Clark Howard's Tips
June 26, 2008
A highly respected organization called the Conference Board is known for issuing reports that usually only appeal to pointy-headed economists. But right now their reports are getting a wider audience in regular newspapers because they're so headline grabbing.
Here's the latest scoop: People's expectations about the economy are the worst they've ever been since the Conference Board's survey started decades ago. In an unusual twist, people are really personalizing their worries. It's not just affecting the "guy down the street" anymore.
A separate Bloomberg study reveals that 75% of people blame Pres. Bush for the economy's woes. Even among Republicans, there's a 2-to-1 ratio of people who say it's all Bush's fault. The truth is presidents are given too much credit when things are great and take too much blame when things go wrong.
Through it all, Clark remains optimistic for our country. We have inherent advantages. We run -- for the most part -- a clean economic system that's free of corruption. We have the rule of law. Many other places don't have either of these. We also have our entrepreneurial spirit.
If entrepreneurs listened to the naysayers when they had a new idea, nobody would ever get started. Clark opened his first travel agency in 1981 at the tender age of 25. At that time, a know-it-all who worked for Eastern Airlines tried to dissuade him. Well, Clark's business went on to boom and the know-it-all had to jump ship when Eastern collapsed.
The truth is that how we handle our wallet creates more insecurity than we need to have. You must spend less than you make -- period. Owing money to everyone is no way to live because it creates intense anxiety.
We've got to get into the mindset of de-leverage, which is a fancy term that means spending your own money instead of borrowing other people's money to spend.
Real estate developers used to be able to borrow 100% for their builds. Now it's a different story. The pendulum has swung back. Look for a decrease in the number of shopping centers, office buildings, speculative residential builds and more. This will help bring us back into balance.
For the time being, step back from the doom and gloom if you can.
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