Dave Ramsey makes this comment, “even a turkey can fly in a tornado” in introducing his best seller The Total Money Makeover. He is describing the problem of greed. People buy stuff just because the money is available. This was part of the problem in the economic downturn in 2008. Here is what Dave Ramsey calls the 30,000 foot view that you would get from an airplane:
1. Greedy, broke people who wanted houses they could not afford got loans at high interest rates from greedy banks. These bad loans were called subprime loans. 80% of the subprime or bad loans were ARMs (adjustable-rate-mortgages). When housing prices started to decline, the ARMs began to reset at higher interest rates, refinancing was more difficult and mortgage payments could no longer be paid.
2. The greedy people could not pay their subprime mortgages and had to foreclose in recorded numbers.
3. The record number of foreclosures drove down the value and prices of homes.
4. Wall Street panicked and stocks plummeted.
5. People’s 401 (k) s dropped in value along with home estimates.
6. People stopped spending money and the economy slowed.
7. Companies went out of business. Ramsey gives a simple example: People stopped buying washers and dryers, so the washer-and dryer manufacturer started laying people off, jobs were lost and unemployment arose above nine percent.
Warren Buffett said, “When the tide goes out you can tell who was skinny-dipping.” Finally, Fannie Mae and Freddy Mac got caught selling packaged subprime loans as bonds.
Until each of us conquers greed we will be like the turkey who crashed landed and the skinny dipper who got caught nude in ankle deep surf. It will take sacrifice to over come our debt as a nation and individual. We can’t continue to spend like a drunken Congressman.
John Maxwell says, “If you pay now you can play later. But if you play now you will pay later.” Dave Ramsey similarly advices, “If you will live like no one else, later you can live like no one else.” If you sacrifice now and get out of debt, later you can grow wealth and be able to give more to help others. We have to learn to say “no” to things we can not afford now so later we can say “yes” to spending to the glory of God.
