Pimp Your Finances

Insanity is doing the same thing, over and over again, but expecting different results.

I’ve been pushed around recently, and I’m tired of it. Responsible folks like myself are getting a bad name in the press. I’ve seen quite a few articles describing how people who save money are bad for the country. 

The latest insult came when I read something that explains How Savers Could Doom the Economy. According to the article – and the paradox of thrift - people who are more responsible in their personal finances are actually sabotaging the national economy. How selfish of us!

The line of thinking works something like this:

• If we, as consumers, cut back on spending in a recession, it only further hurts business. Sales continue to decrease, and as a result, so do stock prices.
• However, if we choose to increase spending again, business grows. Stock prices increase, and the economy expands again – hopefully averting a recession at the last minute (in a true Jack Bauer-like fashion).

What is your credit rating? I SAID WHAT IS YOUR CREDIT RATING?!?

I’m not an economist, but I see a few problems with this simplistic line of thinking.

First, it assumes that spending money can somehow solve problems that were caused by irresponsible spending.

Wasn’t the current economic downturn caused by the sub-prime mortgage crisis? People borrowed more than they could afford, assuming that the rising real estate prices would increase enough to make up for it. It’s was a fool’s gambit, and lenders were all too willing to play along.

The second problem with blaming savers is that it assumes businesses and consumers are obligated to act with the best interests of the national economy in mind. Not their self-interests.

Before we go any further, ask yourself this: do you think businesses do what’s best for their bottom line, or do they sacrifice themselves for the sake of the greater good?

Savers have become a scapegoat, when by all accounts it makes sense to spend less right now. Credit is tight and the job market is weak. Why shouldn’t we try to pay down debt and build an emergency fund?

I’ll take it a step further, and argue that savers are good for the economy. We’re thinking about long term success and prosperity. We won’t be late on our mortgage, miss credit card payments, or declare bankruptcy. We’ll pay our debts and live a sustainable lifestyle.

So what should us savers do to… well… save face? I propose that we refuse to take decisive action.

I’ve heard that there are some stock brokers demanding a new tea party. I say we follow their lead – kind of.

I say we refuse to buy tea, and then refuse to dump it in a major body of water. After all, we’re responsible. Why should we waste our money like that?

I’d rather show defiance by saving even more.