Saturday, July 30, 2011

Our Mutual Debt Whirlpool

There was a time in my life when I used credit cards; in fact, I overused them. At the time, I made excuses. “I need this.” “I’ll pay it back in a couple of months, no problem.” “It’s Christmas, and I’ve got to get the kids some stuff.”

There was ALWAYS some reason to keep spending.

The balance kept growing, and I kept getting further and further behind. Still, I would tell myself that someday soon I’d get a handle on it. Surely, I’d eventually start making enough money to pay it off. I just had to take care of the immediate “need,” and then I’d begin to pay it down.

Up and up went the balance. Deeper and deeper went my debt.

Occasionally, I’d reach my personal debt ceiling. It was the limit of my credit card.

That would stop me. Right? It was a hard stop. Right?

Wrong.

As soon as I would get anywhere close to that limit, the credit card company would raise my debt ceiling, and deeper I’d go.

Remember the line from the old song: “Another day older and deeper in debt.”

Sometimes, people get to the point with their debt where they start taking out other credit lines and credit cards in order to pay the payments on the debt they have already developed. They are trying to spend their way out of a crisis. They borrow from Discover Card to pay Mastercard.

The whirlpool gains momentum and the downward spiral begins to spin out of control.

When a person gets to this point, you know the end is near. Bankruptcy is imminent.

Thankfully, I never got to that point. I got a grip on reality and made appropriate personal changes.

If all this sounds familiar, it is because this is what our government is arguing about right now.

It appears that our government cannot seem to figure out these undeniable truths:

1. Living on credit is living on borrowed time, and time always catches up to you
2. What you borrow, you must eventually repay…somehow…someway
3. Just paying interest does not resolve the situation
4. Financial stability requires discipline and sacrifice
5. Sometimes, you just have to say “NO”
6. Spending less than you earn is the only way to get ahead

Try telling someone in the midst of living large on credit that they need to cut up their cards, and they’ll look at you like you’ve got a third eye in the middle of your forehead. (Is the Tea Party the ones with the third eye right now?)

Unfortunately, it often takes until the sheriff comes and takes the house before some people learn their lesson.

What is it going to take before the government of the United States of America learns this lesson?

They are arguing in congress and the White House about raising the debt ceiling…so they can just PAY THE INTEREST on our debt. They want to borrow more money to pay the interest on what they have already borrowed. They aren’t even touching the principal.

The swirl of our debt whirlpool is about to overwhelm us.

Common sense should tell us that we cannot keep doing this. Hard choices are inevitable. We better start being willing to make these choices or we will one day soon be the United States of China.

We have obligations. We have needs within our society. People need assistance. We cannot leave our seniors out in the cold. We can’t let people die from lack of healthcare. We need to have a strong defense.

Needs and obligations. These are undeniable, and we must be true to them.

Now, all that said…how many of us are sick and tired of the arguments between the Democrats and the Republicans? I know I am. So, how can we get past all of the rhetoric and bickering? Can common sense ever prevail?

It better….and soon.

Maybe it is time for some other folks to step up to the plate. How about a coalition of business and industry leaders joining forces with leaders from churches, non-profits, and labor to find a NEW solution? Leave out the politicians and the financial titans on Wall Street. Let some folks who have to run a business team up with the folks who daily care for the needs. Put them in a room and don’t let them come out until they have a solution. We need to get out of the box we’re in and look at things from a different angle.

In some ways, the problem is simple. If I have a budget deficit, I either spend less or earn more income, or a combination of the two if I’m ever to have a balance sheet that is in my favor. If I have debts to pay, I can sell stuff off and pay my bills. On the macro level, the equation is still that simple, but the factors playing on the needs and obligations are so many and so varied that we can’t see the solution. Raising taxes isn’t the answer, especially if we can’t control the spending. Arbitrarily cutting everything to the bone is painful and we are so far down the hole that it probably won’t drag our butts back out.  Raise employment and you raise tax income for the country, but to do that we're going to have to start making things HERE again, and to do that WE are going to have to start BUYING things that are made HERE...again.

Maybe we need to sell some territories. Guam? Puerto Rico? How long until Hawaii is up for sale?

Crazy? Maybe so. I’m not really advocating that we sell off parts of our country, but if we don’t get a grip on reality pretty soon, we’ll be seeing even crazier things. No doubt.

Take a look at history because we seem about to repeat it.

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