What has our quest for more gotten us? Do we have ‘more’ than ever before, or have we ended up with less?
In America, the first 7 or so years of the decade brought a great deal of growth and wealth in our economy. Property values were appreciating, unemployment was at low rates, we were all enjoying the ‘good life’. Many went to college and got their 4 year degrees, taking out student loans looking to be repaid once they entered the workforce.
The Housing Industry Crisis
As a new mortgage officer entering the business in fall of 2006, I came in just in time to see the downfall of the housing industry. I saw people who were able to borrow and buy a house that would require a monthly payment of 60% of their PRE-TAX dollars. I saw people who were refinance ‘happy’ and eager to pull out all the cash value their house had gained, borrowing up to 100% of the value of their home. Many times, they were doing this to payoff credit card debt they had accumulated or to take a lavish vacation. After all, they could afford the monthly mortgage payment!
Eventually the whole chain of events began, Wall Street, layoffs, housing sales declined, and it became a vicious cycle. And people were paddling like crazy to stay above water.
In our quest for more, we put ourselves in a precarious position. Before the ‘recession’ began, Americans were consistently spending 106% of what they earned. How is that possible, to spend more than you make? By using credit. By charging, by borrowing. It also means they were not SAVING any money. And when their jobs disappeared, they were in trouble.
Also, as housing values fell, many people were in houses with mortgages that ended up upside-down, owing more than the house was worth. Early on, banks were attempting to get homeowners to refinance at a higher riskier rate, or to come up with the ‘extra’ amount that they were over the value of the home. Even though our situation was better than most, we had a home equity line of credit that was not maxed out, thank goodness, but the bank reduced it by 20%, because they said our house value had depreciated.
Spending, Good or Bad?
Since the recession has come and hung around longer than any of us had hoped, now Americans are spending about 96% of their income. What does this mean? We are actually spending less than we make. We are not borrowing, we are SAVING. What a unique concept.
Now, there is a delicate balance here, one I don’t completely get and I am not an economist, but evidentally Americans saving is BAD for the economy, whereas Americans spending is GOOD for the economy. The catch 22 is that saving is GOOD for the American family, and spending beyond our means contributed to this whole mess in the first place.
So, have we learned anything from the recession? I’d like to think so. I think that family’s are reassessing what is really important. A $20k minivan will work just as well as a $50k prestigious SUV.
We don’t have to have the latest and the greatest to be happy. We can take our kids to the park and run and play and bike with them. Forgoing the extravagant Disney vacation for a smaller quieter vacation close to home at a beach or lake.
The Most Important Things in Life are FREE!
You see, the important things in life are not things after all, they are PEOPLE. They are those in our towns and communities that need someone in their life to reach out and befriend them. Relationships matter!
When the resources are not there for buying and spending and financing expensive activities, families and couples, and groups of friends find that there are much less expensive ways of entertaining, and they usually involve human interaction. We are spending more time in our backyards, playing family games, hanging out with friends.
Shopping, which was the great American pastime for so, many has lost its glamour, as we see how unimportant ‘things’ are. Many are turning back to what our ‘original’ forms of entertainment were- spending time in nature, enjoying the beauty that God has given us, no matter what area we live, whether it is the deserts of Arizona, the beaches of Virginia, the Rockies in the west or the marshes in Florida.
We all hope and pray that the economy will turn around and pick up soon, and that people will be working again. It will take a long time for America to recover, especially the housing market. I also hope and pray that the lessons we learned during this time, that things don’t matter, but people do, will not be forgotten. That even when we have more disposable income, we don’t waste it, that we use it wisely, and that we continue to build and cherish the relationships that we have built.
Disclaimer- I know that I basically lumped all Americans together in this post. I do know that there are many who did try to do the right things. I am not throwing darts at anyone. My goal is that we ALL learn something from this mess!
If you would like to share how the recession has changed your outlook on life, and changes you have made, I would love to hear them!
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