And here I sit so patiently
Waiting to find out what price
You have to pay to get out of
Going through all these things twice.
I struggle with my weight. A lot. I have tremendous discipline in business and finance but when it comes to weight loss, I'm the equivalent of a sub-prime mortgage.
I want good things to happen, even if I don't work for them. I want a healthy body, beyond expectations for someone with my lifestyle and family history. I don't want to take time to achieve my goals. I want them to happen overnight.
Preferably while I am sitting in the drive-thru line at McDonald's.
I laugh when economists say that Americans will be savers and misers, even when the economy improves.
Unless someone is capable of changing the American psyche, people are going to go back to their old spending habits. People will be using every dime of credit again, just like they did before the crisis.
It is the economic equivalent of a yo-yo diet.
People in addiction programs say that a person has to bottom out before he will seek help. A lot of Americans are bottoming out right now. They are behind on their mortgages, maxed-out on their credit cards and up to their necks in debt. Many have lost their jobs and are trying to re-adjust their incomes.
They have bottomed out. Most of them have gotten temporary religion and will tell anyone and everyone that they plan to be conservative.
When they get money and easy credit again, they will fall off the wagon.
I've been on every diet program ever invented. The only time I had success was when portions were completely monitored. When I start a supervised program, I throw every piece of food (including condiments like catsup) out of the house. I have no choice but to stay on the program.
I've been at my ideal weight several times. Each time I swear I am never going to gain weight again. Every time I do.
I eventually eat something that is not on the diet. Then I eat a larger thing not on the diet. Within a few months, I am back at the drive-thru, asking them to super size it.
In the diet world, they call it "going out of the box." I go back to old eating patterns.
The same way American spenders will go back to their same old spending patterns.
I've spent 27 years as a structured settlement consultant. I help injured people (and, sometimes, lottery winners) with their money. It's been said that 90% of people will run through a lump sum of money in five years or less. I'm sure that's true.
The only successful strategy is to not let people have access to their money in a lump sum. People who get money in monthly annuity payments (or from a trust) will still have money five years from now. The others won't.
100% of people I've met with tell me that they are going to handle a lump sum responsibly. 90% are wrong. And those 90% come from every social and economic background.
Unless Americans have built in restraints, they are going to run through money.
Right now, many Americans are "in the box" financially because they have to be. They can't afford to go to nice restaurants, buy new cars or live in houses costing far beyond their means. No one will give them credit.
Once things get better, they are going to "fall out of the box" unless access to easy credit is curtailed.
I grew up in an era where college students and broke people couldn't get credit cards. Interest rates were capped at 18%. We need to go back to those standards.
People who preyed on the poorest members of society then were called loan sharks. Now, payday loans and tax refund anticipation loans are considered, by some, to be legitimate businesses. Celebrities like Magic Johnson help to peddle their products.
Those products will make sure that their clients never "get in the box."
This is a unique point in history where we can put America "in the box" for a generation. The opportunity is here to pass laws that rid us of abusive, high interest financial schemes. Congress has only been taking baby steps when giant ones are needed.
I'm an optimist. I think Americans can learn to be good savers. I'm also a realist. I've spent 27 years watching people tell me they were going to handle their money correctly and then watching them screw up.
If I want to lose weight, I need to stay on a restricted program. If we are going to keep our country from facing another economic disaster like the one we are going through, we need to restrict easy credit and stop pandering to people's worst instincts.
There has to be a way to get out of going through all these things twice.
Or three times.
Or more times.
Don McNay, CLU, ChFC, MSFS, CSSC is the founder of McNay Settlement Group, a structured settlement consulting firm, in Richmond, Kentucky.
He is the author of two books. His next book Blood Money and Blowing It All: Why 90% of Americans waste an inheritance or insurance settlement and how to keep it from happening to your family, will be released later this year.
You can write to Don at firstname.lastname@example.org or read his award winning column at www.donmcnay.com.
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