It only took the stock market dropping 7,000 points and an economic downturn, but Americans have finally started to save again. I’m no economist, but I think this is good. I understand that our economy is based on spending and right now people are not spending as much. Americans are nervous about the state of the economy so they are hoarding resources, paying down debt, and cutting expenses. Americans, having seen what happened to big banks and businesses that have made poor financial choices, are doing their best not to suffer the same fate as Lehman Brothers.
When the economy begins to recover and Americans once again feel more comfortable opening up their pocketbooks, the recovery will be made all the more swift as people who have put off purchases rush into the market to buy the “un-necessities” that they had been putting off. That is just my opinion, but it seems to make sense. Hopefully, it will also result is people being less liberal with their money when the recovery does take place. To avoid this situation happening again, we need to get away from the idea that debt and borrowing are a way of life.
My wife and I have weathered the financial storm fairly well. This is despite being a single income family with my wife working full time and myself going to school full time. Our mutual funds have lost a lot of value, but we didn’t have all our eggs in one basket (i.e. the stock market). Over the last two years we payed off all of our debts except for my relatively small student loans which are currently in deferment. Having two paid for cars and enough money in savings that we could potentially live for an entire year (it would be tight, but I think we could do it if we had to) without any income allows us to maintain our financial sanity in a world where the financial system has lost its mind.
My wife and I have been very blessed and are very fortunate to be in good financial shape at our young age. I thank God that I have parents who taught me common sense because when it comes to money, common sense is something many people are sorely lacking.