The stock market follows a very consistent pattern. Approximately every 20 years or so, the previous two decades of financial growth will be at least partially erased by a recession. Although part of the cycle, the largest contributing factor to the length and severity of the most recent recession is the irresponsibility of the individual.
In the last five to 10 years, America has been the country of “right now.” Whereas cash was once king in this country, the ability to finance purchases over several years has replaced it. This system of trading on “credit” (Latin for “fake money which will only cause problems”) can be pointed to as the leading cause of the recession.
The equation used to be simple. If a television costs $1,000, you could acquire said television once you have saved $1,000. However when that number is replaced by $14 per month for infinity months, it becomes much easier to purchase the television. We ignore the enormously long amount of time it will take to pay off the television, or the enormously large amount of interest we will pay if it’s not paid off in a year because the small, tangible number of $14 blinds us. From there, the television leads to a computer we can’t afford, which needs to be carried home in the SUV we most certainly can’t afford, and before we know it we are swimming in monthly bills, all of which are accruing at 23% interest. If you are in this boat, debt consolidation may be your best option. If you are not in this boat, avoid it as hard as you can.
While the number of individuals swamped in debt is largely to blame for this recession, it is also the ticket out of it. If everyone does their part and buys the things they can reasonably afford, the result should be a much more stable, much more financially sound America.