SERIES: “Fix The Economy” – Build Substantial Financial Margin

Welcome to the latest series at the wildly popular “5 Things That Will Help Fix The Economy” In this series, I will be sharing some principles I believe will help fix the economy long term.

The economy has been stuck for some time. The words “Great Recession,” “Fiscal Cliff,” “Sequestration,” “Stagnant,” and “Jobless Recovery” have become common everyday language.

Number 3:  Build substantial financial margin.

When an individual, organization, or government continually operates without a “margin of safety” financially, they are always are at risk of collapsing in the face of a financial emergency.

Over the past decade, the national debt of the United States has soared. The actual debt was:

  • In 2000: $5,757,000,000,000
  • In 2004: $7,097,000,000,000
  • In 2008: $9,472,000,000,000
  • Now: $16,614,000,000,000

This debt has increased in large part because the nation has been “against the wall” financially – with no real savings. Just like a person who has lost their job without having any saved money, the decision was made to “finance” the gap to keep everything running. However, just like a credit card has a spending limit, so does the nation.

Just as it is of first and foremost importance for an individual to build financial margin (even before attacking debt), it is vitally important that the nation build savings. Savings allows the nation to have “breathing room” that would allow for the conversations and dialogue that is very necessary to make the best and wisest decisions regarding income and outgo.

Here are ways that the United States could build margin:

  1. Pass a balanced budget that is REQUIRED to be followed. (This was part 2 of this series)
  2. Ensure that savings is included as an expense that is part of the balanced budget.

I would be more than happy to pay more taxes if the government’s leaders would commit to STOP incurring more debt, and my extra tax dollars would be utilized to build financial margin and to reduce debt. Anything to ensure that my children and grandchildren won’t be left bearing the huge financial burden of a bankrupt nation!

Your thoughts?

Read the entire series (available after 3/14/2013)

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  1. Mr Lee on March 7, 2013 at 8:21 am

    I was totally with you until you said you were willing to pay more to the government. Of course more income can help balance a budget, but not when it comes to government. It’s completely a spending problem.

  2. Bryan on March 7, 2013 at 9:55 am

    In the past I have said the same, ‘We should just increase taxes so that we can finally get out of debt and be a more financially responsible and succesful country’, but where I am now, and where many who I have spoken with are, we don’t want to pay more to a government who is being irresponsible, and who it appears is run by a large group of people who don’t believe they need to follow the same rules as everyone else. If as Joe suggested we, as a country, REQUIRED passing a budget that we had to stick to, because WE HAD to be debt-free, without exceptions, I would be on board to pay a bit more (because I would hopefully already have my personal financial situation and margin in a safe place). I think this would have to be an ‘all for one and one for all’ mentality though, meaning all US citizens should be personally financially stable and contributing an equal percentage in taxes, as impossible and unlikely as that sounds. After all, it should be each of our personal responsibilities to be financially sound and accountable, and in doing so, we could, as a country, be these things as well. This doesn’t really touch on the more complicated topics of tax breaks for the lower class and tax write offs for charitable giving for the upper class, which are confusing the tax situation evermore.

  3. Scott Bryant on March 7, 2013 at 8:04 pm

    I believe that the government should give to those in need of it, however there are too many people getting hand outs while we continue to go into debt and spending too much. Give those people jobs that the cities and states are spending too much on to start with, ie: picking up trash on our roads. Have them do anything to ‘earn’ their keep for getting a free hand out. I’m sure if you made them work for what their receiving then there would be a lot more people NOT applying for assistance.
    Also, when a government office has a certain amount to spend in their fiscal year, they spend it ALL up at the end if there is any left. They didn’t really need new chairs, desks and computers. This kind of spending is crazy! They don’t not spend the money from their budgets because they will not get an increase the following year.
    If the spending problem was in check there would be no reason for more taxes…..Our country would have the money!!

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