Throw a stone in any direction and you will hit someone who believes (or at least is behaving as if s/he believes)
that we should borrow O.P.M. – other people’s money – from banks, finance, lease and credit card companies, to support our current lifestyle… But that

we should put up, sock away, accumulate the “serious money” for the future, in retirement plans, long-term investments, even risk-based accounts so that we’ll have a real chance of hitting a home run in retirement (whatever that means for you)

prevailing-theoriesThe Prevailing Theory is that our savings and investments will overcome and surpass the debt at some point in the future,
and we will be able to erase all our debt, by virtue of the mass of wealth that we have built up in applying this theory.
Is that what you believe?  And is that your Plan?  Or is it simply your Hope?  (with fingers tightly crossed)

Do you firmly believe that your Savings will absolutely surpass your Debt?
 Can we now investigate the truth of this strategy?

The Prevailing Theory is causing the majority of Americans to sink into a deepening spiral of debt, possibly never to be overcome.

While the Prevailing Theory may sound appealing and attractive, the reality is that an overwhelming  of Americans are only saving about 5% of their gross wages.
So if you are earning $ 100,000 you’re probably struggling to save $ 5,000 every year without touching it.

Here’s some simple math:  If your wages or income is $ 100,000 today, and you save 5% or $ 5,000 each and every year, you will have the grand total of $100,000 saved in 20 years.  Of course we’re not including earnings or interest on that money, but I’m trying to convey to you the
poverty (literally!) of that kind of thinking.  That gives you exactly ONE year’s income at retirement.

If you wanted to retire on 100% of your pre-retirement income (and who wouldn’t?) then you would need somewhere North of 30-40 times that income in some form of savings, to allow for inflation, unexpected expenses, market losses and inflation,  to name but a few forces working against you.

So if one theory is inaccurate (by light-years) what else is floating out there that may be insidiously working at cross-purposes to The Goal?
We’ll explore the others in depth as we continue this series.

But for now, consider your thoughts, views and actions that may be playing right into this Prevailing Theory.

And think about who might profit from this argument, if it’s not you!

– Joe Pantozzi

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