Break out the party hats! Friday’s article on Yahoo touted the “good” news that mortgage lenders are easing up on lending rules. As for me, I can’t help but have flashbacks to the big housing bubble, and the subsequent 2008 crash that kinda sorta led to the beginning of America’s financial glass house tumbling down. As Jim over at Critical Financial pointed out, the media’s having a heyday, and urging everyone to jump on the spending/getting into more debt bandwagon as the U.S. stock market soars higher and the housing market experiences its first real “surge” in 5 years.
My question is: WHEN IS AMERICA GOING TO WAKE UP AND SMELL THE COFFEE? Seriously – how long can we live in this world of denial? While a few still sane people are still pleading with people to buckle down on spending, the majority of American consumers are taking the media reports of a recovering economy as eagerly as their morning latte’ at Starbucks, and paying out the nose for it in the process.
My dear fellow Americans: as long as the U.S. Government still has 17 trillion dollars on debt, and as long as Americans still have an average credit card balance of roughly $15,000, things are far from rosy, at least economically, here in the Land of Opportunity. It’s almost as if media is purposely pushing consumer debt and spending to the limit, so that when the SHTF, it will hurt to the point where for many, it’s unrecoverable.
SO: are you going to fall for the bluff, or are you going to seize this opportunity to begin your journey to debt free, and further yourself from your own economic disaster? It’s D-day, people. Get on board, before it’s too late for you and your family!
And the crazy thing is that I personally still buy coffee at Starbucks, but it’s on occasional thing, and I have some form of discretionary budget that is intended for ridiculous purchases (which Starbucks coffee most certainly is).
A lot of people say that “it’s all about balance” and while I agree with that to a point, I think the balance should be this: Automatically put away half of your income, use the other half for whatever you want. If you want extra money sell stuff, get a part-time job, babysit? whatever you need to do.
Thanks for the mention by the way. I appreciate it.
Yeah, but Johnny, you can afford the lattes, unlike many Americans, who can’t but buy them anyway. Although some may think that your idea of balance goes overboard, it’s certainly a whole lot better to go overboard in favor of financial responsibility than it is in favor of financial irresponsibility. I’d pick your plan over today’s norm anyday!
There’s nothing wrong with buying Starbucks coffee, so long as you’re working to build wealth. Now if you’ve got a savings rate near zero or are drowning in consumer debt, cutting back on the high priced lattes would be advisable.
Until people become focused on building real wealth instead of just buying the latest piece of iCrap or putting $6000 spinning rims on a $4000 car, I don’t see things changing.
That’s my whole point, Myfij. I would wager that 80% or more of those buying those daily lattes have no savings and are drowning in consumer debt. If you’re on track, those lattes are a fun little blessing, but if you’re in a financial pit of hell, then those lattes are simply more kindling. It’s exactly that kind of spending and the lack of acknowledgement that consumers are by and large still in trouble that is making me awfully nervous.
Love Starbucks lattes. Fortunately for my wallet, I moved to an area without any Starbucks nearby. So now I have been inadvertently saving money…
As long as you are taking care of your finances, I see nothing wrong with buying lattes (or anything else, for that matter). Some folks willingly give up other luxuries to afford lattes. I feel a little sorry for the poor latte as a signal of bad personal finances – for that, I blame Dave Bach. 😉
I totally agree: luxuries are a wonderful part of life – if you can afford them. SO many people, though, live a life with luxuries when they’re drowing in debt, and that’s a dangerous road to be on. Yeah, I’m guessing the latte’ industry companies are NOT huge fans of Bach, but his advice is right on the money. 🙂
Isn’t in funny and sad how short people’s memories are? The way people act, its like the bad times were 100 years ago. Let’s all go to the mall and buy a bunch of junk, yeee haaaa!!
My philosophy is to live ever day like its the middle of 2008 and we’re in economic doldrums. If times are good and the portfolio is shooting up, its just a little bit of a bonus for the year. Every single day, I think about how thankful I am for my job.
The debt scares the pants off me! Why aren’t more people concerned about it? That debt belongs to every single one of us here in the US and its not going away.
You guys have the same philosophy as Rick and I, Mr. 1500. I don’t understand either, how people can be so blase’ about the debt, both personal and governmental. People should be freaking out about these numbers!
Let em’ buy the junk. I’ll buy it used for 1/10th the price. Yeeee Haaaa!!
Now, that’s smart finance!
Good thing I hate Starbucks coffee. Have people really not tasted coffee that isn’t burned? My office has it as our brand and it is just nasty. I wouldn’t ever pay that much for coffee, but will instead grind my own at home. Now that is good.
We will probably get in the same issue that caused the crash and we will all wonder what happened. I plan on getting ready for it and diversifying my income to make sure I have a backup plan.
I fear you’re right, Grayson. I can just see everyone’s stunned reactions now. Smart move in diversifying your income: that’s our goal too. And as for coffee: Rick’s been buying his Sam’s Club brand and grinding it for a total of $10-$15 a month and it gets rave reviews from all of our guests.
Surely you read my Adventures in Crazy Town post where I mentioned Starbucks?? For some reason, $4-5 coffee is a personal pet peeve.
I don’t think things will change much for quite a while unless something really bad happens – like the dollar breaking…
I loved that post, Jacob! That’s one purchase I could never stomach either, [email protected]@
Norway is still in a very big bubble, and I feel that everyone is so naive concerning our economy. The rest of Europe is broken down into pieces, my generation is called the lost generation, because there aren`t enough jobs. Millions of capable youths have nothing to do. And still, Norwegian believe that something like that could neeever happen in our country… sooo damn naive!
Oh dear, that’s not good. We went through that in 2008 and are STILL going through it!!! It just makes you shake your head. Sorry to hear that your country is going through that same denial. 🙁
While I look on the news and get discouraged, spending my day on financial blogs gets me fired up. This could be like Paris in the 1920s….Fitzgerald, Hemingway, Stein, Picasso, etc….it could be this little group that becomes the catalyst for huge gains in financial education. We’re the prime movers, baby!
I SO agree, Joe! It’s our seemingly small group of PF bloggers that keep me motivated to help our situation and help others as well!
Thanks for the pingback Laurie, much appreciated!
Well said Laurie. People can ignore the problems they and this country have but we will have to face the music at some point, and that could come in a lot of different ways. That’s why I’m taking steps right now to pay off my debts as fast as I can, and increase my income as much as possible to save what I can.
Same here, Chris. At least we can control our own situation, for now…..
Woo hoo, spend, spend spend! Some folks just don’t “get it”. I remember walking around at Christmas-time and thinking to myself, “Hmm maybe they didn’t get the memo that we’re in the middle of a recession?”.
Isn’t it the truth??? Sometimes I feel like we’re living in Bizarro world, you know?
I didn’t read the Yahoo article but it sounds crazy. We never seem to learn anything from the past!
So true, Holly! How many times do we have to be kicked to the curb financially before we get the message?
I am actually using this article for another post in a week or so. It is just nuts. Have we NOT learned from our past mistakes, or was it REALLY that long ago that banks were doing this kind of thing? It just makes you want to smack them upside the head and ask them what on earth they’re thinking. Sorry for the rant…I’ve not had my coffee yet… brewed at home mind you. 😉
LOL, I’ve been feeling kind of rantish lately myself, John. I just want to shake them all!!! As JM said in his recent post, not trying to be arrogant, but we have to get our crap together, both on a consumer level AND on a governmental level. I truly fear for the future of America should we continue on this path of irresponsible financial management.
Line up at the bank, free money for mortgages you really can’t afford. What do you mean you only make $70k a year? You can afford that $500k house, seriously, you can . Just take out an upside down 60 year jumbo (super size it please) mortgage and you’ll be fine…….. Sorry folks, I was just having a flashback to a few years ago 😀
Sadly, it sounds like your flashback won’t be a flashback for much longer, Jose. They’re at it again.
Good financial habits are usually the best cure for weathering a financial meltdown! This isn’t meant at all to patronize those who lost savings without any blame, but a very good path to rebuilding.
I agree, Tony. It can be done!!
Great post with heavy dose of reality. We are not anywhere near where we need to be and Congress and the President are still skirting the tough issues. We Americans for the most part in denial of our micro and macro economics. Somebody needs to get us on the right path. Not sure who that is but boy we need to separate the noise from reality.
I heartily agree, Steven! Hoping people will wake up and smell the coffee sooner rather than later. Thanks so much for the comment!
I agree with you Laurie. I think some of it is psychological. I think that whenever a society hunkers down as a group because of a depressed economy, the first glimmer of hope leads them to jump out of the frugal mode and spend some. As far as personal debt, there’s a conflict. The conflict is that although accumulating private debt is something everyone should avoid, it’s also something that many look at to stimulate the economy with purchases that otherwise couldn’t be made.
SO true! I hate the “stimulating the economy” reasoning. I think lots of times it’s an excuse in some people’s mind for spending what they don’t have.
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