Rejecting the Debt Economy

There is a pendulum shift going on in this country, and financial industry leaders should beware. Younger generations of Americans will not rely on credit and allow themselves to go into debt the way previous generations have before them.

What happens with any generational change is a rejection of old and antiquated ideas in favor of new, enlightened perspectives. Our reliance on debt is something that has gotten us in too much trouble, and more and more American's are craving a life that is free from it.

For younger generations of Americans (twenty and thirty-somethings), we have watched from the sidelines as our business and government leaders have charged their credit cards to pay for excesses that would have never been purchased had the credit not been there. We've seen businesses go bankrupt or become servants to their banking lenders because they spent money they didn't have, borrowed it from someone instead, and now can't pay it back.

We've watched as the U.S. government has borrowed to the point to where it is now in jeopardy of losing it's AAA credit rating. Our national debt continues to grow to the point to where it seems like it's almost impossible to pay it back, while all the while we continue to add to our budget deficit.

It's unsustainable, and we know it. Younger generations want nothing to do with it. Debt stinks.

Dave Ramsey is a financial guru who preaches debt free living. He advocates paying cash for everything, with no credit cards under any circumstances and the only form of debt that is even remotely acceptable being a home mortgage.

As a Christian who grounds his financial philosophy on the teachings of the Bible (his message is mostly secular), Ramsey started by making waves and hitting a nerve with younger Christians who were eager to hear his message and start taking the steps to become completely self-reliant.  His message is starting to resonate with more non-religious people, and everyone should start taking notice.

What's interesting about the Dave Ramsey phenomenon, more than anything else, is that it is the younger people I know who are talking about the message and actively seeking to become debt free, and not so much older adults who are now in positions of leadership within businesses and governments.

For the financial sector, this means that while eager borrowers are still out there waiting to borrow, there will be less and less of them in the future. Banks who think that the demand for loans will never change are no different than newspaper publishers who always thought we would want to read our print stories from the local newspaper.

Perhaps I'm completely off the mark, but there's always the chance that I'm right. Financial service businesses should be thinking about this now before they find themselves in a position that's even worse than temporarily not being able to lend money: not having people who want to borrow it from them to begin with.