Financial responsibility, Obama-style
Get this: President Obama has proclaimed April as National Financial Capability Month.
After all, who better than Obama — who has added $6 trillion to the national debt so far — to help “every individual take ownership of his or her financial future”?
Well, so worried am I by the financial path the president and our other “leaders” are taking us on, I've become an expert on “financial responsibility” — the way the government does it, anyhow. I fielded some questions from readers to help them be as financially responsible as our government.
Q: Tom, I spend more every month than I earn. Should I create a budget to bring discipline to my spending habits?
A: There's no need for a budget. Budgets are stressful. They force you to make adult decisions about where to allot your limited funds. Just spend as you wish and borrow to cover any shortfalls.
Q: Tom, I just graduated from college with $150,000 in student-loan debt and $30,000 in credit-card debt. I expected to get a high-paying management job, but I am working part-time at a burger joint. I have not been paying my bills and my credit is horrible. How can I buy my dream home?
A: You're in luck! The Obama administration is pressing banks to lower lending standards again, so that people like you can buy homes now! What could possibly go wrong?
Q: I got a debit card, but it doesn't seem to work at ATMs anymore. My bank said that is because I have a zero balance. Should I get a credit card instead?
A: Absolutely. Interest rates are so low right now — our government is doing clever things to hold them down — that you can borrow money at record low rates. Borrow as much as you can and enjoy life! Sure, when rates eventually go back to normal, you'll be in a heap of trouble — much like our government will be — but worrying about the future is a drag.
Q: I am spending about 25 percent more than I earn on boats, cars, vacation homes and more. Do I have a spending problem or a revenue problem?
A: You clearly have a revenue problem. Too bad you can't tax your neighbors or create money out of thin air, as the government does. Maybe you can issue bonds and sell them to people in other countries, then use that new money to spend even more.
Q: The wife and I set up a trust fund to pay for college for our kids, but we couldn't resist borrowing and spending all the money in it. We were wise enough to replace the money with IOUs. The IOUs are as good as cash, right?
A: Our government surely thinks so. Take the Social Security trust fund. As money has been put there over the years, Congress has borrowed from it to make up for deficits in other government spending. The trust fund contains IOUs from one branch of government to another. To repay those IOUs, the government will have to tap taxpayers for more dough — just as your kids will tap you for the dough when it is time to redeem those IOUs. But that won't be for a while, so relax.
Q: Tom, your advice is horrible. The country is spending and borrowing at unsustainable levels. The economy continues to struggle because there is no serious effort to tame entitlement programs and bring fiscal order to our government. Government borrowing is crowding out private investment. The direction we are heading may have terrifying consequences in the not-too-distant future.
A: Yeah, I know, but if most American voters aren't worried about it, then I won't let it get me down. Besides, if things get bad enough in America, I figure I can always move to Cyprus!