As The Economy Hits A Downturn, My Advice Is To Resist The Urge To Spend.

Whether you notice it or not, the U.S. economy is headed for a downturn…. Don’t believe me? Just ask any real estate broker you know and ask them how business is. I would venture to say that they would tell you things have slowed down quite a bit over the past few months. For me personally, my high yield savings account, is not as “high yield” as it use to be… as interest rates continue to drop month after month.

I’m 40 years old and when I was in my early 20’s I become really good at spending money. Even spending money I didn’t have! Sound familiar? There is a national debt epidemic in this country and it’s getting worse from the things I have been seeing. I had to learn from the school of hard knocks how to manage my money wisely. I am still paying for some of my mistakes in the past to this very day.

It is my humble opinion that the problem is this: there is not enough emphasis placed on basic financial matters, credit scores, managing money, etc to our countries young people to educate them on how important it is to manage money wisely. Case in point me…. when I was 21 I got a job paying $28,000 annually and I thought I had hit the jackpot. I was use to earning minimum wage cooking chicken at KFC so you can imagine my excitement. No one ever told me about credit scores, credit cards, and how to manage money. So what was first on my list after the first couple paychecks? Buy a new car of course! So I went out and bought a brand new Dodge Colt, with a whopping $198 monthly payment. To make a long story short, lets just say I didn’t have that car very long. The repo fairy came in the middle of shift (or somewhere thereabout) and towed away my baby. Not a pleasant experience trust me, especially when your co-workers witness it on their way to lunch. Think about it, I am sure there is someone you know, a young person who lives well beyond their means. We all know or have seen someone who drives a flashy BMW for example, and their main source of income is customer sales at the local Verizon Wireless store (also as an example). No knock against you if that’s what you do, but a 50 or 60 thousand dollar car is probably not in your budget. (Not to mention you probably went out and got fancy rims and a audio system for it).

I’m not boasting here, but me personally, I can easily make in a month what most of my friends make in an entire year. Yet they have fancy cars, dual jet skis, 50 Inch Flat-Panel TV’s, and a beautiful house with all the bells and whistles. Me… I can’t afford stuff like that. Do I have the money to buy all that stuff? Yes. Would I buy all those things at this point in my life… NO! Absolutely not. I can technically afford to buy those things, but in the long term scheme of things I CAN NOT afford to buy things like a new BMW or a Dual set of Jet Ski’s.

I am very thankful for all that god has given me and I know he can take it all away in a heart beat. I know the money I have saved over the past 2 years could all disappear someway or somehow. Just think of MC Hammer for example. I did a little research and this man was rich, I mean filthy rich. He spent 30 million dollars over the course of 2 years or so and subsequently went bankrupt. I mean, if I had that much money I would guard every dollar of it with my life. I would want to secure my family’s future for generations to come. Not Hammer! Mr. Hammer spent his money on a large mansion, a team of 40+ employees to cater to his every need, an entourage that numbered as many as 20-plus individuals, and we can’t forget Hammers 1.4 million dollar entrance to his home, which was comprised of two gold-plated “Hammertime” gates.

My point here is to save what you have, and be absolutely certain you make sound financial decisions. Does this mean you have to lead a boring life with a piece of junk car and a 12 inch black and white TV. No, certainly not. If you want a new car for example here is general rule of thumb I like to live by (Keep in mind this excludes certain things like real estate).

If you can’t afford to pay cash for it, don’t buy it!

So if you want a $50,000 BMW but don’t have $50,000 in the bank, DO NOT PURCHASE IT. If you do, you will be living beyond your means. Basically you are telling the world, I cannot afford this car and I love paying interest, especially high interest! Now financing certainly has it’s place, especially 0% financing, but this general rule should keep you safe and out of debt as much as possible. Because lets face it, almost all the people around you are in debt. While this claim is informal, I believe it to be true.

So like the title of this post…. As The Economy Hits A Downturn, My Advice Is To Resist The Urge To Spend.