A few weeks ago, I gave my son a savings bond that his late grandmother bought him the year he was born. Nineteen years later, the bond was worth $135. My son decided to buy some skateboard trucks, wheels, and bearings, then went and got Mexican food. Then he did a curious thing: he bought another savings bond. While it's not the highest return, it shows he's got an understanding of saving.
I've never hid from our kids that we have bills. When I wrote checks, I'd get all the bills out and pay them in front of the kids as they did homework or watched TV. Now, I simply post the electric and water bills on the fridge after I pay them with Bill Pay. Life costs money.
Often the kids will tell me they want something, and then they'll say, "but it's too much money, right?" And I'll explain to them that it's all relative to need. I learned when we had our business that cash is king, and debt is a noose. The decisions I have to make are at times are a matter of balance. For instance, I'd love a new car, but don't want the tax, insurance rates, and registration fees that come with it.
In fact, when we bought the car, a young neighbor came over and said she really wanted one. My husband looked at her and said, "It took me 42 years to afford this car." Incidentally, eleven years later, I still drive that car.
This reminds me of the parent who wanted a Mercedes. Her kids wanted to go to the YMCA and the Boys and Girls Club after school, but she complained she couldn't afford it. I have no doubt she'll get the Mercedes, but her kids will languish at home, playing with MySpace.
I'm mindful that many are in debt because of low-paying jobs and not being able to afford basic necessities. Not every person in debt is there because of greed or keeping up with the Joneses. Some haven't had the benefit of completing their educations, while many had a downturn in business. Others got sick and had a high deductible or no coverage. And, as always, there are those times that everyone experiences: bad luck.
But the priority for the last two or three decades has been to acquire a lifestyle out of a glossy magazine. And who could resist when credit cards were coming in the mail everyday? When boards of directors voted to give CEOs exorbitant salaries and parachutes? Why settle for imperfection when you could replace things over the internet?
And why not buy that mirrored sphere for the garden, the very same patch of space taken care of not by yourself, but by a gardener for $120 a month? Why should your kid clean her room when you can pay a housekeeper $70 a week? Why drive an old car when you can lease a new one every two years? Want to see the world? Want botox? New clothes? "Here, put it on my card."
I wonder if the net effect of two generations who veered toward choosing a lifestyle over the life they could afford will be a generation with no concept of saving. I'm worried the debt we've incurred as a nation will only get larger when the economy picks up again. Instead of saving, everyone will start spending again. Credit cards will again be sent by the load through the mail. Ultimately, since one day this progeny will create policies in government, their spending may be no better than it is today. Might we be locked into the crush of an endless tango? A foxtrot which the band never stops playing as California slips into the ocean and Manhattan becomes another Buenos Aires?
Some will say my concerns are alarmist. But it's food for thought as we look forward to the sunrise on this sleeping economy.
Top image from Alter Now