The National Debt Vs. Consumer Debt The Race is On

Unless you don't own a TV or radio, you've likely heard about our government's troubles over the past few months regarding the national debt. In May of 2011 we hit our ceiling at $14.29 trillion. Essentially we, as a nation, maxed out our credit limit. Congress had until August 2nd to come up with a solution. The solution proposed was a package of budget cuts and an increase in the debt ceiling-a $2.4 trillion increase that allows more borrowing into 2013. This is all still in the works, and I'm sure we'll continue to hear lots more about it.
This story perked my interest so I logged onto the US Debt website. Have you seen this website? It's like watching a ticking time bomb as our national debt increases to the tune of about $1.5 million a minute. The figures that we as a nation owe are mind boggling. But what I found even more fascinating is that the "total personal debt" owed by American consumers actually exceeds the national debt. American consumers owe over $16 trillion!
The government's solution is to raise their credit limit, and worry about the consequences later. What about you? Will you request an increase in your credit limits and hope your lenders will give it to you? Will credit card companies continue to raise your credit limits when you hit your ceilings on your cards? Of course not! Credit card companies aren't so quick to raise limits so you can continue spending. Thanks to the recent bank debacle, banks and lending institutions are far more likely to lower your limits every chance they get.
Honestly, it's just as well that the government's solution is not your solution. As consumers, our solution is to get aggressive with debt and act now, not wait another two years hoping that things will get better. This is a more proactive viewpoint, giving you the consumer the ability to do something about it and handle your finances and your life.
There's an old saying that was inscribed onto a sign on President Truman's desk back in the 40's: "The Buck Stops Here." This was meant to indicate that he didn't "pass the buck" to anyone else, but accepted personal responsibility for the way the country was governed. Our current administration seems to have misplaced that sign, but that's another story.
As consumers we have a personal responsibility to ourselves to do something about all of this debt we've accumulated. Stop using Credit Cards! Make purchases on a "need to have" basis, and only buy it if you have the money for it. And whatever you do, DON'T make only the minimum payments, otherwise you'll literally be paying your credit card debt for the rest of your life, no matter what your current age.
Do everything you can do to get rid of that debt and live a credit card-free life. You can make a difference in that consumer debt calculator by personally taking responsibility for your OWN debt.
The Debt Lady Says, "Don't add to the consumer debt and everybody wins."

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Learn To Be Wisely Frugal But Selectively Extravagant!

Have you ever wondered why so many solid businessman drive cruddy, old cars from a dingy, run down offices to their palatial homes in the suburbs? Warren Buffet, perhaps the greatest investor alive is known for this. The reason they live this life style is not because they are cheap misers but because they have a high level of financial intelligence that you can develop as well.

They understand that if they have $90,000.00 that they could either put that money into
1.reducing their debt
2.invest it into the stock market
3.selective home improvements
4.improve the appearance of their business facilities (I am assuming that this doesn?t have an appreciable impact on their profitability and believe me it almost never does despite excuse mangers make to blow money)
5.buy a new Mercedes Benz for themselves
6.buy their children a new car.

The first two choices increase your net worth (equity) which is always a good thing and equity is not taxed. The third choice increases your enjoyment (utility) of your home. If you remodel your kitchen or bath appropriately you may also increase your equity. So if you have spare cash in excess of your debts and a solid investment, savings plan than this can be a good choice as well.

The fourth and fifth choices are TOTAL wastes of money because your business sits there for you to suck money out of and nothing else. A car loses a quarter of its value the moment it is driven off of the lot and then continues its downward slide to nothing. Depreciating assets are not investments they are financially undesirable necessities if you can?t walk everywhere you need to go. An automobile is a financially undesirable necessity, nothing more, nothing, less.

The very last choice is the worst possible use of your money. Not only do you waste your money but you also teach and reinforce financial mismanagement in the minds of your offspring. Your children learn that they do not have to work for anything they want. Worse still they will mentally assign a value to the automobile relative to the amount of effort it took for them to acquire it and that is zero.

In Steven Silbiger's book ?The Jewish Phenomenon? he describes in other ways why this concept of being prudently frugal yet selectively extravagant is a major key to the extraordinary wealth of the Jewish ethnicity. He shows clearly how Jewish families use this wisdom to convert their income into lasting wealth. Don?t forget that this wisdom is not restricted to Jews and in fact is the underlying lying cause of financial stability in high income families of low income ethnicity. The most enduring wealth of course is a debt free life style with adequate passive income and the knowledge to recoup it all if lost.

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