Personal Finance

Carmen: The Silver Lining of the Financial Crisis

I was a guest on Boston's 108 KISS FM this morning and had a great chat with show host Matty about all this painful economic mess we're all in. After we grappled and grumbled and analyzed what got us here and what's being promised now to clean things up, Matty took us where we all want to go: "You've got any hopeful news, Carmen..?" You betcha.

Some of the worst things that happen in life offer the best opportunities and gifts. Today's gift: We're on our way to living a better life with our money. The market may or may not have hit bottom yet, but we as consumers, hit our bottom when the market peaked—when we reached the crest of overextending ourselves on credit. When the biggest number of us bought too much house or bought a home the wrong way (Can any of us really predict where we're going to be in 5 to 7 years? Or where mortgage interest rates will be? And if we'll be in a position to afford the adjustment?). There was too much credit floating around and HELOCs and 'priceless' cards were being pushed on us as an American right. Well, it was wrong.

So here's what's good about what's happening right now. Retail sales show we've slowed down our spending. Credit card data shows that we've cut down using our plastic. Poll after poll shows that we've all made a pledge to spend less and save more. I want to break out in applause! These are good things—good habits. These are solid habits that build a stable financial foundation for us, our future and our family. There is nothing dull or anti-American about wanting to be financially stable, about not wanting to use plastic or the equity in our home just because we can. Sure it will take some time to get a consumer-spending based economy running again if we're not spending. But after that time, what we have built will be sustainable. It will last.

And that is the biggest silver lining of all.