The opinions stated in this article are solely those of the author and not of The Davis Clipper.
Several weeks ago my column (“Reagan’s Drivers are Drunk”) brought about the following response from a reader: “You’re right that people want more government spending but less taxes, and they can’t have it both ways. The difference is that the government recklessly spends while people tend to live within their budget.”
Sorry, but the government is not alone in spending more than it takes in. People do the same thing Р and I’m not just talking about college students and their average $27,000 school loans.
The Employment Benefit Research Institute recently reported a surprising result. The percentage of senior citizen families (with a head of household aged 75 or older) carrying debt rose to 38.5 percent in 2012, and of these families, 2,400 had a mortgage or a housing loan. It’s even worse for younger senior citizens; more than 40 percent of families ages 65-74 had debt tied to their home.
Obviously, the “golden years” have changed. The traditional retiree was supposed to be virtually debt-free, having paid off his or her home after a lifetime of work and “downsizing” to smaller dwellings in later years.
What has changed? Employment lay-offs during the recent recession can be blamed for part of it, but I suspect the biggest culprit is the financial illiteracy of older adults who should know better. If you turned 55 and wanted “more and more,” desiring the nicest automobile on the block and the newest in electronics, it’s no wonder your finances are troubled. Keeping up with the Joneses comes with a price.
The parents of the baby boom generation saved money and avoided the frills. They tried to save a little from every paycheck. They knew a giant house didn’t equate to happiness or financial security. Somehow, this wasn’t always passed on to their children.
Financial wisdom is not nuclear physics. In fact, it’s fairly simple.
Pay yourself first. Attempt to save a portion of your earnings, even if the amount is small.
Use a credit card wisely. By paying off your balance within 30 days, you are effectively getting an interest-free loan along with the additional “rewards points” for restaurants or vacations.
Open up a Roth IRA. Accumulate tax-free money.
Take advantage of employer 401k savings plans. Ignoring company contributions is like walking past a $100 bill lying on the street.
And at any age, separate your wants from your needs. You may want a BMW, but only can afford a Camry.
It’s pretty simple stuff. If heeded, a 75-year old would be on the golf course or on the cruise ship, not staring down a mortgage payment while criticizing the government for spending beyond its means.
Blame the government if you wish, but don’t forget to look in the mirror.