Hard Truths About the Economy and Personal Spending

Ramit Sethi of I Will Teach You To Be Rich is one of my favorite personal finance bloggers, simply because of his honest analysis and common sense approach to finance. His post today titled "The Truth: What Obama and McCain won't tell you about your money" really emphasizes how little we as Americans truly understand the economy and points out how we bear some responsibility for our own financial future. Some highlights:

"Things will get a lot harder before they get better. All the predictions about the recovery taking until 'at least the end of the year' are horse****. In truth, nobody knows, but it would be political suicide to admit that a recovery — whatever that means — will take a few more years. The truth is, nobody knows how long it will take. But if there’s one thing Americans love, it’s a leader pretending to know everything. And if there’s another, it’s that Americans love a quick fix…only to later complain about it not being done right."

"Not all homeowners deserve to stay in their houses. Renting is a perfectly reasonable alternative, but the idea of Americans 'losing their houses' is politically untenable. Why? Because America perpetuates a mistaken culture of homeownership. Owning your own home is the kind of BS sacred cow that got us into this mess: Our parents tell us to buy a house. Our friends are impressed if we own a house in our twenties. The government literally encourages us to own a house by offering tax deductions. Homeownership is the American Dream!
The truth is, if you’re making the largest purchase of your life, you need more than a slogan — you need to take the responsibility to do some research. (And note that you can’t advocate for increased homeownership and also argue for Americans to keep their houses. By not reducing the prices, younger people cannot buy houses at these inflated prices.)"

And my personal favorite:

"Taxes: Pandering to ordinary Americans instead of telling them to stop spending on stupid stuff. The reason Obama and McCain spent so much time talking about taxes is that most Americans are historically horrible at managing their spending. Since they make a fixed amount of money (revenue) and can control only one thing (costs), both politicans use tax breaks to pander to voters. Most people have never seriously thought about how to make more money. Fine. But what’s even more outrageous is Obama and McCain’s complete lack of honesty about what people really need to do to weather the economic crisis. Did you hear either one plainly say, 'You’re going to need to buckle down and save more?' Of course not. You might as well walk into a Dave Ramsey seminar and argue that credit cards are a useful tool. It’s a suicidal suggestion. But it’s true. "