My wife and I just paid our monthly bills and noticed two changes that are going to affect us and millions like us. First, our heating bill is up dramatically from the same month last year--over double. We have a heat pump and a pretty insulated home, so we can absorb the increase for a few months, but a retired friend of mine (think fixed income) is complaining of a $450 natural gas bill. I don't think he is alone. Lots of people are wearing extra sweaters this winter.
Second, and in the same month, our minimum credit card payments have doubled, prompting my wife to look into refinancing our home. In our case, pulling equity out of our home to pay off our credit cards is possible and will, no doubt, save our budget, but my wife asked how we are going to avoid running up credit card debt in the future. Like most Americans we haven't experienced any dramatic increase in our wages is years. We are over 50 so we are holding on to what we have as hard as possible. We talked about it and have agreed to cut up our cards, or at least, use them only in emergencies. From what I read nearly everybody has had a similar increase in minimum credit card payments.
What does it all mean? Well, in our case, we are not going to be buying that big screen high definition television until we save the money to pay cash. Neither am I going to be buying a new deer rifle, or any thing else that might be considered a luxury. We are probably going to cut back on our travel. Nothing bad about any of that, but assuming my wife and I are not alone in cutting up our credit cards, think what enforced private virtue means to the economy in general. Two hundred million people cutting back on credit card purchases could throw our economy, and the economy of the rest of the world, into a recession. Maybe it is a good thing in the long run, but bad, bad, bad for the rest of this winter and into the summer. Enjoy the Rose Bowl Parade.
