We Need to Talk…

It’s been a rollicking start to the year. Markets are high as kites! Unemployment is super low! Bitcoin billionaires are everywhere!!

And earnings season is just about to kick off again, so get ready for more superlative headlines.

Even battered retail is cheering. The latest rocking headline comes from Target ($TGT). Guess why? Because people like us flocked to them more than expected over the holidays. Yay for Target.

And yay for the credit card companies. We’ve been spedning up a storm. And Visa ($V), Mastercard ($MA) and Amex ($AXP) (which are all public companies) have reaped the benefits. Their stock prices are all up over TWICE the market average over the past year

But… Yikes for us when we open those January credit card bills.

So let’s pause there. When times are good, there can also be a more somber flip side. Take credit cards. Credit card debt is usually the elephant in the room when we talk about money.

What happens when times are good is people spend. Even if they’re in debt already. But here’s the thing. It’s safe to assume that at least every second adult that you come into contact with is carrying some serious credit card debt.

A sober side to the DOW@25,000 news is that the percentage of families with zero or negative non-home wealth is now over 30% is the highest its been since 1962. The boom has left many behind.

Most people know the right things to do. Pay bills on time, don’t miss payments, don’t incur high interest debt. But the world is delicious and distracting. And the plaintive “set a budget in the new year” can be very easily drowned out by the NEW YEAR’S SALES signs. This year almost TWO TRILLION dollars will be spent globally by marketers, separating us from our money.

And pretty much no-one is immune.

Because financial health is so closely linked to income and spending habits, feelings of guilt and shame and “oh-my-god-everyone-has-it-together-except-me” can easily come from our credit card bills.

And we are not helped by the peddlers of debt. Every day new companies are launched that focus on new & improved ways to load people up with debt. Why? Because it’s a great business for them.

So what does this mean to you?

Know that good news for the market isn’t necessarily good for the humans of the world. As human beings, we wear two hats every day – one as a consumer and the other as an investor. The headlines and policies right now are firmly pro investor. Which is great for you the investor.  But remember that 70% of the GDP is consumer spend, and at sky high debt ratios, things can get messy

So try to balance your two hats. Make sure you wear your investor hat and take advantage of this booming market. But make sure you wear your consumer hat with caution. Don’t get caught up in the marketing hype and overspend. Keep your credit card debt in check!

Team GoldBean

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