Yesterday I heard a story on the radio that grabbed my attention. I was listening to National Public Radio, or NPR for short, and a lady from (insert name of the university that she taught at here) was talking about a recent research study that she did. the study looked at American spending and not what we spend our dollars and cents on, but how we in fact spend those dollars versus those cents. The basis of the study was based on her assumption that we will spend coins first, then smaller bills second, and continue to save as we make out way through our wallets.
To test this study she decided to park herself, and a truck load of cash, outside a busy gas station. At this station, standing by the door, she would offer each person walking in the front door $5. She offered the $5 in three varieties. First she would give them the money in all quarters. The second was in all one dollar bills. And the third and final way was as a single bill. She would tell them to treat it just as it was, free money. Each person was sent on his or her way into the gas station with their new found riches.
When each person that she had given money to came out of the gas station she stopped them yet again to see how much of the money they had spent. I do not recall the actual percentages, but the number of people that spend the change first was insanely higher than those that spent even the dollar bills, let alone the five dollar bill.
So what does that mean? Well, according to the woman that presented this study, a lot. She made mention to the stimulus packages that President Bush approved, and the one that our new found “leader” is establishing, as being a waste of time. The end result of these checks and added funds to our back accounts is coming in lump sums. Take the Bush package.
President Bush handed out billions of dollars (and do you ever wonder where that money is coming from in the first place) to individuals and families alike. I received (actually my father did since at the time I was still on his taxes) a check for $600. Every individual in the United States of America received no less than $600 if you were a working tax paying individual. (I had heard that even those that were not working individuals, or rather those in the unemployment line every morning, still got a check for $300.)
So that check, assuming that I had received it myself, would have gone to one place; the bank. Why would I take money that is being given to me for doing nothing more than opening my mail, and spend it? What do I gain from that other than immediate temporary satisfaction? $600 is not going to buy me much of anything worth keeping anyway. So I, and I hope most smart Americans, would take that check to the bank and deposit to gain interest. Call it my rainy day fund.
And them the new leader comes into play and gives us a hush hush refund but does it in smaller, one year increments. This package is in the size of $20 that will be added to each pay check that we receive over the next 12 months. And he did this so quietly that no one even knows we are getting this money. I actually had to ask when I saw that my check was a touch more than it usually was. I did a little research and learned that was his idea of how to boost this economy. (Do you think an extra $20 a pay check, which is every two weeks for most of us, is going to boost anything?)
So the lady that handled the research study (she tested 2,000 people in this particular study) has come to the solution to boost the economy. She feels that we should send out the next stimulus package in small bills or even change. (Did you know they have stopped making the penny?) She stated that if they (the government) provides another package that it could be as small as $20 as long as it is in nothing more than $1 bills.
For me nothing would change. I would laugh at the fact they spend as much as it would cost to ship change, and I would laugh even harder if they tried to ship cash. Can you image how many people that would attempt to steal that? Sure, your mail is “protected under threat of federal charges” if opened by someone other than the name attached to it, but how could they ever track that much cash?
There are a few things that will help our economy. One is government spending and bailouts for all of these fortune 500 companies that are failing left and right. Stop it. Until we let companies live and die, which is what the foundation this country was built on, we will never move forward. We take tax dollars to bail out a company that has failed on their own. Who is responsible for that? The government? No. The stock holders? No. It is the people who make the financial decisions and pocket millions of dollars a year to self benefit from his or her company. (Does anyone remember Enron?)
So if we are given small bills and change to help this economy we will get nowhere. $20 will not help. But erasing credit card debt will. Lowering interest rates on home owners will. And if the government wants to get involved then it needs to produce some sort of standard with loans and creditors. When I got my first credit card (and I have never carried a balance on it yet) I was given a $7,000 credit card balance per month. The year that I got that card I made just over $12,000 for the entire year. But the bank was allowing me to spend $7,000 every month. This was with a 20% or more interest rate. (I think my first card was 24.9% to be honest. I am right around 12% now.) Stop loaning newlyweds $250,000 for a house when the combined income is a fraction of that. Yeah, they make billions of dollars on interest but it is coming back to bite everyone in the butts. With some of the highest levels, and always increasing, of unemployment no one is getting help.
I am actually getting to the point where I am sick and tired of hearing about it. I get it; you don’t have a job. You are not alone. I get it; you have to budget your spending because we are in such a terrible economy. You do not have to remind me every day that you are struggling. I heard you the first thirty-five times. (That is one of my biggest pet peeves. Did you know that when you type, or write, a number like thirty-two that you have to place a – between the words? Write down fifty-two, forty-eight, or three hundred twenty-two and see if it does not look weird without that hyphen.)
(I was told yesterday that I tend to get off topic on my blog posts. I agree to an extent. I feel that my posts are to be viewed, at least by me, as an open forum for my thoughts to run wild, and for me to jump up on my soap box, about issues that are effecting the world. Do I loose track; sure. But I think that is OK. The underlying topic is always there and I never jump from one subject to the other without provocation. I just wanted to make sure if you had realized that you are not alone. I know it as well and I apologize in advance if you see this in the future.)
But I need to get to the bank before they close. I need to cash in my pack check. I hope they have enough dimes.