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10 Years Ago

This week we “celebrate” the 10-year anniversary of what we now call the “Great Recession” or the “Crash of ’08.” Exact starting dates are hard to pinpoint, but the Dow-Jones Industrial Average (DJIA) had crossed 14,000, and it looked to be on a roll. 17 months later the DJIA reached 6547, or a decline of about 54%. The economy joined the market in a free-fall. What happened?

There are as many explanations for the problems in 2007-2009 as there are economists, authors, politicians, and the various other “talking heads.” What they have in common is general agreement that one of the main contributors was excessive debt. Debt for housing, debt for cars and trucks, debt for education, credit card debt, and perhaps worst of all, debt for lifestyle. When the delicate balance of income and outflow was exceeded, the downward spiral began. The economic pain is still being felt by many people, and the last thing we need is a repeat performance.

Today we see signs that memories are fading over time. Most of us have no interest in re-creating the situation that led to the problem. But, there is an entire younger generation that has no vivid memory of the dark days of 2008. We owe them the guidance necessary to avoid a recurrence.

Personal debt is rising, along with loan defaults. High-risk (“sub-prime”) auto loans are buoying up the auto industry. Mortgages with ultra-low down payments are once again available, and student debt is at an all-time high. Without slowing the growth of debt, people are inevitably going to receive harsh reminders of the dark days.

You don’t have to participate in whatever pain and suffering might afflict others. Managing personal finances is not particularly difficult, but is frequently easier when working with a qualified financial advisor. Van Wie FInancial is dedicated to helping our clients to objectively manage debt, income and assets.

True financial independence requires planning and discipline. The rewards are life-long.

Will someone please tell the U.S. Government?

Van Wie Financial is fee-only. For a reason.