Debt and Credit, Confident or Not? ....Continued (See One Post Prior)

Just as this retiring generation has molded the nation’s perception, acceptance and embracement regarding financial planning; these “Hippies” have also molded the nation’s desire, need and drive for instant gratification. Their rebellious years characterized by Woodstock festivities and free will/go with the flow mind sets have caused for the ‘Keeping up with the Jones’ cliché. The rebellion itch may have been the drive behind marketing the up side to revolving credit (aka open-ended credit) as such instant money availability allows for the façade of having more than what you actually earned; this concept appears to be where confidence in self and the future ability to pay comes in. Revolving credit such as Visa, MasterCard, and department store cards come in several colorful designs that can be a reflection of one’s personality and façade of confidence (mine is multi-colored tie dye). A revolving line of credit does have limits, ceiling versus sky if you will. Credit limits are based on payment history and income; these factors have an impact on the annual interest rates charged and the potential annual account fee charged to the consumer and calculated into one low monthly payment (the minimum payment of total balance) (Yahoo! Finance, 2010). Easy enough right? No way, not a chance, of it being that easy, as the annual rates are significantly higher than installment debt interest rates. Annual rates are at an all time high as many credit ratings are declining (confidence factor maybe?). Although appealing introductory rates are offered to new customers as well as an extending the same inducement in an effort to keep the good rated customers, eventually those introductory rates expire, leaving consumers in the position of good management skill application. Annual rates are noted to be 18% or higher (Yahoo! Finance, 2010). Math calculations indicate minimum monthly payments with no further usage (lack of balance increase) cause for the debtor to now spend more years paying for such convenience than that of either an installment debt or self discipline of delayed gratification.

Let’s face it, the strictness and self control displayed by those sixty five and older is paying off for the parents of baby boomers. The era of a great depression and those who persevered (suicides were some of this nation’s highest rates) are now the positive statistical representation of poverty rates. Those of the depression era reflect plummeted rates of poverty and appear to have the well-founded financial stability (Celent, 2003). Their offspring, baby boomers, have critiqued, molded and overall made the good foundation of financial planning better however, left the management skills and self control issues a bit to be desired. Today’s active generation now struggles with confidence, trust and laziness. Yes, laziness. The revolving line of credit continues to feed impulse buying, purchasing large items that one can’t actually afford and proposes the lack of need to compare costs prior to buying therefore costing this generation more money, money that is being spent for instant gratification (LCD Flat Screen) instead of delayed gratification (investments that will provide for a desired lifestyle during the ‘Golden Years’). All generations are currently impacted by this generational transformation.

Confidence (in all forms) must be substantiated based on history in order to make decisions for the future; this is what the economy refers to as forecasting. The anticipation of future abilities derived by analyzation of all data applicable is the foundation for a reliable opinion of confidence (or lack thereof). In my opinion, the definition of credit presented by the article, “Man’s confidence in Himself”, is faulty (Yahoo! Finance, 2010). Historically speaking: keeping up with Jones’ has been the measurement of worth rather than looking at self to measure worth. Looking at “self” to define worth would mean analyzing the data applicable, substantiated history of income and the management skills to disperse funds wisely. How can there be “confidence in himself” if the analyzation process contains the wrong data? However, later in the article, my opinion is further supported by the first step to eliminating credit card debt, in which I do agree with; “begin to address it by honestly evaluating your spending habits. Examine your existing expenses to analyze how your money is spent. You will most likely be able to identify the problem areas…” (Yahoo! Finance, 2010).

CONCLUSION....coming tonight....