A Hopeful Financial Future?

Humanity is hopeful.  We are indoctrinated into a life of believing tomorrow to be a better day.  In a sense, it will be by simply having the ability to enjoy it and learn the lessons in store for us.  After all, a life of believing only the worst would undoubtedly demoralize the population; therefore, we cling to hope because it is among our most powerful possessions. As we hear the news that the recession may be subsiding, there is more cause for hope.  However, there is pause to analyze if hope is what got us in trouble in the first place?

Alan Greenspan made some interesting remarks recently regarding the inevitability of another financial crisis.  In his words, the fundamental source of all financial crises is

“[The] unquenchable capability of human beings when confronted with long periods of prosperity to presume that it will continue.”

Are we too hopeful that the good times we enjoy will continue? Perhaps.

Over that last few decades we have amassed unprecedented levels of credit card debt while watching our savings dwindle.  Americans took on home loans at record pace and watched their investments grow exponentially.  Could this have lasted?  Unlikely; however, if we lived as if each day were insulated by our own prosperity, we may be facing very different circumstances at the moment. Regardless, we can analyze the situation six ways to Sunday, but it will not change anything.  All was can do is walk away with wisdom so we do not encounter the future Mr. Greenspan predicts.

Financial security is different for each of us; however, you can maintain a hopeful outlook if you have constructed a financial plan. The American savings rate has fallen, into the negative as recent as 2007, to record lows because of the hopeful nature that we will always be employed, grow equity and be part of the strongest economy on the planet.  While we play a grand part in the economy of the country, and the world for that matter, we must remain true to our personal economy.  Each of us must learn to manage our financial circumstances differently so we can enjoy the fruits of our labors and this wonderful thing called life.

Constructing a Spending plan, which takes into consideration building wealth through saving and debt reduction, can help us to become hopeful yet again. The American savings rate has been on the rise and reported to be approximately 5% at the end of the second quarter of 2009.  This coupled with the news that consumers reduced their debt by $21.6 billion in July has made me extremely hopeful. Will we continue on this path? Well, that remains to be seen.  It will take time to gauge if the lessons of the recession have resonated with the public. While many of us have become accustomed to living with a tightened belt, there are many more who suffer from the more devastating affects of our economic situation such as joblessness and foreclosure.  For those, we can only hope that they are able to embrace the promise of a new day and regain their footing.

For more information, or to speak with a certified credit counselor please contact Cambridge Credit Counseling at 800-897-2200 or www.cambridgecredit.org.

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