Aug
19
2010

Buy local, save local, debt local

Late at night, Meaghan and I sit over cups of coffee and try to solve the world’s problems.  The topics vary greatly.  Recent topics have been healthcare, capital investment in emerging markets, and the implications of treating corporations as individuals.  I’ve come to the realization that late night chats, occasional political status updates, and biannual voting are not a significant enough contribution to my role as citizen in our representative democracy.  The problem is how to affect change and to what policies.

The rhetoric in the US has become so divided that inaction and maintaining the status quo almost sound favorable compared to some of proposed solutions, and yet that isn’t what I want either. We must come to some common ground. Fortunately, I believe there’s one area of life we can start to work together on whether you are a Tea Party supporter or a Socialist – local community prosperity.

For the Right, going local takes power away from centralized government, multinational corporations, and Wall Street fat cats.  For the Left, going local is environmentally sound, anti-corporate, and promotes community.  People and politicians can argue all day long about which policies will stimulate local initiatives, but nothing is preventing people from changing their buying habits other than well-crafted marketing campaigns and a perceived convenience of big box retailers.

Long ago, my father told me that “every dollar spent is a vote.”  It’s a philosophy that I’ve mentioned before, but an idea that has stuck with me and also one I believe is the most powerful in our current “free-market.”  Whether it’s spent on various products, charitable donations, or campaign contributions, these “votes” decide what products, services, and policies the private market and public figures will focus their attention on.

Going local can mean many things.  In recent history the focus has been on where you shop and what you eat.  Those choices are very important, but I want to call attention to an area little talked about – how you purchase.

The average consumer is probably unaware that the switch from using cash to credit has hurt businesses of all kinds greatly. Every swipe of the card deducts anywhere from 2% to 3% of the sale away from the business and to the credit card company and issuing bank. To put that in perspective, if a business does $30,000 in sales for a given month, they are losing up to $900 for the month or $10,800 for the year. That’s money that a lot of small businesses do not have or could use to pay their employees more.

Other countries have passed regulations that have curbed the excessive fees that credit card companies charge.  In the case of Australia, transaction fees have been lowered to 0.5% (a 600% reduction). Of course lobbying congress to fight the credit card companies could take a while, so it might be best to take matters into your own hands.

The most apparent way to do this is always pay in cash. I highly recommend cash because it’s simple and limits your likelihood of going into debt. For many people this is not possible or practical, either for financial reasons or just convenience. A possible compromise exists by switching your national credit and debit cards to a local credit union.

The switch helps mitigate the problem of high transaction fees by keeping money the hands of the local community.  While the transaction fee will still be charged, the majority of the fee goes to the issuing bank and in this case, your credit union.  Rather than the money leaving your community for Wall Street, it goes to your local credit union and is used for loans within the community.

The same is true for the interest you will pay on that debt to the credit card company.  Rather than interest payments bolstering stock values, they will instead be bolstering your local economy.

The whole idea of “going local” is to improve the economy and sustainability of the community you live in, and the more money you can keep in that community, the better it will do.  I am personally in the middle of such a transition and will post more about the pros and cons as I come across them.

There’s more to local credit unions than just changing the way you purchase.  The benefits are several fold and for more information, you can read these articles here and here.

Written by John in: Politics,Ramble | Tags: , , , , ,

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