Fiscal responsibility is history

By Ryan Phillips U-Wire Columnist The Rebel Yell University of Nevada – Las Vegas

In 2005, for the first time since the Great Depression, Americans spent more money than they earned.

This fact seems almost incomprehensible when one considers that in order to live, one needs a positive cash-flow. In addition to this, the average American is carrying $2,328 in credit card debt according to Myvesta, a nonprofit consumer education organization. Simply put, Americans are spending money they don’t have, dipping into savings that no longer exist and living paycheck to paycheck in a society devoid of job security.

Why do we spend money we don’t have? The logical answer is that hard working people who don’t make great wages don’t want to be told they can’t get what they want. When someone else drives a Mercedes, it’s only human instinct to want your own Mercedes. And unfortunately, with the right credit cards, most people can afford the torture of owning a Mercedes. And yes, it is torture, because at least for the next five years all your income goes toward a car payment which wasn’t affordable in the first place. But your neighbors, friends and family will be impressed by your new possession, at least until a newer model comes out.

Today’s society is being brutally punished for its greed and its “we’ll worry about it later” attitude. Not all people fall into this category, but it’s a trend for Americans to spend more than they earn. Eventually, this trend will cease, even if it means that people will have to foreclose on their house, lose their cars or have to work a second job. After all, credit card companies are like referees; they never lose.

The fact that the United States is a world super power completely coincides with our spending behavior. Citizens of a super power grow accustomed to having the best of everything, and when they can’t afford something, they simply charge it. After all, there is plenty of opportunity to make money in this country and pay off the credit card bills. Ultimately, though, this is nothing more than wishful thinking. As credit card bills go unpaid, interest accumulates and a snowball effect occurs. Last month’s minimum payment becomes this month’s interest payment, and in a flash, your whole salary isn’t even paying for the items, but for the interest.

Many people suggest cutting up your credit cards. Just rid yourself of them, and they can’t harm you. This is a viable alternative if you can’t control your spending habits. For some people, this is probably the right decision. For those who are fiscally responsible, however, a credit card can be a powerful tool in building credit and being able to purchase items that they deem desirable. This seems appropriate for the majority of people who realize that money doesn’t grow on trees.

The competitive nature of this country is going to lead to its economic demise.

A simple example occurs every holiday season as one house tries to outdo the other with extravagant Christmas lights and decorations. There have been countless examples of one neighbor adding a house extension and the next-door neighbor adding a bigger extension. It’s really quite ridiculous how petty grown adults can be when it comes to matters of ego.

I’ve always felt that the rich spend their money simply to differentiate themselves from the poor.

Most of the fancy items that they own are meaningless possessions that do nothing more than show other people how well they are doing.

The few rich people who use their money to support causes they find important have always had my utmost respect and admiration. In my ideal world, all rich people would support causes rather than possessions.

My point for the above paragraph is that some middle class citizens think they’ve found a rich loophole. They think that if they purchase the same items as the rich, they’ll demand the same social status. These are the people who own a Hummer and a BMW, but can only park one because their apartment complex only allots them one parking spot. There are people wearing Rolexes who can only afford Timex and wearing Versace suits when they should be wearing some generic designer from Macy’s. It isn’t a social gaffe to live within your means!

Over the next few years, the situation will only get worse. As mentioned above, credit card debt increases before it decreases. Unless Americans make it a priority to pay off debt first, and only then buy meaningless possessions, we will not make it out of our current deficit.

My resolution is to stop competing in a superficial society comprised of overpriced possessions, and return to the days of the swap meet. If someone makes more than you, make it a priority to work harder and make more than them. Don’t load your credit card with items you can’t afford, and then spend the next five years working twice as hard just to pay off things you really didn’t want in the first place.

They say that jealousy is the green-eyed monster, but I say that greed is the true green-eyed monster because it’ll take all your green and make it disappear. In order to improve as a society, it’s imperative that we change our spending habits and learn to balance a checkbook. With a little help, I think we should all be capable of spending less than we earn.

After all, it takes longer to get from Point A to B in a caravan. And during that time, the passenger could be balancing the family checkbook.

Think about it.