Letter: We must change our financial course

Talk about it

The other day I was asked to look at the (name withheld) family financial situation. Like Suze Orman on TV, I said ,“Show me the money, friend.” 

This is what they showed me:  Annual family income: $24,000; Money the family spent: $37,000; New debt on credit cards last year: $13,000; Outstanding balance on credit cards and other loans: $175,000; Interest payment on debt:  $4,500; Total budget cuts planned for next year: $385.

I asked who was in charge of the family’s finance and was told that it was Mom and Dad. It seems that whatever the kids wanted, Dad and Mom would get and put it on a credit card — new credit cards were always available. When questioned how they ever expected to pay off their debt, Mom said she thought she could cut down on spending over a three- or four-year period. Dad said he should be able to find a really good high-paying job in a few years and then they could start paying down the debt.

When I suggested that the interest that would be piling up on their debts — if they didn’t start to immediately cut their spending or get higher paying jobs — would give them little chance of getting their debts down to a manageable level in the future, they replied that they thought three or four years was soon enough. And they really didn’t want their children to feel they couldn’t afford their current lifestyle. When asked what their financial advisor was telling them, they said that he as long as they had a good credit rating, they had the right long-term plan, but he did suggest they find some credit cards and loans with lower interest rates. At that point I felt it was useless, given their attitude, to continue to try and show them how unsustainable their financial condition really was.

Here is the rest of the story. You see, the family is really the United States. Those dollar figures are really the federal government figures with eight zeros removed.  It’s a whole lot easier to understand how big the problem is when we talk in terms of hundreds and thousands instead of trillions and billions, isn’t it? And Mom and Dad — they are the United States senators and representatives (Democrats and Republicans).  Mom figures Dad should get a better job (raise taxes), and Dad figures Mom should spend less (cut programs). And the financial advisor (the president) keeps telling them to keep spending but get lower interest rates from a different lender (the Federal Reserve and its print-more-money monetary policy).

It seems to me that with their attitudes, Mom and Dad need to be replaced with people that understand the urgency of the situation and are willing to make the hard choices and compromises necessary to ensure a sound financial future for coming generations.  And the financial advisor needs to be replaced, too. Or, are you one who wants to keep on the present course and get all the government goodies while believing that your grandkids or the good fairy (all those undertaxed millionaires) should pay for them? If the U.S. continues on the present financial track without making some significant and painful changes, the United States will sooner or later wind up like Greece and be forced to adopt severe austerity measures or be forced into bankruptcy.

Editor’s note: The author cites http://www.gao.gov/financial/fy2011/11guide.pdf and http://www.treasurydirect.gov/govt/reports/ir/ir_expense.htm as sources.

Tags: opinion, letters, politics