Move Your ASS-ets Long Beach: Depression Economics
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Many Long Beach homeowners are suffering from an insidious disease called Grandpa Economics. Actually, so are many Californians. I suppose most of the country suffers from this affliction.
Grandpa Economics or Depression Economics starts off with the theory that you go to school, study hard, get a good job, save up money, buy a home and pay it off, save more money, retire, and live debt-free on a pension and/or social security. That was a great plan for our grandparents. They are often referred to as "The Greatest Generation" and I don't wish to take away from their many accomplishments. They lived through the Depression, fought the war, built the roads and ports in our state, and were the backbone of our country. These children of the Depression put Long Beach on the national map!
So why would I suggest that this thinking is wrong for the middle class of the new millennium?
The rules are entirely different today. You see, the federal government, under the leadership of President Roosevelt, moved towards a paternalistic economy. When the veterans came home from Japan and Europe in the 40s, the US government provided them with a free education under the GI Bill. The country was beginning an arms race with the Soviets that required massive government investment in the defense industry. President Eisenhower coined the phrase "Military Industrial Complex" and warned us of our reliance on it. Skilled work in Southern California was a plenty during the 50s, 60s, and 70s. The employers mirrored the paternalistic nature of the government and provided good paying jobs with fantastic benefits.
So powerful was the influence of Depression Economics that "The Greatest Generation" passed along that thinking to their children, "The Baby Boomers". If you are a Boomer (or an older Gen Xer), you might remember these sayings:
- "Take all you want but eat all you take"
- "Shut the light! Whaddayouthink? I'm buying stock in Southern California Edison?"
- "Watch the pennies and the dollars will take care of themselves"
What are some of things we've done in the past 15 years that exhibit Depression Economics? Have you refinanced your home from a 30 year mortgage to a 15 year fixed-rate loan? Did you set yourself up on a bi-weekly payment program for your home loan? Have you left tens of thousands of dollars in your savings account at the bank, earning a paltry 3% because of the "safety" of an FDIC-insured institution? If you've answered yes, to any of these questions, Depression Economics has had an influence on you
The rules changed in the early 70s and then again in the new millennium. In fact, economic rules change about every 25-30 years so don't feel too bad about it. The effects of our upbringing influence our habits towards money and investing throughout our lives.
In this series, Move Your ASS-ets, Long Beach, I'm going to outline these changes in our economy and make suggestions about how you can position yourself for success in retirement. HINT: It ain't by following Depression Economics.
Part Two: Boomer Economics
Part Three: Millennial Economics
Part Four: The Worst Investment and You Probably Own It
Part Five: A Strategic Solution For Financial Freedom
Part Six: Recommendations For Action
| Laurie MannyLong Beach Realtor (562) 212-5420 |
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Main Street Realtors Belmont Heights 244 Redondo Avenue Long Beach California 90803 |
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· http://www.longbeachrealestatehome.comWow Brian, I could hear my grandmother saying all of those things while I was reading. This is so true! I can't wait to read this series.
Permalink May 17, 2007 05:21:56 · http://www.equityscout.com/blogBrian, I'll follow this series with interest.
But hopefully in questioning the economic philosophy of the Greatest Generation you won't throw the baby out with the bathwater. Sure, pay your home mortgage early and rely on the government / corporate pension for your retirement years is an iffy stratey in today's economy....
...but...
the go to school, study hard, get a good job, save, own a home part of the equation is stil pretty good advice which not enough American's follow, in my opinion.
Permalink May 17, 2007 10:56:25I'm even younger than the generations you listed, but even I know those sayings. And, I'm guilty - I think I've even SAID some of those things. Depression-era economics definitely are pervasive.
Permalink May 17, 2007 11:45:49 · http://www.YourPropertyPros.comNice history lesson - I always enjoy your posts Brian...although some go over my head. It's an interesting point of view and think you are right, we have a tendency to compare ourselves to our grandparents but our spending habits are the complete opposite....some of us could learn from "if not in use...turn off the juice".
Permalink May 18, 2007 01:02:53 · http://delmar.typepad.comThese comments are so encouraging. I'm excited about this series because it brings together 13 years of thoughts. I'm about to share what is, what I believe, the most important economic revelation of my life.
I think I'm on point here. I hope it reaches people.
Thank you all for the feedback. Boomer Economics is next.
Permalink May 18, 2007 23:18:41 · http://www.theharperteam.com/blogDealing with that Depression Era thinking depresses me. Get off and out of your house and put your money where the vitality is.
Brian - are all segments of this series going to be here or your blog or bloodhound or a combo?
Permalink May 19, 2007 01:12:22 You couldn't have teed it up for me any better. Stay tuned. By the way, Chris, we aren't gonna throw out the baby with the bathwater. You understand posts 3-5 already.
John:
All of the posts will be right here on Long Beach Real Estate Home
Permalink May 19, 2007 04:30:06 · http://www.thefhaexpert.comBrian... this blog is right on the money. I am trying to educate more consumers in regards to what you mentioned. Basically, let the house work for your money and take your money not spent on the house and make more money off of it. Great job.
Permalink May 24, 2007 00:14:33 · http://floridahouseinfo.comBrian Your thoughts are like fine wine have a rich and robust flavor. They make "cents" and are poignant. Great Series!
Permalink May 26, 2007 08:01:30 · http://www.miamism.comPermalink December 21, 2007 22:22:26This post has no comments awaiting moderation.
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