Monday, July 27, 2015

Your Uncle is no longer rich

For as long as I can remember, I have enjoyed the Fourth of July festivities with my family in northern Michigan.  But this year was different.  This year, my family packed our suitcases and we were off to Greece for a vacation that concluded with our attending a real Greek wedding.

Months ago when planning for the trip, I was keenly aware of Greece’s precarious financial situation with the Eurozone.  As the travel dates approached, it became apparent that we would be in Greece during the height of their financial crisis.

As a financial advisor, I’ve been through numerous financial downturns and crises, including the recent near meltdown of the U.S. banking system in 2009.  But until my recent trip to Greece, I have never had firsthand experience of a nation defaulting on their financial obligations and ultimately closing their banks.

I take a fair amount of good-natured ribbing from friends because I have never used an ATM.  For most of the younger generation, financial transactions are executed primarily with plastic cards.  And on those rare occasions when cash is actually needed, they usually find an ATM for the ever-popular plastic in and cash out transaction.  Some have probably never been inside a bank.

While in Greece, it was quite a rude awakening for one of my family members when the plastic card went in and no cash came out.  At the time, ATMs were totally shut down.  Eventually, they began working, but there was a daily limit of $60 Euros per day.

The European newscasts, which were quite critical regarding the reasons why Greece was in such poor financial shape, sounded very familiar.  The criticism centered on the contention that Greece was overspending and had an enormous amount of unfunded pension obligations.

Listening to the newscasts critical of Greece, it occurred to me that they could have just as easily been talking about the good old USA.  After all, Greece’s problems sounded eerily similar to the financial issues we’re facing right here at home.  I say this because we have an $18 trillion national debt that continues to grow and across the nation we have a serious problem with underfunded pension obligations.

I don’t want to be a purveyor of Doom and Gloom, but our government needs to become just as fiscally responsible with our finances as you are with your household budgets.  If you aren’t responsible, bad things can happen.  The same holds true for Uncle Sam.

Most of us have never experienced a bank holiday where we could not get our hands on our own savings.  I’m not suggesting that the U.S. will follow Greece’s lead, but in this world anything is possible.

Households, businesses and nations all have to be fiscally responsible.  Overspending ultimately leads to financial issues.  As I have stated before, politicians cannot alter mathematics.

Overall, my trip to Greece was an enjoyable, once in a lifetime experience.  The history is incredible and the scenery is breathtaking.  But, no matter where your travels take you, there is never a vacation from money issues and concerns.

I am pleased to share that I will be one of the speakers at the Healthy, Wealthy and Wise program sponsored by the Society for Lifetime Planning on August 18th.  For details, please call 248-952-1744.

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