Personal Financing the Federal Budget

With trillions of dollars of spending, revenue, and debt, it can be tough to have more than a theoretical handle on what all this Federal Budget nonsense is all about. Why don’t we scale it down a bit so we can get a better grasp on what the idiots fine folk in Washington are doing.

We’ll assume that our household is a little above the $46,000 estimates. We’ll make it a nice, round $60,000. Figures will be based on 2010 FY amounts. So now, I’m going to be your financial advisor.

As a quick appraisal: you aren’t doing so well. While you earned $60,000, you spent $95,911.20. Wow. That’s very…wow. And that’s on top of the debt you already owe $398,048.10. Even without interest, if you used all of your income and spent nothing and didn’t borrow more, it would take you six years and eight months to pay it off. Yeesh. Currently, you are spending $11,489.36 on the interest of your debt (about 2.8% of the total). And…you’re asking the bank to increase your line of credit so the collection agencies don’t start calling.

Clearly, someone as a money-management problem…but I think I can help you.

Let’s look at how much you’re spending on…oh, personal safety [DoD, DHS, VA]. With as much debt as you’re carrying combined with your love of non-broken kneecaps, security is obviously a big deal to you. It must be, being that you spent $24,061.05 on weapons, security guards, their health plan, and just about anything else, it seems. Come on…you only earn $60,000. There’s no way you can afford that. I’m not saying to only get by with a lock and a dog, but you need to pare that down a bit.

Looking at your health [HHS, SSA, Medicare] expenditures… Huh. It’s tough to stay healthy, isn’t it? And it’s not just you. You have your kids, your retired parents, your brother that had that accident, and the odd freeloading relative to take care of (your mama raised you right). As a result, you’re spending $60,610.55. Dude…really? You have nothing left to spend on anything. ANYTHING. In fact, you’re already $610.55 in the red with this alone!

OK…it’s clear that we’re just going to have to wipe the slate clean and start again. It’s not going to be pretty—especially with that mountain of debt you’re carrying around. Still, we can do this.

First off, $60,000 isn’t going to cut it. You need to get another job. I know, I know…it’s tough in this economy, but there’s simply no way to fix this unless you get some more income. If both you and your spouse each work half-time at an easy minimum-wage job, there’s no reason why we can’t add another $15,000 to your revenue. I know you want to spend more time with family, but you’re the one who created this mess. Time to deal with it while you still have those kneecaps. So let’s assume we now have $75,000 to play with. It’s not a lot, but that 25% increase is better than nothing.

First, we’re going to deal with paying down that debt. Guess what that $15,000 is going to? See, I knew you were smart.

Next, you have to pay for the necessities. Housing, insurance, food, etc. sixty-percent. We’ll devote 60% your remaining income for that: $36,000. Yeah, it’s a lot less than what you were spending before, but you simply can’t afford that. We’ll break that down more later, but for now, we’re leaving it there.

As for security…look, I know the world can be scary, but you can’t live in fear. In days of yore, Kings built castles with moats and still weren’t safe. But, I don’t want you to feel you can never leave the house, so how about we give you $15,000 for security? If you can’t feel safe on 62% of what you were spending before…well, you’re never going to feel safe. Trust me: growing a pair is much cheaper.

So, that leaves us with $9,000 to spend on everything else. While this is your discretionary cash, you need to be frugal with it. By that I mean that you have to use the money to not only lower long-term costs—maintenance is usually cheaper than repair or replace—but to also build a foundation for future growth.

For example, in your old budget (and I use that term very loosely), you put aside $872.52 for technology [NASA, NSF, DoE]. That’s for a cell phone family plan, the phones, a couple of computers, software, some books. Uh…. You know, I meant what I said about building the foundation. The fact of the matter is that we live in the future and the future is a moving target. With that in mind, I’m actually going to increase your budget for these items to $1,000. BUT, and this is huge, you are going to have to run all of your desired purchases through me. No surprises. If you go over budget without my approval, I’m taking it out of next year’s budget.

And then there’s education. I’m sure you realize that you’re going to need your children to help care for you as you get older just as you are your own parents (after all—you’re raising your kids up right, too, right?). I see you’ve been spending $2,578.17. I’m actually sort of impressed that you devoted that much. Still…that lowest-common-denominator education it buys isn’t going to cut it. Your kids are going to need scholarships. That means better instruction. I’m not talking private school (trust me, you can’t afford it), but a more intense experience and expectations can go a long way. I’m thinking $5,000 minimum, but it’ll take some creativity on all our parts to have them rise above the mediocrity.

That leaves about $3000. That’s for travel, paying me, utilities, savings, and unexpected happenings. Just so you know: you aren’t taking any unnecessary trips, so get used to “stay-cations”. Also, you’re clipping coupons and getting better prices on things. Now, I know you’re shy. You hate negotiating, and I don’t want to put you in uncomfortable positions. I’m just saying to be frugal not wasteful.

Annnddddd….I see our time is up. There’s still much to do, but I know you’re serious about getting your house in order. You can’t be tossing your money about like you have been—I think you are starting to see that, now. It’s time to grow up and take responsibility not only for you but for your kids and their kids still to come. We’ll focus on more details in our next session, but for now…the sooner you find that job and get more money in the bank, the easier all of this will be. Bye now.

(Alice, call the bank and get the guy you just left an extension on his credit line. I have a feeling he’s going to be a project. Thank you.)