I think what my six years of higher education taught me is that I now know, without a doubt, that the people on TV talking about the economy don't know what they're talking about. My television addiction has been well documented, so we won't dwell on that here. We'll just say that I watch pretty much everything. I do take breaks from Oprah and The Biggest Loser to watch some CNBC and CNN. While these networks are riveting, the best examples of financial expert double-speak happen on shows like The Today Show or the NBC Evening News. Thanks to "the biggest financial collapse since the great depression" (TBFCSTGD for short. You can substitute 'cluster' for collapse if you want) we get to see people like Jim Cramer and Suzi Orman and Jean Chatzky on primetime network news. My favorite part is when people call in with questions like "should I continue to put money into my 401K even though it seems to be disappearing" or "I got laid off and I can't pay my bills. Should I stop paying my house payment or my credit card payment." I should point out that I don't take pleasure in these people's misfortune. It sucks, and I feel bad about that. But I do enjoy watching the financial experts giving advice that completely contradicts what they were saying six months ago. I guess their econ classes didn't cover what to do if TBFCSTGD happens either. We must've read the same books.
While this is pretty entertaining, it makes financial decisions fairly difficult. I mean, the lady on The Today Show told me that I should be saving up all of my money, then the guy on the news told me that the economy is blowing up because everyone is saving their money and we need to spend more. This confuses me. Now I'm no expert, but I'm pretty sure I can't do both. It's like having Paula Dean follow Richard Simmons in the guest lineup. Oh, that happened too.
It took me a semester of Investments Class (Econ 350) to realize that I'm not smart enough to beat the stock market and that I should just have some smart person who understands this manage that kind of stuff for me. Now it has taken TBFCSTGD to realize that those people might not exist. And if they do exist, they aren't the celebrity financial experts on television.
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3 comments:
This American Life had an interesting episode about this a while ago... basically, one person they interviewed was arguing that if you still have a job, you shouldn't really change your spending habits. (I think he also mentioned that this whole time you should have had several months of expenses saved up, just in case, so if you don't have that, save more, but don't cut spending 100%).
Part of the problem is that people today really haven't learned to save (myself included). With boundless credit available, the idea of 'saving up' for a big purchase seems nearly archaic.
I know what you mean re: savings seeming archaic. When we bought our first house five years ago, we put 5% down. We didn't have to put anything down, but thought we should. We were 23 and a year or so out of college, and people were willing to sell us a house with no money down. Yeah, there might have been some lending issues. Maybe that's why half of my old neighborhood is foreclosures now.
I'm (unfortunately) in real estate-I have a title insurance company. I've been doing this for about 14 years now, so I've been around to see the changes. It used to be that you HAD to have a down payment. 3% at least if you went FHA. Since 2004 when I started my own company, one (among many) of my pet peeves was buyers getting money back at closing! How is that good?! But as an escrow officer, you just follow instructions from the lender. I don't buy that no one saw this all coming because they did and really didn't care. They were living it up, believe me, and I only saw what was going on on a local level. Everybody was getting a piece of the pie at the customer's expense.
As for savings, I'll let you know what I do with my paycheck when I actually get one again.
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