No Savings and High Debt ? The Link Isn?t a Coincidence

We hear a lot in the media about two very important personal financial issues ? no savings and high debt. The problem is that the two are usually discussed individually. It’s as if they?re independent of one another. But I’m convinced that no savings and high debt are connected ? intimately ? and the link isn’t a coincidence. People who have no savings typically have high debt. It’s a natural combination, and a very unfortunate one.

Let’s discuss the two ? no savings and high debt ? individually, then combine them to get the full effect. After that, let?s talk about what you can do to get out of both circumstances at the same time.

No Savings and High Debt ? The Link Isn?t a Coincidence
No Savings and High Debt ? The Link Isn?t a Coincidence

We?re going to cover the two together in this article because you can?t fix one without resolving the other.

Let?s start by painting a clear picture of the extent of both personal financial issues.

The Dismal Savings Record in 21st Century America

Only 39% of Americans can come up with $1,000 for an emergency. The rest would have to use a credit card, take a personal loan, borrow from family or friends, or cut expenses.

If we take that statistic to its logical extreme only 39% of American households remotely qualify as middle class!

Technically speaking, the inability to come up with $1,000 ? or even $2,000 ? means you?re really part of the working poor. That means you might be living a life that approximates middle class on the surface, but you?re so far on the financial edge that a single emergency, or the loss of a few paychecks, could bounce you out of the middle class in a matter of weeks.

Now, I don?t want to blame this situation squarely on individuals. If you?ve spent much time on this blog, you know I attribute much of the precarious state of Americans? financial situations to big picture issues:

Auto expense is particularly troublesome, and probably the biggest ?stealth expense? in most households. We consider them a necessity, but the average cost to keep a car is over $8,000 per year, and most households have at least two.

None of these problems are the fault of any individual. But at the same time, no one will help you if you?re living on the financial edge. It will take effort on your part ? probably radical ? to change your circumstances for the better.

Rising Consumer Credit Levels ? Americans Owe More than Ever

If you?re not a numbers person, I understand. But please bear with me as I throw out a collection of statistics. They?re necessary to prove the high debt side of this discussion. To make it easier, you can ignore the numbers themselves, and focus on the percentages toward the end. They?re what?s really relevant.

Let?s look at total consumer debt in America for each decade going back to 1950 (as of June of each year). The statistics are according to the Federal Reserve, and include credit cards, auto loans and student loans, but not mortgages:

  • 1950, $21.1 billion
  • 1960, $58.4 billion
  • 1970, $129.2 billion
  • 1980, $346.7 billion
  • 1990, $802.9 billion
  • 2000, $1.609 trillion
  • 2010, $2.520 trillion
  • 2018, $3.907 trillion

So how do these consumer debt numbers stack up when compared to a broad measure of the total US economy, like gross domestic product (GDP)?

Once again, according to the Federal Reserve, GDP was roughly $2.8 trillion dollars as of June, 1980. As of June, 2018, it?s about $20.4 trillion.

From 1980 to 2018, America?s GDP grew by a factor of 7.3. Consumer debt however, grew by a factor of 11.3.

Put another way, consumer debt has increased about 55% faster than the total US economy since 1980. In fact, consumer debt has increased by 55% just in the eight years that have passed since 2010, which roughly corresponds to the end of the Financial Meltdown. In the same eight years, the GDP has increased by just 37%. Consumer debt is consistently growing at a faster rate than the total US economy.

This is a major reason why so many Americans feel poorer, even thought they?re making more money. An increasing amount of income is servicing the rising debt levels, which lowers disposable income.

Bringing National Statistics Down to the Individual Level

OK, the statistics bear out the reality that consumer debt has been growing at a rate well in excess of the national economy. That has consequences, and anyone who?s in debt is well aware of that reality.

But what can you do about it?

No matter what anyone says or writes, getting out of debt is NOT easy! There are fundamental reasons why people can?t get out of debt that are totally ignored by the blame-the-debtor champions. I?m not saying it?s never the debtor?s fault, but debt is becoming a systemic problem at all levels of society.

It?s difficult to get out of debt for all the same reasons it?s hard to save money. But there?s a difference between hard and impossible. And as I?ve found in my own life, overcoming adversity is an incredibly empowering experience. Put another way ? getting out of debt, regardless of the struggle, will be an incredibly empowering experience.

There are some challenges that are worth taking on, regardless of the difficulty. The payoff is too great, and the penalty for staying where you?re at is too confining.

When Credit Becomes ?Savings? Your Fate is Sealed

Here’s where the connection between no savings and high debt reaches the crisis phase.

If you have no savings, you?re forced to turn to credit. Once that becomes a pattern, credit becomes your ?savings?.

I once worked for a CPA who admitted to having no savings, despite being part of a high earning, two income couple. His ?savings? were the unused portion of his home equity line of credit (HELOC). If the HELOC had a total limit of $50,000, and he owed $22,000, his ?savings? was $28,000.

That sounds absurd on the surface, but I believe it’s more typical than most people will admit. I saw a lot of that when I was in the mortgage business. People use their HELOCs as their savings. Millions more do it with credit cards. $3,500 owed on a $10,000 credit line translates to $6,500 in ?savings?.

You may not call it that, but that?s how it functions.

Many millions of people live this way, and it’s a dangerous delusion. It may seem like a safe strategy ? as long as you maintain good credit, a stable income, and ample unused credit limits. But you’re flirting with disaster, because a negative development with any one of those three circumstances could topple the whole strategy. That would leave you with no savings ? real or imaginary.

There’s an even more fundamental problem with using credit as savings. Anytime you access those lines, you’re creating a corresponding liability. Not only is there more debt added to your existing debts, but you’re also adding a fresh monthly payment.

That’s not at all what savings are or were ever intended to be. And if you maintain your finances that way, you are absolutely flirting with disaster.

Is it any wonder 78% of Americans are living paycheck-to-paycheck?

The Payoff of Becoming a Saver

Before we get into savings strategies let?s first recap the benefits of being a saver. It may be just the motivation needed to get you to become one.

Lowering your stress level. Life in the 21st century is stressful. But if you’re living on the financial edge, it’s even more so. Every unexpected expense can send you into a panic, as can any lower-than-expected income source. Having savings will insulate you from much of that stress.

Keeping small problems from turning into big ones. Picture this scenario: you get an $800 car repair bill, but you have zero savings. Now you have a big problem.

But let’s say you get the same car repair bill, and you have $5,000 sitting in the bank. What could have been a big problem is now more of an irritation than anything else.

Irritations are a part of life. But big problems are to be avoided. Having savings can help you do just that.

Avoiding health problems. So far we’ve been talking about the financial problems that come from a lack of savings. But those can contribute to health problems. Examples include a lack of proper sleep, excess eating, excess alcohol consumption, and constant worry. Each has the potential to wear down your body. Eventually, they can lead to serious health conditions. Even a small amount of savings may be the best possible medicine.

Creating options. If you’re broke, you’re pretty much stuck. Whether that’s a bad job, a car that barely runs, or an unsatisfactory living arrangement. A lack of savings can keep you locked into bad situations. But if you have adequate savings, you can make job changes, buy a new car, or even move to a new home. Savings enable all that to happen.

Once You Become a Saver You Can Make Your Debt Problems Go Away for Good

Since there’s a strong link between no savings and high debt, building up savings is probably the single most important strategy for getting out of debt.

Most people can’t get out of debt because they’re stuck in a Catch-22 situation. They may be paying their regular bills every month, including their credit cards. But if any financial disruption comes they have to tap a credit card. Because there are no savings, credit becomes the preferred option for dealing with financial emergencies.

Before you can get out of debt, you first have to learn to live without it. The only way to do that is to develop an alternative funding method. Having savings is the best solution. Whenever a financial emergency erupts, you can use savings, rather than running up your credit cards or tapping some other loan source.

Naturally, this will require either lowering your living costs, developing additional income sources, or using a combination of both. For a time, you’ll need to direct the additional cash flow into savings. Along the way, you’ll also have to make your regular monthly payments on your credit card bills.

This will accomplish two goals at the same time:

  1. Building up savings, and
  2. Gradually paying down your credit card bills just as a result of making the regular monthly payments, and not borrowing more against them.

If you can continue this pattern long enough, you’ll eventually reach a point where your savings will be higher than your credit card balances. When that happens, you?ll have a choice to either pay off your credit cards completely, or continue on your path of gradually saving money while paying down your cards at the same time.

This is another example of how having savings creates options in your life.

How to Become a Saver

Rather than detail several strategies on how to become a saver ? and to keep this article from getting longer than it already is ? I?m going to recommend you read the following articles on the subject:

These are two strategies I strongly recommend. But you can and should use any method that works for you. The most important step is always getting started. Today is an excellent day to do that. The longer you put off any venture, the less likely it is you?ll ever actually do it. Remember, good intentions don?t equal action.

Start now, even if it means saving just $20 this week. You can gradually build the amount over time. Eventually it will become the kind of money that can make a difference in your life.

Final Thoughts on No Savings and High Debt

Some people recommend paying off debt ahead of savings. I get the basic idea ? if you can get your debts paid off, you’ll have more money to plow into savings.

But the problem with that approach is that it doesn’t do anything in the near term to alleviate the lack of savings. While you’re busy paying down debt, money is not making it into a savings account. If an emergency should come up, you?ll once again need to turn to your credit lines.

But if you begin by emphasizing saving money, you?ll already begin building reserves you can use in an emergency. That approach will take you out of the business-as-usual approach that got you in debt in the first place.

That?s important too. Any time you want to make a major change in your life, the first thing that has to go is business-as-usual.

As the saying goes, if you do what you?ve always done, you?ll get what you?ve always gotten.

Also, getting into the habit of saving money is a critical step. The sooner that begins, the more effective it will be. Saving money is both a habit and a lifestyle, and you?ll need to get comfortable with both. Paying down debt, while certainly constructive, doesn?t create the all-important savings habit.

Do you have any strategies you can recommend to help others begin saving money?

( Photo by Images_of_Money )

18 Responses to No Savings and High Debt ? The Link Isn?t a Coincidence

  1. Some of the issues I always see with most people. Let’s use this as an example. It’s well documented that money loses value year after year.
    So let’s say money loses 2 percent of its value in a year. Then take the bogus government inflation number of 3 percent for that same year. To me, that means that in one year I have lost five percent
    Most people try to maintain the same lifestyle without reducing your spending by five percent.
    Then let’s say you have a goal of saving ten percent over that same year. Again, to me, that means that I either have to save fifteen percent just to maintain my ten percent goal or reduce my lifestyle by five percent and still save ten percent. Of course, that gets eroded by inflation and the loss of value.
    Most people still try to maintain that same lifestyle without any kind of reduction or increase in savings.
    Of course, this requires us to pay attention to this, which most don’t. One or two percent doesn’t seem like a lot but over five years it adds up to twenty-five percent at the numbers above.
    Then let’s say you actually get a rise of salary at ten percent in that five year period. You still have lost fifteen percent over five years, not gained ten percent.
    Now I am just talking basics here. This doesn’t account for investments or residual passive income. I’m just talking someone basic who just tries to live day to day and save a little in a bank account.

    Every year I take into account these numbers. Over the past ten year’s I have reduced my lifestyle year over year. Although I make more than I ever have my lifestyle has gone down just to maintain my yearly goals.
    For example, I sold my home three year’s ago in a fairly upscale neighborhood and bought a home in a fringe neighborhood for practically nothing. My property tax burden went from 7,000 per year to 900 per year. The neighborhood is fine. Nobody bothers us and it is fairly safe. With the reduced lifestyle and the money, I had left over from the house sale I was able to finance a nice investment for down the road.

    It requires sacrifice and some number crunching and actually paying attention to this. We can be proactive with money. It’s a living thing in this life.
    This is the main reason I don’t see people getting ahead or telling me they can’t save. They try to maintain a current lifestyle with less and less each year. Inflation and loss of value in our money are hidden in plain sight. We can save but it requires less time watching TV and entertaining ourselves with nonsense and more time on this type of thing.

    Of course, getting out of debt is the main priority first. Living on cash gives us a very good understanding of what you can actually afford.
    Once a debt is handled, you can begin to become more and more proactive over time.

    That’s my two cents. Kinda of long. I probably could write a book on here about all this. LOL

  2. I think you nailed it Tim. Lifestyle is the holy grail. It’s less about how much money you have, but more about how well you live, and what you can afford to buy. That all works against savings and encourages debt. It’s also people trying to be middle class in a world where that lifestyle is getting harder to maintain all the time.

    What I find interesting is that every time I write an article on savings, it gets very few views and even fewer comments. I don’t know if it’s a sore subject or a boring one. But to me, this is one of the core dilemmas of personal finance in the 21st century. The game has changed, but people continue to convince themselves it’s still the 1990s, or that that decade is on its way back. We’re completely unprepared for the future if that’s what we think.

  3. I find interesting also that their wasn’t any comments. I’m not sure why. I remember havimg conversations with Co workers and everytime it got to savimgs or debt everybody would quickly chamge the topic. I spent two nightshifts with a guy who asjed for help gettimg his finamces in order. We went ober everything and made a plan for him. Two weeks later he buys a waverunner on payments. That’s the last time I ever tried helping anybody with money.
    It’s a touchy subject for a lot of people. It requires us to be transparent. People would rather deny or act like they have all the answers. I still ask questions or seek advice or read articles on the topic. I never understood inflation or why money loses value and how it erodes your lifestyle without you really knowing. It’s only in the last ten years that I have and more so the last five.
    I think people just get to a point in life where they give up and just go with the flow.

  4. I completely get the idea of spending as a diversion. It’s more common than we think, probably more so even than alcohol and drugs. There’s no social prohibition against it, and of course government and big business like nothing better than a spendthrift population to keep the economy humming (and profits and tax revenues coming in), than to advocate people secure their futures with more savings and less spending. If you think about it, there’s almost nothing you can buy today without some form of credit, including college and medical procedures. Anything with a price tag over $100 has some sort of financing program with “low, easy monthly payments” The whole system is set up that way, which is why I feel compelled to write about it. But it isn’t a popular subject. Write about how people can afford the unaffordable, and they’ll be beating down the door.

    It reminds me of my days in the mortgage business when state bond money would become available for down payments in conjunction with FHA mortgages. We’d have lines 100s deep outside the door as people waited for hours (even overnight) to get their piece of the giveaway. Meanwhile I’d be inside thinking “if these people can’t save 3% of the purchase price for a house they shouldn’t be buying one.” Heck, what will they do when the roof needs to be replaced or the furnace melts down? But that’s not how we roll here in the “good ole U.S. of A.”, at least not anymore.

  5. I always hope that people would realize that there is nothing better in the financial world than paying cash for things. It’s a great feeling. I’m so used to it that I can’t imagine borrowing money for anything. It literally makes me ill thinking about it.
    I knew guys that would borrow two or three thousand dollars to go on vacation. They would spend the rest of the year paying it back. Then they would do it again the following year. I used to think, I can’t imagine still paying for a vacation eight months after it was over.
    Or buying a car and making crazy payments. It’s probably a little easier when it’s brand new but what happens after two or three years when it has a hundred Dinges in it or starts to rust and your still making that huge payment. It has to make you sick.
    The mortgage thing you describe is the same. What happens when the euphoria wears off and the furnace blew up or roof starts to leak. You borrow the money of course.
    Once your in that cycle it is rinse, wash, repeat.

    Breaking that cycle is the best thing anybody can do for themselves. If the system is set up a certain way it is to there benefit not yours.
    I just got a check from chase for 4,000 dollars. I used there card last year, racked up 400000 points paid in full every month and boom, they pay me. Not the other way around.

    Once you can use their system against them with no debt. It is the greatest feeling. I wish more people would get on board with what your saying here.

  6. I’m with you Tim, when we took our vacation last month it was already paid for when we got there, right down to the spending money. It makes vacations more fun. We also kept a lid on it. I recently read the average household spends – get this – 10% of their annual income on vacations! My wife and I spent less than 2%! We just went to the beach, but that was plenty for us. We won’t get close to 10%, or even 5%, otherwise we won’t go. We’re not misers, but we aren’t spendthrifts by any means.

    When I was a kid I used to envy people who paid with credit cards (no debit cards back them). They seemed like the people who had their “$#%t together”. But as I got older I came to much more admire people who pay cash. I personally don’t pay much with cash because earning my living on the web the income is 100% electronic. I use debit cards instead, which is the next best thing. But I still admire the cash crowd and wish I could be one of them. Probably won’t happen in this life. I probably should start using ATMs to pull out cash, but that adds an extra step. But I figure as long as I’m not using a credit card I’m still heading in the right direction. That said, there’s an undeniable sense of freedom that comes with paying by cash, and I don’t think enough people don’t appreciate that. It means a purchase is done and over with, and has no possible identity or debt trail attached to it. Not enough people get that.

  7. I used to take out cash for the month that I would use on groceries, gas, etc. The rest I would leave in the bank for bills.

    I did want to say one other thing on debt. I have said it on here before but that includes a home. I realize once you’re older and you have had a mortgage a long time the only thing you can do is pay it down as quickly as possible or sell the home and buy a cheaper home for cash with the profits of your current home.
    I hate to see young people start off this way. I have seen twenty-one-year-old couples start off with 350,000 homes. This is a huge mistake. It took me 40 years to buy a house of that price.
    I started at twenty one with a 15,000 property. It was basically abandoned. It had one person living there. It was a small four unit building in a fringe neighborhood. I fixed one apartment and moved there with my wife and 3-month old baby. I fixed the rest over four years. All on cash. All by myself a little at a time. The things I could not do I hired out but saved the money first before getting it done. I gradually got three tenants for the other units. That paid the taxes and allowed additional repairs and little savings. All total I put 40,000 into it and sold it for 85,000 five years later. Didn’t make a huge profit but it came to about 20,000. I did this again and again. Five times in total until I built up enough cash to buy a really nice home for cash. Each time we fixed or bought a building we lived there also. 15 years of construction and five moves later we had a 220,000 home for cash. It took a lot of patience and a spouse that was onboard with it. We also had two more kids during that time.
    My point is that people now want to start off with something that took me many many years to achieve. I learned a lot during this time and the payoff when I finally stopped was worth it.
    Now I have started going backwords. I sold that home after it went up a huge amount in ten years and went back to buying a fixer-upper with cash in a much lower neighborhood. this time pocketing the profit after repairs for retirement or savings.
    The key is to start off on the right track, to begin with. That’s what young people are missing now. They don’t have the guidance or they are spoiled to where they want to start off with what should be the end game of many years of hard work and planning.
    I didn’t start off with any money and was never given a dime by anybody. I had the initial 15,000 that I saved.

    The debt train starts right off the bat. Once you’re on it it takes almost the rest of your life to get off. Most never do.
    I already have my kids trying to figure out how to go to college without any debt. I won’t pay but I won’t allow them to borrow. My oldest son is talking about going into the navy to help pay for training and school when he gets out. Plus he wants to travel the world without paying.
    I have no issue with this. If I just sat down and wrote a check for his school he would never value it or understand what it takes to make it on his own.

    I realize this is not the norm. We talk about all the time on here about being different, not following the herd. We can all pass along the wisdom of what we have learned. If you went the other way and started off with debt you can pass along this also. What you learned and how to do it differently or what you would do differently.

  8. You raise an outstanding point about how you start out in life, and it’s a critical message for today’s young people. I’m talking about student loan debt primarily. It puts a young person on the debt treadmill very early in adult life. Basically, if you’re 22 and a recent graduate, and you owe a high five figure or low six figure student loan debt, you’re already behind the eight ball. Worse, you’re set up for a lifetime of debt, always with the assumption that your brilliant career, or genius stock investments will bail you out. But debt begets more debt, and large debts beget more large debts. Young people are conditioned to believe debt is how you make it in life. They take big car loans, run up big credit card debts, then the ultimate debt – a fat mortgage on a “home” they really can’t afford. (Notice how what used to be called houses are now called “homes”? It’s a play on the emotions and it works!)

    It all combines to create a lifetime of indentured servitude. Or suburban poverty – high income offset by high debts and few true assets. In this way the system has become vicious, and people are falling into it, just by going along with the herd. Making it worse is that many college grads no longer land in high paying careers. They tool along on the edge of poverty, barely able to live while servicing an out-sized debt secured by nothing.

  9. Hi Kevin. I’ve been absent for a bit, but the reason ties into your discussion and article. Recently, my husband had a problem with his eyesight in one eye. He let the symptoms go because he thought it was just age catching up with him. He went to the optometrist to get new glasses, and they referred him to an ophthalmologist immediately, who confirmed he indeed has a retinal tear, which is a medical emergency, and will cause blindness. As we sat in that doctor’s office at 6:30 in the evening on a Friday night, she did an emergency procedure on his eye to repair the tear. We looked at each other and said “this is it…we’re done working.” We own our own business, as you know. But the strange this was, we were at peace with that forced decision. The reason was because we knew we would be ok….we worked hard all our lives, saved our money, paid off all of our debt, we have good medical insurance and disability insurance, and I’m eligible for SS, if need be. This is what plays into the importance of savings and no debt. As you’ve said, you never know what’s coming down the road. As I type on a Tuesday morning, my husband is resting on the couch, recovering from the surgery, which involved needles inserted into his eye (ewwwwww!), and his eyesight is returning. He got a good report from the doctor so far, and after next week, he can hopefully return to work. Now, if we didn’t have insurance, we’d be stuck with a large medical bill. Not an issue. If we didn’t have savings, we’d be talking about how to manage for the rest of our lives. Not an issue. If we had excessive debt, how would we pay for it with no money saved. Again, not an issue for us. This was a serious curve ball thrown at us, but we’re going to be ok, and his sight is returning slowly to normal. Sorry to be so long-winded, but I think the story plays to the article about the importance of savings and keeping finances in order.

  10. Hi Bev – It’s actually quite related. The availability of savings in combination with the absence of debt is giving you options other people don’t have. That’s one of the most important reasons to become a saver. Life is so unpredictable and we never know what’s coming down the road. By having savings you keep small problems from becoming financial disasters, which is more important than anyone realizes.

    If I can offer some unsolicited advice on retiring, give it some time before pulling the plug. You might have made an emotional decision based on the immediate circumstances. You said you’re eligible for Social Security which means you’re in the 62 year old age range. But as we’ve discussed in other articles, a lot of people who retire in their early or mid 60s end up back in the workforce a few years later, usually doing a job they’d rather not. It’s that rising cost of living problem, as well as the fact that the earlier you retire, the greater the likelihood of outliving your savings. And since you’re self-employed, it won’t be so easy to get the business restarted later if that’s what you want to do.

    BTW, I faced a similar situation earlier this year. I had a major floater in my right eye, one that impaired my vision, and a detached retina was a concern. Fortunately it didn’t come to that, because it would have required laser surgery. As a writer I can’t afford even partial visual impairment. You’re husband is recovering his sight, so be careful not to make long-term decisions based on short-term events. Of course, I don’t know what other health issues you may be dealing with, nor the stress involved in your business. But still, be careful to weigh out all the considerations. Some decisions once made aren’t easily reversed.

    (By now you know I’m always looking at the counter argument, so do what you think is best 😉 )

  11. Very good advice. I was the king of making emotional choices earlier in life.
    Not to say this situation is or these people don’t know what’s best. It’s good advice for anybody.

  12. I appreciate your very good advice, Kevin. Neither of us want to quit work, we were just emotional at that moment. There’s no way he can work his job with vision in only one eye, but, fortunately, that’s not looking like that is the outcome. We just felt that if that decision was forced upon us for whatever reason, we would be ok because we do have some savings and insurance. He is otherwise quite healthy and he’s bored out of his mind laying on the couch on these beautiful weather days we’re having. He’s sick of watching the History Channel and Netflix. 🙂 No, we plan to continue to work for some time to come if that’s at all possible. We know the very real possibility of running out of savings when we really are too old to go back to any kind of work. What I can say for both of us, however, is that after some time, even just a week or two, of laying around doing nothing but working on recovery, it’s shocking how quickly your brain turns to mush. We are optimistic and hopefully will get the ok to return to work next week.

  13. A couple of other points here Bev…A good friend of mine – who did very well for himself and worked into his early 70s – always told me “Never let circumstances or employers decide for you when to make a move. Always make a move on your own terms.” I’ve taken that advice to heart over the years and it’s served me well.

    If you have an injury or illness that’s permanently debilitating, retiring has to be a consideration. But one of my uncles, my father’s twin brother, had three (or was it four?) heart attacks before age 60. He worked until 80 in a physically demanding business, and is still going and in good health at age 92. There’s a restauranteur locally who had five heart attacks and a ruptured aorta, and he continues to run his business. I’m guessing he’s 55-60. And I can’t tell you how many cancer survivors I’ve seen and known who refused to give up. I’ve seen this quite often. Something bad happens, and we think the worst, completely unaware that we can and do have more to give.

    On the flip side, I’ve seen people have health problems, go into a shell, and die shortly after. Attitude seems to have a lot to do with it. Speaking for myself, I plan to keep swinging until the Good Lord takes me. I’d be completely bored otherwise.

    This morning while doing my morning walk at the mall (it was pouring outside) I ran across a guy, probably 60ish, who was obviously crippled in at least one leg. He was exercise walking with a cane, but moving quite quickly. I walked along side him, and told him he’s an inspiration to everyone who sees him. He smiled and continued walking quickly. Those are the people I want to pattern myself after. They make the most of the life that’s been given to them, even if it’s less than perfect.

  14. Kevin – GREAT POST and great comments! I want to just share a few thoughts.

    I count as one of my richest blessings the common sense I was taught by my parents. They were both Great Depression-era children. My mother could pinch a penny better than anyone. But the best advice was very simple and it came from my Dad. “Keep your wants simple and retain your independence.” I followed that and it has made all the difference. My wife’s parents were also Depression-era kids and so we share a common financial attitude because of this. I pray earnestly that my children have spouses who have financial common sense. I have a relative whose wife ran up $40k in credit card deby and his mother had to bail them out. Crazy!

    Another piece of related wisdom – “Don’t try to have everything in 3 years that it took your parents 30 years to obtain.” Do they even cover the tortoise and the hare in school anymore??!!

    Since leaving a really a high paying job in February, I have scrutinized our spending, cut back on many things and worked hard to control my discretionary spending. It has been an eye opener!

    Again, great post!

  15. Thanks Walter! I agree fully with what you’re parents taught you. I’ve known many people who lived at very low levels, had fat bank accounts and no debt, and were free to do most anything they wanted, despite the absence of visible wealth. That’s even covered in the book The Millionaire Next Door.

    I’ve also seen the distorted view of life young people get when looking at older, well-established people. They see only the end result – the financial security and the toys it produces. They don’t grasp the struggle and self-denial that created it. When I was in the mortgage business I’d see first time homebuyers stretch to buy McMansions. No starter homes for this generation, they wanted to start at the top.

    I think the Great Depression experience was a beneficial one in that regard. That generation knew what it was to do without, and the sacrifice it takes to rise above it. The younger generations don’t know what that’s like, and want to get the trophies of success as early in life as possible. It’s sad that it takes a disaster for people to learn what really matters, but as a species we’re more than a bit thick sometimes.

  16. Kevin, if you ever get a chance to read the James Braddock story it is an amazing one. The boxer, who lost everything in the 29 crash and had to rebuild his life and career. It’s amazing how losing everything changed him forever even after he won the heavyweight title.
    I admired him greatly in this story. If you ever watched Cinderella man it is about him also. Just thought I would mention that since the depression came up. Stories of this era facinate me and so do the people who went though it. How it changed them.

  17. That’s a good recommendation Tim. I too love those stories. I find myself drawn to the stories of people before WW2 more than since. Most knew failure and desperate times. There were no safety nets back then, and no corporate/government controlled worlds to manipulate. People had to survive by their wits and courage. I LOVE that, certainly much more than the nepotism/inheritance stories of so many people after WW2.

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