for 2007 we had a negative savings rate… again. that is 2 years running. maybe this is hard for people of intelligence to fathom. so in dumbed down vernacular, the average person spends more than they make. so they are effectively more poor this coming year than they were the previous year. isn’t that the antithesis of the “American Dream”? i mean come on people is this really a difficult concept? DON’T SPEND WHAT YOU DO NOT HAVE. if you can figure this out you will have an understanding of what i call the pirates first rule of finance. i know this seems easy, but just from our national savings rate we can see that not very many people understand it. get on the wagon train people, we are going west.

i think it is also of importance to point out that this negative savings rate is not including mortgages and car loans (though in many cases these may be the very problem) they are focusing on consumer debt. meaning money spent on none permantent things. like eating out and clothing.  

some of you may be asking: how do you spend money you don’t have… answer: the wonder of credit.

what is credit? very simply put, it is borrowing money from someone you don’t know, for specified return on THEIR investment. when you invest in a stock you are loaning your money to a company of your choice assuming you will receive a return. that is the same thing that visa and american express are doing. they are assuming you wont pay it all back in a that period. so they charge interest. that is the very definition of “risk” as far as i am concerned.  so the pirates second rule is this (you may have heard this before) “those that get it, get it. and those that don’t get it, pay it.” i truly hope this will sink in and work for your benefit.   

the bank pirate