You don't understand how the majority of people think, financially. If
you really looked at the housing credit crisis and why it happened you
30 years ago, people would save up money for the big ticket items.
They would make sure that their income was higher than their expenses
by a fairly wide margin and would sock away as much as they could -
because they knew that they had to have a savings to cover those
unexpected expenses. Like a set of new tires, or a trip to the
emergency room to set a broken leg, etc.
Today, people don't want to save. They have been taught by a
generation of shysters that they want to spend as much as they make
because somehow if their money sits in a bank somewhere it gets
smaller and smaller. (apparently nobody understands compound
Of course, the problem then is that for this to work it's -imperative-
that your expenses are the -same- every month. You cannot have
any large unexpected shock expenses.
People will go out and buy a new car that's under warranty and
also buy an extended warranty - because doing that, you can finance
it all, and your car+warranty payment is now the same every month.
You won't have unexpected car expenses because the warranty
takes care of that.
Obviously, doing it this way costs people more in the long run,
but they would rather pay more as long as the costs are the
same every month, than pay less and save the difference to use
for the unexpected expenses.
The people replacing Avalanchs with econoboxes are doing
it because the fuel price rises are unexpected, and have
broken their budget. So, the trade in the Avalanch, get a
new econobox, and finance everything. Then their uncontrolled
variable expenses - fuel - drop. And their non-variable
expenses rise, but not as much because they have financed it
and thus pushed the additional expenses into the future.
Look at President Bush. He has pushed most of the Iraq
war expenses into the future for Obama to deal with when
he becomes president. And I will bet that by then the
debt will be so large and the deficit so high that even if he
wanted to, Obama will have no choice but to push it into
the future for the next president to deal with. And so on
and so on.
And your amazed that the common citizen is watching this
financial gamesmanship and doesen't want to try copying it
himself? Where have YOU been?
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