In early July there was an article in the Morning News about the ability of people in different earning brackets to withstand a $1,000 emergency. It stated that only 50 percent of people earning $100,000 per year could absorb this emergency. This information, assuming it is true, was appalling to me. This indicates to me that these people are financially irresponsible, living above their means and trusting luck to keep them out of trouble. I was taught 60 years ago that it was prudent to have savings equivalent to at least one year of earnings.

In the July 7 edition of the Morning News, there was an article in the Business section titled, "If payday loans go away, what replaces them?" How about common sense? How about classes on finance, budgeting and interest? In the 1950s these things were taught in elementary school. How about living within your means? Debt is a killer. Why would a reasonable person want to spend his money solely to temporarily use someone else's money? In the case of payday loans the interest is exorbitant. Once you are in debt, it is very difficult to extricate yourself.

On July 9, an article on the Business page of the Morning News said that consumers increased their borrowing in May with credit cards by $18.6 billion. Consumer borrowing in the three months ending in May increased by $61 billion. On Nov. 8, an article on the Business page of the Morning News stated that consumer borrowing rose another $19.3 billion in September. The Federal Reserve said that outstanding consumer debt is $3.7 trillion. With this mentality among our citizens, it is no wonder that our national debt is approaching $20 trillion.

For most people, the only prudent item to go into debt for is housing. The secret is to buy an inexpensive house with a short-term mortgage so you can build up equity rapidly. Years ago these houses were called starter homes. When you have acquired enough money, then you buy a better home. By living frugally for a few years when you are young, you can set yourself up to live well for the rest of your life. This was taught in school when I was a young fellow. However, not everyone absorbed this lesson.

In 1964 the first Pontiac GTOs and Ford Mustangs came out. I was a third-class petty officer in the U.S. Navy. Some of my contemporaries were re-enlisting, using their re-enlistment bonus to put a down payment on one of these cars and then making payments. I continued to drive my 1955 Studebaker and invested my money. In 1967 I made a bundle on a speculative stock. In the spring of 1968 I bought a brand-new Ford Fairlane 500 coupe for cash. My contemporaries who had bought new cars in 1964 were just getting them paid off. The cars were now four years old, and the owners had no cash because they had been paying interest and total coverage insurance and had no money to invest. I had a brand-new car and enough cash that later that year I bought my starter home.

Each person has a different standard for living and has the right to live as he sees fit. For those who want financial security, do not get pressured into buying things just to keep up with the other guy or to try to impress others. Very few things are true necessities. Get educated, work effectively, stay out of trouble, buy frugally, invest wisely and you can have a very enjoyable and worry-free life with no debt.



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