What the World’s Largest Lollipop Has to Do With Our Financial Problems

July 27, 2012

I read this article about the world’s largest lollipop.  It checked in at a whopping 7,003 pounds and I had a few thoughts as I was reading it.  First, I saw it was chocolate and I thought that my daughter and I would LOVE to have this delivered straight to US!!!  We both love chocolate. 

But I digress…I thought about how our culture has been moving to a “bigger is better” philosophy pretty much my entire lifetime.  Super-size me!  We like restaurants with big portion sizes, we drive SUVs and minivans, we keep moving to bigger houses.  The whole time, painting with a very broad brush here, we are going further and further into debt.  That big lollipop gave me a moment of pause when thinking about our cultural “bigger is better” mentality that was fully in effect right up until the recession gave many of us a serious wake-up call.

Over the last 4-5 years, our economy has not exactly been firing on all cylinders.  Unemployment is too high.  Growth is too low.  Our national debt keeps climbing.  Far too many people have lost houses to foreclosure and/or filed bankruptcy.

Debt isn’t always bad, but I have seen such negative consequences for people I’ve met with over the last several years that I have become very debt averse.  Much of that debt was not incurred because of need, but rather because of our desire for a bigger lifestyle.  We always expected our incomes to go up.  We always expected our home to rise in value.  And, our financial behaviors were symptomatic of that.

We (again, speaking very broadly) had great expectations for our futures.  The recession and lackluster recovery since then took us in the opposite direction. The net worth of Americans has dropped by ~40% over the last 3 years.  The drop in real estate values is the primary driver of this, but our large appetite for debt is another big reason.  Every dollar spent on interest payments on our debt is a dollar that isn’t able to be saved. If we want to chase a “bigger is better” philosophy, the “bigger” component should be our net worth if our goal is long term financial security. Fortunately, I have seen more people lately who have a new found commitment to making progress in reducing their debt load, getting back to financial basics, and making positive behavioral changes.

Behavioral change is how we make progress in our lives.  It works with fitness & nutrition.  It also works with our finances.  When I meet with someone who is in financial distress, it is often their “old” financial behaviors that got them into trouble.  Occasionally, it was something completely out of their control, but that is the exception not the rule.  Within a short period of time, they have changed just a few behaviors (modify spending habits, increase savings, pay down high interest debt, etc.) and their personal financial crisis turns into a mini-crisis and then a speed bump and then a memory.  That big lollipop, chasing the dream of “bigger means better” can either be a negative (if the bigger leads to a life of cash flow issues brought on by “bad debt”) or a wonderful positive (if the bigger is your net worth).  The choice is yours.  I think I’m going to go share some chocolate with my daughter now…