Thomas Jefferson is a man to be emulated in many ways, but certainly not in the realm of personal financial management. He died deeply in debt, to the tune of $100,000 in his time (the equivalent of several million dollars today). While his retirement years were generally happy and productive, the knowledge of the disastrous state of his personal finances preyed on his mind.
Today, Americans have fallen into the same trap of personal debt. Nearly half of all American families spend more than they earn in any given year, and the average household now owes $8,000 in credit card debt alone. Mortgages have been refinanced again and again as if they were ATM machines, contributing greatly to the current global economic crisis.
If Alexander Hamilton, Jefferson's archenemy, were to magically materialize in 2009, I think the first thing he would do would be to start up a credit card company and start bilking people out of their hard-won cash. The manipulations of powerful financial interests are largely to blame for the present disastrous state of American personal finance.
But that leaves out much of the story. Americans as individuals have been living beyond their means for many years. Self-reliance and self-restraint has given way to consumerism of the grossest kind. If the long-term economic prospects of our country, and indeed the world, are to be protected, we not only need to implement rational reforms to our national financial systems, but we need to recover the spirit of self-reliance and self-restraint that prevailed in the country during Jefferson's day.
Watch this movie, Maxed Out, which describes in blunt detail how the greed of credit card companies, when combined with the naivete of the American people, has lead to the present crisis of personal debt in America.