Spending Money To Save Money

Apologies for the inconsistent posting. This week should allow me more time. All last week I was out in San Francisco for the Web 2.0 Expo sponsored by the great folks at O’Reilly Media. I really had a great time!

The big theme of the last two weeks has been the economy. I have spent a lot of time thinking, reading, talking and listening to some of the greatest economic minds of our day. The picture painted by most suggests only one thing: we should all be worried.

The economy has held up reasonably well as of late, propped up by the small come-back of the dollar, better than expected results by the likes of Google and of course, the recognition that the Fed won’t let the economy go without a dogfight. Many of us are still in the middle/high income bubble where we don’t know anyone first-hand who has suffered. It still doesn’t quite seem real.

On the plane last night I overheard a couple talking about their car. Over the past few weeks it had started making a number of ‘sounds’ and had begun to smell like burning rubber (timing belt ready to break?). They seemed to be in total agreement: while the car was obviously not healthy, they were not going to bring it to the shop because it would ‘save money.’

I think this small anecdote is in many ways representative of Americans’ attitudes at the moment. Although it seems contradictory, we often need to spend money in order to save money. Putting away cash into an IRA is a long-run method to save and make money. Joining a gym will likely result in a huge health savings. Bringing your car in for repair before a major issue is necessary preventative maintenance – it might not only save you money, but could save your life. Americans, myself included, too often spend money only when there is a fire to be put out. Not only does such an approach often result in needing to spend MORE money, but it also results in large quantities of stress and time.

I fear that the thought process of the couple in front of me is similar to the thought processes of a majority of Americans. I think the economists are right that we ought to be worried.


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