The lack of in the land of plenty:

It has been said that America is a land of plenty. It’s true that we have enough of everything but due to see that because of this economy we have become a lack of every thing now. People have a lack of confidence about their future, lack of trust in the job opportunity, lack of health care, lack of equity in their houses, lack of savings in their banks, lack of jobs (most specifically), lack of trust in their government, lack of vision and doubt in the young generation to catch up to their parents living standards, lack of affordable housing, lack of privacy etc. In fact if we look closely we are having a lack of crisis.

So how to we get rid of this lack of syndrome. Well the politicians should start this initiative by being truthful about our weaknesses and strengths without coating it in accounting gimmicks and having a hopeful future. We can’t wish for a bright future when we are burdening our future generation with high taxes and extremely high and uncontrollable federal deficits. If we can’t keep our country’s budget in check how can be expect people (who are already struggling) to keep their daily budget in sync.

We need a politician with a vision and realistic approach to the problems we are facing instead of having a utopian vision about a perfect world. Nobody is perfect and if we start from there we will be able to achieve something concrete.

Who is better financially?

You keep on hearing about how the Europeans are the happiest people on earth and how the Europeans (and Canadians and Australians ) have the best health care system on earth, but still have you realized that how many Americans have moved to these places. Granted there is and will also be migration from America to other places but how come we don’t see massive net migration out of the U.S. Although our health care system may not be the best or that we don’t have much financial cushion in the case of emergency but generally people are content over here. Most of the immigrants want to come to the U.S. even with our (supposedly) inferior services and unhappy people and happiness is a relative term too.

Although we may not have superior social services (like free health care, extensive vacation time, early retirement etc) but overall we are content with what we have and what we believe in. We can envy their systems but the trade off is low taxes on our part and the choice to choose our own health care and flexibility to change jobs and move around without bothering about different cultures and languages. As they say that the Grass is always greener on the other side of the pasture.

The necessity of financial education.

In this economy where all the conventional wisdom regarding assets and your liabilities has been turned upside down, the most important thing has been lost on most people. The need for financial education has become a crucial aspect of avoiding another disaster in our economy. The schools and states have been emphasizing Math and Science in order for the U.S. kids to catch up with the world but what about the financial education. Many of these same kids’ parents have fallen on hard times because of the lack of grasp of basic financial sense.

We can rely on financial experts and advisors regarding technical aspects of money matters, but the basic financial education should be the responsibility of everyone.

Basic financial education can be like the calculation on credit card and mortgage interest rates, what is debit and credit, how to balance your accounts, how to balance your monthly household budget and daily dealings that one do regarding their finances.

If we are not able to know what is going on with our finances, then how can we expect that other people will not take advantage of our ignorance? Although I know that basically human beings are honest, but you are setting yourself up for financial ruin if you feel that some person will not take advantage of your lack of financial knowledge and rob you off your precious and hard money.

Good debt vs. Bad debt-2

And we should even be talking about the lines of credit like the home equity line of credit. Although they can be good in that sense that people use to renovate their homes, pay college bills, reduce their credit card debt but nowadays it is very hard to get your hands on one since the housing market is very volatile, you will be hard pressed to convince banks that the price of your house is high enough so that they can award you a line of credit.

Now we come to the so called bad debt. It used to be that credit card debt was bad debt because of the high interest rates. But as I said before, the classification of good debt and bad debt has totally changed on its head. Now people are using more and more of the credit card to pay for their daily essential items and for these people this credit card is the only line of credit that is keep them afloat. The car loan is also something not a bad debt after all since the people need their cars to drive to places.

All I am saying is that the notion that certain debt is good and certain debt is bad depends upon how you see them especially in this economy where the survival of the household finances is the real issue. Although the classification as I pointed before will remain the same for financial advisors, it is up to the individual to figure out their own good and bad debt.