Building Finances in an Unstable Economy

Billions of hard earned dollars from average Americans were lost in the greatest downturn in stock market history from 2000 to the end of 2001, some say maybe as much as a trillion dollars was lost. Then again in 2007 and 2008 we saw the markets meltdown again. Much of this money was lost due to bad information, some would say criminal, which was given out to investors. A great deal was also lost because investors really had no clue what they were doing, and therefore should not have been invested in the stock market in the first place. The use of credit is a pandemic today, causing millions of people to attempt to file bankruptcy (BK) every year. It is so bad the credit card companies lobbied the government and had the law changed to make it harder to file BK now. Every program you turn to on TV is designed to sell you something. Nothing on TV is for information or entertainment purpose only any more.

There are four foes or obstacles to building your finances: Madison Avenue, Wall Street, the Credit companies, and finally and most important, investor ignorance. These foes are all out to get your money, all of it. While millions of Americans lost their life savings, the investment houses were raking in millions. Merrill Lynch earned over $2 billion in profits for 2000 (Fugazy, 2001).

And what about Madison Avenue, are they really trying to steal our money? Jay Chiat, former chairman of ScreamingMedia, an Internet Company and partner in TBWA/Chiat/Day, one of the world’s ten largest advertising companies, in his article Illusions Are Forever, in essence comes clean on the subject of the media’s real agenda.

Advertising—including movies, TV, and music videos—presents to us a world that is not our world but rather a collection of images and ideas created for the purpose of selling. These images paint a picture of the ideal family life, the perfect home. What a beautiful woman is, and is not a prescription for being a good parent and a good citizen. The power of these messages lies in their unrelenting pervasiveness, the twenty-four-hour-a-day drumbeat that leaves no room for an alternative view (Chiat, 2000, p. 166).

This sounds a little like brainwashing, doesn’t it? It’s clear that the advertisers’ agenda is not to assist us, but rather to control us and our children; to focus our wants and desires in an effort to make us become purchasing robots. Let’s face it, like Pavlov’s dog that salivated on command, advertisers would have us buy anything they wanted whenever they desired so as to sell our buying to the highest bidder.

If you think this is not so, then you may never come out from under the spell. Why is it that we are called consumers? Consumer: a person or thing that consumes. Source Dictionary.com 2/2011. In reality that is all we are to corporate America, a means to an end. I think that we are more than that!

The first step in creating solid and stable finances in an unstable economy is to begin to consider our own personal, micro-economy, before we worry about the macro-economy. We as individuals do not bear the responsibility of singlehandedly getting the US Economy up and running again. Financial and fiscal stupidity at the corporate and government levels caused this. Let them figure this out for themselves. You and I have the responsibility to us and our loved ones to take care of ourselves first.

The first thing we need to do is create a budget that is realistic in relationship to our income sources. A prime part of that budget is savings. Save first and always before anything else. Get yourself used to living without the part you are saving. If you have a 401k where you are employed, maximize your participation. If your company matches any part of your 401k deposits, then you should be putting in enough to maximize the company’s participation. This is free money and you should do everything you can to get all of it. Your company may require what is called vesting, years in service, to receive their full part. Typically vesting is between 3 and 5 years but may be immediate.

Get out of debt. Do whatever you can to get out of debt, all of it. Debt is OK within reason for businesses, but individuals should stay away from it. I know this may differ from what some may consider sound financial advice, but I have worked with too many people who found themselves over their head when their income changed negatively with no way out. I have written about this before so I won’t belabor the point. However, I will say that you actually lower your standard of living when you utilize credit for any length of time.

Set goals. This is so important and can’t be ignored. There is a saying within the business world that says, “What gets measured gets done.” You need a measuring stick to determine if you are succeeding or not. You do this with goals. Work backwards by starting with long-term 3 to 5 year goals. Then take each goal and break them down to six month goals and then finally to thirty-day goals. By working on your thirty-day goals you will find that you’re on your way and you will accomplish your six month goals and finally your long-term goals. Rome was not built in a day, but it was built wasn’t it?

These three steps may seem oversimplified. However, I guaranty that if you do these three things you financial life will change for the better dramatically. Break free from the pack and build a stable and sustainable financial future and achieve your greatest dreams.