Consumer Spending Binge Will End Badly

Americans are spending their paychecks as fast as they are handed out. The Commerce Department reported February 1, 2007 that the savings rate for 2006 was a negative one percent, which means people spent more than they earned.

For years Americans have been on a spending binge using easy-to-obtain money from credit cards, home equity loans, and inflated stocks prices. Rather than save for their retirement, people are spending most of the money that comes their way.

But this spree will end sometime. As baby boomers retire, many will be strapped for money and will be forced to cut back on their spending. Or they will be need to continue working well past 65 years of age just to pay their bills.

You can avoid the retirement cash squeeze if you reduce your spending and begin to save and invest now. See our book called Eat Your Spinach to see how you can spend less and save more.

Posted February 2, 2007.