Americans Addicted to Consumer Spending.

First Command CEO Urges Prudence and Self-Reliance as Long-Term Solution to the Nation's Economic Woes

FORT WORTH, Texas -- With the economy struggling, Social Security overtaxed and company pensions fast becoming a thing of the past, government officials and ordinary Americans alike are wondering "what should we do?" But one expert argues that the question is not "what should we do," but "what should I do."

Scott Spiker, Chief Executive Officer of First Command Financial Services, claims government bailouts, rebates and other government initiatives will never get to the heart of the problem.

"Our nation and economy have become addicted to consumer spending," he said. "While Americans were saving between 7 and 10 percent of their disposable incomes back in the '60s and '70s, the rate is now close to zero. Meanwhile, credit card debt is soaring, home equity borrowing has topped $1.1 trillion and banks are reporting a surge in early withdrawals from 401(k) plans."

Spiker said while tax rebates may generate a few months of better-than-projected retail sales, in the long run they will only feed bad habits that must be changed.

"Today's economy is not-so-firmly grounded in over-spending, over-borrowing, under-planning and under-preparing," he said. "Government can't change that, but individuals can and doing so will serve them well in good times and bad."

Spiker said the too-little-used words - prudence and self-reliance - represent the only long-term solution to the nation's economic woes. The rules are simple:

* Live on less than you make

* Reduce debt in the near term, eliminate it in the long term

* Contribute to long-term goals in a well-conceived savings and investment plan

* Leave long-term assets alone to grow

* Manage risks of financial catastrophe with adequate planning and insurance

"Thanks to the Internet and both public- and privately-sponsored education programs, a wealth of information is available on how to accomplish these feats, and that may be part of the problem," Spiker said. "There is so much information people tune out. But in fact, getting back on track is a process every individual and family can start today."

Step one is making a budget, he said. This entails examining check registers and credit card records to determine how money has been spent in the past. Make a list of all income sources and write a plan that makes it possible for your after-tax income to cover necessary costs while paying down debt, building savings and providing for the unexpected.

"What people discover through this process is that most overspending traces to things they want, rather than things they need - entertainment and the broad category I call 'stuff,'" he said. "Breaking old spending habits is tough, but with a budget in hand and the knowledge that your future depends upon it, the choice of 'doing without' is easier to make.

"Too many people wait to start saving for retirement until after they buy a house or put their children through college," he continued. "This method seems logical, but it doesn't work. Time is critical to the growth of a retirement account. Putting off saving for retirement means missing out on the benefits of compounding, and it is practically impossible to make up lost ground once you get a late start."

Given the recent stock market performance, should investment plans avoid equities? Spiker says "no."

"What many investors don't realize is that non-equity investments can also carry risks, including the risk they won't stay ahead of inflation," he said. "If you have a significant number of years before you will be ready to retire, your investments have a lot of time to recover from periodic declines. The best course is to choose a mix of investments that will give your retirement savings the chance to grow over time."

About First Command

First Command Financial Services and its subsidiaries, including First Command Bank and First Command Financial Planning, assist American families in their efforts to build wealth, reduce debt and pursue their lifetime financial goals and dreams--focusing on consumer behavior as the first and most powerful determinant of results. Through personalized financial plans that emphasize accumulating wealth while reducing risk, First Command Financial Advisors have established lasting relationships with hundreds of thousands of client families since 1958.

First Command Financial Services, Inc. is the parent company of First Command Financial Planning, Inc. (Member SIPC) and First Command Bank (Member FDIC). Insurance products and services are offered by First Command Financial Services, Inc. Financial planning services and securities products are offered by First Command Financial Planning, Inc. Banking products and services are offered by First Command Bank. Securities products are not FDIC insured, have no bank guarantee and may lose value. In certain states, First Command Financial Services, Inc. is a separately registered domestic corporation and does business in California as "First Command Insurance Services."