Archive for the ‘financial’ Category

Bare Truth or Fairy Tale? (Is Little Red Riding Hood & The Wolf One And The Same?)

July 28, 2008

Because tough choices were made, the global crisis did not catch us helpless and unprepared. Through foresight, grit and political will, we built a shield around our country that has slowed down and somewhat softened the worst effects of the global crisis.

We have the money to care for our people and pay for food when there are shortages; for fuel despite price spikes. Neither we nor anyone else in the world expected this day to come so soon but we prepared for it.”

State of the Nation Address (SONA,) Pres. Gloria M. Arroyo, 2nd Regular Session of the 14th Congress Republic of the Philippines
28 July 2008

Like Filipinos, Americans Have Money Troubles Too!

July 16, 2008

In an article by Glen Curtis (Investopedia.com,) an interesting graph from US Bureau of Economic Analysis caught my attention. It’s a telling illustration of our floundering savings rate when the cost of living around us is skyrocketing.

Waking up to a world threatened by economic uncertainty and global recession, Americans are unable to save enough for the future. They have pressure from poor countries who ask them (plus their rich counterparts in the developed world) to share and redistribute wealth worldwide to stave off scarcity and famine.

But like Filipinos, Americans are aching in their pockets too. They don’t save as much money as before.

Burdened by impulse buying, house mortgages, and rising costs of credit card debts, the average personal savings rate of Americans is negative 0.5% in 2005, a time when they dug deep into their savings and spent all their incomes. This was close the worst savings rate in 1933 at the height of the Great Depression when savings rate plunged to negative 0.7%.

Today, the US income savings rate is about 0.5%, far short of the recommended 10%, to protect from unexpected money troubles in the future. According to experts, a savings below 5% of income brings serious possibility of financial ruin. They advise an allowance of at least 6 months of salary savings to cushion for any unforeseen change in our cash needs—unemployment, loss in natural disasters, illness, divorce, death in the family to name a few.

More belt-tightening is required of us to avoid becoming a bankruptcy casualty. We need to work harder and longer. It’s important to know where we are in our finances so we can make the needed corrections before our money situation worsens.=0=