Should we spend or should we save? Should we diet or should we enjoy ourselves. Both are conflicting points of view. In many ways, they parallel each other.
President Obama keeps talking about freeing up credit. Free up credit to jump start the economy. Yet, many Americans are concerned about increasing their dept limits.
There are many individuals that would love to get a new car. They would get one just to help out the auto industry. However, they can’t for many reasons. Banks just won’t hand out more credit. People don’t want more indebtedness. The job future for many is just too risky at this time to add more debt. So we find ourselves torn between spending and saving.
In an ideal world, people would use their credit cards and pay off their balances. Even if this meant several years or longer. Financial institutions would be happy because this would mean modest profits from interest rates, and user fees. All would be right with the World.
Consumers are confused. Should we save and pay off our debt or should we spend our way out of this predicament. The answer is, “it depends.” Experts on the economy as well as Congress can’t tell us the right thing to do. It is like going on a diet. There are so many diet plans, that you don’t know which one is right for you.
How much debt is too much debt? The answer is that everyone is different. Each situation is unique. Each individual has to get grip on their own situation and get control over it.
If you can afford it, it is not bad debt. If you can’t afford it, it is bad debt. “What can you afford? We are about as good at this as we are selecting the right diet or food portions.
Some debt makes sense because it reflects your confidence in your future earnings and the economy. If you spend money that do not have, it reflects that you are confident about your future earnings. That is a good thing.
If you spend or add debt and your job slows or stops, then you have problems. We all know that is a bad thing.
If spending is done responsibly, like a responsible diet, the economy like our health will benefit. Like our diet, the improvement in the economy is a slow process with various setbacks.
Moderation and careful consideration in spending is critical to each individual. One individual and their spending and credit habits won’t jump start the economy. It is going to take a wise and concerted effort by everyone over a given period of time.
sources; Debra Ross, St. Louis Post Dispatch