As you are reading this, things may have changed a bit regarding the financial fortunes of Greece, and the United States territory, Puerto Rico.
While many of the problems are political, we’ll set those issues aside and take a look at what the normal person can learn from the failures of such supposedly smart governments. In failure, there is always a lesson, if one is willing to accept those lessons.
CREATE A BUDGET AND STAY WITH IT
Most people understand this. Yet, how many people really have a formal budgeting process? Very simple…………on the left side of the ledger, write down all sources of monthly income. On the right side, write down your expenses.
Hard? Hardly so.
The hard part is admitting how much you actually spend for things that aren’t important. It’s great to have fun, but all good things come to and end if you don’t have the money.
DON’T PROMISE MORE THAN YOU CAN DELIVER
If you have budgeted properly, then this should be an easy lesson. Yet, people want to be liked, want to show how successful they are. So that leads to eating out every night. Buying too much automobile for the budget, and owning a house that should be a home.
Beware the urge to be more than you are. Live within your means.
YOU CAN’T MAKE IT ON OPM
OPM………Other People’s Money. In the case of Greece and Puerto Rico, it’s the government trying to be all things to all people on a limited income. Too many people are taking from the people that are paying into the treasury.
For us, it can be too much debt. The cost of that debt can overwhelm anyone that doesn’t keep a good handle on it.
Think about this. Debt payments, specifically the interest part of the payment, are negative savings. Dollars that pay interest are dollars that cannot earn anything. As I’ve counseled many people, you already know how to save, you are just doing it in the wrong place. Converting that debt payment to a saving payment will work wonders for that budget we mentioned earlier!
PLAN FOR THE FUTURE
As I’m learning at almost 61 years old, the future does get here! The work you do in your twenties, thirties and forties will make the sixties and seventies a lot better.
A country like Greece has saddled its future generations with unworkable debt. That has led to limited access to personal bank accounts to prevent bank runs. Yet, the Greeks would not vote to cut services and reign in their budget. They still want ‘what’s coming to them’. I’m afraid they are going to get what’s coming to them.
If you want a debt free future, the ability to provide for yourself and your family, and freedom to live like you want, do the opposite of Puerto Rico. Having visited Puerto Rico two summers ago, I’m not sure where all the money went. It certainly wasn’t on infrastructure.
It is our responsibility to not leave excessive debt to future generations. We can only pray the politicians will wake up in time.
Yes sir! There Ain’t No Such Thing As A Free Lunch. Dr. Britton taught me this in Senior Econ at the U of A in 1976. It is the basic tenet of all economics. There is a cost to everything, and nothing is ‘FREE’.
Social Security was earned. Medicare was earned. We all pay into it and it’s not free.
The best example today is the skyrocketing cost of health insurance. When mandated to cover a multitude of services for ‘free’, the insurance companies knew what the result would be. Some states are seeing insurance companies ask for 35% to 50% increases in premiums. Free for some, costly for others.
In the end, TANSTAAFL will rule the day.
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