Its time we understand Thrift
I was about 13 years of age when I first saw a credit card. My cousin who worked as an executive for a multinational bank owned one. It seemed so cool and owning one was seen as a status symbol back then…. Cut to 2008 everyone I know owns atleast one now… from college students to big executives…
The concept is simple you spend the money you haven’t earned as yet… Basically spend your future earnings today… Hmm just wondering if I we do that… what will we spend in the future?
Today the world is in that future…. Having spent their future earnings banks, organisations, people find themselves bankrupt …
We are seeing the end of an age in which a person who is 25-27 year old can own a home, own a car and own all luxuries of life…. This was not possible 10-15years ago… In any part of the world… but today it is and not only in USA, Europe, Australia but also in India , China, Brazil etc….
Did the world’s economy suddenly become so good that a 26 years old could earn so much to buy a house and a car. No it did not… The world economy did not grow significantly faster in the past 10-15years than earlier…. But what grew was our addiction and usage of credit.
Instead of saving for things we wanted… we choose to get them now on credit… Taking a loan or credit was considered taboo in days of my father… But today it is the way of life…
It is about time we change this addiction for credit because if we don’t we are in for a rude lesson in knowing what is thrift.
The concept is simple you spend the money you haven’t earned as yet… Basically spend your future earnings today… Hmm just wondering if I we do that… what will we spend in the future?
Today the world is in that future…. Having spent their future earnings banks, organisations, people find themselves bankrupt …
We are seeing the end of an age in which a person who is 25-27 year old can own a home, own a car and own all luxuries of life…. This was not possible 10-15years ago… In any part of the world… but today it is and not only in USA, Europe, Australia but also in India , China, Brazil etc….
Did the world’s economy suddenly become so good that a 26 years old could earn so much to buy a house and a car. No it did not… The world economy did not grow significantly faster in the past 10-15years than earlier…. But what grew was our addiction and usage of credit.
Instead of saving for things we wanted… we choose to get them now on credit… Taking a loan or credit was considered taboo in days of my father… But today it is the way of life…
It is about time we change this addiction for credit because if we don’t we are in for a rude lesson in knowing what is thrift.
Comments
Our usage of credit is probably half the problem the balance half are the banks who gave credit easily. On the same note taking a loan or credit in olden days was not easy as the banks would not lend so easily, was a nice check and balance.
In both cases two sides of the same coin. Governments are not thrift conscious these days. They just owned Fannie & Freddie that lead to collapse of mortgage market. Now with new equity they own almost all the big banks - interesting world to be in?