Living Beyond Your Means, is a Means to being an Idiot

By: Jennifer Lawson-Zepeda

Wealth Building

My best friend has a lot of latitude to talk. She owns a home that most Americans would give their eye teeth to have; and yet, she drives a 1990’s van. And her husband still drives a 1989 Jetta that he repairs every time it needs it. She’s got investments up the ying yang, both here and in Costa Rica; and together, her husband and her make a VERY HEALTHY income. So it’s kind of a running joke between us about her husband’s car. But they don’t piss their money away on vehicles! They drive very modest used cars and put their money where it counts.

My friend and I learned that as kids, when both of us bought our first showy cars and realized car payments are for suckers.

The subject came up; because, I was telling her that we were buying a used SUV. Something to simply get us from point A to point B.

I talked it over with my fiancée, and he agreed. We don’t need a fancy car right now. We have been looking at real estate to cash out; dealing with his inheritance issues; and planning our retirement. And we are realizing we should have quite a nice, comfortable retirement together, if we don’t spend it on ridiculous things.

Ghetto Fabulous

I read one of the comments on my blog and realized that an old boyfriend was reading my blogs and placing comments on them. This person is a perfect example of what I’m talking about when I mention the words, Ghetto Fabulous.

When I met him, he had just leased a new BMW that he really couldn’t afford. Especially on the income he made working as a glorified security guard.

So, he was forced to live with his parents at the age of 45 to afford the payments. It was really quite comical, because he freaked out whenever I closed the passenger door to this BMW; as if he thought the car might fall apart from normal wear and tear. Yes…he was really THAT gauche!

Then, I thought of an old friend who always purchased late model SUVs with every bell and whistle. Yet, her and her husband couldn’t afford to pay rent most months on time; barely could afford to eat; and were always borrowing money from others…including me. All of this, in spite of the fact they dressed very stylishly and had two nice cars with high payments.

Today’s Economy

In today’s struggling economy, there is nothing more ridiculous a person can do than make high car payments. Especially, with the failing Euro looming over American economics. Because, most economists are betting the spiraling Euro WILL affect the dollar and the economy will go in the tank, once again.
Europe’s debt crisis has many American investors closely watching the euro. Since the euro can impact U.S. investors, Americans should be aware of the euro’s worth.
Chuck Butler, president of EverBank World Markets and author of The Daily Pfennig, explained that if the euro is trading around $1.2950 (as it was on May 9, 2012), 100 Euros would be worth $129.50. If the euro falls 1 percent, the resulting value in dollars would be $128.21.
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The smart money is on those who are strengthening their financial portfolios, paying down their bills, getting their credit scores up, and ensuring they have enough savings to tide them through any potential hard economic times or job losses, in the future.

But the interesting thing is that car sales are WAY up! Yes, it’s true! Car sales are up at least 14.4 million.

Lacey Plache, chief economist for the automotive Web site, said U.S. auto industry sales are being driven by growing consumer confidence and pent-up-demand.
The average age of cars that consumers are trading in when they buy a new car is now more than six years old, the oldest since 2007.

That is evidence that consumers who have been holding onto their vehicles are now eager to buy a new car even though the broader economic recovery has been slow.
“Because of the strength of pent up demand…we have people who are recession weary who are ready to go out and buy new cars,” Plache said
Also, the average credit score of people buying new cars dropped to 761 during the fourth quarter of 2011, Plache said, down from as high as 776 in 2009.

“There is a whole segment of people out there who simply haven’t had access to credit over the last few years,” she said. “I fully expect that we will see…that average credit scores will continue to fall.”
(Source: U.S. auto sales will increase 12.5% in 2012, economist says)

Which goes to prove there are a whole HELL of a lot of incredibly stupid people out there; and also why America has such high national debt. Quite simply, we are a silly nation of people who seem to have our head firmly planted in the sand, when it comes to economics.

Punch Drunk Consumers

Most American consumers remind me of a punch drunk boxer, reeling around after getting slammed in the head; trying to recover, only to take the next punch that will send them into the inevitable TKO.

And that’s how we’ve always been; because our banks have convinced us that we can rely on credit, instead of responsible spending and savings. But what happens when the bottom falls out?

A new wave of unemployment and homelessness.

I know it won’t be me or mine. I’m setting up fail safe measures with a new deliberate effort. Why? Because, I know that when things topple, those of us set up to absorb the economic problems of our country will be the first to recover.

If any of you can’t see that, you are doomed to write blogs like my past blogs on homelessness. I pity you.