5 Money Problems We Didn't Have 50 Years Ago

DAVE RAMSEY

Times they are a-changin’.

Bob Dylan sang it best on his iconic 1964 album. It was a decade of monumental events like the March on Washington, the British Invasion and Neil Armstrong’s moon landing.

Along with some major cultural shifts, America’s relationship with money was shifting too. But not necessarily for the better.

Here are five money problems we didn’t have 50 years ago—and the modern mend for each.

1. Retirement money was guaranteed.

In 1960, 41% of private sector workers were covered by pension plans. But with retirees living longer than ever and drawing retirement benefits for 20 to 30 years, companies can no longer sustain the pension plan model. Now workers are in charge of saving for their own golden years.

Modern Mend:

With a 401(k) and a Roth IRA, you’re in control. You get to pick your mutual funds and contribution amounts. (We recommend saving at least 15% of your household income in good growth-stock mutual funds.) Plus, you don’t have to worry about the company going bankrupt and losing all your money!

2. Identity theft wasn’t an issue.

Pretending to be someone else has been around since Jacob and Esau. Just not on today’s scale. In 2014, 12.7 million consumers lost a total of $16 billion to identity theft. If you had an open account with Target, Neiman Marcus, Home Depot or eBay in recent years, you probably learned this firsthand.

Modern Mend:

Reduce your chances of getting hacked by canceling your credit cards. Give the envelope system a try. Use cash for your day-to-day purchases and protect your debit card account with some inexpensive identity theft insurance. Should the worst occur, this takes the hassle out of cleaning up your name.

3. Health care didn’t cost as much.

Fifty years ago, health care spending was high at $23 billion. Now, it’s absurd at an estimated $3.1 trillion and growing. The average family’s cut of that? According to the annual Milliman Medical Index, the typical family of four paid nearly $15,000 in health care costs last year.

Modern Mend:

First, save up your emergency fund to equal three to six months’ worth of expenses. Then see if you can lower your monthly premium with a higher deductible plan. (Check with an insurance pro before you change medical plans.) Finally, take that $200 or $300 you’re saving each month and put it in a Health Savings Account to cover deductibles, co-pays, contact lenses or dental appointments. It’s tax-deferred and it gives you a cushion for your out-of-pocket expenses.

4. Credit cards weren’t in our wallets.

Credit cards officially came on the scene in 1950 with the introduction of the Diner’s Club; however, the whole buy-now-pay-later thing didn’t explode until the late 1970s. Now, the average American has 2.6 credit cards. And of those with credit card debt, the average outstanding balance is $15,355. Gulp.

Modern Mend:

Cut up your credit cards. All of them. Yes, even if you’re the kind of person who usually pays off your balance in full each month. No one is above slipping up. Instead of charging stuff, save up for what you want before you buy it. Crazy, right?

5. We didn’t have truckloads of debt.

In the early 1960s, the average American’s debt was less than $4,000. Now, it’s a stunning $129,579! That includes credit cards, mortgages, auto loans and student loans.

Modern Mend:

If you’re in debt, there’s hope! Use the debt snowball method to pay off your debts from smallest to largest. When you start building momentum and your balances begin to shrink, you’ll feel a huge weight leave your life. Once you’re free from debt, you’ll be able to spend your money on more important things like retirement, college and charitable giving.

Make Your Money Count

Before you start longing for the financial good old days, remember that your money is what you make of it. It’s in your control. Right now. So work hard to get out of debt, stay out of debt, and save for your future.

Your success has nothing to do with the generation you were born into. It has everything to do with you.

DAVE RAMSEY

https://www.daveramsey.com/blog/5-money-problems-didnt-have-50-years-ago?ictid=aw15