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Many Long Beach homeowners are suffering from an insidious disease called Grandpa Economics.  Actually, so are many Californians.  I suppose most of the country suffers from this affliction. 

Grandpa Economics or Depression Economics starts off with the theory that you go to school, study hard, get a good job, save up money, buy a home and pay it off, save more money, retire, and live debt-free on a pension and/or social security.  That was a great plan for our grandparents.  They are often referred to as "The Greatest Generation" and I don't wish to take away from their many accomplishments.  They lived through the Depression, fought the war, built the roads and ports in our state, and were the backbone of our country.  These children of the Depression put Long Beach on the national map!

So why would I suggest that this thinking is wrong for the middle class of the new millennium?

The rules are entirely different today.  You see, the federal government, under the leadership of President Roosevelt, moved towards a paternalistic economy.  When the veterans came home from Japan and Europe in the 40s, the US government provided them with a free education under the GI Bill.  The country was beginning an arms race with the Soviets that required massive government investment in the defense industry.  President Eisenhower coined the phrase "Military Industrial Complex" and warned us of our reliance on it.  Skilled work in Southern California was a plenty during the 50s, 60s, and 70s.  The employers mirrored the paternalistic nature of the government and provided good paying jobs with fantastic benefits.

So powerful was the influence of Depression Economics that  "The Greatest Generation" passed along that thinking to their children, "The Baby Boomers".  If you are a Boomer (or an older Gen Xer), you might remember these sayings:

• "Take all you want but eat all you take"
  
• "Shut the light!  Whaddayouthink?  I'm buying stock in Southern California Edison?"
  
• "Watch the pennies and the dollars will take care of themselves"

What are some of things we've done in the past 15 years that exhibit Depression Economics?  Have you refinanced your home from a 30 year mortgage to a 15 year fixed-rate loan?  Did you set yourself up on a bi-weekly payment program for your home loan?  Have you left tens of thousands of dollars in your savings account at the bank, earning a paltry 3% because of the "safety" of an FDIC-insured institution?  If you've answered yes, to any of these questions, Depression Economics has had an influence on you

The rules changed in the early 70s and then again in the new millennium.  In fact, economic rules change about every 25-30 years so don't feel too bad about it.  The effects of our upbringing influence our habits towards money and investing throughout our lives.

In this series, Move Your ASS-ets, Long Beach,  I'm going to outline these changes in our economy and make suggestions about how you can position yourself for success in retirement.  HINT:  It ain't by following Depression Economics.

Part Two:      Boomer Economics

Part Three:   Millennial Economics

Part Four:     The Worst Investment and You Probably Own It

Part Five:       A Strategic Solution For Financial Freedom

Part Six:         Recommendations For Action

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