Debt up, savings down

You know what they say about history. Those who don’t know it are doomed to repeat it. And it looks like this is the case with Americans and debt.

According to a recent article published in The Boston Globe, personal savings has declined by half since 2015, with the average family saving only three percent of their income compared to six percent three years before.

The recession of 2006, which caused so much pain for so many, has become a distant memory. Credit card debt is up, savings is down, but spending is up so it all looks like the economy is humming along and everything is fine.

Until the next downturn. Until the creditors come calling. Until the school loans come due, or the baby is born, or it’s time to pay for college or a wedding.

Until it’s time to retire and the social security check isn’t enough to pay the bills.

Count me among those whose happiness index rises each time I put aside some money for the future. Add me to the list of people who’d rather not charge something on a credit card, especially if it’s a purchase I’m not sure how I’m going to pay.

Last week I flew home from a week’s vacation in the Dominican Republic, happy as a clam, not only because I missed another nor-easter in New England, but also because I didn’t spend all the money I brought for my trip to the sun. Just a little bit of cash to put aside as I begin saving for my next trip.

Which brings me back to the point of history and not being doomed to repeat it. Thirteen years ago, when I started saving my $5 bills (I’m just over 40K in fives now), I was an active credit card user who worried a fair amount about money. I had two kids in college, a couple of mortgages, and not always enough money in the checking account to pay all the bills.

All that’s changed, but so too has my mindset. Money in the bank is an investment in my future. Every $5 saved is a little more towards that goal. Debt serves no purpose, while a savings account gives me the freedom to explore my purpose.

Undoubtedly, there will be another recession. No one knows when or how long it will last if it comes. When and if it does, I hope I won’t be the only person who rests a little easier because they’ve put away a little (in $5s!) for when the downturn comes again.

Yours in Fives,