Stop Worrying About the National Debt

Lately everyone’s been panicking about the U.S. debt.

If you watched any TV news over the past 2 weeks, you heard an earful about the national debt. If you picked up any newspaper, you noticed the national debt dominating the headlines.

If your friends are anything like mine, Friday night dinnertime conversation turns to the national debt. After the second beer, someone starts ranting about how our country is buried in debt to China. Someone else counters that our citizens have less health care and worse education than Europeans. A third person chimes in with a rant about taxes. This triggers an all-out dinner table war.

This is the point where I quietly excuse myself and slip off into a corner, where I start a new conversation about something — anything — that I can actually DO SOMETHING ABOUT.

You see, I’m a firm believer that you should spend less time worrying about the nation’s finances and more time thinking about your personal pocketbook.

How many people do you know who argue about the national debt, taxes and health care reform, while failing to contribute to their 401k?

How many people do you know who discuss how the politicians and/or corporations are “ruining the economy” while they pay 10% on their car loan?

I’m going to mount my high horse for a second to give a blunt piece of advice: Stop blaming the country for your problems, and get to work.

What Debt Crisis? What’s Going On?

For those of you living under a rock (and for the benefit of my non-U.S. readers), the national debt drama goes roughly as follows:

• America borrows a bunch of money.
• America hits its $14.3 trillion “borrowing limit” — the debt ceiling — in July 2011.
• (Imagine you hit your credit card limit and Visa/Mastercard stopped letting you charge anything else. That’s the situation the U.S. is in, except our ‘credit limit’ is self-imposed.)
• Americans realize that if the “borrowing limit” isn’t raised, our country will default on our loans. Yikes! U.S. goes into panic mode.
• International credit ratings agencies investigate downgrading the America’s national “credit score” from AAA (the highest possible score) to a lower score, like AAA-(minus). This would raise the interest rates on our $14.3 trillion debt, which would reverberate throughout the country in the form of higher mortgage, tax and inflation rates. Further panic ensues.
• U.S. stock market plunges 6.7 percent. “This is only the sixth time the Dow has dropped eight straight days in more than 30 years,” says the Wall Street Journal.
• Politicians from both parties bicker like insolent children.
• Life imitates art Congress: ordinary Americans argue about the national debt crisis while failing to fund their own retirement accounts.

The Anti-Debt Politicians Carry a Credit Card Balance

I’d laugh if it wasn’t so sad: some of the most vocal anti-debt politicians carry huge credit card balances.

Senator Mike Lee of Utah declared that Congress is “burying our children … under a mountain of debt.”

But as a CNN review of his financial disclosure forms shows:

Lee had amassed at least $15,000 in credit card debt and had a $50,000 line of credit at a Utah bank as of late last year.

He’s not alone … Rep. Tim Griffin of Arkansas had at least $15,000 of debt accumulated on an American Express card, according to the forms. Griffin … has recently said Washington has “a spending addiction.”

Note that the report said at least $15,000 in debt. The financial disclosure forms give a range of figures: Griffin’s credit card debt ranges somewhere between $15,000 to $50,000.

The report continues:

Rep. Kevin Yoder … said in a recent press release, “Washington needs to cut up the credit cards.” But Yoder’s own form shows he amassed at least $15,000 in what’s called a “revolving charge account” with Citigroup.

I’m not telling you this to poke fun at politicians. Seriously. I’m not trying to take a cheap shot at Congress, nor am I trying to make a partisan statement. Notice that I omitted any mention of their parties: that information is unnecessary, and it would only distract from the larger point.

I’m telling you this story because these Congressmen’s personal finances are a reflection of what’s happening across the country. Many Americans get caught up in the nation’s economy but fail to take care of their own bank balance.

They rail against higher taxes and more spending in Washington, but won’t cut their cable bill when their checking account balance gets slim. They’ll complain that Social Security is going bankrupt, but they won’t open a retirement IRA.

They’ll read books by partisan talking heads and political pundits, but they won’t read a book about step-by-step financial planning in your 20′s, 30′s, 40′s and 50′s.

It’s easy to think that if the government solves its problems, we’ll all be okay.

Guess what: you’re the only person who can make your own life okay.

I have no control over how generous Social Security will be in 30 years. I can’t control the inflation rate. I can’t control taxes. And I won’t waste my time trying.

I can make sure I’m saving for retirement every year, so that I don’t have to rely on a government check when I’m elderly.

I can make sure I have a decent emergency fund, so if taxes rise, I’ll have enough to pay the bill.

You get the point, so I’ll leave you with this political cartoon from the New Yorker that summarizes it all:

Paula Around the Web …

Contemplating a move? I write about 10 Surprise Moving Expenses at Barb Friedberg Personal Finance.

I’d Like to Thank the Academy …

Thanks to the Festival of Frugality and the Carnival of Personal Finance for featuring my posts this week.

Photo courtesy Kevin Krejci.