The state of the economy cannot be under emphasized right now, as it is with great concern that the current conditions, and not paying any attention to political shenanigans, are a direct reflection of those circumstances that lead up to the crash of 2008. However, the difference is that nothing has fundamentally changed in the sense of economic “recovery”. There never was a recovery and one is not going to happen under the current conditions.
That said, I cannot emphasize enough that the average person must look at events today in the same way of Aesop’s famous story of the ant and the grasshopper. Now is the time to prepare, not to relax or slack off, as when the next crisis comes- and it is inevitable based on the current paradigm of spending and borrowing in the context of the economic state of the country -it will destroy most of the Millennials permanently and most of the Zoomers. The process leading to perpetual debt slavery that will drive calls for revolution and socialism will naturally follow from most people under the age of 40.
However, the economic crisis has not been realized yet on a popular level. People are continuing to buy and spend with money they do not have, and increasingly for things they need as well as do not need. As the Wall Street Journal notes,
Gone are the days when special financing plans were mostly reserved for big-ticket purchases like TVs and refrigerators. Now, sweaters, makeup or other everyday items can be paid for in installments with loans or other payment plans offered at checkout with thousands of merchants in the U.S., including Walmart Inc., Urban Outfitters Inc. and, soon, H&M . Some Amazon.com Inc. credit-card users can also sign up for these plans.
Merchants and lenders are tapping into the financial challenges many U.S. families are facing…consumers are increasingly relying on borrowing to fund their daily lives. U.S. consumer debt is higher than ever, as cars, college, housing and medical care grow more expensive but incomes stay largely stagnant. (source)
The income stagnancy is compounded by the decline in the purchasing power of one’s own money, which declines with each year.
Credit cards, if used in moderation and with strict control and wisdom, can be extremely useful and helpful tools. However, this is not how most people use them, and they quickly form a system of “rolling debt” that takes months to years to pay down. Yet it is not only the cards, but alternative forms of credit such as noted above that are expanding and serving only to trap the consumer further than what he already is stuck in, playing “catch up” in a game where he can never win.
This anxiety was expressed in a recent poll reported by Fox Business, where almost 40%, or 2 in 5 people, were concerned about just being able to pay bills.
Among survey respondents in the nationally representative poll, 38 percent said their top financial priority is “just staying current on living expenses or getting caught up on all the bills.” Almost 3 in 10 respondents (29 percent) said their chief priority was “saving more money,” and 19 percent indicated they were mainly working on paying down debt from products like credit cards and student loans. (source)
It is estimated right now that approximately 78%, or almost 4 in 5 people, are living paycheck-to-paycheck and cannot cover so much as a basic unexpected expense without falling into rolling debt.
This is not even a criticism of those who are in such circumstances, for while there have been people who made bad decisions, many now are forced into hard circumstances because of elements beyond their control or that they naturally would be seldom expected to know.
The economic decline of the US is visible before one’s eyes. It is no accident for the expansion of “Dollar” stores, Wal-Marts, cheaper products, thrift stores, and salvage grocery stores. What little money the people have left is being taken from them in many different forms, and desiring to maintain a semblance of the previous lifestyles they enjoyed, they are turning to enslavement in the form of debt.
In addition to working harder now, another important lesson that must be taken away is to accustom oneself to a lower standard of living than what was enjoyed in the past because this is going to be the only way to ensure that bills are paid and that one can weather difficult economic times.
This is not said as though it is an easy matter. These changes can have serious effects on relationships and families. However, in order to be able to survive, there are only two major changes that anybody can make economically- to expand income, or to cut expenses. The answer is not found in one of these answers alone, but in a radical embrace of both.
Another consideration is legal options that help safeguard a man’s property. Perhaps these will be discussed in a future article, since those who have assets, no matter what they are, need to preserve them.
But right now, the focus of the common man must be on saving money as much as possible while paying down debt. If this means taking on extra work or making more sacrifices than normal, it must be done because when the next debt crisis comes, one has two choices. One either will be in a position to purchase assets at a low cost and pay down debts, or one will be in the majority of people looking to fire-sale what little one has to attempt to pay bills, and probably without success at all.