buy a home slightly over what they can afford, thinking that future raises will be enough to cover tax and insurance increases. (By doing this they are spending money they do not yet have). They bought 2 vehicles, slightly over what they could afford. The children don’t want for anything. They have the newest, the best, and what the other neighborhood children have, regardless if the parents could afford keeping up with “the Jones’s” and regardless that the purchases have been charged.
They vacation on a credit card, staying at hotels and eating in restaurants. They care not about the cost, only that they are having fun.
School begins. The cost of supplies, clothes, books and other incidentals are charged on a new credit card because their other credit card balances are maxed out.
Christmas is just around the corner, when wife is laid off. Then husband’s vehicle needs an expensive repair. A child gets sick and needs medicine.
Husband and wife never thought about have a nest egg to protect the family in case of emergency.
Their world begins to crumble. Payments are late. Stress is unmanageable and sleepless nights interfere with husband’s job. They may loose their home, their cars, everything.
Same family of 4 after adopting positive attitude adjustment: Husband earns a decent income. Wife works, but not to have a higher living plane. She saves almost all her income. They have an eight-month salary nestegg for emergencies. They make due with 1 vehicle. They bought a home below their means and bank the difference, had they bought a home slightly over their means. The extra money is saved for college, retirement or that special dream get-a-way.
They vacation by camping out, where the kids meet new friends. When they “need” things they pay cash. When they get a credit card bill, they pay the full balance every month.
They realize what children need most is family security, not overwhelming debt that can destroy the entire family.
So, by having positive attitude adjustment as a lifelong companion…(you finish this sentence)
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...by having positive attitude adjustment as a lifelong companion you can sleep at night knowing that you've been responsible, and that collectors are not at your door. No one is trying to repossess your car, or worse -- foreclose on your house!
ReplyDeleteDebt addiction has its consequences, as you pointed out so brilliantly. Often individual character flaws are exemplified by the culture, like our obsession with thinness or celebrities. Nothing could be more true than the hole that our government is in, owing more than $12 trillion. That's a number we can hardly comprehend.
What's true for the individual is also true for the state. As John Lennon said, before you start a revolution, clear your own head instead. It starts with the individual. It starts with buying a life jacket!!! Thanks for providing that, Judy.
So, by having a positive attitude adjustment as a lifelong companion you will be happily debt-free. I enjoyed reading Judy's book because it contains many helpful ideas to save money. Although I am debt-free, I am always looking for more tips to stretch my limited dollars so I will have more to save and to spend. Judy's book is great reading!
ReplyDeleteThe message is more timely than ever. I've been debt free for five years, except for very small mortgage, and it surely opened a lot of doors.
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