The Financial Crisis – What You can do about it

As hundreds of demonstrators in New York and elsewhere complain about the avarice of Wall Street and corporate America they miss the single largest financial problem of this nation which is entirely within the control of every individual American.

According to the 2010 US Census the total consumer debt in the US is over $2.4 trillion! That is over $7800 for every man, woman and child in the nation. This debt is crippling. It leads to massive discontent, more divorce, less financial security, and often great heartbreak.

And this is not limited to the US. Debt is a problem throughout the developed world both for governments and individuals. Over the past several decades the hard lessons learned during the Great Depression have been forgotten. Concepts such as frugality and paying your way as you go are considered passé. People want everything right now.

They have been unwilling to save for future purchases and deny immediate gratification for long term financial security. As a result credit card and other forms of consumer debt have grown astronomically. When easy access to home mortgages allowed people to purchase homes they could not afford they took full advantage and this led directly to the massive numbers of foreclosures in recent years and indirectly to the financial downturn of the last three years.

Everyone likes to find a scape goat for their problems. It must be someone else’s fault after all and blaming the government or the rich is easy – they are easy targets. In fact we have no one to blame but ourselves.

The solution to these problems is not more legislation, more taxes or attacking corporations. The solution is for each individual to take control of their own finances, pay off and avoid any debt that is not absolutely essential, and buy only what you can afford. This is not a novel idea – this is the way people functioned for a very long time before the idea that we can incur unlimited debt caught on.

If every American would save not less than 10% of their income each year and put off purchases they cannot afford without debt, financial security would increase substantially and mass foreclosures and bankruptcies would not occur.
A big part of building wealth, as we write about here all the time, is managing one’s money wisely and this includes avoiding debt. It is time to do something about this mess that is totally within everyone’s control. It is time to save, manage and postpone gratification until you can afford it.

Wishing you success and prosperity,

Daniel R. Murphy
Helping People Learn to Build Wealth

Wishing you Success and Prosperity,

Daniel R. Murphy

Wishing you well,

Daniel R. Murphy
Educating people for building wealth, adapting to a changing future and personal development.