I just realized I am halfway through my year of pursuing my dream of mastering my personal finances. I’ve pretty much got the day to day stuff whupped, which for me is amazing.
I notice that all the energy I used to spend sweating the pennies is now going into thinking big, off-the-wall thoughts about the world of finance. I am no doubt insufficiently educated to throw these big strange thoughts out there, but it looks like I’m not going let that stand in my way.
One such thought is about spending. I know, I just got done learning how to spend less, and now I’m going to talk about figuring out how to spend more. Ironic, isn’t it? But I can’t figure out how the economy is going to heal if we don’t spend. That’s all.
The other day I heard a University of California economics professor say that in the modern economy, we have it all backwards. Our actual behavior is: we spend with abandon when times are good, and we pinch every penny when times are bad.
What we SHOULD be doing is pinching our pennies when times are good, and when times turn bad, spending those pinched pennies with abandon.
In other words: People, we are the economy.
Our habits, our choices, our profligate spending and penny pinching ways, and all the enabling and disabling forces around us – collectively, we create the economy.
If we would save our money when we we are confident about having money, and spend our savings when the economy slows down and prices decline, then we would create a self-healing economy.
And we’d get much better deals! Unfortunately, at the moment, we are caught in the doldrums where what we really need is the healthy savings account we didn’t contribute to five or ten years ago.
Ideally we’d jump into the Way Back Machine, turn the calendar back ten years, and instead of scarfing up easy credit to buy mini-mansions, flat screen TVs, and SubZero refrigerators, we’d build a culture around saving. Instead of glorifying bling, we’d become a cult of savers.
Then, about six years later when the economy started heading down hill on its usual cycle, we’d start salting our saved pennies back into the worldwide river of cash. And just like that, we’d right the listing ship of the economy.
Sad to say, the Way Back Machine was only a figment of The Rocky and Bullwinkle Show. (I know. That’s before your time. But I gave you a convenient Wikipedia link so you could look it up.)
Since we don’t have a national savings rate that would have given us the cash to spend to get out of this big deep hole, we’ve got to find some other ways to spend, or we’re going to stay stuck here.
I have a really weird idea on one way to do that, but it involves retirement funds and I’m scared of the financial advisers forming a lynch mob and coming after me. I’m going to work on my courage and do my homework and maybe I’ll get up the nerve to suggest it next time.
For now, how about you, World of Dreamers? How could we come up with some cash to spend so we can get this boat afloat? And what could we do NOW that would get us in the mood to save like fiends when the economy improves?
Leave a comment below and share your ideas. See you next week!