"We don't have a trillion-dollar debt because we haven't taxed enough; we have a trillion-dollar debt because we spend too much." - Ronald Reagan
These words are timeless, whether you like him, or not. If you don't live this way in your personal life as well, you're destined for poverty.
Here's an example. John Smith has a credit card debt problem. He's $50,000 in debt. He makes $30,000 a year, but he spends $40,000. Rather than make cuts to his lifestyle, he decides that he needs a better job. He succeeds. He works really hard, and he gets a promotion. Now he makes $40,000 a year. You would think that the problem is solved, but the natural inclination for a person with a history of spending more than they make in this situation is too now spend more. Now he spends $40,000 a year, but he's spending $45,000 a year. The problem isn't that he doesn't make enough money, the problem is that money burns a hole in his pocket, and so he spends more than he makes.
Here's an alternative example with the same John Smith. It starts the same. $25,000 in debt, makes $30,000 a year, spends $40,000. But in this example, he decides that the answer is a budget. He makes $30,000 a year, so he decides to cut his expenditures down to $25,000 a year. He owns a home with an unpaid mortgage, so he sells it, and get a more modest one. To make it more relate able, we'll say that still leaves it unpaid, but cuts the payments in half. He's now saving on mortgage, insurance, taxes, and probably utilities. He cuts back on eating out in all forms, and now virtually always cooks at home. He cooks from scratch to the best of his ability, rather than buying pre-made meals, because he knows it's cheaper that way, and he makes his meals in bulk, so that he can bring leftovers to work with him. He buys most of his clothes at a thrift store. He sells the car he's still making payments on, barely making enough to pay it off as well as buy an ugly beater. After a lot of cuts he previously couldn't imagine giving up, he sees that he's accomplished it. He even has $5,000 left over to start paying down his credit card debt.
After all this, he gets the same promotion. Now he makes $40,000. This new John Smith is now wiser with money, so rather than thinking he doesn't need to live on a budget any more, he simply takes another look at his budget, and decides to live a little better, but still take it easy. He increases his lifestyle by $5,000 a year. He adds some money to his entertainment, and less necessary facets of his budget, but most of it, he decides to pay toward his mortgage, understanding that if he owned his home entirely, he'd be far better off. Even if it wasn't the one he now missed. The other $5,000, he pays toward his credit card debt.
Before long, his debt is paid off. Now he has $10,000 extra every year. Rather than spending it, he saves it. Now, instead of paying interest on money he's already spent, he's collecting interest on money he actually has. Now, instead of spending himself so far into debt that the taxpayers will be forced to take care of him when he's forced to retire, he's going to retire comfortably, early, and on his own dime. He won't care that Social Security isn't around by that time, because he's already set.
There is no logical reason to think that this doesn't apply to government. We are constantly thinking that we need more government programs. Whether it be extended welfare benefits, or glitter for dog shows. Both of those things are really supported by the government, by the way. There are millions of problems to be solved, and government tends to believe that this responsibility is it's own. The further we descend into a welfare state, the more people also believe this. If we manage to solve all the problems, the minuscule problems become big problems. What we consider poverty is in many parts of the world, considered wealthy. A fact which can be accredited to the freedoms we have in this country, that these other parts of the world do not have.
If you increase the taxes to pay for the spending, it only results in even more spending. It always has, and it always will. We've increased taxes enough. It's time to stop focusing on that, and time to create a budget that spends less than it brings it. With our debt, it needs to be significantly less. We are currently spending one trillion dollars more than we bring in every year. This needs be as close to reversed as possible. Repealing Obamacare is a start, but it's only a start. Welfare needs to be reformed so that it's not so easy to be abused. The bureaucracy needs to be slashed, so that there isn't waste around every corner. Every single program like glitter for dog shows needs to be eliminated. We can do it, we've done it before.
These words are timeless, whether you like him, or not. If you don't live this way in your personal life as well, you're destined for poverty.
Here's an example. John Smith has a credit card debt problem. He's $50,000 in debt. He makes $30,000 a year, but he spends $40,000. Rather than make cuts to his lifestyle, he decides that he needs a better job. He succeeds. He works really hard, and he gets a promotion. Now he makes $40,000 a year. You would think that the problem is solved, but the natural inclination for a person with a history of spending more than they make in this situation is too now spend more. Now he spends $40,000 a year, but he's spending $45,000 a year. The problem isn't that he doesn't make enough money, the problem is that money burns a hole in his pocket, and so he spends more than he makes.
Here's an alternative example with the same John Smith. It starts the same. $25,000 in debt, makes $30,000 a year, spends $40,000. But in this example, he decides that the answer is a budget. He makes $30,000 a year, so he decides to cut his expenditures down to $25,000 a year. He owns a home with an unpaid mortgage, so he sells it, and get a more modest one. To make it more relate able, we'll say that still leaves it unpaid, but cuts the payments in half. He's now saving on mortgage, insurance, taxes, and probably utilities. He cuts back on eating out in all forms, and now virtually always cooks at home. He cooks from scratch to the best of his ability, rather than buying pre-made meals, because he knows it's cheaper that way, and he makes his meals in bulk, so that he can bring leftovers to work with him. He buys most of his clothes at a thrift store. He sells the car he's still making payments on, barely making enough to pay it off as well as buy an ugly beater. After a lot of cuts he previously couldn't imagine giving up, he sees that he's accomplished it. He even has $5,000 left over to start paying down his credit card debt.
After all this, he gets the same promotion. Now he makes $40,000. This new John Smith is now wiser with money, so rather than thinking he doesn't need to live on a budget any more, he simply takes another look at his budget, and decides to live a little better, but still take it easy. He increases his lifestyle by $5,000 a year. He adds some money to his entertainment, and less necessary facets of his budget, but most of it, he decides to pay toward his mortgage, understanding that if he owned his home entirely, he'd be far better off. Even if it wasn't the one he now missed. The other $5,000, he pays toward his credit card debt.
Before long, his debt is paid off. Now he has $10,000 extra every year. Rather than spending it, he saves it. Now, instead of paying interest on money he's already spent, he's collecting interest on money he actually has. Now, instead of spending himself so far into debt that the taxpayers will be forced to take care of him when he's forced to retire, he's going to retire comfortably, early, and on his own dime. He won't care that Social Security isn't around by that time, because he's already set.
There is no logical reason to think that this doesn't apply to government. We are constantly thinking that we need more government programs. Whether it be extended welfare benefits, or glitter for dog shows. Both of those things are really supported by the government, by the way. There are millions of problems to be solved, and government tends to believe that this responsibility is it's own. The further we descend into a welfare state, the more people also believe this. If we manage to solve all the problems, the minuscule problems become big problems. What we consider poverty is in many parts of the world, considered wealthy. A fact which can be accredited to the freedoms we have in this country, that these other parts of the world do not have.
If you increase the taxes to pay for the spending, it only results in even more spending. It always has, and it always will. We've increased taxes enough. It's time to stop focusing on that, and time to create a budget that spends less than it brings it. With our debt, it needs to be significantly less. We are currently spending one trillion dollars more than we bring in every year. This needs be as close to reversed as possible. Repealing Obamacare is a start, but it's only a start. Welfare needs to be reformed so that it's not so easy to be abused. The bureaucracy needs to be slashed, so that there isn't waste around every corner. Every single program like glitter for dog shows needs to be eliminated. We can do it, we've done it before.
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