Editorial: Using common sense to navigate murky financial waters

“Saturday Night Live” used to be America’s sharpest source for political and social satire.

During the past few years, the sketch comedy show has clearly declined in quality, rarely hitting the comedic highs during its heyday.

However, it will still come up with the occasional sketch that combines laughter with commentary.

Ironically, it was a sketch that aired roughly two-and-a-half years ago (Feb. 4, 2006) that maintains the most relevancy, given the nation’s current financial climate.

Steve Martin (an SNL cast member during the glory days) and Amy Poehler play a couple with serious financial woes. They’re in desperate need for any potential solutions to help relieve their debt.

A debt consolidation expert (played by Chris Parnell) suggests that the couple buy his book: “Don’t Buy Stuff You Cannot Afford.”

When faced with a possible expensive purchase, Parnell advises the couple to check first if they have enough money saved up to actually make the purchase.

“But what if I want something, but I don’t have any money?” asks Poehler. “Don’t buy it,” responds Parnell.

“Well, let’s say I don’t have enough money to buy something. Should I buy it anyway?” questions Martin. Parnell’s answer? No.

The only reason this one-joke sketch succeeds is because a shocking number of people — lenders and consumers — ignored the most basic budgetary principles.

Obviously, there are dozens of reasons why the economy has hit a lull, but the housing market’s collapse is clearly the No. 1 factor.

The subprime mortgage crisis recently brought the stock market to its knees. Lenders were quick to approve mortgages for anyone willing to sign up for a shortsighted and possibly financially crippling agreement.

This was one of those situations where everyone’s greed overwhelmed common sense. Borrowers eventually began defaulting on their home loans, mainly because the payments proved to be far too steep after the deceptively cheap opening costs.

Lenders eventually lost unfathomable amounts of money because of ill-advised commitments to people who never would’ve qualified for a traditional housing loan.

Everyone bit off far more than they could chew and started to choke before the American government starting performing billion-dollar Heimlich maneuvers.

Green Valley is a bit more affluent than an average community, for obvious reasons. Since much of this area falls under the “upscale retirement community” designation, these subprime nightmares haven’t swept through here to the same degree.

But with the stock market upheaval we’re currently seeing, it might be worth an extra few minutes to run through the fine print on those retirement funds.

Of course, it is to nobody’s benefit to completely abandon the market, lest we repeat the worst days of 1929. But one can never be too careful when managing one’s finances.

Later this week, Tim Hull (one of this paper’s finest freelance writers) will have an in-depth article discussing the ins and outs of the subprime crisis and how to survive these uncertain market conditions.

In the meantime, the federal government must take great care to make sure something like this never happens again.

People will always want to purchase things beyond their means and lenders will always look to turn a profit. It’s one of the pillars of America’s economy. However, common sense must prevail over every transaction.

As a wise sketch once said, if you can’t afford it, don’t buy it.