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Economic Novice

As I continue walking the path of this personal journey, it has led me to read more articles on economics, money, and personal finance. It's a wonderful challenge - my brain activity after reading articles on the economy is similar to what I imagine my daughter's brain activity would be trying to teach her about basketball basics in the middle of an NBA playoff game. It's very much a foreign language; terminology I've never heard discussed in day to day conversation.
For someone who jumped into the economic lake whilst already drowning, it's not surprising that this information overload can lead to negative thinking. So, I intend to keep educating myself, while making personal progress, and hopefully turn a better understanding into more positive thinking going forward.
The article that led to me dumping thought into written form this morning is this one, The Consumer is Maxed Out - A Theme to Watch in 2018. For the past year, the one financial related thing I'd hear out in the streets with the other financial novices was the collective cheers about the positive stock market performance. The article I read this morning leads me to believe that to every action, there's a potential serious reaction. I do understand that the market has always fluctuated, and the trends the article is pointing out (savings rates being at historic lows, collective interest payments being close to an all time high, rising credit card debt and delinquencies, auto loan defaults) have always occurred, but there's a small voice in the back of my head questioning how long these trends can continue.
Credit card debt is rising as the savings rate is falling indicating that consumers are funding consumption with debt, not income.
My simple understanding is for the economy to experience a lift, people need to be spending money (obviously). Many people don't have this money to spend, yet they're willing to access credit to keep buying that new Apple or Samsung phone at $1000. This continues until they can no longer access credit, and then live cash strapped until they lower their account balances enough to get right back in the credit game. We appear to be entering that cash strapped period for a while. With interest rate increases looming, the amount we'll pay to pay down those credit limits will certainly increase. Not good for the average consumer.
To relate it to physical wellness, yo-yo dieting and poor weight maintenance is extremely common. We see it in our social habits when looking at our political environment, bouncing between democratic and republican every 8 years or so. It appears the collective, and individual, human condition is attracted to extremes in many things.
I've experienced the financial yo-yo for years, and really hope I can get ahead of the debt beast once and for all. I hope others find the motivation to do so, as well. My "ah-ha moment" was when I added up how much interest I paid on all of my accounts in 2017 - ultimately the name of this blournal - $6262. I'll close today's thought dump with the most worrisome chart from the above referenced article, the total amount of personal interest payments paid by American Consumers on their debt (have a great Monday!) -


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