Don't Buy Stuff You CANNOT Afford

Apparently, President Bush's economic stimulus package is near finalization.

Here's the bottom line:
-single, making less than $75,000 = money back
-married, making less than $150,000 = money back
If you fall outside of these guidelines, you should supposedly have enough tucked aside to stimulate the economy out of your own pocket.

While the amount per individual/family will undoubtedly depend on a variety of factors, do YOU think this will prevent the economy from falling into a recession? The sad truth is, probably. Generally speaking, those in lower tax brackets will spend it faster, thus having a greater positive impact on our slowing economy. Those in higher tax brackets will save the meager $300, or use it to pay down some existing debt - which, let's face it - does nothing to stimulate economic growth.

Even Congressional Budget Office Director Peter Orszag agrees:
"For any given pot of money, the more you target the lower-income, credit-constrained households, the bigger the bang for your buck."

Why is this the case? A significant 43% of Americans spend more than they make each year. The average American household has over $9,000 in credit card debt. We buy houses we can't afford or take out second mortgages for things we don't need. We can't control our spending habits. It's the "I owe, I owe, it's off to work I go" mentality. Then what happens? Corporate America "trims the fat" to appease shareholders. The debt-laden American goes on unemployment - possibly filing for Chapter 7 or 11 - draining government resources to pay for things they couldn't afford to begin with, and certainly can't afford now.

In the meantime, that $9,000+ in credit card debt doesn't get paid down, but continues to accrue an average of 20% or more interest - while the typical American just adds more to the balance. Teaser mortgage rates expire and all of a sudden you're stuck with a mortgage payment that's double what you initially were paying. On a whim, you refinance - but only to find that your house is worth LESS than it was 3 or 5 years ago. Or worse yet, you go into foreclosure - but not without putting up a fight and blaming "predatory lenders."

Whatever happened to paying bills on time, only buying things you can afford, taking responsibility to understand your own finances, and living within your means? Even Chris Parnell gets it.

-SM