WE'RE ALL MIXED UP

Has anyone noticed that both as individuals and as a government, we can’t seem to get out of debt?  Well if you agree with that, perhaps I can help us all figure out why.  You see, we’ve got saving and investment all wrong and quite frankly we have it completely backward.  Don’t believe me, consider the following.

Yesterday I took my granddaughter to purchase a winter coat and as we were checking out, this very nice young lady offered me a credit card saying that if I took it that we would save an additional 30%.  When I explained that I didn’t want the card, she continued to ring up the coat, and as she handed me the receipt she politely said thank you sir, your coat was $83.45 and you saved $91.00 today by shopping at Kohl’s.  As we were leaving the store, my granddaughter said wow papa, you saved almost a hundred dollars, to which I replied “honey when you spend money, no matter what they say, you didn’t save”.  I remember several years ago a couple of friends  went shopping on a Saturday morning and when they returned shopping bags in hand, I asked  them, “exactly how much did you guys spend”; to which one of them replied I spent $800.00, but I saved $500.00 because it was all on sale.  Now I don’t know about you, but to my way of thinking if you spend $800 to save $500 that’s not saving.  Hopefully if you use this logic, you’re purchasing things that you need and not just your wants, but either way, you’re not saving!

Our government is no better!  Has anyone besides me noticed that when the government talks about saving money, they really mean that if they had planned a spending increase of 3% and they reduce that percentage to 2%, they say their saving us money.  Now once again, I don’t know about you but a saving would actually be spending less, not spending more and passing off a slight reduction in the increase as a savings.  If you have folks who don’t know a true savings from a reduction in spending, is there any wonder that our budget never gets close to balanced? 

For years I’ve heard people say that their home is their largest asset.  Now let me see if I’ve got this straight, I own a house that let’s say I agree to purchase for $500,000.  I put down $100,000 and the bank agrees to lend me the remaining $400,000 if I agree to pay them 5% interest for the next 30 years.   If I stay in the house for 30 years, I’ll pay the bank $772,920 which comes to almost double what I borrowed 30 years earlier.   Some asset!  If mobsters were charging that kind of interest they would be convicted of racketeering and put in jail for 30 years.  Now I’m not saying that a bank lending money to people who want to buy homes is a bad thing, I’m simply saying that people need to see their homes for what they are, and that’s a Liability, not an asset!  Unless we can figure out how to get income from our homes, we need to stop calling them investments!

I’m Just Sayin