by Friends are crumbling with ruined savings and lost pensions. Strangers are in distress. The world is bleeding money. A good friend of mine, a hardworking, responsible widow in her late Sixties, told me yesterday that she’s ruined. All her money retirement money was lost in the slow decline of the financial markets. She spread out her risk, but she still got crushed. She has some savings left, but she cannot afford to live the quiet, easy, life she wanted before she dies.
My friend didn’t want pity or even a soft shoulder to cry on — she just wanted a single answer to this question: “Why did I bother?”
I knew what she meant without her having to say anything more.
Why bother saving?
Why be financially responsible when those around her were not?
Why did she put away her money for her old age instead of spending it as freely as she earned it throughout the long span of her life?
There’s a certain “of the moment” power to her argument: If you live hand-to-mouth, if you pay-as-you-go if you live paycheck-to-paycheck, you will never suffer the sort of devastation she is currently experiencing. You live a life of carefree pleasure. You buy whatever you want exactly when you want it. There is no delayed gratification. Every want and wiggle is filled and scratched and you care not for tomorrow because today might be the end of your life.
“I wish I’d been less responsible. More wild,” she told me as her voice trailed away, “Had some fun instead of worrying about the rainy day that’s pouring on me now…”
I took her point. I felt for her. All that money, all that effort, all that sacrifice was gone and there was no hope for recovery. She bought into the idea of a safe investing formula and ended up poorer for the effort while those above her became richer.
The United States better find a way to repay these loss-hungry, small-time, investors in the American dream, or there will be even harder times ahead for everyone. The nation relies on savings and investment and if an entire generation — born to serve and save – now take to their deathbeds the lonesome lesson that none of it was worth it, then every generation after them will rightly be wary of banks and the stock market and the very government entrusted to provide for their welfare and to honor their genuine, humble, interest to just die in peace.
No democracy can survive if inherent trust in the system becomes a ferocious monster that eats away good hearts and swallows whole every moral covenant.
Sometimes I wonder that myself but – given the lump sum I have to pay every month to get myself out of the financial mess I caused myself a few years ago, saving hasn’t really happened for me. 🙂
How did you get into a financial mess, Gordon?
I wonder if the idea of “saving for a rainy day” will be lost on future generations?
Threats like this do no good to calm elderly and future fears:
http://www.nytimes.com/2009/01/08/us/politics/08obama.html
If Obama goes after Social Security — he’ll flop in office faster than Clinton did with his whole “Gays in the Military” fiasco!
Basically I spent more than I earned and did it for far too long – and relied on credit cards, and watched as my payments to companies had smaller and smaller impacts due to skyrocketing interest. Then I “took charge” and now the interest rates are low and I am actually going to be credit card debt free by the end of next year, G-d willing.
I feel for you, Gordon. Credit cards are a real problem. The average credit card debt of every American is currently $16,000.00USD. That is an incredible amount to carry each month that most will never be able to pay off.
Mine was nearly 50K in June of 2006.
Now it is January of 2009 and it is closer to 20K.
I feel that “taking charge” has done wonders.
Gordon —
Did you get any financial help or advisement?
Did you renegotiate with your lenders to get a better interest rate?
I signed up with an organization that specializes in this sort of thing. They negotiated with all of the lenders and gave me a fixed amount to pay every month. There are lenders that had me paying 14% interest that now are charging 2%. I have made references to their name in the last two comments 🙂 I couldn’t have done it without them.
I’m glad to know it is working out for you, Gordon!
Were you tempted to file bankruptcy?
Not at all. I know that haunts you for years later. Also I felt it was cheating.
You were smart to get a handle on it early, Gordon. I’m sure you’ll be excited to celebrate emancipation day!
I will hold my hand up to not being a long term saver.
After I saw what happened to my parents savings and income over the years – how they had to pay full rate for their care fees and the way their pension funds were robbed and taxed.
First my father – then my mother – I just thank goodness my mother passed before this latest crunch – she still had enough of her wits about her to understand that this was a very poor financial climate and she would have been overly worried/stressed by the whole situation.
Luckily she never had to know she ran out of money – she was never told about the £85000 charge on the house that has to be paid if/when it is sold.
The only thing I save for is my annual holiday – if I can afford it. The rest is pay as I go – some months we eat steak – others it is soup and toast!
Nicola —
I appreciate your honesty and I have always been of an “of the moment” person, too. Posing for the long range never felt right for me or many of my peers. I think a lot of it has to do with the performance aesthetic and the creation of things. Most of the people I know that actually have a savings account are not in the entertainment industry or the arts business.
Hi David,
I truly feel for your friend, the frustration and despair is a natural outcome of this financial menace.
I am not a good saver either but fortunately I never go overboard – that helps.
Saving for rainy day…not me…the tax structure makes me force saving.
How does the tax structure force savings, Katha? Is it because it isn’t automatically taken from your pay? Are you required to make quarterly tax payments?
Hi David,
What I meant was forced investments to save tax actually – no, I am not required to pay quarterly tax.
Oh, I understand now, Katha! That’s a very smart plan to invest your money to avoid losing it as fast as you earn it. Our private portal is now open for business! Let me know if you have any trouble logging in.
I have come to the conclusion that life is for living – I know far too many people who have spent it working (at the expense of living) and who have died before they can claim any of their hard earned savings.
What my parents had to pass on – was focused on my kids education – with my agreement. My kids know that was both their grandparents and their mothers inheritance to them – they have no false expectations of getting anything else. They may get a surprise – who knows – but they are NOT banking on it.
I think that’s the only way to live in a modern world, Nicola. If you worked in the 1940’s and found retirement in the 1970s or 80s, then you likely did some saving and ended up having a good life. The world changes.
We no longer live in a world of social guarantees.
The danger is that the system is set up to only help the most desperate and needy — but the “fine” and the “well off” are realizing now that they are getting left behind and they are becoming more and more comfortable with lowering their standard of living using “any means possible” to qualify for that social welfare and that will end up breaking the back of the current system.