These words were spoken by Barack Obama during his economic address at Georgetown University on April 14, 2009. The operative word in this sentence is the word "we." The significance of his statement is relevant not only to our legislators but to all of us who are concerned citizens of this great country. No one needs to rely completely upon the government for financial success or prosperity. We all have the power within ourselves to make a change; just as our government will implement a recovery plan that will yield positive results for our country, we can implement a personal plan to rebuild our own financial assets.
"We cannot rebuild this economy on the same pile of sand. We must build our house upon a rock."
Each week we hear of a different recovery plan such as the Troubled Asset Relief Program (TARP), the Toxic Asset Relief Plan (TAR), the Public-Private Investment Partnership (PPIP), or the Term Asset-Backed Securities Loan Facility (TALF). However, there is not a plan that is created that can match the will and the spirit of the American people once we believe in our own capability to enact our own personal recovery. As the President and his administration continue to strategize and develop plans to promote economic recovery, Americans must begin to build our own recovery plans that will provide financial security and longevity for our families.
To explain further, let us briefly examine recent history. You may recall when the Dow Jones surged from 6400 in 1997 to 11700 in 2000, only to have the internet bubble burst. The country went into a recession and before long we hit lows of 7286 in October of 2002. However, reaching new lows was not the end of the road for us. The country self-corrected and essentially started over. People began to diversify investments and explore alternative investments resulting in an appreciation of the real estate market; companies trimmed the extra fat from their balance sheets, and before long we were entering into the fourth longest bull market trend in the history of the market.
We are now in the midst of the second recession within the past decade. The Dow lost over half its value as it collapsed from 13930 in October of 2007 to 6500 in March of 2009. As in the previous recession, we were able to start from levels in the market that we haven't seen since 1997. We have seen a slight recovery toward the end of the first quarter of 2009, but how do we build a recovery that is sustainable? How do we build the house on a rock and not on sand so that we no longer have to continue going through this alternating boom and bust economy?
President Obama has his five pillars that he plans to use as a foundation for strengthening the economy. We can use these same pillars to apply to our daily lives. The 5 pillars the President outlined are:
- New rules for Wall Street that will reward drive and innovation.
- New investments in education that will make our workforce more skilled and competitive.
- New investments in renewable energy and technology that will create new jobs and industries.
- New investments in health care that will cut costs for families and businesses.
- New savings in our federal budget that will decrease debt for future generations.
Pillar OneGovernment: New rules for Wall Street that will reward drive and innovation. Americans: New rules for households that will reward integrity and diligence. The values that we hold true to ourselves must change for our families and our households. The days of borrowing today with consumer credit for what we think will be earned tomorrow must be discontinued. Statistics show that the average person will spend an additional 35% in capital just because they have access to this capital through a credit card. Availability of credit has caused as much as 60% of this country to operate their monthly budget in a deficit. Just because someone offers you a new t-shirt and frequent flier miles at the airport does not mean that the credit card should be used. Each line of credit must be chosen very cautiously. Go to www.bankrate.com before you select a card and use these online resources and guidelines to utilize the cards that are the best for you. Select a card which has no fees and good introductory rates. Most importantly, use this card only in the case of emergencies and to assist you in establishing a credit history. Never use the card if you do not have the dollars in your account to cover the purchase.
- Do you have a FICO score of 750 or higher?
- Have you eliminated all of your credit card debt before you invest in the stock market?
- Have you thoroughly researched how much you can afford before you talk to the mortgage lender?
- Did you do your own insurance needs analysis before you talk to the insurance agent?
- Do you and your wife and family hold regular, open conversations about your household finances?
- Do you have 6 months of living expenses in a high yield savings account?
These are a few of the basic questions that we must regularly ask ourselves.
In addition, for those households with entrepreneurs in the family, the days of putting your own well-being before the needs of the community are over. Morals, ethics, and a strong value position must be demonstrated within each business decision. Just because you can be compensated legally for your action does not mean that this action should be pursued. Many of the issued subprime loans that resulted in foreclosure were not considered predatory loans, but nonetheless should NOT have been issued. Social entrepreneurship is in; greed and indifference to how the community is impacted by your decisions is out!
Government: New investments in education that will make our workforce more skilled and competitive.
Americans: New investments in our education that will increase our skill levels and competitiveness.
Statistics show that the average person's work-life earnings increase almost $1 million for those who get a college degree over those who have a high school diploma or GED. Much more than the Government, it is time for all Americans to think seriously about investing in education. President Obama cannot reach the goal of the United States becoming the country with the highest proportion of college graduates by 2020 unless we also make the commitment to further our own education and demonstrate support of our educational systems. Parents must encourage children to study, students must adopt a culture where learning is "cool," and all community members should begin to support/develop networks that cultivate a culture that values learning in our communities.
If college is not for you, you must take it upon yourself to complete high school and develop a skilled trade. With as many community-based organizations in our communities that offer free training and job placement resources there is no reason to have unemployment rate of 10%. We must learn to look in the right places in our neighborhoods for the right resources, leverage our social networks aggressively and efficiently, and look within ourselves to pursue our true passions in life. Your work should reflect your passion in life. In days of employment cutbacks, if you are not excited about your job and cannot give 110% effort you are more likely to be laid off.
Government: New investments in renewable energy and technology that will create new jobs and industries.
Americans: New investments in skill sets and companies that can create jobs and industries for ourselves.
As I write this, each week I continue to advise a group of formerly incarcerated men on how to become entrepreneurs and form their own legitimate companies, or become certified in weatherization in order to capitalize on the $15 billion per year in green jobs investment dollars that are scheduled to be injected into American communities. This is not just for the benefit of these men; this is for the benefit of our communities. If you want to capitalize on this market, research those jobs and careers that are of interest to you. Amazon.com or the free community library should be your best friend as they have many books on careers that can aide your research.
As we seek to become an energy independent nation, we must all play a role within our homes. Turn lights off when you leave the room, turn your computer off when you are not at home, check the air on your tires to conserve gas, car pool frequently, utilize the tax credit and purchase a hybrid car. These are only some of the methods that we should all be collectively implementing to assist in this cause.
Government: New investments in health care that will cut costs for families and businesses.
Americans: New investments in personal health and preventative measures that will cut costs for our families and businesses.
As a country we spend over $2.2 trillion in health care costs. Approximately 75 cents of each dollar spent is spent on chronic illness treatment. Universal health care is critical for our economic success; additionally, there is a critical need for each of us to become more mindful about our own health.
Are you getting regular check-ups at your doctor? Is there is an excess of fried foods in your diet? Are you patronizing restaurants that adhere to healthy cooking menus? Are you exercising for 1 hour at least three days per week? It is estimated that we can save $150 billion per year by using preventative measures with our health care.
If you are a part of the almost 50 million Americans without health care insurance we need for you to set a goal of establishing a plan to establish coverage for yourself. For many of the uninsured the cost of coverage is just too much to bear; however, it is amazing what an American can achieve when one sets a goal and works hard for it. While you are attempting to reach that goal of being able to afford that monthly premium, in addition to eating right and maintaining a good bill of health, make sure that you do the following:
- Seek regular care at a community health center or at your local free medical clinic. There are many sites that have a mission to serve those in the community even if they do not have the ability to pay.
- Become a bargain hunter when it comes to purchasing your medications. Programs such as the Partnership for Prescription Assistance which provides access to more than 450 private and public patient assistance programs assist in this initiative of driving down your medical costs.
Government: New savings in our federal budget that will bring down debt for future generations.
Americans: New savings in our households that will establish a financial legacy for future generations.
Every dollar spent today is a dollar less that you are able to provide future generations within your household. Needless to say, much of what we spend is necessary. We must clothe ourselves, provide for food and shelter for our families, and purchase other necessities that allow us to function and live. However, as a nation, as our wealth has grown so has our propensity to consume. This is much more than a trend and in fact now, some things that were luxuries to previous generations are necessities for current generations.
This recession has taught us a lot about what is truly necessary. Large gas-consuming fancy cars, exquisite clothes that keep current with the latest fashion trends and expensive social outings have for too many Americans become a primary goal. A financially independent retirement, debt free living, and a healthy financial legacy for future generations for too many of us have become secondary goals.
This administration has a very comprehensive vision for this country. If the vision for ourselves does not coincide with the vision our President has for this country we cannot expect for the five pillars to be successful. Now amidst an economic recession financial literacy has become a value that is "cool." It is incumbent upon all of us to become financially literate and learn as much as we can to support our country and the communities we call our homes. If you really love this great country we call America...display your love with your actions to empower yourself and especially each other.