Finances the Old Fashioned Way

People who went through the Great Depression are fond of saying that even though they were poor, they did not realize it, because everyone else was also poor. I grew up in a poor family and, unlike the veterans of the Great Depression, I knew I was poor and, furthermore, I did not like it. Our family lived, at times, in rental houses that I was ashamed to show others. There were times I wore clothes that other families were finished with. Rather than being able to buy hot lunch at school, my siblings and I had to take sack lunches because it was cheaper. I think you get the idea.

The Great Depression was a great teacher for my parents' generation and, by osmosis, for members of my generation. Unfortunately, the lessons seem to have been lost on the present generation of young people. The financial ways of the past seem to be old-fashioned. Why? Here are some thoughts.

1. First, we have defined the "American Dream" in such a way that it can encourage irresponsibility rather than responsibility. In the many definitions of the "American Dream" that I have heard, home ownership seems to be a key element. In my growing up years, home ownership was not the "American Dream" for my family, but just a dream. A home was one thing my parents simply could not afford, so they did not try. My wife and I have had three different experiences of home ownership or, more exactly, beginning to buy a home. We did not lose those homes; we sold them when we moved to new locations. We are currently five years into paying on a mortgage for a home that we began to buy when I was 63. By contrast, our daughter and her husband began buying a home shortly after they were married. Some can afford to do that; many cannot. The current mortgage crisis was built on the foundation of people being allowed to buy homes when they clearly could not afford them. For too many people, the "American Dream" has turned into the "American Nightmare." For me, the true "American Dream" is the freedom to reach my potential without undue interference from the government.

2. Second, our fascination with the present led to the loss of all the helpful lessons from the past. It is no secret that our culture is largely ignorant of and impatient with history. One of my favorite lines in the movie, "The Princess Bride,' is when Westley is matching wits with Vizzini, and Vizzini talks about classic blunders. The most famous blunder, he says, is "never get involved in a land war in Asia." For me, the classic blunder is to forget the past. I am concerned with the Obama administration that will be taking office in January. Their announced economic plans seem to betray an ignorance of basic economics and the consequences of certain actions-consequences that even a cursory study of history would make evident. In the effort to correct a failing economy, there is the danger that we will just postpone some painful realities to a later time rather than facing them now and moving on past them.

3. Third, the desire to live in the present too often leads to an attitude of instant gratification. I cannot count all of the young couples whose weddings I conducted over the years that have started out with the desire to have the things that their parents spent a lifetime acquiring. A favorite approach of people who went through the Depression was to wait till they had the cash in hand before making any major purchases. It is different today. When people who have grown up in comfortable surroundings begin their own homes, it is difficult to begin with less than they have become accustomed to having. Easy credit makes it possible to have what their parents have, but there may be a terrible price to pay sometime down the road.

4. Fourth, we live in an age when values have shifted from absolutes to relatives. Of course there have always been people whose lives and values revolved around themselves and their desires, but in the modern world, that has increasingly become the norm for large numbers of people. A society full of self-centered people is a recipe for economic disaster. The current bailout program is an example of how a program intended to help critical industries is attracting even companies who are not in trouble, but still would like a handout.

5. Fifth, if we have forgotten the past and its lessons, we have also forgotten how our actions will impact future generations. I heard a radio personality jokingly say that, in light of the government's hand out of billions of dollars to troubled industries, he had told his eight-year-old child to get a job! At least I think he was joking. There really isn't much to add to this point except to say that we are piling up debts right now that will affect the future tax burdens and the value of the dollar in the years to come.

So, whose fault is the current mess? At the risk of oversimplifying the situation, let me suggest three main "villains." First are parents who are eager to have their children avoid the painful experiences that they themselves had while growing up. Love is often defined as pampering your children and giving in to their every demand. Second are companies that target young people with enticing advertisements about products that no one really needs but that are desirable because "everybody" has them. Included in this category are easily available credit cards. Third is the government that in a desire to stay in office will say and do just about anything, even if the result makes no economic sense. Our representatives are often just as self-centered as anyone else, so we should not be surprised when their actions make things worse rather than better.

To sum up: if we're going to move beyond the mess in which we find ourselves, it is going to require that we make some hard choices and go through some difficult times ourselves rather than pushing things off on another generation. The first step is to look at ourselves honestly to see what we have done to create the situation. As you look at the political parties who are blaming each other rather than take responsibility, that first step may be the most difficult of all.