Thoughts on Debt

For the past 30 years American’s on average saved about 7% of their salaries. In 2006, the average savings was at -1% and now in 2008 the average American saves about .5% of their annual income. There are several thoughts on the reasons for this trend.

Some people think that it is because the Boomers and Generation X just overspend, however looking more closely at the trend there was a huge increase in family income between 1947 and 1973, sometimes even doubling which left Boomers with a huge amount of disposable income. Now with the rising inflation rate and the lack of savings everyone needs to be concerned. This trend could hit hard.

In the years of the great depression, people knew how to make the most out of every dollar. To conserve and to save was the norm and the better you could do it, the better your family would make out. When these people hit the above time frame, they made a killing. Most went from having a very low income and stretching every dime to making a lot of money, and they kept many of their frugal ways while doing that. They continued to live modestly and put aside plenty of money for savings and investing and they have done well for themselves. Future generations have not learned the value of frugal living due to the fact that entered the world during a time of abundance and there has always been plenty of “stuff” for them, so they do not have the values of saving and conserving that their ancestors exhibited, and therefore as we enter this difficult economic time, no one is really prepared for it financially. They have just been living day to day, knowing that tomorrow will bring more money, but now with the financial slow down, it is truly time to take the examples from our forefathers and put ourselves into a save and conserve mode, and when and if the economy improves, we should still live modestly and continue to save for our futures.

This time of financial difficulty can prove to be a learning experience for us all. Live modestly, conserve where you can, and save every dime that you have available to you. Times are tough but the tough people will see this through.