Thursday, October 2, 2008

My Two Cents

(by Ryan...apparently people are confused about who stresses out about money the most in our family...)

The "Financial Crisis," which is being described as the worst financial dilemma since The Great Depression, has been on my mind - A LOT. Even after stewing over it for a couple weeks, I can hardly discuss it without getting fired up. It is like discussing a recent argument before you have had enough time to really calm down. You know the type, where everything you say only gets you more riled up and angry. So if I storm off before I finish, then please forgive me.

Money brings happiness is the epic lie that is bought and sold by Americans to Americans around the clock (don't worry we are generously sharing it with the rest of the world too). It is a foundation of advertising and is subtlety shown on televisions and movie screens even when commercials are not. It is hawked in the suburbs, on the freeways and at my last high school reunion. Americans have bought the lie so fully that money has become the tool of measurement for how "well off" our fellow Americans are. This isn't even a very good lie. We see examples of its deception all around us, so much so that even reading it we immediately lump ourselves into the category of enlightened souls who don't buy into it. But is that true? Have we really declined the lie? Don't we think that if the house was a little bigger or the car a little nicer or our clothes a little better then we would be happier. Yet each upgrade does nothing to permanantly change our overall satisfaction. We get a momentary buzz and then go on to look for our next fix.

Our greed has made even us uncomfortable. However, rather than quell the greed, we have shifted our paradigm to accommodate our greed by commuting our wants to needs. Americans don't even know the difference between wants and needs anymore. Could I really not survive without cable/dish, another cell phone, another car, a pedicure, a new <fill in the blank>? Really? Would it kill me? And so we change our language to obscure the truth. "I want" becomes, "I deserve." Things that used to be classified as an extra or something we want is now justified because we "deserve" it.

So Americans buy what they cannot afford. When I went to buy a car, most dealers could not understand the concept of negotiating the price of the car. They always wanted to negotiate the monthly payment. "How much do you want to spend a month?" The exasperated salesman would plead. Americans define what they can afford by whether they can make the minimum monthly payment. This might seem reasonable to many, but what usually gets neglected is an accurate calculation of what they really need left over for daily expenses not to even mention what happens when the car breaks down unexpectedly, or some other unintended expense pops up. "Isn't that what credit cards are for?" NO! This is how we end up people making monthly payments on houses and cars and furniture and electronics and credit cards and on and on. "So what?" "Why do you care?" Let's just pretend for a minute like all the foreclosures going on around the country aren't affecting my house price, my job market and my investments. That mentality is wreaking havoc on my government.

We live in a country with a representative democracy which in our case is a great representation of the people behind it. Our government buys WAY more than it can afford. Way way way more. Last year alone we overspent by roughly $330 Billion (a third of a TRILLION dollars). We treat our national budget like our personal budgets, except for unfortunately we feel less burdened by the national debt plus we have avaricious politicians who are all too eager to help us spend our money on ourselves to cinch up their re-election efforts. This only exacerbates the problem causing us to dip even deeper into the hole.

Currently the US National Debt is $10,029,611,831,671 (That's just over 10 TRILLION Dollars). That boils down to $32,901 of debt per PERSON. If your kids have as much as mine do, I am looking at a debt of $230,307 for my household alone. And once you factor in the money we owe for all the programs we have obligated ourselves to but not saved for (i.e. Medicaid, social security, Medicare, etc.) that figure jumps to a little more than a half million Dollars per household. Do you have half a mill' lying around the house somewhere? "So what?" "Why do you care?" Well -

Question: Do you know what number is even bigger than the amount the government overspent last year?

Answer: The number of Dollars we paid towards INTEREST on the national debt.

Our debt makes it increasingly difficult to balance the budget from year to year. Sound familiar? So if we owed less ... we could spend more on those things we "deserve" like health care, poverty, job creation, etc. Heck we could plunk down more than half of the government's original bailout package without needing to ask China to "spot us" $700 Billion till next payday. Our Dollar wouldn't be falling through the floor. Heck ... maybe we could keep more of our hard earned money in our own pocket.

We are such a nation of overspenders that the Holy Grail of government finance is to balance the budget (that's only the yearly budget). Let's forget that no one (except for Bill Clinton during the high times of the 90's) has managed to do that for decades. But we don't even bring up (except for "crazy" Ross Perot in the '80s) the idea of paying off the national debt. We can't even stop the bleeding from year to year.

Our government is so ridiculous that while we are trying to figure out how to revive our economy, the senate couldn't help but tack on an EXTRA $100 Billion of pork (i.e. $100B of the spending has NOTHING to do with the bailout). Seriously? We are facing the largest financial crisis since the Great Depression and we can't keep from adding on spending amendments to the bailout package. Incredible.

In the presidential debates, you would have thought that Jim Lehrer was trying to pull teeth when trying to get the candidates to explain what parts of their budgets they were going to cut in order to account for the huge price tag of the bailout. Both candidates couldn't identify anything concrete the first time around. Then on the second pass one of the candidates had the audacity to hope that I wanted to hear what spending he wasn't going to cut AND then added that he would not abandon plans to expand the budget to include a health care plan for every American that no one on either side of the isle is very clear on how we will pay for it.

I am obviously beside myself with indignation over the American people's spending habits. I realize that you might not be able to cough up your half million right now, but we can be a little more reasonable in our personal spending as well as the type of spending that will earn our vote for our city council person, our senator and our president. If we don't make some serious changes to our own habits, then maybe, just maybe we can create a financial crisis that will finally beat the Great Depression once and for all.


Jessica said...

Um. Who hijacked my blog??

Everyone is going to be so confused when they don't have funny Jane stories to read and pictures of furniture to ponder over.

And since I've only been hearing this for the last 11 years, it was also fun to see it in written form!

Of course, I think you are smart and right and this is why we are in the safe, and fully-balanced-budgeted, place we are in.

Now let's see if anyone will comment...

queenieweenie said...

Thanks for the actually put everything into perspective.

Elizabeth Caldwell said...

yep. you got it. It is a mess and no one in DC is leader enough to tell us the hard truth and to get us to clean up the mess.

Whether it is a father who says we cant afford the new xbox or a congressman who says we cannot afford a new program we need real leaders in our society who inspire the best, not the worst from all of us.

Thank you for being one of those rare leaders.

Rochelleht said...

Oh, I SOOOO agree. I was incensed at the debate when one candidate wouldn't give up early childhood education. WHAT!? Since when is that guaranteed by the constitution? I thought that was a mother's job.

I have had this on my mind so much lately, too. The bill is ridiculous and the pork they tacked on to try to get people to vote for it is ridiculous. I blogged a bit about this last week. I've come to the conclusion (not that hard, mind you) that the only place to find peace at this point is prayer and scriptures.

I am reading a biography of the early life of Pres. Kimball. Last night, they entered the Great Depression. It was so interesting watching how it all came down and how the government passed socialistic laws to try to solve it. I couldn't believe how much I empathized with it and really saw our own time. It was almost identical to what is going on right now.

And yet, they all survived. But ours is much worse, I believe (because unlike back then, everyone is in debt now).

Bridget said...

Amen sister! Americans are so greedy and don't think twice about running up huge credit card debt. Our realtor and mortgage consultant were stunned when we did a 15 yr mortgage. "Why do that when you can do a 30 yr and get a bigger house?" Because we don't NEED a bigger house! And we want to get out of mortgage debt asap. I am proud of the fact that my husband drives an old beater car and guys who work for him are pulling up in their $70K cars. I am happy my parents raised me to fear debt like the plague and to budget, budget, budget. Great post. Your kids are lucky to have you and Ryan as parents. They'll know its better to save than to spend. That said I did just get back from Target and got me some lovely cardigan sweaters.

Bridget said...

Sorry about the run on paragraph. I hate when I do that.

Kara Jayne said... friends...if only we lived by each other!

Lauren in GA said...

I loved this. Perhaps, because I have some friends that insinuated that my husband is cheap (Our house could really use some updates, but it is just going to have to take some time). I am not calling, said friends, choices of living outside of their means selfish or wreckless (at least not to their faces)...why be critical (to our faces) of us trying to live within our means?

When I was newly married I remember being in a Relief Society lesson and they were discussing debt avoidance. I really did not understand what the big deal was with having credit cart debt. (My parents always, always, always lived on the edge. My dad denied himself very little materially.) I raised my hand (I kind of laugh at this now) and asked what the big deal was, because we don't have debtors prisons anymore. I remember saying there is no day of reckoning for debt in this day and age. I openly told the sisters in that room that I only wanted to avoid debt because I know from the prophet that I should and I want to be obedient and because my husband was gripped with fear about going into debt. I remember some sisters chuckling and I remember one sister saying that there would be a day of reckoning. She explained that countries that don't take care of their debt eventually fail. I distinctly remember not believing her...and only continuing to avoid debt in hopes to be obedient and not cause my husband to slip into a coma from fear.

Now...I am thinking that sister was right. I am scared this could actually be the day of reckoning that she spoke of. Thank you for this post Ryan. Splendid hijacking. ☺

jessica said...

Thank you Ryan for taking the time to write everything I feel. Seriously this post needs to be cut and pasted and sent to all of our elected officials. You speak for so many of us. At least those of us who are "cheap" and uh SMART!

Carie said...

I LOVE THIS. You are so exactly right on!

We have a cash only budget. I drive an 11 year old (PAID FOR) Toyota Land Cruiser. We have a large emergency savings, on top of our investing for retirement. In short: We live UNDER our means.

I know this oversimplifies things greatly: BUT this whole mess is basically because of 1) sub-prime mortgages and 2)Credit crunch. SO if everyone OBEYED THE PROPHET: stayed out of debt, lived within their means, avoided Home Equity loans, extravagant home loans . . . WE WOULDN'T BE IN THIS MESS!

p.s. Jessica - don't let RYan see my JCrew post. (in my defense: it was all paid for with budgeted CASH.)

buddens said...

Hi, I'm a blurker, and I'm sorry I haven't come out before this. (Incidentally, since you can't link to it otherwise, my blog is, which is also, incidentally, not our last name). I found your blog via Brooke Romney's (we grew up together). Anyway, I think you, Jessica are hilarious and I completely agree with you, Ryan! I worked for J.Crew for two years a few years ago and during that time, really started realizing how ridiculous our country is! We had charts comparing our sales to the same date the previous year and it always had to be significantly higher or the managers got upset. Really? In one year's time they think sales and profits should skyrocket ... for just clothes? There's a cap, people. And that's just one teeny tiny thing, but it's what got me started thinking about all the ridiculousness. Then there's the real estate flipping shows, where homes were selling for INSANE prices ... and all the while I couldn't help but think of how I always hear that the average salary in America is around 45K (or close)? It just didn't add up.

I have thought a lot lately about what it would be like to have another depression and oddly enough, (even though my food storage is lacking a bit), I haven't been that scared, which I attribute to the Gospel. We have two cars -- one we own and one we owe money on, but at least we own one! That's all we would REALLY need if it came down to it. I've thought a lot about how my family is what makes me happy, not my stuff. The only thing that makes me nervous is that my husband is in his final year of law school, so the job hunt as well as our mountains of student loans are iffy.

Anyway, sorry to be so rambly as a first-time commenter.

Annie said...

Even before I saw Jessica's comment, I was going to say "wait, this is Ryan, right?" :)

Meg said...

What impressed me the most about this post is that Ryan burned money right in front of our eyes! Very cool.

Oh ...I mean not cool since his whole point is we need to be more careful. Ok. Point very well taken. Now can you put Jessica back on the line so we can hear cute stories about Jane again.☺

Ben said...

Excellent post. I don't comment much, but I must agree with your thoughts. Our economy is in trouble. This crisis has been predicted for years now, but everyone wrote the doomsayers off. What I can't believe is that those who just three months ago said we were fine, are now the ones trying to come up with a solution. If they had no clue back then, why would they have a clue now?

Over on Calculated Risk, they have been discussing this for a while. They recently posted a very amazing video about the foreclosure crisis in Southern California. It is here:

Ben said...

Here's a direct link:

Bekah said...

You guys amaze me! Great post!

Hollyween said...

Very informative, smart post.
I wish I could have written it myself.

Too often we confuse wants for needs. Us included. It's a daily battle.

I have to admit that I feel a little dumb after reading that though. Where are the funny Jane stories?

Jake said...

Amen, Ryan. Amen.

Erika said...

Ryan, I have the answer - move to Canada.

Ilene said...

Ryan, tell me how you really feel.

Yeah, I LOVED the debate when Obama explained what programs he wouldn't cut. I felt for that poor moderator whose name I just forgot.

Tristan said...

That was a lot of 2 cents! ;)

Kenny and Linsey said...

And this is why we need term limits. No politician is ever going to stand up and say "the only way to fix the economy is to cut ___ and ____ and ____ " or they will not get re-elected. But, if reelection is off the table, then maybe, just maybe, someone might have the guts to do the right thing and stop making the money in our pockets continually worth less every day.

Ryan, maybe you should run for office?

Laurie said...

And he plans kids' birthday parties too!!

Good job Ryan.

Brooke said...

Thanks for the insight. I had to ask Spence what pork was, because I was pretty amazed the gov. would spend so much on hot dogs. :) Hopefully it was a little more important than that. Well, after a month of eating out because of nausea I'm feeling a little guilty about my overspending. I'll do better next month Ry, but hey no checking up on me just in case. We're doing our part by driving your hand me down car. Thanks we really do appreciate it.

Adrianne said...

So, are you gonna tell me who to vote for or what? I have to mail in my ballot soon.

Adrianne said...

and maybe I should stop complaining that ARgentina doesn't have a real mortgage system so if you can't pay cash it's practically impossible to buy a house here. Whatever happens, we own our whole 700 sq. feet free and clear!

Jenibelle said...

If I read this and understood it and appreciated it and assimilate it into my life do I finally get credit for that Econ class from BYU, 1981, that I dropped because it was boring?

Excellent business writing~

I was going to make a smart aleck comment about pedicures being a mental necessity...maybe I shouldn't.

Dancin Queen said...

Loved it!

Tammy said...

I liked the post! When the govt spends in other countries when we need money here, its really hard to swallow. Consumer free spending, people who buy luxury items....well if they can afford them, do pumps up the economy. For those who cannot afford it and are piling up credit card debt, well they are idiots! Greediness is bad, I know but I am guilty of frivolous spending....but I dont have debt, I pay my bill off every month, so does that count?

bloggingchristy said...

i heard that obama plans to help decrease the deficit with unnamed funds from Saudi Arabia. oh yeah, did i mention that his middle name is Hussein. i don't care if snopes says different, i heard this on rush limbaugh and checked it out and can confirm that his middle name really is Hussein. Be careful of islamic terrorist wolves in sheepskin(at least I think that's a direct quote of scripture). By the way i would be careful voting conservative as well, as Palin has proved that women are less intelligent than men. If you're looking for greener pastures this time around then follow my lead and vote Nader because at least when we have it worse than the great depression economically, environmentally we'll be in good shape.