Saturday, March 14, 2009

Some thoughts on the financial crisis

A recent article in USA Today highlighted the anxiety and need for second jobs of those impacted by the recent economic woes. Using the example of a bank manager whose wife was laid off by Anheuser-Busch. "There's definitely anxiety," says the husband, whose employer is cutting his salary by 5% this year. Now, if you have read any of my past posts, you can probably guess what is coming: (names omitted)

The family's income dropped from about $93,000 to $47,000 a year. After paying their $1,700 mortgage and some of their roughly $50,000 in credit card debt each month, the husband says, there's barely $200 left.

So they tap their savings, and weigh every expenditure — from an ice cream cone to a haircut.

"Sometimes you can't afford to get food," he says. "We just scrape whatever's in (the pantry)."

The wife remains unemployed, but is searching for a job.

In February, the husband tried to get food stamps and make payment arrangements with his credit card companies. But he was turned down for both — because he earned too much money to qualify for food aid, and he already had the lowest interest rates offered on his cards.

What is wrong with this picture? $50,000 in credit card debt on the previous income of $93,000 a year!!! Not only that, on an income of $47,000 a year he tries to get food stamps. Why aren't I sympathetic to this scenario? What happened to thrift, provident living and food storage? And we expect the U.S. Government to bail out these people?

The article also mentions a 39-year-old lawyer, who has three children and is concerned about her family's financial security. She fears her husband's job could be cut. What happened to savings and paying off debt? Why not use some of that $93,000 to pay off all those credit cards and the house too?

Now, someone is going to say, they probably got all that debt from medical bills. Not likely, with a job at Anheuser-Busch and medical coverage.

It is really time not just to think about the basics of provident living, but to do something about it. Get out of debt. Build up your food storage to have a three month's supply of food and other necessities, put off purchasing anything that you cannot afford. Live frugally and survive. What is more prosper in hard times.

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