Final thoughts on 2008
Don’t you just enjoy the passing of an old year? 2008 brought many challenges from a financial perspective. Large and small corporations, retailers, stockholders, investors and regular employees all felt some pain. This post will have two major points. First, the biggest question everyone has is why did this happen. Last year, I was reading a book entitled “Secrets of the Temple: How the Federal Reserve Runs the Country” by William Greider. While the book is a bit heavy to read for most people, it does a very good job of describing the role of the Fed and the economic turmoil of the late 1970s through the 1980s. There is also some history thrown in to help the reader understand the role of the Federal Reserve in our economy. It became very obvious to me that with each recession/contraction/depression in our country, the main cause is a sudden lack of confidence in money. During the 1900s, it seemed that economic pain came along at the same time as stock market pain.
Many of the pains were caused by aggressive use of debt by both companies and consumers. In reality, the debtor is nothing more than a fixed positive cash flow for the lienholder. Why allow someone else to have your cash flow? Let’s make a resolution as a society that debt will only be used as a last resort. There is no need to mortgage your future just to have that new flat screen tv. There is a great need to take that money and put it away in an account somewhere for you to use in retirement, or for a rainy day. That giant tv simply cannot help you financially if you experience some traumatic event like a health problem or a disability of some sort.
The second point I want to make is that we don’t have to wait until a new year to change our behavior. New years of course make it easy to make resolutions that no one intends to keep. However, if you look at your financial situation and see that changes need to be made, make that resolution now! The sooner you realize that there is a problem, the sooner you can work on fixing in. It may take several years, but the payoff is a stress-free life where your money works for you, not you working for money. The government is not the answer to bail us all out. It is an incredibly inefficent machine that definitely serves its purpose. But you are in charge of your financial future. Make a resolution to have a financialy free future!
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