Are We Supposed To Be Spending Or Saving?

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These days the government seems to be telling us to spend, spend, spend — but isn't that what got us into this financial mess in the first place?

David Leonhardt, economics columnist for The New York Times, gives host Liane Hansen some principles for spending wisely.

Dave Kansas And 'The End Of Wall Street'

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Dave Kansas

Dave Kansas edits The Wall Street Journal's "Money & Investing" section and is the author of The Wall Street Journal Guide to the End of Wall Street as We Know It. Harper Collins hide caption

itoggle caption Harper Collins

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As the number of home foreclosures and job losses mount, many Americans are taking a closer look at their savings, investments and debts and wondering what to do. The answer to that question, says financial journalist Dave Kansas, usually depends on who's asking.

Kansas is the author of The Wall Street Journal Guide to the End of Wall Street as We Know It. As he tells Weekend Edition host Liane Hansen, a number of factors should determine an individual's investment strategy, including age.

"A good rule of thumb is that your age should be where you are in terms of fixed income," says Kansas. "So If you are 65, moving to 65 percent fixed income and 35 percent stocks is a safer stance than having it at the reverse."

Kansas says the economic turmoil of the last year has changed the psychology of money and our views of saving: "Living within our means ... is the prevailing notion. And I think it's the appropriate notion."

To that end, Kansas advises paying down expensive credit card debt as quickly as possible before focusing on investing: "If you're paying 18, 19, 20 percent on credit card debt, if you make 7-8 percent on the stock market, then you're still losing ground."

And looking ahead, Kansas says, stocks can be good investment — provided investors stay in for the long haul: "Over the long term, I still believe that stocks will give you a better return than bonds or cash."

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