SEEM to learn.

If you are 40 years old, you have lived through three recessions as an adult—1999, 2008 and now here in 2020.

Each time, there are people—often the same people—who lose their jobs and worry where their next dollar is coming from. They struggle financially and promise themselves that next time they will have money in the bank to help them navigate the tough times.

But most people have short memories and when the economy improves they go back to work and once again starting spending every penny they make.

Worse yet, they get themselves in debt up to their ears, taking cruises and lavish vacations and buying things they really don’t need. They don’t put a penny away for a recessionary day.

They are warned that every household should have enough money in reserve to get it through at least six months of hard times. They ignore these warnings, convincing themselves that everything they buy is a necessity and that this time the good times will go on forever.

Well, they don’t. In the past 40 years, we have had four recessions, roughly one every 10 years. These economic downturns have become as predictable as the changing of the seasons.

And generally they hit without much warning. In October 1987, the stock market took a sudden nosedive and that ushered in five years of recession.

The dot-com bubble of 1999 hit without warning and in August 2007 the wild and frenzied housing market of the previous five years came to a screeching halt. Hard times followed almost immediately.

But not since the stock market crash of 1929 have we gone into a recession as quickly as we have with this coronavirus pandemic. Almost overnight, the country—and many parts of the world—shut down with the speed of a light switch being turned off.

Again, there are many among us who are unprepared, people who are long on bills but short on savings. Again, there is a large segment of our population in deep financial trouble.

I think I preached this same sermon back about 2010 when those with no jobs and no savings were struggling. You have to put something away for a rainy day. Times will not always be rosy. The sermon fell on deaf ears.

It always amazes me how many people live paycheck-to-paycheck, never worrying until tomorrow brings trouble.

Worse yet, I know people who live tax refund to tax refund. They max out their credit cards, incur heavy interest all year long and then use their federal tax refunds to pay at least part of their debt. The next year they do the same thing.

Well, you know how this story plays out. They pay a fortune in interest and unless they hit the lottery, their credit card bill is never paid off.

Years ago, I worked in furniture retail and there were many customers who never once asked the price of a big-ticket item. Instead they asked, “How much do I have to put down?” and “How much are the payments?”

The interest they paid sometimes almost doubled the cost of the furniture they bought. The people who paid cash saved a lot of money.

Living in a small town, I knew most of these people and often those who stretched payments over three years and those who paid cash had the same jobs and made the same amount of money. One group saved some of their earnings, while the others lived above their means.

At an early age, I learned that it is not how much money you make, but how you manage your money that often separates the rich from the poor. Yes, there are sometimes extenuating circumstances like medical bills, but saving mostly boils down to extravagance versus sacrifice and restraint and wants versus needs.

Temptation, especially when it comes to using credit cards, is always out there and sometimes it takes a lot of willpower to resist. But if you’re going to save enough to get you through the hard times, you have to be tough.

The last recession was a decade ago and for many it would have taken only a wee bit of sacrifice to save six months living expenses in 10 years.

Sadly, many people didn’t, so when the recent pandemic hit, they found themselves hung out to dry. Now they expect the government—you and me—

to come to their rescue.

Those who would “worry about tomorrow when it comes” are now wondering how they will pay their rent. Some landlords, who also have bills, are allowing tenants three or four months to catch up. That means that in three or four months, these people will owe three or four months back rent. And if they can’t pay one month’s rent now …

Saving is sometimes tough, but money in the bank makes the hard times a lot easier.

Donnie Johnston:


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