Spending Ourselves Into a Hole

When I first heard about this statistic, I was appalled.  I absolutely couldn’t believe my eyes.  In 2006, the average American saved a negative one percent of his/her after-tax income.  Please go back and read that statement again.  Not only did the average American fail to save a single cent, the average American actually went further into debt. 

This caps off the second consecutive year of negative savings.  Not since the Great Depression, in 1933, has our personal savings rate been in the red.  I understand that living isn’t cheap, but c’mon.  Our economy, for the most part, has been very strong over the past 12-24 months.  How in the world did we manage to go further into debt for the second straight year? 

Issues such as unemployment, rising medical costs, rising interest rates, and falling home prices can all be used to try to explain this horrifying statistic.  In reality, these aren’t new issues.  We’ve always had unemployment.  Medical costs have been an issue for decades.  Interest rates are very low on a historical scale.  The housing market has always been cyclical.  So why is it that, after going 73 years without a negative personal savings rate, we’ve have two consecutive years in the red? 

I would give my vote to negligence.  Our society is so plastic-burning, possession-craving greedy, that we are burying ourselves.  Instead of trying to save for our future, we are trying to live like rockstars today.  Am I just another prude trying to get on my soapbox against those of you who like to enjoy life?  Heck no.  Those of you who know me know quite well that I enjoy some of the finer things in life.

The race to retirement and financial freedom is a marathon, not a sprint.  If you start early and pace yourself, you will beat the pants off of the guy who waits and tries to sprint to the finish line. 

How much of your take-home pay do you save each month?  I would like to offer a challenge to every single person who happens to stumble across this post.  Whether you make $100,000 or $20,000, commit yourself to saving.  Set a goal for yourself.  Do a little quick math and determine how much you’d be willing to part with on a monthly basis.  Maybe it’s only 2%.  Do you have a 401(k) or a Roth IRA?  Even a savings account would be a start.  Once you know what amount you are willing to put away, set up a direct deposit that will take it right out of your paycheck.  If you can’t touch it, you can’t spend it. 

Although I’m just a regular Joe, I do know that you can have the best of both worlds.  Enjoy life and save for the future.  It can be done.  I realize that everyone’s situation is different, but I challenge you to at least try. 

Good luck!