This is another guest post from Joe Plemon from Plemon Financial Coaching. Joe is the Money Columnist for The Southern Illinoisan.
As I hear the pundits explain the negative impacts this mortgage crisis will have on the average citizen, I sometimes scratch my head and wonder if I have not been transferred to a parallel universe. While the newscaster gravely declares that credit card limits will be dropped, that car loans will not be as easy to get and that home mortgages will be available only to those who can afford them, I am wondering why this is such a bad thing.
I am not unsympathetic towards businesses which may fail or individuals who may lose jobs, but I marvel at how we have corporately developed the mindset that debt is good. Have we swallowed an elixir that forces us to believe that black is really white?
What About The Past
It has not always been this way. The 1910 Sears Roebuck catalogue warned its readers, “To buy on credit is folly”. Today Sears sends out one million credit card offers a month. Henry Ford was so opposed to debt that Ford Motor Company was 10 years behind General Motors in financing their autos. Today, financing and shop work are the most profitable divisions of the auto industry. James “Cash” (JC) Penny would not allow his department store to issue credit as long as he was alive. My grandparents thought that debt was sin. My parents believed that debt was wrong. My generation (I am a baby boomer) began to think that debt was acceptable, but should be avoided. However, ensuing generations have bought the lie that debt is good and even essential.
Doughnuts and Debt
If all of us who struggle with our weight were told that doughnuts and ice cream will no longer be available, we might moan and groan but we might also lose weight. Tighter credit might just force people to save, pay cash and avoid debt. Hmmm. How can that be a bad thing? Do you have bad credit?
photo by xollob58
