The Truth About The Economy

It’s Finance Friday and after another near cash melt-down, people are thinking about the economy and the budget again or at least until some new reality show comes on TV. However this is really simple. Normal people do it all the time. Smart people do it all the time. Normal, smart people do it all the time. Ready?

Don’t spend more money than you take in.

Yup, that’s it. Go home now. I can hear people yapping through the ether, “But that is too simple, you don’t understand!” No, I do understand and it is that simple. It is no different from what normal, smart people do every day and just let me say, just because you have a college degree doesn’t make you smart. If you spend all your dough on coke and hookers then whine about being broke, guess what? You are a Congressman now.

Here is how it works. First, you figure out how much you are making each month. I know, there are always little bits and bobs you can’t account for with certainty (income from a garage sale, selling a car, lotto money, a second job) but let’s start with what you know. Let’s say $2,000 a month.

Now you write down your expenses. Let’s start with the things you have to pay each month (Rent, utilities, car payment, car insurance, food, child care, etc.). Your drug dealer is NOT a necessary expense. The money left over from what you bring in vs. what goes out is your “discretionary income”. This is called a budget.

Now, in your day-to-day life you may wonder why you have no money at the end of the month. Answer, it’s because you spent it, usually on stupid stuff like lattes, movies, books you wont get around to reading for another year, video games, cocaine and hookers. If you were in government these things would be stuff like “8 million for a study on the reasons we need pencils” or “800 million on aircraft carriers with staff and fuel and the machine that goes BING!” SAME THING.

Do you know how many aircraft carriers we have? The Navy lists eleven currently in service on their site. Do you know the number of the next highest amount owned by another country? One – Three in the UK, depending on which source you are using. The point is, we don’t need twelve aircraft carriers and this observation was brought to you by my former military Dad. Do you know what we need? We need roads and bridges and infrastructure. We need investment in our country and building that infrastructure creates…. JOBS. Yeah. It’s just like if you invest a little cash each month on car maintenance, the chances of your car blowing up in a swirl of black smoke and costing you a huge chuck of change all at once are minimal. You need to take care of the “must have’s” first not the “I wants”. Wanting things because we think we “deserve them” or they are “owed to us” is what got us into this mess in the first place both in our personal finances and our countreys.

This month just started so do this little experiment with me. Get a little notebook and write down every single cent you spend and what you spent it on. Latte $4.34, PG&E $42,87, Gas $123.82, you get the idea. come September 1st, look at what you spent and on what. Don’t be a pork barrel politician (of either party). Did you really need to see five movies? Why not just one or wait until it comes out on Netflix. Did you really need 35 lattes? How about one latte a week and the rest of the time you brew your own at home. Did you really need to eat out all those times when you could have made sandwiches and dinners at home for 1/4 of the cost? See? If we want our politicians to stop being asshats, we need to stop this co-dependent behaviour as well.

I leave you with this brilliant video I heard about via the Colbert Report. Enjoy.

The Economy Explained In Under Three Minutes

Posted on August 5, 2011, in Uncategorized and tagged , , , , . Bookmark the permalink. 1 Comment.

  1. This made me giggle for a protracted time.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: