Mismatch of Money
February 12, 2010
President Obama recently gave this quote as part of an interview about taxes and budgets:
“Our real problem is not the spike in spending last year, or the lost, even the lost revenues last year, as significant as those are,” he said. “The real problem has to do with the fact that there is a just a mismatch between the amount of money coming in and the amount of money going out. And that is going to require some big, tough choices that, so far, the political system has been unable to deal with.”
On one level, he’s exactly right. If you look at any American family who currently has debt, this principle will hold true. If only the money coming in and the money going out matched! The best get-rich advice I have ever heard is this: “Spend less than you make, and do it over a long period of time.” The only difference between the American families in this situation and the Federal government is that most families don’t have the ability to legislate an increase in the money coming in. While there are some ways to increase the income, most of the time the obvious solution is to spend less. Unfortunately, that just never seems to be an option for the Government.
But is this really the overall issue? Is the problem with the government (or the families in debt) really that the income/expense columns just don’t match up?
In most (but not all) cases, when this happens, there is an underlying cause: a mis-management of money. You buy that expensive car that you didn’t really need, or you take that vacation instead of paying off your student loans. The government is no different. They spend so much money on various pork projects, and then act surprised when there’s no more money left.
The reality is, by saying that your income doesn’t match your expenses, you avoid the underlying question: WHY? Knowing that this is off-balance won’t help you; Your first step is to figure out WHY they’re mismatched.
Of course, the second step is fixing them, and that’s usually even harder than the first….
