BY RUSSELL TURNER
CHAMPAGNE TASTE ON A BEER POCKETBOOK
I guess it is just human nature to desire more money and luxury in our lives. I have always believed it is healthy to have ambitions and strive to better ourselves, in my opinion that is what the American work ethic is all about. However a dose of reality is just as important. One of the greatest gifts that my parents gave me was the knowledge to be able to live within my means. There are a couple of simple rules that would solve most of our problems in this nation. #1 You cannot spend yourself rich. #2 You cannot borrow yourself into prosperity. All of us know individuals that seem to be continually broke even though they have a good job and a high salary. And likewise we all know individuals who have a low salary but seem to always have the ability to pay their bills and have a few dollars in their pocket. The latter group understands the skill of living within their means.
There are some recent facts about consumer debt that should be of concern to all Americans. The Treasury Department reported that U.S. consumer debt hit $13 trillion as of June 1, 2017, an all-time high. That’s double what it was 10 years ago, and a ridiculous 90% of our country’s annual Gross Domestic Product. While there are several reasons for this growing debt, the two main items are that the Federal Reserve’s zero-interest rate policy has temporarily made it cheap to borrow money and personal incomes have grown so slowly that all the I-want-it-now folks have financed their spending with debt instead of living within their means. While all of this spending may feel good now, it can and will have a detrimental effect on our future. The primary purpose of debt is to pull futureconsumption forward to current consumption. In short, all that debt translates into lower consumer spending in the future. This debt is already starting to catch up with our fellow Americans. Example: In the first quarter of 2017, consumer spending grew at the slowest pace since the end of 2009.
A slew of retailers are closing stores all over the country. This list includes retail stalwarts like Radio Shack, Sears, Macy’s, and J.C. Penney. This is what is happening in the first half of 2017. By year-end, some groups are predicting more than 8,600 brick-and-mortar stores will close their doors. We keep hearing about the staggering debt that our government is acquiring, but it is only one part of the problem. All debt, both personal and government, will cast a huge shadow on the future prosperity of this nation. Fortunately I never developed a taste for alcohol, but if did I would be content to have a beer instead of drinking champagne that I could not afford. Until we Americans wean ourselves from going into debt we are not going to solve anything.
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