I have been spending a lot of time lately (lack of full time employment to blame) reading up on news articles from Huffington Post, msn, cnn, ny-times, the washington post, The Atlantic and I have seen a global trend. Everyone is spending more than they make. The US, Japan, and all over Europe are in debt and are risking bankruptcy. Throughout Europe, countries are relying on countries that have been responsible with their income/outgo budget to give them money to carry on.
The problem is this: Giving money to a person who is habitually failing is like giving an alcoholic a drink, it is not going to solve the problem. Someone, (a financial expert most likely) needs to teach the people of the world how to budget. You could have all the money in the world, but if you cannot budget that money, you will eventually run out. This is why impoverished people who win the lottery often go bankrupt, they spend and spend and spend and don't plan financially.
To add on, citizens of these countries are demanding certain "perks," for lack of a better word, to be provided by our government. It is not a bad thing to want specific services and help. It is normal to want help and support and it would be great if the government could provide these things. And please, do not misunderstand me, I want people who can not afford to help them selves to be helped. But if you look at the debt, America can no longer support the services that it wants to provide. If you take the USA's financial situation looking at it like you would a normal household. Maybe so it looks more doable, lopping off a few zeros, so instead of the debt being trillions, it is merely thousands. Instead of dealing with billions in a budget, it is hundreds. If you begin to "balance America's check book," in the way you balance your own personal, it is completely obvious that there are only 2 options to move forward: increase income decrease outgo.
Before I get into this, I would like to say a few things. First I want to awknowledge that I have lived an EXTREMELY short and sheltered life. I am not claiming to be any sort of an expert, nor am I claiming to understand finance or anything about policies.
Secondly, I will do my absolute best to be non-partisan. I will cite articles when I use them, try to be balanced in my political opinions, because the specific services that are provided are not what I am talking about. I am merely trying to take us back to the monetary values we had before the 1920's, before credit cards were invented.
I would like to use principles that are taught by personal finance guys like Dave Ramsey (yes Lesley, I can hear your sigh and see the eye rolling now), and then just my own limited experience when I talk about this.. I am going to talk about the US budget, talk about Europe's economy, and then just common sense principles. Just observing on the medias that I have seen and what I would do if I was in charge, which thankfully I am not.
My boyfriend and I recently moved in together, before we did, we looked at our current bills, and then looked at our projected incomes and tightly budgeted our selves for that. We looked at housing in the area, gave our self the recommended 25% to spend on housing and started looking at apartments. Our budget was going to let us spend about $1,500 a month for an apartment. We chose a place that was only $1075 a month but farther away from the city, because we wanted to pocket that extra savings and pay off my student loans or go on mini vacations and weekend trips quicker and with greater ease. After housing came transportation, so we averaged out how much the metro would be per month and it was goingto be about $300 a month per person, then we budgeted for food, allowing our selves to spend about $75 a week on groceries. After that we began adding on amenities, we shopped around on internet, cable, decor, cars and chose things that were in our budget. We chose not to get cable TV, using only internet because we decided that we didn't have the money to spend on that. We are looking to purchase a car. So we are looking to save up and buy one with cash. Not a loan. We cannot afford a monthly car payment, and we don't want to have one. We decided that we will leave our lights off during the day, and keep the thermostats fairly high, because we are trying to cut our budget down. As of right now, we can pay all of our bills off of Kevin's income (minus my student loans of course) but that is right where we want to be, because if one of us loses our job, or takes a pay cut, we will be able to make it. Having good credit is important to us. We are looking to buy a house or condo, and really start our life together. Which requires lots of saving, we cannot do that if we are spending all that we make each month.
Now, to relate that back to the larger more grand scale: when looking at a countries deficit, there are only two options. Make more money, or spend less. Because our debt is so high, it would be ideal if they could do both. Think of planned parent hood as cable tv, think of welfare and food stamps as internet, think of veteran services as your car payment, all of these things are great when you can afford them, but now it is time to make some really hard sacrifices. Honestly it really sucks, I can tell you that I personally don't want to live with out TV. I like having recorded shows at my finger tips, but there were things that were way more important to me and my boyfriend. I am definitely not trying to trivialize the help that these people recieve, I am not trying to say that they don't deserve it, just that from a fiscal view, we can't afford to do it.
I think that part of the problem is that people want the government to take care of them, and I mean who doesn't? I would love to have some help, and would love to have to do less. Many times doing less is still so much. I worked 2 jobs in college, worked 25+ hours a week. I interned for free 15 hours a week, I also went to school full time and graduated with fairly good grades. I know that people who need help work extremely hard. But on the flip side, I had one low limit credit card that I regret using. I am in the process of paying it off and once it is done I am cutting it up. Because being in debt is not the way that I want to live.
If countries like Germany and Canada can have great benefits and good education then why can't America? Because Germany looked at its costs and said to provide these services this is what it is going to cost. They were spending less that they made, and they were able to be a profitable country. They have been carrying the euro, and countries like Greece, Italy, Ireland, and Spain are all depending on Germany's responsibility. America hasn't done that realistically.
I know that every once and a while people need help. Something happens and we need a little extra, but we cannot make that the norm. The national debt calculator is only going up. We have been aware of it for years. And all these cuts that congress is making and people are protesting and everyone hates, that will only make the budget work out to 0. That won't begin to pay off any of the debt. I remember 3-4 years ago when people were yelling and screaming about how high the debt is, and they are the same people who want all the benefits. I am not blaming it on one party. I am blaming it on people.
Forbes does interviews with the wealthiest people in the world, and almost all of them said the way to be wealthy is to stay out of debt. Debt completely consumes this country. Gone are the days when hard working Americans save up as much as they can, and spend that saved money. We buy cars, update our phones, move into more house than we can afford, we have kids, buy clothes, go out, go on vacations all with money that we don't actually have. You may think that this isnt you, and for a very small percentage of people, maybe this isnt you. But anyone who uses a credit card, takes out pay day loans, has a loan on a car, student loans, you are all spending more than you can afford. I am not exempting my self from this. I have made mistakes, I took out student loans and am now paying for them. I have a credit card. But I am actively working to not be that way. I also understand that things come up, sickness, car breaks down, things like this that are so out of the ordinary that you are completely unprepared. there is nothing you can do but borrow to rectify the situation. Obviously, there are exceptions, and in a perfect world, if you are financially stable, you can be prepared for these situations and not have to borrow, but if you do, then please make it your effort to pay it back.
I think the world has to come to the realization, that yes we can rely on the government to take care of things like our health care and our poor, like some people want, but all of Americans need to be ready to step up and pay for them. We can also, say WE will take care of these things. We can start non-profits, so that the sick, and hungry and veterans can survive, and they don't depend on the government, or at least SOLELY on the Government. Statistics say that the upper class gives way over half of all the money recieved to non-profits. What if we all stepped up our giving? What if churches, synogages, and mosques all opened their doors and took on the lead role of helping people once again. I know so many of these religious organizations do, and I am not trying to speak ill of anyone. But we are always so focused on being unique and different, what about the bottom line we are all the same. We are all people. And people need to help people.
During World War II the government urged people to plant Victory Gardens, they stopped selling metals because they needed them for planes and ships. What if they reused that wonderful campaign? Instead of sending those resources for troops they used it to get out of debt. People could donate money to a non-profit that was solely in charge in getting us out of debt. You could have memberships to raise money. We could join forces with our neighbors to allow us to rely on each other, we as a people, come together, all over the country to stop diseases, protect nature, feed the hungry, promote awareness, because all of these things have been thrust upon us in a terrible way. Even if we were only able to help out with a few million, and maybe take some pressure off of the outgo, maybe we can help in a small way. What if we found someone who is on government support, or an organization, or a school and we spent a small amount of money helping out people. Maybe we could begin to change things.
I think it comes back to the image people want to display and instant gratification, and for most people I believe that that image is always being new and flashy. Everyone wants everything now. So people borrow, take and spend unwisely to do the things that they want to do. I am not being critical, I understand that sometimes people want to do things, and that they justify it. I have had my faults, buying a new xbox game when I could spend that $20 on loans, food, gas or even giving it away. But I am trying to make this the rare exception and not the norm. Everyone wants to be financially secure and successful. But people don't understand the hard work and sacrifice that it takes to get there on the grander scheme. Living below their means, investing money wisely, not borrowing, driving the same cars until they are dead. They don't waste money on things that they don't need, and then when they have that extra money, they are still living below what they earn.
That is why multi-million dollar jack pot winners go bankrupt, because they were not taught to use their money wisely. People need to be aware of how they spend their money and Dave Ramsey's first step is having a written budget that they calculate each month. People need to direct their money, not have their money direct them. I just want America to be able to recover from this horrendous debt that it has accrued, and that wont happen until the world, and the people in it say we cannot afford this, so we cannot do it anymore. We need to bring people back to a majority of being debt free. We need to get back to saving up to by things and not letting our emotion get the best of us. We can help people turn their lives around, but it starts with knowledge.
I guess what I am saying is that people need to be aware that the only way out of this financial problem, is for government to stop spending, and then rallying together to support each other until we can work our way out of this debt. That is going to be completely long term. Like decades from now long term. It is going to take rebuilding a society, and living on the basics until we can make enough money to support the services that we want. Why is it solely the Government's job to take care of us. I want to know where does personal responsibility come in? What as a human being should I be required to do? And instead of have the government regulate that, why can't parents teach their kids that? I know that it is tough working 40+ hours a week then coming home and trying to then parent children. But I know so many families who have had both parents working their whole lives and they have raised excellent children, with good morals, a clear sense of what is right and wrong, and fighting actively for what they stand for. I have seen this on both sides of the party line as my own family is split in the middle and I am still proud of who they are. Inside, they are all good people, trying to live their lives helping people the best they can.
