Thursday, April 22, 2010

American Economy - One person at a time.

There are growing reports that the economy is not recovering as quickly as many expected and they are upset or discouraged because of it.  News reports are increasingly showing angry and heated agruments, debates, and protests.  The politicians play into this by seeking to whip the crowds to fervor reactions without constructive solutions for dealing with day to day challenges. Although it means the road to recovery is longer than many expected I would like to suggest that there are a number of factors we cannot forget.

The American economy can not and should not return to the way it was in the first years of this century. The country was driven by unsustanible PERSONAL borrowing bringing a false impression of wealth and prosperity.  The old debt financed lifestyle was an illusion. In addition, reckless CORPORATE GREED went unchecked while they made a prey of those who were their customers using their customers money to do it. We cannot expect that it would go back to that level again.  We cannot wish for the good old days on this one. The possibility should not even be desirable for the consquences are undeniable. However, there are many who expect this and they will be disappointed.

The American economy was on the verge of collaspe.  This cannot be underestimated.  Only the intervening actions of the government kept us from total panic and choas.  In absorbing some of the high volumes of personal and business debt many of the balances have been transfered to the national economy. Whether we agree with the specific actions or not something was needed to slow the out of control train from a complete wreck. The situation was not a minor blip on the Dow Jones.  If you are unconvinced of this I recommend reading the book -700 Billion Bailout by Paul Muolo.
More then 7 million people lost their homes, more than that lost their jobs.
The stock market is still the stock market.  It is not and never has been a guaranteed place to invest money.  
The reality is that even in the best case scenario it will take five years for recovery. Debts need to be paid off, savings established, and businesses picking up.  We will probably be at 50% to 75% of our old lifestyle based on a live within your means basis.

We have met the enemy and he is ourselves and the polices that allowed it to happen.  Yes, there have been many factors that have contributed and we all able to make a list. 

What we need to do:
Phase 1 - Establish our own Minimum Basic Budget lifestyle.
Phase 2 - Educate ourselves for the task ahead.
Phase 3 - Beginning Savings.
Phase 4 - Pay off all debt.
Phase 5 - We are well on the way to recovery and can now build again.
Phase 6 - Investment and retirement planning phase.

The good news is that we can recover and become stronger, wiser, and more sound than we have ever been before.  That was the outcome of the first big American Depression and it can be for this one as well.

It will take hard work, a disciplined approach, and patience.  We are well on the way but the results will come - one person at a time.


Anonymous said...

I am unskilled and living on a poverty-level income. Don't see any recovery for me.

Carol Schultz-Weil said...

The good thing about being at the bottom is that there is no place to go but up. When you say unskilled - I'm not sure what that means. You can read and type so there are some skills to start with. There are typing programs on the computer where you can practice your speed and take timed tests. You may want to consider adding 10key to that.

Improving your skills is only as far away as the local library. What are you interested in? Become an expert and start a blog.

As far as being a poverty-level income. That's just for today. Everyday you have the potential to change that. Hard work and hope are the most important elements to any success. Discouragement is the enemy to these objectives.

Have you every watched the movie "In Pursuit of Happyness" with Will Smith? I've watched it three times so far and am encouraged every time. And, keep watching this site. I may have a couple of copies of In The Trenches to give away to our readers. And, keep in touch.