Funny How It Takes an Economic Meltdown for People to Realize What Works Financially

Is it just me or does anyone else find it "funny" (I don't really find it funny -- actually it's pretty sad) that it has taken an economic meltdown for people to finally see what really works financially? For instance, consider these 12 lessons from 2008 from the Wall Street Journal:

1. You have to take charge of your own finances.
2. Never put all your trust in one financial whiz, no matter how highly recommended.
3. Never invest in something you don't understand.
4. Invest more, not less.
5. Never assume there is investment safety in numbers.
6. Your grandma was right after all. A penny saved really is a penny earned. Debt really is dangerous.
7. Psmith frequently warned against the perils of confusing "the unusual with the impossible." Certainly the events of the last year were unusual. Alas, too many thought they were impossible.
8. Own plenty of bonds.
9. When someone offers you obviously good value -- like inflation-protected Treasurys with a 4% real yield -- take it.
10. Avoid needless risks.
11. Take all expert predictions with a pinch of salt.
12. Still trying to predict the next short-term move, or call the market bottom?

Now granted he says that maybe these are lessons that have been "reinforced" not just "learned" this past year, but it seems like I've been seeing a lot of this stuff lately. I'm reading more ideas on how to save money, seeing more articles on how to watch your spending and (gasp!) even articles on how carrying a $10,000 credit card balance is probably not a good idea. Wow. Where were all these "experts" a year or so ago? Has it really taken a kick to the gut of our economy for people to realize that solid financial ideas work? And that they work in all sorts of situations -- not just in a meltdown?

Anyway, I'm not saying anything different that what I said before -- and I'm sure many of you reading this are the same way. We're on the same path as we were two months ago, two years ago, and two decades ago -- we're spending less than we earn, decreasing/eliminating debt, investing/saving as much as we can, etc. In short, we're taking the steps that many in the media are now finding are the true steps to becoming rich.

Too bad it took our economy falling to its knees for them to see the light.

Comments

[Eden]

The good news- yes, people really are starting to realize what we did wrong and how to fix it.

The bad news- all of this will be forgotten in 5 - 10 years and the cycle continue.

[Katy McKenna]

We go to church in a very nice suburb of Kansas City, near McMansions galore. I think maybe one short year ago, the church membership as a whole might have considered itself too prosperous to find Dave Ramsey's teachings useful. However, starting next month, the church is sponsoring Dave's Financial Peace University. Typically, I see FPU advertised on church signs in more middle-to-lower class neighborhoods. The fact that he gives "the same advice your grandma gave, only he keeps his teeth in" has evidently begun to appeal to neighborhoods all over town. I'm glad!!! We need it....

[Strick]

It is funny how the market drop seemed surprising to many it just happened 6-8 years ago. Both downturns (2000-2002 and 2008) saw about a 50% drop in the Vanguard Total Stock Market index (my most widely held investment) at some point, so I didn't find it that unusual. The fact this index was the same on Nov 2008 at is was on Nov 1996 was the surprise and reminder to me that anything is possible.

[Zen City Chick]

Let's hope people REMEMBER what they're realizing now.

[Josh]

what would happen to our economy if everyone took the advice on FMF literally? If everyone saved and did not spend their money then the economy would suffer. I am a fan of this site, and i am a fan of frugal living, but the fact remains that if everyone did it then it would effect us in a negative way; a bad example of trickle down economics.

[Pop]

"what would happen to our economy if everyone took the advice on FMF literally? If everyone saved and did not spend their money then the economy would suffer. I am a fan of this site, and i am a fan of frugal living, but the fact remains that if everyone did it then it would effect us in a negative way; a bad example of trickle down economics."

Maybe we'd actually return to being a country that made things other people want, instead of being a country that goes deeper into debt to buy things from others. The horror.

[Frank]

Pop --

We would have to have cheaper labor, materials, and hope that other countries would go consumer crazy as soon as we decided to save

Frank

[Pop]

I think cheaper labor is a given at this point. I think we have lots of materials too. Regarding exporting, how much of that did we do 50 years ago?

[TStrump]

Most of those so-called 'financial whiz's' depend on commissions for their income - ie. the more they sell, the more they earn. A bit of a conflict, I think.
And if they're so great at investing, why aren't they retired?

[poor boomer]

Advertising FPU on church signs in lower class neighborhoods can't hurt but I'm not sure how many people it will bring in the door.

FPU is certainly beyond my meager means at this point in time.

[Gia]

Poor boomer, you're limiting yourself. You don't need to buy FPU to follow the plan. Dave has a free radio show online and his books are in all bookstore (browse).

[Frank]

Pop --

The cheaper labor has a lot to do with wage inflation happening in China and other countries. It also has a lot to do with the falling value of the US dollar. Counting on that is not sustainable.

As far as exports 50 years ago, that is a myth. Exports, currently, are at record levels. You know what is also going strong? Manufacturing dollar output...

Do we really want to go back 50 years?

Frank