Consumer Spending: It's Time to Wake Up and Get a Grip

I'm probably about to upset half of America by writing this article, but it's my own true thoughts and feelings. I was taught, "if you dont' have the money , don't buy it."

I just read a great article by The Penny King about banks going out of business. It also mentioned how the banks gave out all those loans--loans to consumers that remain unpaid. Most of America is hating the banks, hating the government, instead of hating themselves for running up their credit cards into thousands of dollars of debt.

Perhaps it's time we should start looking at how and why this mess occurred.

I'm the girl you see who has driven the same car for ten years, scrubs her rugs outside on a warm sunny day to avoid buying new ones, and shops at the local thrift for bargains. Some of my clothes I've had for years, and a few stains on the pants makes them great for yard work. When I have to buy that expensive gift for someone else, instead of going to Macy's, I'm often found shopping online at BlueFly, or at my local Marshall's store, which gives me the same designer bargains for a fraction of the cost. I am found at the Save-A-Lot or Aldi bargain generic food stores instead of the higher priced Super Fresh or Giant. We stretch the pasta in this household if you know what I mean. I work two and a half jobs just to make ends meet, and sleep is lacking, like most of this country. I own my own business and make good money, but I don't spend it friviously, and most of the time, it's spend on the high cost of health care (one of the horrible perks of working for yourself.)

I'm sick of everyone blaming these banks and the government for taking advantage of consumers who applied and were given balloon (ARM) mortgages and have went into foreclosure because they could not make their house payments. I believe the consumer is JUST as responsible as the banks. Consumers were fully given terms of their loan upon closing.

Did they not understand in three years their $500 payment would be $1200 plus PRIME plus 3?

My reason for saying this is like any smart consumer, why not sleep on the terms of your loan before signing it? For every action, there is a reaction.

Here is a prime example.

I talked to a friend who was in this boat. We'll call him "James." When I asked James why he thought he could afford his payment of $757 for three years, then ballooning to $1459 for the remainder of the loan, he said, "Well I wasn't worried about it at the time. I figured I had three years to ride the wave and look for a second job. Things didn't work out that way."

If you couldn't afford the $1459 on the day you signed the contract, why did you sign it? James was happy that the bank gave him this loan that he didn't worry about saving money-instead he maxed his credit cards buying NEW furniture, putting in a pool for the kids, and extra money on landscaping. (He has those fru-fru weeping willow pussy willow trees that I only wish I could afford.)

Enter three years in-gas soars for the automobile, the Baltimore Gas and Electric company's rates skyrocket with a 75% increase (how is this legal I ask?), and county taxes soar also. James finds himself struggling just to make his $757 payment with all the additions, and try to pay down his credit cards are futile. One late payment and his credit card has upped his interest to 22% vs. 14% like her previously had. Money problems cause stress in the household. James is soon finding himself struggling to avoid foreclosure. His wife gets laid off. It's one big mess.

Now James is in bankruptcy, his wife left him and his kids are with her at her parent's. Not only is she mad her credit is ruined but that James put her in this boat. She also is going after him for beau-coup child support. Worse than his divorce or losing his home, now is his credit score, with a foreclosure, and bankruptcy, he blames the government and big banks.

How can he?

James didn't have the money to make that "balloon payment" when he signed on the dotted line and he knew it. Instead of thinking, "I better not get myself into that, some emergency might arise", he instead thought, "Sure, I'll worry about this later."

Perhaps he could have made it, if the economy didn't take a turn for the worse and he didn't spend frivolously along the way. He didn't need the pool right away or the fancy trees. A quick trip to Walmart for some mulch and a few marigolds would have spruced things up just fine. What of the new furniture? Ten thousand dollars worth plus recurring interest that he probably could have used hand me downs from both he and his (now ex-wife's) wonderful family until they could afford buying piece by piece.

Like most gregarious consumers, James took for granted that things would always be as they were. You can't do that in this ever changing world. I'm also tired of people who sit around and complain they don't have any money-but when offered a job they don't' want to work. Work three jobs like me and save. I ask you, why buy it if you can't afford it? Rip up your credit cards and save yourself, NOW!

Get rid of:

Fast food or take out - cook your own and save your money.

Cigarettes - what good are they doing? They are only making you NEED health insurance

Fancy Stuff - find the same 'used' items at the thrift store, second hand shop or consignments. Find top of the line unused clothing here too. Goodwill's now have Target buyouts!

Stress - walk around the block each day, you will feel energized and revitalized and not so tired. Not to mention it helps your overall health.

Your Gas Guzzler - now is the time to afford low payments on an Eco friendly car which will save you money and repair money in the long run

Your Spendaholic Friends - the ones who shop when they are depressed. Not a good group to hang with.

Your new clothes - get some SHOUT! And remove your stains from the old ones. Mix and match and stretch them a little bit farther.

Your old video games, DVD's, CD's - many electronic stores will buy these from you, if you aren't using them why not cash them in and help pay a utility bill? They also buy used game equipment.

Your unused junk - Sell on Ebay, or vintage on Etsy. Work your real job and a second job too.