First off, if you need any financial advice, Dave Ramsey is a great person to listen to. But I don't want to talk about him. What I want to talk about is how idiotic and perplexing it is that Americans are wondering, "Why are we in this state? How did we get here?" I think the explanation is pretty simple. We spend what we don't have. Period.
Americans (on average these days) not only have no concept or idea of what it means to save, but we spend money that we don't even have...and we spend it like it's going out of style. We're in credit card debt up to our eyeballs, paying for our kids braces, adding more packages to the cable bill, renewing our cell phone contracts, paying Booster Club fees, and on and on...and then wondering, "Where did all my money go?" Are we serious?
And then we wonder how institutions like Fannie Mae and AIG get into trouble. Because WE are borrowing money from them. And who are THEY borrowing money from? US. The government. We're spending money we don't have and "borrowing" it from institutions that, in all reality, don't have it either. We're nuts!
And I know, all my financial friends are going to give me some kind of lecture on the macroeconomic principle of it all, but here's the way I see it: If you come over and ask me, "Can I borrow some eggs" and I say, "Sure, let me go grab a few" and I go to my refrigerator to regretfully find that I have no eggs, I can come back and tell you I have some eggs, hand you a piece of paper that says, "EQUALS 2 EGGS" or whatever I want to do. But if I don't HAVE the eggs, there is nothing there to borrow. And what are you going to do? Go home and finish baking your cookies with the imaginary eggs I gave you? I think not.
So for me the lesson is simple: If I don't have it, I don't spend it.
But stating this principle and actually living by it are two completely different things!