by Brad Homer
Today, April 1, 2008, it's no joke - The Independent declares "United States of America - The Great Depression of 2008." On a much more balanced note, The Wall Street Journal reports a strong first quarter for the stock market in 2008 along with a double digit decline in auto sales (worst in at least a decade.) Ok, so what does this mean, and what's to believe? And what does this have to do with debt management? And where do I fit in?, you may ask.
First of all, don't believe everything you read. Fear sells and newspapers know this. In this day and age (really, any day and age on planet Earth), it is possible to sift through all the news in the world and frame it as something good or something bad. Having said that, the article published in The Independent focuses on a 'record 28 million Americans now rely on [foodstamps]' - that's a little less than 10% of the U.S. It also mentions the unemployment rate nearing 5% - a relatively low number, unless you're in the 5% (during the peak of the Great Depression of the 1930's, unemployment reached over 25%) Calling what we're in the Great Depression of 2008 will probably sell a lot of papers, but we're not there yet. The Wall Street Journal in this instance was much more objective and balanced reporting on a great number of different financial indicators and the influence of debt on all of them. Some very good news, some not so good news, and everything in between is what the WSJ seems to be reporting today. So again, where do you fit in? And what does debt management have to do with it?
Improper debt management, it is almost universally agreed, is what created the current financial crisis being felt and handled with varying degrees of success around the world right now. Not every financial sector is equally affected, but every sector that is affected got there through ill-advised debt; high-risk debt at high interest rates that was unwise for both lender and borrower - credit cards, sub-prime mortgages, and other debt. If you spend much time on the Internet researching this topic of debt management and the current financial state of the world, you will soon become overwhelmed with ideas and speculation about everything from gas prices to conspiracy theories. So, I won't get into that here. I want to talk to you about you and me and every other person we share our lives with. What can we think? What can we say? What can we do?
First, if you're feeling a lot of fear right now, get it under control. The Great Depression of the 1930's was fueled by fear first - on a personal and on a global level. If you've got a lot of fear of debt, use this opportunity to get *out* of debt. Don't waste a lot of fear and bad feelings on debt. As much as possible, positively think about and plan your way through and out of debt. It's very hard to take positive action towards debt management and maximizing income opportunity when you're feeling fearful. Take steps to take more and more financial control over your life. When you talk to others about money, don't talk about your debts unless it's with your immediate family and you need to get agreement on a debt management plan. Talk about finances constructively with your spouse, without negative emotion, in a business-like manner. With optimism, talk about and focus on ways to increase your income and to maximize a financial buffer for your family. If you haven't created a budget, now is the time. If you haven't created a rapid debt repayment plan, now is the time. Remember that everyone's situation is unique and it is ultimately up to you to decide the right course of action to take with your finances.
So are we really in a time of great peril? Every situation in life has potential for a negative and a positive focus, including today's global financial situation. You probably have an old grandparent or uncle or two that lived through the 1930's. Many of them don't have much in the way of money problems today. Why? They learned then what our current time may be teaching us now, if we let it:
Borrow as little as possible (under the best terms possible) and budget your money.
You can create a rapid debt repayment plan now using the free Debt Management Wizard on this website.