Friday, October 31, 2008

Take This Advice to the Bank

We’ve heard the recent financial crisis blamed on greedy bankers, President Bush and Alan Greenspan, to name some favorite scapegoats.

If you want to find the real culprit, look in the mirror.

For many of us, commonsense was knocked out by ambition.

You could see this coming like a Hollywood divorce. I used to drive my trusty Buick LaSebare through exclusive neighborhoods and wonder who could afford the million dollar homes there.

As it turns out, nobody could.

That didn’t stop people from living in those swanky homes, driving those expensive cars and taking those exotic vacations.

We’ve become a society that isn’t very good at delaying gratification. With apologies to Queen, we want it all and we want it now. If we can’t afford it now, then we’ll just put it on a credit card and worry about it later.

The only problem with that lifestyle is that it’s not sustainable. The collapse was inevitable. Now it’s time to pay the piper.

If we are going to recover, we’ve got to return to the financial principles of our grandparents. Buy only what you can afford. Save instead of spending. Eat at home instead of a restaurant. Buy a car based on reliability, not status.

Remember, when it comes to this mess, bankers, Bush and Greenspan weren’t alone in making bad decisions.

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