I contribute to theLiberty Ledger and this was posted there yesterday. A posting by Terry Bascom. I hope you all enjoy.
I make $100,000 per year, and I have a net debt of $87,000. I’m worrying about making payments on my loans, in addition to keeping up my basic living expenses. I have to pay more this year for health insurance, food, utilities and gasoline. I own a business, but it looks like sales are going to be down again, which will cut into my revenue stream.
I budget July – June, and I had planned to increase my living budget by 8% for 2011-2012, based on anticipated income. Now that it looks like my income is going to be less than I’d hoped, I’ll have to make cuts instead. So I’m only going to increase my budget by 5%, which is a 37% reduction. It’s going to be hard to live with such a huge austerity measure, but I’ll just have to find a way to make it work.
Since my revenue stream is already taking a hit, and I’ve cut my budget all I can, I’m planning to borrow more money to make up the short-fall. I’m confident my earnings will increase next year when business picks up, which means I will be able to pay everything back over time. I think I’ll need to borrow about $7,000 to hit my scaled-back spending budget of $105,000.
My wife is arguing that we should reduce our spending even more. She thinks we should not count a reduction in proposed spending increases as a spending cut. She thinks our debt burden is getting too high and we should start spending less than we bring in.
I’ve pointed out how unsavory that would be. In a down year like this, we would have to make some pretty serious adjustments to our living standards. I don’t know where we would cut. Do we really want to reduce the kids’ allowances? Are we ready to forego our quarterly vacations? Should we scale back our Christmas lights display? Are we going to close the backyard swimming pool and throw fewer barbeques? Does she think we should stop replacing the living room furniture every 2 years, or the cars every 3? Would she like to spend her days growing vegetables where the roses are blooming, just to save a few dollars on food? What, exactly, can we cut?
She says ‘yes’ to all of the above. She even thinks it might be good for the kids to go mow lawns for their money, rather than getting it from us! She reminds me that when she was a kid her parents bought her 1 pair of shoes at a time, and she never owned more than a single pair of jeans until she went to work to buy them herself. They ate whatever was cheap – tuna fish this month, chicken next, hamburger when it was affordable. They ate ice milk rather than ice cream, and often mixed powdered milk rather than buy fresh. Her mom kept a vegetable garden and canned the extra to tide them over through the winter, and her dad never owed a penny except for his mortgage.
Yeah, okay. I’ve heard all of that before. But do we really want to live like that, I ask?
No, she says, she doesn’t. But she’s willing to do it for awhile, if the result will be a more stable household economy, the ability to get out of debt, and getting the risk of bankruptcy removed from over our heads. She’d even like to see us put some money in the bank.
I tell her that’s fine for her, if she wants to do it. But I don’t see why the kids and I should suffer because she’s afraid of a little debt. After all, we’ve never gone bankrupt yet, so why get gloomy about the future? All we need is for a little turn-around in the world economy and we’ll be flying high again in no time. In the meanwhile, we should just suck it up and borrow what we need. After all, I’ve already cut deeply into our 2011-2012 budget. She should just meet me half way by agreeing to increase our debt load a couple percentage points. What kind of difference is that going to make over the long haul?
For some reason, she refuses. She says she’s not willing to raise our debt ceiling any further. So I told the kids that half their parents think they deserve all the good things we can provide them, but half their parents think they should unnecessarily and unfairly suffer just because we’re going through a temporary rough patch.
It’s obvious to me that if we borrow more, we can keep to our inflation-adjusted budget, modestly improve our lifestyle and, if we borrow enough, I can even invest more in my company than I did last year. Surely more spending on my business will turn this year’s reduction in revenue into next year’s surplus. It’s clear to me that I just didn’t spend enough on employee wages, fringe benefits and improving the phone system. This year, if I put money into new toilet seats, upgraded computers, and softer mood lighting – heck, I should probably rewire the whole plant, and upgrade the entire sewer system, not just the toilet seats – oh, and pave the parking lot – I could even bring back a couple of the guys I had to furlough last year to help – if I make those infrastructure improvements, productivity will surely increase! We’ll turn the corner and make a profit next year, and from that profit I can pay down the debt I’m accruing.
The kids get it. They like it. They even voted for it when I put it to them. But for some reason, my Grinchy wife won’t get on board. She just can’t see that if we do it her way, we’ll be in for a hard time. And hard times are not fun. The kids don’t like it. I don’t like it. And I venture to say that even my wife won’t like it when she’s in the midst of it.
She has such a negative outlook, and won’t budge. So it looks like I’ll have to go around her, somehow, to get the money I need to keep this family solvent.
