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Lessons From The U.S. Government Gridlock on Debt

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p>While I tend not to be all that vocal about my political views to others, as a citizen I try to stay relatively well informed about ongoing political issues. Being a long time writer about Personal Finance, I have always thought how the government borrows and spends was fascinating. The numbers just balloon beyond comprehension so quickly it is almost laughable to think about, and tracking and managing that spending must be an absolute nightmare. Still, the bottom line is that the U.S. Government has been spending well beyond its means for decades, and the problem is finally starting to draw more serious attention. At the end of the day, someone is going to get hurt, no matter what decision the government makes or the approach it takes to get the national debt under control.

The parallels to our own financial situations are easy to deduce, especially given the dire straits that many Americans find themselves in today. After years of borrowing to consume, we reached a point where reality slapped us in the face with the real estate collapse. Without a credit line, many of us have realized that borrowing to live is really no way to live at all since, eventually, you have to pay that money back. Habit changes, painful at first, to live below our means are becoming increasingly widespread. The more you borrowed, the more difficult you have probably found it to unwind your debts and get back to stability. Worse still, those that were barely scraping by under a pile of debt were immediately crushed when they were hit with the first sign of adversity. It is a stress that no one wants to live with, wondering if they will keep their house, car, and life. It is a fear I try to fight off even as I work to keep my emergency fund full and my retirement account happy.

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Likewise, for years, the government has spent money without a thought even if it didn’t have it, because our credit line was so huge that no one would dare question our ability to repay. There always borrowers out there happy to pick up our debt because historically speaking, with a few notable exceptions, we were good for it. Yet now, it seems, we are starting to approach our limit. We aren’t there yet, and all of this Political grandstanding is more about the 2012 elections than the future of the Federal budget, which is all the more frustrating when you think about what is at stake. Don’t these people realize the fire that they’re playing with? No one wants to accept the fact that in order to get back on the right financial track, more than fat is going to have to be trimmed. We’re going to catch a little muscle and bone, too. Not good if you want to get re-elected, but necessary if you want to approach a balanced, long term plan to financial stability.



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