Wednesday, February 13, 2008

Economy 101 by Shirley

Years ago I heard there were economists saying that if all the money was gathered up and redistributed evenly to everyone in the country, in "X" number of years, it would all be back to the current status quo.

I am not so sure about that, but look at this "stimulus" package before Congress now.
The idea is to get some money into the hands of people who will spend it and that will get the economy moving again. And when the economy is doing good -- well who is really doing good? You get the pix.

Here's an example of what business wants you do do with your little windfall. Use it to put a down payment on a big ticket item -- like a $1200 big TV -- and put the rest on a credit account. Because not only does the business get the TV sale, it gets to charge big time finance charges.

Here's what business does not want you to do -- pay on your debt. Know why?
Those finance charges -- interest on credit cards without fixed rates, are what is paying for those subprime loans that are out there failing now. Those mortgages given out to people that could not afford them, have gone into foreclosure, which has the property values dropping, and of course affecting all the economy. I have heard there are some credit card rates going up to near 30%. Anyone carrying a balance on cards at that rate is paying for the property losses of others.

So save your stimulus check or pay down debt. It puts you ahead.

5 comments:

Myrnagj said...

AMEN!

On my walk around the neighborhood a few days ago I saw three houses for sale and two for rent in one cul-de-sac. Every weekend there are bank auction sighs along the main streets. Those subprime loans are catching up big time.

Janell said...

Why wouldn't paying down debt help the economy as well? If people didn't have credit card payments to make, wouldn't they spend it new items ("stuff")?

Shirley said...

Nope -- doesn't work that way, Janell, paying the debt only helps one -- yourself. The credit card company loses it's finance charges, and fees, etc. And nothing was sold in the transaction.

I suppose without having to make those payments, one could buy other stuff, but that's not what they are "banking" on.

LaDawn said...

I say pay off debt and SAVE SAVE SAVE. Maybe if it doesn't work this time they'll give you even more back!

Shirley said...

LaDawn may be on to something here.