The great standard of living that Americans have enjoyed for decades was largely built on credit and consumer spending, according to Louis Scatigna, who hosts a financial program on XM satellite talk radio.
“Too many Americans now are finding that they can’t afford that lifestyle anymore. So what we need to do now is we really need to go back to the financial values of our grandparents. If you want to buy something, save up and buy it. You know why? Because in those days, there was no credit cards. You know, credit cards should be avoided at all costs. Unfortunately, many people use credit cards just to live right now. They have to use them, it’s the only thing that’s keeping them alive. So we have to really, like, rein in our thinking and start becoming more frugal.”
The author of The Financial Physician recommends a back-to-basics approach. He says America’s net worth has been eroded by the tendency to buy bigger homes than we need and new cars every three years.
“You back in the 1950s the average square foot of a home was about 950 square feet. The average square foot of a home right now is about 2,500 square feet. And at the same time, the size of families has shrunk. And here’s another big thing: Americans should never, in their entire life, buy a new car. As soon as you drive that car off the lot, you’ve already lost 25 percent of your money. And also once we pay off our cars, after those big car payments, don’t turn it in to get a new one, especially if it’s safe and it’s running and it’s dependable.”
Scatigna says all those high-risk mortgage loans belong to people who were buying more house than they could afford. All those people with high credit card debt didn’t have their arms twisted by the credit card companies.
Ed Mayberry, KUHF News.