Friday, March 17, 2017

You Have A Spending Problem


Anyone who has ever made a budget knows that if you are spending more money than you're making, you have to figure out how to reduce some of those expenditures. This means listing everything you spend money on in any given month and then deciding which expenses are necessary and which are not. At some point, if you're going to disrupt the pattern of over-spending, you will have to start eliminating some unnecessary expenses and reducing others.

For your average family, this usually means eating out less, going on fewer vacations, not buying new clothes as frequently, and maybe even dropping your cable or satellite TV service. Obviously different families and even the various members of those families would probably prioritize the importance of those expenditures differently. But ultimately, the final decision lies upon the the head of that household; the person who earns the money and then turns around and spends it to keep that roof over their heads. That person has to make a difficult decision which no matter what, will piss off at least one member of their household.

When you aren't the person writing the checks or paying the bills online, cringing as you watch that number in your bank account change from black to red, it's difficult to comprehend the importance of these decisions. It's easy to get used to all of the luxuries you have and begin thinking of them as something you are entitled to.

This is especially true for kids. They are used to having all the latest toys and clothes and electronic gadgets. They're accustomed to turning on the TV and having hundreds of channels to choose from. Whether due to innocence or selfishness, they give no thought to what it took for their parents to be
able to provide those things for them.

They are completely oblivious to the fact that while they enjoy these luxuries; these entitlements, their parents are getting closer and closer to maxing out another credit card as their expenses that month once again exceeded their income. This is the life of many American families. They refuse to reduce their lifestyle and live within their means. So they keep running up and maxing out their credit cards, burying themselves in more and more debt, just coasting as long as they can on the inevitable path to bankruptcy.

I know some people who see bankruptcy as something that is just assumed. They know it's going to happen eventually, so they are just going to spend as much as they possibly can until that time comes. But I don't think this is the norm. I think most people who are in this boat, are hoping for a miracle. They're hoping for that new job, or promotion at work. They're hoping to win the lottery, or hit it big at the casino, or get that phone call telling them that some distant relative has passed away and left them a fortune.

These people become so delusional that they convince themselves it isn't a matter of "if," but only a matter of "when" it will happen. They think if they can just keep playing this game for a few more months, or a few more years, that miraculous event will take place and they'll finally be able to pay off those credit cards, avoid bankruptcy and continue living the life of semi-luxury they have come to expect.

Sadly, most of these people will never get their miracle. They'll keep spending without even a passing thought of trying to live within their means. They'll keep buying those lottery tickets at the gas station every Friday, and they'll keep hoping this will be the week that their numbers match and they win the big jackpot. After all, they deserve it.

For many, this is just a way of life. It's how they were raised, so it can't be wrong. It's always someone else's fault, whether that be their parents, their boss, their kids, the government, the color of their skin, where they went to school, or the neighborhood they grew up in.

Most of the time, the people unwilling to take responsibility and acknowledge that they are to blame for their financial devastation, are the ones who will never escape it. But once you can acknowledge that regardless of your circumstances, you are solely to blame for the poor financial decisions that put you in this situation, then you can start digging your way out.

If you're lucky, your moment of clarity will be early, before you've managed to rack up a few lifetimes worth of debt. If you decide to change your lifestyle early on, it might not take that drastic of a change to get yourself back on the right track. You might be able to turn your financial situation around by just choosing less expensive restaurants when you eat out. You might just decide to skip a
few retail therapy sessions, or have a family game night rather than taking everyone to the movie theater. There are plenty of simple smart choices you can make that won't really be that big of a disruption to the life you are accustomed to.

However, Americans aren't used to moderation, and if you aren't able to catch yourself and start changing your spending habits early on, those changes are going to have to be much more drastic. I'm talking Ramen noodles and peanut butter sandwiches three meals a day. Not just spending less on clothes, but selling the clothes that you don't wear regularly and sewing or patching that hole rather than just buying a new pair of jeans! I'm talking about canceling your TV service, trading in your new Lexus for a used Kia, selling that big house you can't afford and moving into something smaller, even if it isn't in the best neighborhood! Hell, if it helps you meet your goals, sell your living room furniture and replace it with lawn chairs and milk crates!

I don't care how painful it is, or how much it crushes your ego. If you truly want out, you'll do whatever it takes. And if you aren't willing to make those changes, then you are exactly where you deserve to be and have no one to blame but yourself.

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This is where our country sits today. We and several generations before us have racked up an insane, disgusting, unimaginable amount of national debt. An absolutely inconceivable number, with a dollar sign behind it. We have dug ourselves deeper and deeper into debt every year, by adding more entitlements, more grants, and more foreign aid. In order to get one good bill passed, our legislators have to tack on hundreds of other unnecessary bills, creating even more entitlements we can't afford, just to buy the votes needed to pass the original piece of legislation. Then, as a final order of business, after spending the entire session promising imaginary money that we don't have to everyone under the sun, those same legislators vote to give themselves raises "for a job well done"!

This is insanity by definition. We are continuing to do the same thing over and over, then we ask why we don't have different results. By the time you finish reading this article, our national debt will have increased by approximately $9,994,658. This isn't the government's money; it's your money! The government is just spending it on your behalf, and you currently owe somewhere in the neighborhood of $60,000!

When we elect our leaders, we are entrusting them with the responsibility of spending our tax dollars, and with the current manner of business, spending taxes we haven't even paid yet. Those government services and grants that you think are so great and so necessary, aren't free. Just because they don't send you the bill, it doesn't mean you aren't ultimately responsible for the expense.

Now our elected officials have to play "head of household" and make some difficult decisions. They can continue with "business as usual" and keep hoping for different results, or they can decide to make drastic changes. They have to decide what is necessary, and what is not. Then, regardless of how many people are pissed off when their entitlement of choice is de-funded, they have to start making cuts. Whether you like it or not, that public service you feel is so necessary, just might be an unnecessary luxury that we can no longer afford. You don't get to claim ignorance anymore. The question is, are you going to look at this like the head of the household, or like a spoiled child.

We have a spending problem...and it's your fault.


Sources:
http://www.justfacts.com/nationaldebt.asp
http://www.washingtonexaminer.com/8-crazy-facts-about-the-national-debt/article/2598352
https://www.nabber.org/projects/debtcounter

4 comments:

  1. It is obvious you are a concerned citizen when it comes to fiscal and monetary policy in this country. Yet your post indicates that there is confusion on the difference between the two. The federal government is the sovereign issuer of currency. It creates money at the behest of congress and is the only entity that can do so. When it does this there is more money in the economy for investing, saving, spending and employing others. If it does not spend enough into the economy then resources are not cultivated for industry, jobs are reduced, savings are used up and borrowing from private banks must increase which then floats money to the top income citizens who stash money offshore and make less available to use in the economy. This creates austerity and recession. Then the income gap widens and the situation gets ever worse.

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  2. Truly the longest fallacy of composition ever. The mechanics federal budget (and the so-called "debt") are not even remotely like your household budget. For one, you don't issue your own currency (or if you do it doesn't carry much weight outside of your household). It follows that the rest of the economy isn't depending on you to issue sufficient currency to fulfill the economy's need for a suitably abundant medium of exchange.

    The federal so-called "debt" is not how the government "gets money to spend". Rather, it is simply a service provided to users of the currency to convert liquid funds into an ever-so-slightly less liquid asset that serves as a risk-free, (optionally) interest bearing "investment".

    While your household borrows money and then on-spends it, the federal government does NOT on-spend the funds used to buy securities. In reality, deficit spending works via creation of new dollars, not borrowing existing dollars. The "debt" is simply a charade.

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  3. Your initial premise is incorrect. The government's budget is nothing like a household budget. The reason being is the US government is sole issuer of its currency. It is impossible for it to go bankrupt or run out of money. We do not borrow money from China either. Why would we when the US government has sole authority to create its own? The governments deficit is the private sector's (us) savings. Why do you want to make it impossible for people to have a decent standard of living by imposing austerity which ultimately leads to recession?

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  4. Well, I'm not American so I could be wrong but just because America makes its own currency doesn't mean it can't be hit with similar problems a home can. Printing more money will only make it worth less (didn't we learn that from the Nazis?). And "money" is not technically worth anything. It's a glorified I.O.U. from the bank. And the bank is all powerful, even over the government. Why? Because they have the gold that the money is meant to represent. But they don't have enough gold for how much money is printed so ... yes, America has a spending problem. Maybe having a business man for a president isn't such a bad thing, eh?

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