Welcome to Today’s Family Budget!

Written by Steven on October 6, 2011 · Leave a Comment

Life is complicated and expensive. Today’s Family Budget tries to cut through the complication, and give you great advice about what is happening now and how you can improve your lifestyle. Learning how to have a budget that fits your lifestyle is one of the keys to a happy life.

Within this blog, you will learn how to create a family budget, how to get out of debt, how to repair or improve your credit, and more that relates to personal finance and you!

Make sure you grab your Free Debt Reduction Report on the right and get started today!

I have a beef with this guy… Part 2

Written by Steven on February 21, 2012 · Leave a Comment

Continued from Part 1

This is a continuation of my beef with the article The debt is not nearly as scary as you think: Government budgets are nothing like family budgets:

3. When households owe money to other people, they can’t just print it. The government can.

This is how it works: Technically, it’s not the government but the Fed that prints the money, then “lends” it to the Treasury. But the effect is ultimately the same, since the Fed can print as much money as it likes and the government doesn’t really have to pay it back.

The only real limit is the danger of inflation: If we flood the economy with too many dollars, the dollar itself might begin to lose its value. This is the scare story the deficit hawks always trundle out. The irony is that at the moment we have exactly the opposite problem: Not enough money is circulating, so the Fed right now is printing dollars with reckless abandon.

They are making me feel so good that they can just print more money. How did that work out for Germany? Oh, and China is doing this as well to keep their currency so low that no one can compete with them. So we should be glad that we are trying to feed inflation? And what happens when the economy recovers enough that we can get rid of money? Just because you can print it doesn’t mean you should. Many of the policies that the government uses are not always in the best interest of the American people and they don’t seem to realize that.

4. When someone in your household writes a check, the recipient tends to cash it. Not so when the U.S. sells Treasury bonds to banks in Brazil or China.

They rarely cash them in, but mainly just sit on them, rolling them over each year. This is because U.S. Treasury bonds have come to substitute for gold as the world’s reserve currency. So our foreign debt isn’t exactly debt, either. True, some economists worry that if we print too many dollars, other nations might eventually find something else to use as reserves and start cashing in their T-bonds. But that’s an unlikely prospect, because it would mean having to create an entirely different global banking system.

This one I actually think is true. And when I have treasury bonds or bills, I do the same. However, this once again goes back to our previous question of should we actually have that much debt out there that is funding a lot of frivolous spending by our government? We are in debt for some pretty silly things.

5. If a household doesn’t pay its debts, creditors can take them to court or call the cops. Internationally, we are the cops.

Why are countries like Brazil or China effectively giving us money and pretending they are loans? Well, consider this: A major reason the U.S. has a deficit to begin with is that we spend more on our military than all other nations in the world combined. But the military backs up the entire financial system. Think of these “loans,” then, as the salary we’re being paid for acting as the world’s enforcers.

This one, again I partially agree with. We spend a lot on our military which is partially what got us into more debt in the past 11 years. Some would argue that this is not the greatest reason to be in debt either. But we have plenty of other issues that are causing us to be in debt such as medicare and social security which are both extremely important programs. However, we need to find a way to manage these programs in better ways and try to reduce expenses around these items.

So these are just some of the things that I thought of as I read this article. I would love to get your take and let me know what you consider to be some of the true problems of our country being in debt. Is it setting a bad example to the American people?

I have a beef with this guy… Part 1

Written by Steven on February 21, 2012 · 1 Comment

I found an article from the New York Daily News that I have a beef with. He talks about how different the federal government is and how different it is from a family budget. But I couldn’t sit here and let him say this without a little response. So, here are the parts of the article and my response. The article is called The debt is not nearly as scary as you think: Government budgets are nothing like family budgets:

We have to live within our means. That’s what President Obama repeatedly tells us, echoing a point Republicans have been making for years. Like households, governments must husband our resources and balance our budgets, or future generations will surely pay.

There’s a problem here. The analogy is ridiculous. Government budgets – and the U.S. budget in particular – are absolutely nothing like a household budget.

Here are five reasons why:

1. Households can’t levy taxes.

True, governments, like households, have revenue coming in and expenses to be paid out. But if the breadwinner in a family has a job, he doesn’t get to decide what he’s paid for it. The U.S. government can charge its employer (the taxpayer) pretty much anything it wants to.

So does that mean the government should? He is actually right, the government can charge whatever they want, but shouldn’t that make them a little more accountable to us? Maybe better stewards of our money? The problem is, for so long the government has simply paid for things that are wasteful. There are many beneficial programs in the federal government, but many things, like the earmarks, can be very wasteful and do not actually help a large group of people. Can you imagine if they wouldn’t do this.

In your own budget, you have to be a little more responsible. You don’t just throw money at things that are not going to add some value to your life. If the federal government would really think about what they were paying for and tried to really make it worthwhile to the American people they wouldn’t have to raise taxes to pay for a truck full of hay for pigs in Alaska (or whatever they are paying for).

2. When households owe money, they owe it to other people. The U.S. debt is owed mainly to ourselves.

Contrary to popular belief, the U.S. debt is not mainly owed to China. In fact, roughly 70% of it is owed right here at home. Even more remarkably, the vast majority of that is owed to the government itself – mainly to the Federal Reserve or other government accounts. Granted, the Fed is a semi-independent entity, but the President appoints its chairman and its purpose is to serve the U.S. public. Money owed to a bank you ultimately control is simply not the same as money your family owes to Citibank.

So, now we are okay that the federal government owes money because it is our own money? I want my money back! With interest!! That is what they do to me with my student loan, but apparently this guy is telling me I shouldn’t be upset that the government actually has taken out a loan from me. Well I have to pay my loans and try to completely pay it back, why shouldn’t they?

Continued in Part 2

Family Budget: What if The Nations Budget Were A Family Budget?

Written by Steven on February 20, 2012 · 3 Comments

What if The Nations Budget Were A Family Budget?

This is extremely eye opening. What if you took the nations current budget proposal and cut off the zeros to make it more realistic as an American budget. This article from THV 11 in Arkansas. The story is called If the president’s budget proposal was a family budget:

LITTLE ROCK, Ark. (KTHV) — President Obama has proposed a 3.8 trillion dollar budget. For the second week in a row, we’re dropping the zeroes and presenting his plan as if it was a family on a modest budget. It’s a concept we introduced last week in connection to the national debt. UALR’s Dr. Mike Pakko, has crunched the numbers and here’s what he found.

Our little family has a budget for 2013 of $38,000.

Unfortunately our little family has an income of only $29,000

In 2013 our family will add 900 dollars to their debt.

That debt is pretty massive. Our little family faces $126,000 in debt.

Looking at the country through the eyes of a struggling family and you can see that the President’s 2013 proposal is not that ambitious. Still, it’s drawing fire from Republicans who again are balking at more taxes, primarily on the wealthy.

The interesting thing about this picture, is that it’s not far from what the President faced in his personal life when a community organizer in Chicago. He had a massive college loan debt. His bestselling book “Dreams of My Father,” helped get him out of debt. Here’s hoping the country has a story that gets us out of the red.

I just thought this put a lot of things in perspective. I found another article by a giant in the personal finance arena that I will share with you tomorrow because it is also right on point. What do you think about this comparison of the nations budget to the family budget? Let me know below.

Family Budget: Can You Spend Money to Get Out of Debt?

Written by Steven on February 20, 2012 · Leave a Comment

You cannot just spend more money to get out of debt.

Can You Spend Money to Get Out of Debt?

This was a very interesting article I found at StarExponent.com. The title of the article is You cannot spend your way out of debt, which is an interesting idea. The article is actually talking about the federal government. But can you imagine if this was your own family budget? Most people realize that within their own budgets they can’t just spend more to get out of debt. The actual way we get out of debt is to spend within our means, or make more money. But spending is not the way. Take a look at this article below called You cannot spend your way out of debt:

Today I am going to once again take a look at the abysmal performance of the national leadership in the financial affairs of this nation over the past 50-60 years.

Two years after the end of World War II Government receipts ((as a percentage of the Gross Domestic Product (GDP)) exceeded outlays for two fiscal years. A Democrat (Truman) was in the White House until 1953 and we saw outlays rise from just under 12% to just over 20% of the GDP while receipts rose from about 16% to about 18.5%. Clearly we were embarking on the path of deficit financing.

The driver for this deficit financing was the Korean War (referred to as a “police action” and initiated at the request of the United Nations). Technically the war was from 1950-53.

During the period from 1953 through 1984 outlays generally followed an upward trend while receipts were more or less stagnant. This encompassed the presidencies of Eisenhower, R 1953-61; Kennedy, D 1961-63; Johnson, D 1963-69; Nixon, R 1969-74; Ford, R 1974-77; Carter, D 1977-81; and the first term of Reagan, R 1981-89. During this roughly 30 year period outlays rose from roughly 20% to almost 24% of the GDP while receipts averaged out at approximately 18%. This is a clear picture of a nation encumbering itself with a real debt problem.

There were several actions taken during this period which contributed to the debt growth: The Vietnam War; The Great Society; The Guns and Butter; The bureaucratic growth at all levels of government; etc.

From 1984 through 2000 we saw outlays fall from 24% of the GDP to 18% while receipts remained stagnant at 18%. It appeared as though the nation’s leadership was finally understanding the problem they had created and might actually start paying off the national debt. We even had a nice surplus during the last few years of the Clinton administration.

The last 12 years have witnessed only chaos in fiscal management by our national “leaders.” This has occurred under both Republican and Democratic administrations. Outlays have risen to about 25% of the GDP while receipts have fallen to about 14% of the GDP. The receipts level is the lowest since 1950.

While, in my opinion, one of the major drivers in this latter situation is the ill-advised excursions into Iraq and Afghanistan there have been a number of domestic misadventures by many individual citizens and institutions also. The housing market was driven to unrealistic heights by people borrowing beyond their means to repay their loans, abetted by lending institutions that had been given free rein to do so by the government. Many stocks are traded at prices that are absolutely unreasonable considering that they have no underlying value to support those prices. We have seen proof of this through the Silicon Valley bust and the housing market implosion.

The answer to the financial debacle we are in is not that we should raise or lower taxes (although lowering taxes should be an ultimate objective) since taxes are the receipts side of the equation but that outlays should be reduced. The arguments made by many politicians that the tax rate is the controlling factor and that lowering it will stimulate receipts is specious at best.

VERITAS

Bayne’s column appears every Sunday. He is an author and historian. He lives in Culpeper. Email: walking.h.farm@hughes.net

The real way to get out of debt

The very last line makes my exact argument. You can’t just raise taxes to bring in more money, because what will happen? Congress will simply spend to the new limit above that new figure. Do not follow in the path of the government, don’t just raise your credit line to get more money and now spend to that limit. You may be able to pay the interest and monthly payment, but the only way to get out of debt is to make more than you spend, and then quit putting money into your debt lines.

Let me know what you think below.

Can You Afford a Family Pet?

Written by Steven on January 9, 2012 · 1 Comment

Pets are a part of many families these days. They are playmates, confidants and close friends. But, pets also come with a price. If your family is thinking about getting a pet, first consider if you can afford the extra cost.

They are cute and cuddly, tall and curious and like little people. We are not talking about children but the personalities of pets. Pets are man’s best friend, lifesavers in dangerous situations and stick close right up to the end. They forgive all and take on your traits over time. With all these good things about pets, why don’t more people have them?

Well, pets are not cheap. The cuteness can’t hide the fact that you will have to shell out money to get your pet in the home and to keep them throughout their lives. It is worth the time to make a well-informed decision. Many pets end up in shelters or homeless in the streets because their owners could no longer care for them.

Here are some things to consider before buying a family pet.

* Research your pet – Do you want a dog or a cat or an iguana? Different animals have different care needs. Even within a species, there are different considerations. Short dogs are good for small apartments. Large dogs need to run free and get a lot of exercise. Apartments don’t always allow for that. Different pets also encounter illnesses that may affect your pocketbook.

* Short-term needs – Most pet owners know that they will have to spend money at the outset for a pet, but just not exactly how much. Let’s take a cat for instance. They need a litter box, a scratching post (so they don’t use your furniture), toys, bedding and an initial vet visit. If you don’t want more of them, then your pet needs to be spayed or neutered. Even if you bargain shop you can spend a few hundred dollars this first go round.

Long-term needs – These will be your recurring costs. This includes food, vaccinations, pet insurance (if you opt for it), grooming, litter and treats. Consider the fact that you acquired your pet as a baby and they will grow. Their food will get more expensive and so will the needs of their regular check-ups. And, you want to keep your pet healthy so they have a long life with the family.

You can even compare pets if your family is interested in more than one. Depending on your financial situation, the pet may have to wait until another time. In the meantime, your research has given you a goal to shoot for in future hopes of getting that new puppy or kitten.