(photo: Daniel Oines)

Happy New Year!

It’s traditional to make a resolution for change, and what better time than now? The best resolutions are for changes that will make us happier, better able to act in the world, but it’s hard to carry them out. Every year it’s the same at the gym, dozens of people I’ve never seen show up; we regulars call them New Years Resolutionaries. By the end of January, things are back to normal, with one or two new people. It takes more than a vague dream of losing weight to motivate people to make all the changes you have to make to get that daily workout into your schedule.

The same thing is true of our economic lives. It isn’t easy to change our consumption habits, or our savings habits. But let’s face it. The oligarchs have won. They want austerity, and tax cuts, paid for by cutting Medicare and Social Security. Obama and the Democrats think that sounds great. We can only protect ourselves by saving up a lot more money. Even those of us who are in relatively good financial condition can use a checkup. The best part is that living this way will, in the long run, hurt the oligarchs.

A good first step is to tune your radio dial to Dave Ramsey when you’re out driving around. Ramsey has a simple plan for getting out of debt and straightening out your finances. I first met Ramsey in the late 80s when the radio station he was working at went into bankruptcy and my law partner was appointed Chapter 11 Trustee. When I tune in today, he is saying the exact same things he was saying then. I frequently recommended that my bankruptcy clients listen to his show.

I don’t agree with all of his ideas, and the religious side may be off-putting to some, but the plan works. At one level, it sounds just like the ideas in the book The Millionaire Next Door, by William Danko. You may never be a millionaire, but you can use the same ideas to survive.

Ramsey’s plan shows you haw to get out of debt, but more important, he talks about living debt-free. That is the first step towards banging on oligarchs. Remember, the wealth of the rich is dependent on our willingness to buy and buy, especially on credit. That flow of interest income is the lifeblood of the oligarchy. Wealth today is not in physical assets, but in the form of financial assets, like stocks and bonds. Retailers can’t make money in vast quantities because of competition, so they lend you money and add usurious interest to their income. If you quit borrowing, they lose that income. When the income drops, the price of the stock drops. For example, people quit going to Sears because the know-it-all venture capitalist who controls the company quit upgrading the stores. Now the company is losing money and closing stores. The stock price is down 58% in the last year.

The same principle works for you in every single consumer decision. Let’s take an example. You like Coke. You drink a can pretty much every day. If this were a diet post, I’d point out the empty calories, but since it’s a financial post, look at the cost, say $.30 per can on average. That comes out to maybe $100 per year on Coke. It won’t matter to the company if you quit drinking it. But, suppose 100,000 people who shop at Kroger quit drinking it. That reduces revenues at the Kroger store by $10 million. Kroger stock sells at a price to sales ratio of .16. Our example reduces the value of the company by a very small, but very real, $1.6 million dollars. That comes out of the pocket of the management of the company as well as the shareholders. Think how that can multiply around the country.

It has ramifications beyond Kroger. The stock of Coca-Cola falls a tiny bit. The price of the tin can supplier drops, the price of the sugar sellers drops, and the price of aluminum drops. These are only tiny fractions, but there are lots of us, and those tiny fractions add up.

One more example. You buy bottled water for $100 per year. Stop. Make a tax-deductible contribution to your public radio station of $65, and they’ll send you a half-liter aluminum bottle with their logo. Fill it with tap water and carry it around. That’s $100 the Kroger store will never see again, and neither will the Coca-Cola company, which owns Dasani, and sells purified tap water in plastic bottles. You get the same outcome, except that you reduce the number of plastic bottles instead of the number of aluminum cans. Bonus: you support your local public station.

If you look at the things you buy like this, it gets really easy to figure out the things that give you real pleasure, and the things that you do simply because you have always done them. Get rid of the latter. Save the money. You’ll need it.