Fresh Finance: To Buy or To Save?

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So it seems we aren’t really digging ourselves out of the current recession just as quickly as we had hoped. According to the Labor Department, job losses for the month of June totaled 467,000.  The new losses pushed the unemployment rate up to 9.5% nationally.  That equates to 1 out of every 10 people eligible to work are without employment.  The rate for African Americans/Blacks and Latinos is even higher.  Upon reading such depressing news, I took a moment to ask myself if I was doing everything I could to shield myself from the current financial crisis? I know my answer, so now I ask you.  Are you doing everything you can to shield yourself financially from the pipeline effects of the recession?  I bring this point up for several reasons.  First, the only way to adequately deal with the impending stress of a recession is to possess an adequate savings.  Secondly, no matter how financially fit you think you may be, I’m sure there is room for improvement in all of our lives.

I’m an avid reader of the New York Times because I love the relevant real life news coverage as well the sense of elevation it gives me mentally every time I pick it up.  While doing one of my 15 minutes quick session a couple of days ago, I came across an article about the U.S. savings rate being at a 15 year high.  This is great news considering the savings rate was actually negative just a few years back.  The rate hit -0.05% in 2005 which was the first time since 1932 the year ended in a negative number.  The current rate is now 6.9%.  I’m sure your wondering how something measured in this magnitude could result in a negative number.  The reality is we as Americans have been living on credit cards and other available loans for some time now and we were spending a lot more money than we were bringing in.  Essentially, we were living off money we had not earned and were actually obligated to pay back with high interest rates.  A lot of these loans went unpaid which helped lead to the current recession.  As a result, people are now being forced to actually save money for fear of possible job loss and mounting personal debt.

This sense of insecurity has created a frugal and thrift oriented mentality among the American society where the economy is powered by 70% consumer consumption.  Less spending may be bad news for the economy but it is good news for you if you are one of the people who have adopted a more frugal lifestyle.  You are now able to save more money, pay off debt, and have more in the tank for an emergency drive over to the unemployment office.  If you aren’t one of these people, I suggest you become one immediately because statistics don’t lie.  A negative savings rate and unemployment equates to mental anguish.  I don’t know how you sleep at night.  It is estimated it could take at least 6-8 months for the average person to find full time employment if they lost their job today.  Would your current bank balance sustain you, your bills, and other expenses for this long?

I’m sure your own personal financial condition crosses your mind at least once per day.  There is always a decision to make financially whether it’s buying penny candy at a local convenience store or purchasing a vehicle.  Given the luxuries of our society, we are forced to make financial calculations all the time.  You would think with such a repetitive process, we would have mastered the art of money years ago but that is almost never the case.  For example, Eddy Curry, the famed New York Knicks basketball player, is experiencing financial woes despite earning over 35 million since 2005.  His home in Chicago is currently going through foreclosure because he owes an estimated $217,000 in back mortgage payments.  Also, he has been sued five times over the last 18 months for failure to pay bills at local clothing stores and popular jewelry outpost.  Now I can’t pretend to say I know his financial situation nor his amount of savings but it’s obvious he isn’t doing a good job leveraging his money.  Whatever your financial condition, there is always room for improvement.  Use a little more scrutiny the next time you decide to spend some money.

All I’m saying is raise or maintain your observance of what is happening in our society.  The effects of the recession will be felt for years to come and we all are feeling it in one way or another.  Take a moment to reflect on your own situation and think about saving a little more each week.  Having money in the bank is the most powerful tool in combating unexpected financial loss or hardship.  Also, take a minute to evaluate how well you handle your money.  Look for signs of inefficiency and repetitive mistakes.  I’m sure there is something you would like to do better. You have to take it upon yourself to identify it and correct it.

Let’s Get Wealthy!

Tagged as: budget, buy, Recession, save

Article by Kevin Breckenridge

Helping to raise the financial conscious of those who are consciously aware of the necessity to obtain financial freedom. Through education, exposure, open discussion, and action we can eliminate the financial strain on our pockets. Doing so will allow us to build the capital and asset portfolio necessary to truly enjoy our life as well as elevate the launching pad for our future generations. Follow me on Twitter @Legacieinmotion

Kevin has written 32 article(s) for us.