It’s Easy Being Green

A new study out this week is showing that the post-Christmas rush to spend gift cards is apparently non-existent. It’s a sign that everyone is dealing with a continually weakening economy. Our nation’s biggest retailer, Wal-Mart, has been closely watching the way people have been spending their holiday gift cards this month. It turns out people are either holding on to them and saving them for harder times or they’re spending them on basic necessities.

Wal-Mart has indicated that most gift card purchases in their store are going toward food staples like pasta, cereal and canned goods. Even other major retailers are seeing similar trends. Upscale clothing retailers are seeing more people spending their gift cards on socks and underwear then on that new $100 pair of jeans. People are walking right past those plasma screen TV’s, video games, CD’s and other superficial items and picking up the necessities.

This sign doesn’t make me worried. I feel like we’re in a good position to weather a recession should our country really slump into one. We are always stocked up on the basic food items and are continuously looking ahead. What do we need and what do we really need to not spend the money on? One thing we could do better is save. It’s hard right now at this point in our life to really shunt money away into another account. Our retirement savings has been underway for the last 5 years now and we do have about $2,000 in a savings account that never moves. But, I still don’t think that’s enough and would like to have a bigger pad.

In the meantime, I think this latest economic trend shows consumers finally realizing what’s important and what isn’t. You need the basics to live. All the rest are just accessories of our lives that for some wild reason, we feel like we need to drag around with us. I’m glad we’re getting a bit of a reality check. I don’t think our nation has really had to scrimp or save for awhile. While I’d like to think it will get people into the habit of planning financially and making hard decision on what they need and what they don’t, I know it will just return to the same old consumer economy a few years down the road.

If you haven’t already read my post below on the Mortgage Meltdown and Credit Crisis you should.  This is an illustration of what amazes me about American’s current financial status and the desire for more.  We were watching TV this morning and an ad came on for “cashcall.com”.  They were advertising small consumer loans, presumably to pay your house payment or other items you’ve already fallen behind on like bills and stuff.  Then, the fine print pops up for less than one second at the end of the commercial.  I was able to freeze frame it thanks to my DVR and took a picture using the digital camera:

It’s a little hard to read but let me break it down for you.  The fine print says a typical loan of $2,600 has an APR of 99.25% with 42 months of payments at $216.55 per month with a $75 origination fee.  If you break that down, you’re paying $10,070.00 for the whole loan spread over three and a half years.  That means you paid $6,495.00 in interest alone on a $2,600 loan.  That also assumes you don’t make a late payment or get hit with other fees in the process.  What a bunch of crooks!  I hope consumers steer far away from companies like this!

You’d have to be like an ostrich with its head stuck in the sand if you haven’t heard one bit about the current state of our economy. Houses are foreclosing at record rates, new homes aren’t selling and there’s already an 8 month glut of unsold homes sitting on the market. Add to that the staggering amount of debt a lot of Americans are carrying around and the situation begins to take on some epic proportions.

I just finished watching an interesting documentary called “Maxxed Out“. While I was unsure about it during the first ten minutes, it actually turned into a pretty interesting piece looking at the real impacts of our love for credit. The impacts are extremely sad and disheartening and your left feeling like everyone is just preying on people, waiting to make a quick buck off of them. How did we ever get to that point where people became so engrossed with greed that they will absolutely crush the people underneath them to better themselves? Some would say it’s simply survival of the fittest. Luckily, I’ve never been too wrapped up in the rat race. I was for a time but quickly had a thought about two years ago that it just really wasn’t worth it. I’ve now paid off debts and am in the process of cleaning up my credit. We want to be able to bite while the housing market is down over the next year and get us into a home, so we can finally stop throwing money down the drain in rent every month.

Our government now wants to toss several hundred dollars at each of us so we can go out and “spur the economy”. While I’m honestly not going to sneeze at an $800 check headed my way from the federal government, I’m also not going to go spend it willy nilly like our President and representatives would like me too. Do we really need that new plasma screen TV? No! What you need is to spend more time with your family, get out and enjoy the fresh air or do something good for yourself and our environment. I’m hoping that most Americans will use the money to pay off a debt or throw into their savings account. I know how difficult it is to achieve that financial goal of 3 months worth of pay sitting in your savings account in case of emergency. This just makes it even easier to get there. If you can save 10% of your paycheck, in just a year you will be close to having one month’s worth of pay saved up. That’s not too hard, especially when you add in the “economic incentive” check that will show up in your mailbox.

I know people who just aren’t being smart right now, who still think they’re going to make a mint off someone else. That’s just not going to happen and people really need to buckle down, analyze their spending and be smart about what their paying for. The feds just cut another key interest rate by 0.75% so now would be the time to look at refinancing major purchases like homes and cars. Haggle with your credit card companies to see if you can get a lower APR and save yourself some money on all those interest payments. There’s a lot of websites out there that can help you shop for better deals in the banking system like Finance Genius. If you shop around, you could potentially save yourself hundreds if not thousands of dollars in finance charges and interest. Do something good for yourself in 2008 and become financially fit.