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This post was guest blogged by Dan Tanner of dan-ruth-tanner.com

Here in America, where everyone has credit cards and automatic teller machines (ATMs) and the Internet make banking and purchasing a 24-hour/7-day-per-week proposition, people are supposed to be somewhat sophisticated, or at least not completely naïve, financially. But that is not the case, and as a result our economy is in crisis, not just from the cost of the war in Iraq and Bush’s deficit spending and the imbalance of trade, but also because people consistently make bad choices against their own self interest. The home finance market meltdown is but one example. Sure, everyone in the picture – borrowers, lenders, brokers, bankers, traders, bond insurers, and even politicians – share in the blame, but none of it could have happened if the borrowers had exercised common sense in the first place.

Dominicans can learn from the miserable American example. My wife Ruth and I have weathered hard economic times and avoided these pitfalls. Both of had parents who were tempered by world wars and the Great Depression, and passed on to lessons that we heeded and which I’ll now share. Remember these three rules:

  • 1.Know the difference between what you want and what you need.
  • 2.Be patient.
  • 3.Nothing is free.

I’ll illustrate these rules by giving examples:

Know the difference between what you want and what you need. My mother had an older brother and one younger. My older uncle did well in business and would make loans to his younger brothers and sisters if they needed money. He would always ask what the money was being borrowed for. It had always been for some real need; a rent payment, to pay a doctor, etc. Payback of the loans was always a matter of honor. A payment might be missed, but that was infrequent.

It was never stated, but well understood, that if for some reason a loan could not be paid back, my older uncle would not be putting his younger relatives and their families out on the street – he was not like a bank. One day his youngest brother asked for a loan and when asked what it would be for, he replied that he wanted to buy a TV set. My older uncle refused him the loan, telling his young brother that he did not need a TV set, he merely wanted one. Too often, people can’t make that distinction, and then they can’t wait for what they want, leading to the second rule.

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