Freedom & Frugality go hand in hand.

[creditcardfree]

IMO, an society that values frugality and good personal finance is an society that would highly value freedom. If the majority of society were living below their means, they would not be open to socialistic engineering.

It seems that a vast number of americans live payday to payday, and dependent on some form of government programs. This has been exasperated by growing healthcare advances and large city population.

But, I believe that an independent society is still possible if it could retrain its thinking to an society that values frugality and proper financial skills.

The big question is, how do we do this? It is not enough for the very few with these skills to just train their own children, it needs to be a massive movement, like a new fad that could be instilled. I liken it to getting a junkie off drugs, only this is getting society off debt & consumption.

Any thoughts?

I think it comes down to educating people on all facets of money, particularly compound interest and investing. Many people have no idea how much buying things on interest adds to the price of something. Recent credit card legislation has likely opened many people's eyes to how much they are paying in interest in dollar terms and how long it will take to pay the balance off.

Investing education just gives people the confidence and knowledge to make their money work for them. So many people don't even know what the DOW really is. Just ask 10 people on the street and see how many people could explain it. If you don't understand investing you are less likely to do so, or if you do, you may make some costly mistakes.

[maat55]

I cant even remotely agree with student loans... the government offers a low interest rate on student loans - thats why people take them out. There is nowhere to go to collect unemployment other than the government, however there are plenty of institutions that offer student loans that are not affiliated with the government in the slightest.

Ever wonder why the cost of higher ed is so high? If free market forces were in play, prices would likely be lower allowing an individual to pay as you go. I have no problem with private entities loaning for college. But, passed in the health ins. bill, the government now controls all student loans.

[maat55]

Are you a student of Thomas Jefferson, maat? Just curious if you've read much written about/by him, as alot of your points (and posts in other threads) echo Jeffersonian ideas quite nicely... If not, I might recommend a study of him worthwhile.

Anyway... I do agree that much of what you're talking about would be a preferred course of action as compared to the current state of affairs. Back to Jefferson, he stated:
However, in order for such changes to happen, I think most of Congress will have to be replaced by true fiscal conservatives. I suppose it's possible given today's tide of anti-incumbency, but I don't see it happening anytime too soon. There are 3 (possibly 4...though I don't see my generation, now in our 20s, having much faith in SS and other programs) full generations living today who are planning their later years (or in them now) around social security, medicare, and other such programs. The political capital required to overturn that tide will be enormous.

I haven't specifically studied Jefferson, but I have read many of his quotes. I've read books and quotes pertaining to the Constitution. Most founders and many of the authors I read believe that a Constitutional government is very limited in size, much smaller than we have today.

IMO, we would have a much smaller government if not for social programs, many of the issues like: healthcare, retirement, education, food and housing are individual based issues and not the business of the federal government.

It is typical for government to add new socila programs during depressions and recessions, when the people are most vunerable. We should be focusing on better personal finances and not social programs. It is the old teach a man to fish, not give a man a fish. Government only gives a man a fish.

I look at SS for what it is, it is an horrible product handled by a horrible management company, no intellegent person would go to the government for their retirement investment. Secondly, it is forced and not voluntary, that makes it unconstitutional. It and medicare will not only bankrupt the country, but they will also destroy its freedom.

[maat55]

[QUOTE]

Do you have any data to support you idea? What the heck is 'socialistic engineering?

I'll let the national debt and unfunded liabilities speak for themselves. Not to mention the longevity of unemployment.

What is a vast number?

Defining Paycheck to Paycheck
I don’t know that an official definition of “living paycheck to paycheck” exists, but since I’ve been there myself I can sum it up by the example of checking your balance the day before payday and breathing a sigh of relief that you are not overdrawn, even though the $1.81 left in your checking account doesn’t leave much breathing room. Your credit cards are nearly maxed out, you have nothing in an emergency fund, and your wallet is empty. Kind of reminds me of my own soggy hotdog story.

The Numbers
The survey revealed some interesting statistics:

47% of workers live paycheck to paycheck to make ends meet
21% of those earning over $100,000 also live paycheck to paycheck
25% of all workers reported they save nothing each month
33% do not participate in any retirement programs (employer-sponsored or otherwise)
Living Paycheck to Paycheck

The US has never been an independent society - it has always been an interdependent society. Cowboys never made their own saddles, saddle-makers never killed their own cows, farmers never built their own tractors, et cetera.

What do you mean by 'independent society'?

Independent from the federal government for personal needs like, food, housing, healthcare, education and income.

[maat55]

I agree with what you say Maat. I think it will take quite a few generations for this to become reality if we started today. None of us would likely see the results. There are too many people on the goverment nipple and the weaning process would be painful and lengthy. Frankly, politicians of today are to spineless to make it happen. That's my .02. I think part of the allure of socialism is that it attracts those who don't want to do much but can get by with gov't handouts and really couldn't care less about the freedom they've taken for granted all their lives.

As any good drug counselor will tell you...Junkies only get off drugs when they reach rock bottom and decide for themselves to kick it.

I have to agree that reverting back to a constitutional government would be difficult. It cannot happen in Washington, it has to start in the private sector. Americans have slowly gotten used to socialism and do not remotely understand what the Constitution was designed to do.

It was not just intended to protect freedoms for the individual from government, but visa versa as well. It takes a people willing to accept the responsibilities that come with freedom to keep freedom.

[maat55]

I think it comes down to educating people on all facets of money, particularly compound interest and investing. Many people have no idea how much buying things on interest adds to the price of something. Recent credit card legislation has likely opened many people's eyes to how much they are paying in interest in dollar terms and how long it will take to pay the balance off.

Investing education just gives people the confidence and knowledge to make their money work for them. So many people don't even know what the DOW really is. Just ask 10 people on the street and see how many people could explain it. If you don't understand investing you are less likely to do so, or if you do, you may make some costly mistakes.

You like many here understand the concequences of poor financial decisions. We have a much higher standard for how many is spent. How our government wastes money is an abomination. It is my fundamental belief that a very small government can only waste very small amounts.

But this requires that society man up to its responsibilities and keep its desires in check. One might have to give a car payment for health ins. etc.

Ultimately, people have to value freedom with great intensity. It has to direct ones habits.

[maat55]

Many families continue to live in small apartments until the children are school age and they want a backyard.

I don't see a lot of out of control spending here, especially not in comparison with my shopping trips to the states. People here like clean design, without a lot of 'stuff'. The stuff they buy does tend to be more high end (or Ikea) and that is because they expect it to last a long time and not need replacing.

In the beginning I didn't believe much in the system here, now I have to say I think it is great. And yes, that probably is because I am benefiting from it in some way - I also paid into it a great deal before hand and will continue to do so when I go back to work.

So in proportion to the amount of social programs here vs. the US one would expect that here people would be even less frugal. And I'm saying I don't think that is necessarily the case.

I believe there are fundamental truths when it comes to the two different systems. Freedom and personal responsibility demand personal effort in order to prosper, but with greater rewards, with a socialistic society, your freedom is limited by your after tax discretionary funds.

In a socialistic society, there have to be high taxes which lower disposable incomes. This results in lower living standards, basically, the government is forcing the individual to pay for things a free society may ignor such as healthcare etc. I also happen to accept that humans are lazy by nature and need motivation to succeed.

The question is: does the free market provide a more abundant life than a socially engineered society? I believe so, and I happen to charish freedom(although our free market is not nearly free enough to provide the rewards it could) and the responsibility it comes with over the restaints of government.

I'm not totally against government aid, I could live with medicaid for those 18 and under, with unemployment up to three months. But, I would rather all social programs be in the hands of state government and not the federal government. The people can better manage welfare from the state and local level than by an out of control federal government.

[thekid]

Ever wonder why the cost of higher ed is so high? If free market forces were in play, prices would likely be lower allowing an individual to pay as you go. I have no problem with private entities loaning for college. But, passed in the health ins. bill, the government now controls all student loans.

This is why higher education is much cheaper in almost every other developed country (western europe, canada, australia)?

[thekid]

Just curious, would you be in favour of governmental regulation of lending and borrowing practices or do you just leave it to banks, derivative markets and consumers to regulate themselves?

[Mjenn]

I believe there are fundamental truths when it comes to the two different systems. Freedom and personal responsibility demand personal effort in order to prosper, but with greater rewards, with a socialistic society, your freedom is limited by your after tax discretionary funds.

In a socialistic society, there have to be high taxes which lower disposable incomes. This results in lower living standards, basically, the government is forcing the individual to pay for things a free society may ignor such as healthcare etc. I also happen to accept that humans are lazy by nature and need motivation to succeed.

The question is: does the free market provide a more abundant life than a socially engineered society? I believe so, and I happen to charish freedom(although our free market is not nearly free enough to provide the rewards it could) and the responsibility it comes with over the restaints of government.

I'm not totally against government aid, I could live with medicare for those 18 and under, with unemployment up to three months. But, I would rather all social programs be in the hands of state government and not the federal government. The people can better manage welfare from the state and local level than by an out of control federal government.

Except that living standards in the nordics are among the best in the world. My rent controlled apartment is cheaper than what I was paying 10 years ago in the states and is renovated constantly -due to legal requirements- and is much larger than my friends paying the equivalent rent in the US. I strongly recommend traveling or atleast learning about places that practice social democracy before presiding judgement on the living standard there.




I totally respect and do not feel the US should become more like the nordics, but I don't think we are in danger of that either. I just think spending practices are a lot more cultural than government mandated. In the US everyone wants to be the best and have the best. Thus a lot of people buy into this idea,for better or worse, and buy 'the best' even if they cannot afford it. To give the impression of success.

In the nordics the idea is often to prioritize family time, enjoying life, and having free time. Your success isn't jusged just by the size of your car, but by your ability to spend time with your family, relax on vacation, etc You don;t want to show off too much with stuff or accomplishment, because that is considered gaudy.

[Snodog]

Thank you Mjenn for another perspective. Its nice to get a different viewpoint besides the US-centric media always telling us what to think.

[maat55]

Just curious, would you be in favour of governmental regulation of lending and borrowing practices or do you just leave it to banks, derivative markets and consumers to regulate themselves?

I believe the government should have reasonable regulations in order to maintain a fair free market. I don't agree with predatory lending practices. The derivatives market instability was based on risky mortgages allowed and promoted by government policies.

The problem was not the market, it was the governments influences into the market that were not self corrective. Bankers will make safe loans when they have to to survive, government backing only distorted risk allowing the bubble then burst.

In essense, the government is more an enemy to the free market than a safe regulator. I still believe we have to have regulation, I'm just not sure our corrupt government can provide it. If I had to choose between a corrupt government and a regulation free market, I would go with the regulation free market.

[cschin4]

Yes, I look at the stuff I have "consumed" from cars to electronics, etc and think of the money I could have had in the bank. Now, I view consumer items with suspicion as I know it parts me from my money and thus makes me slave that much longer to "the Man". Someone at work recently rolled in with their new car. Of course you ooh and aah, but in reality, I don't every want to pay the cost of a new car again. How many hours of my labor does it take to pay for such items is what I ask myself. And, how many more years of working am I adding to my life before I need to retire or what if something happens and I need to retire early. I still buy stuff but try to be more careful now.

[thekid]

The derivatives market instability was based on risky mortgages allowed and promoted by government policies.

And greed. And short term gain. And the inherent risks of an under regulated financial industry.

Seriously, to come out of 2008 and think the US needs less regulation of financial markets baffles me.

I can understand the romantic appeal of ideals of free markets and peoples, but in reality a more nuanced approach often reaps best results. I don't care much for labels and slogans, I care for effective approaches to goals and challenges.

Take your use of the word freedom, for starters. What does it mean? I'm a fairly conservative guy with regards to my life choices: fairly frugal, fairly safe good wage employment, good net worth, etc. A good buddy of mine is self employed (with unstable income), low net worth, etc. He also just bought a yacht, goes on vacations often, flexible work schedules, etc. Which one is more "free"? How do you measure that? Are Americans "more free" than Norwegians or Swedes or the British, for example, simply because they are taxed less? Are you "more free" when you live in a rich country with safe cities and less work time?

How about the concept that "more free" markets are always best. Take your claims on the costs of higher education. In most other developed countries (western europe, canada, australia, etc.), higher education costs are significantly lower than in the US because government has had greater control of such costs while footing a much larger portion of the bill than in the US. Similar for health care. Did you know that the US government spends a larger percentage of GDP on health care than most other developed countries while covering much fewer services? As with education, a "more free" market for these services has lead to much higher service costs.

I think it best to stay away from simplistic ideological catch phrases and over generalizations when discussing public policy.

[PennyPinching]

The name of this thread is such a great summary. By saving money and spending less, you can create a much better safety net to provide you with the things you need.