When Will We Learn Our Lesson?

Posted Friday, August 5th, 2011. Filed Under Financial Empowerment

Whether it is a person or country we all have lessons to learn. Awareness is the key to growth. When our lessons are not learned we continue to experience them until we sit back, take accountability and responsibility and make different choices. Lesson learned.

As I have said, the world is in a financial mess. Choices have been made in the past which we are now seeing the result of; Cause and Effect.

It is astounding to me that the U.S. has taken the stand that it has in it’s most vulnerable state. The U.S. is in crisis yet when it needs to come together it refuses. It behaves like a couple quibbling about the need to be right. Right and wrong — it never solves anything. I always like to work to a win/win.

Everyone wants to blame Obama for the state they are in. This crisis has been the result of 20+ years of government and in particular, George Bush Jr. His decisions are what you are feeling right now.

So imagine the U.S. is your child what financial advice would you give it??

There was a great article in the National Post, written by Jonathan Chevreau. His tag line says, “Manage money better than Washington did?.

If my child had accumulated credit card debt, for instance, the last thing I would allow is for him/her to go to the bank and extend their credit so “it appears” that they are ok; raising their credit limit is not an option for all it does is allow my child to get into more debt. That is exactly what the U.S. did. It extended it’s credit. This is a bad decision and one that cannot be sustained. Debt still needs to be paid off and the more debt you have the more interest you will pay.

So what would I do? I would have my child sit down and look at what they are spending their money on. We would look at how much money they bring in and after tax, what is left to spend. You cannot spend more than you have and if you do, this can only be sustained for so long. I would figure out a plan to reduce their debt and more importantly the amount of interest they pay. Credit cards carrying around a 19% interest rate. If you are just paying off the interest then you are not even getting to the principal, the original amount owed.

For those that own homes, buy within your means and accelerate your payments so that you pay this off quicker. We pay our mortgages in Canada with after-tax dollars. Therefore for every dollar that you pay you need to earn two dollars.

There is always help and you are never too far along in your debt. Consider your options. For some it may be declaring bankruptcy which carries with it penalties – this will be on your financial record for 7 years. You will likely not be able to have a credit card. What you can do is use the pre-paid ones and then slowly build up your credit again.

The U.S. was able to extend it’s credit because as a country the interest it pays is less than that of a credit card. Regardless, the people of the U.S. better start coming together. There have been talk of raising taxes for the wealthy. Money has to come from somewhere. For many years the rich have been able to get away with paying little to no taxes. At what price are you prepared to let your country go down the tube? Look at what is happening in Greece, Italy, Portugal, Spain and Ireland?? In Greece paying taxes was an option and now the country is in huge financial trouble.

Now, the markets have plummeted due to fear. We have the ability to turn this around just as we have had the ability to cause this financial mess. Life is all about choices. Better choices need to be made!

Stop blaming and take responsibility for your own finances. That is where we must begin. Then force corporations and countries to do the same for they are just the collection of people.

The time is now!

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