| Recent newspaper stories have reported that the | | | | good. |
| U.S. savings rate is the lowest in seventy three | | | | 4. Society of Consumption: This is a society of |
| years, that is since 1933. Within the last twelve | | | | consumption, the advertisement's are everywhere to |
| months, the personal savings rate has actually turned | | | | be found, Television, Billboards, Buses, Taxi's and the |
| negative. The data indicates that people in the United | | | | Internet. There is certainly no shortage of ideas or |
| States are not saving money. So why can't some | | | | opportunities to consume goods or services. These |
| people save more money? There are several reasons | | | | constant images and ideas are more powerful to |
| as follows and we will briefly examine each one. | | | | some people than their limiting cash flow or personal |
| 1. Home Equity Loans: People see their homes or | | | | budget. |
| condo's as an appreciating asset and have taken | | | | 5. Employer Retirement Plans and 401k Plans: For |
| money out of them against their paid principal and | | | | many years this valuable savings tool required people |
| appreciation. | | | | to "opt in" to participate in Retirement Savings and in |
| Many people see their home as a new ATM machine | | | | many cases the employers matched some of the |
| that they can use to make withdrawals. Some people | | | | savings. Because people had to "opt in" many people |
| use the money to consolidate their debt which then | | | | did not take advantage of the plans. Beginning this |
| allows them to take on more debt. Some people use | | | | year with the new tax law changes, people will be |
| the money to remodel their existing home or buy a | | | | enrolled automatically and will have to "opt out" of |
| second home. | | | | these plans not to participate. |
| 2. Americans are competitive and do not like to think | | | | 6. Many people do not live on a budget : How many |
| they are falling behind their neighbors in lifestyle. For | | | | times have you heard " I live paycheck to paycheck" |
| many if they see a new Ford SUV in their neighbors | | | | or " I spend it before i get it "? Many people do not |
| driveway or a new DISH satellite system or even | | | | live on a budget and have no idea of their personal |
| their friend's children playing with a new Pokemon, | | | | cash flow. This results in out of control charge cards |
| Talking Elmo, XBOX 360, Webkinz or Harry Potter | | | | and usually debt consolidation. |
| book or toy, they immediately want the product and | | | | To increase the savings rate, people need to budget |
| regardless of their personal budget the product is | | | | and have better short term and long term financial |
| obtained. | | | | plans. They need to avoid the immediate gratification |
| 3. Attitude/Mentality : For many of the last seventy | | | | of buying things to make themselves feel good or to |
| three years, People who experienced and lived | | | | consume to keep up with their friends and neighbors. |
| through the Great Depression have remembered this | | | | People need to take advantage of the new tax laws |
| hardship and saved money with a Depression era | | | | to fully fund 401k or other employer retirement plans. |
| mentality. Time heals all wounds however, and as the | | | | They need to stop "spending money before they |
| generations have passed into history so has the | | | | get it" and to show fiscal discipline in our society of |
| memory of that suffering. Today, people tend to | | | | consumption. |
| buy things because it momentarily makes them feel | | | | |