never ceases to amaze me that people *and govt's* all seem to think that it's better to live high on the hog (so to speak) than within one's own means.

I have paid off all my CC's and I will not use them but in the most dire of emergencies. Wish I'd never had them to start with, but I was young and a bit foolish with the same mindset. Student loans are still looming over my head, but they will eventually be done away with also.

"Do not a borrower nor a lender be' (although not *Always* possible, a good direction to go in).

Dave

People rarely use credit well because we WANT stuff. Sometimes I think that the best way to pay off your debts is to turn off the TV and internet until it's all paid off. The two are very good and driving one to consume. Even when advertising doesn't work for the specific thing being advertised, it still drives you towards consumption.

The positive thing about money and credit (vs barter) is that the two are a great way to communicate wealth across the globe. I can work for a week, get a token of that effort (money - which only has value because we all agree that it does), and then use that wealth to have goods shipped from Australia. The vendor in Australia only ships those goods because of a system of credit that promises that he'll receive that wealth in exchange. And then of course that vendor can take that wealth and trade it for a week's worth of someone's effort in Australia.

When you think about it this way it's kind of magical. My effort did not actually get transported from California to Australia, only a symbol of my effort was transported.

This is short term credit that just keeps things moving. It's vital that this exist, otherwise your local grocery can't stock it's shelves. This lack of an ability to move value was one of the things that made the United States first constitution (Articles of Confederacy) such an abysmal failure.

Franklin's addage of "neither a borrow nor a lender be" is fine but within certain reason these two are the cornerstones of capitalism. People with capital gather it together and apply it to tasks, either directly or in the form of a loan. Like a lever, that massed capital makes economic activity possible *now* rather than later and allows you to make productive use of time. You can buy an edit suite now on credit and earn an income over time that you would otherwise have spent saving the money.

The two enemies of this are desire and lack of financial planning. People bought unproductive assets (flat screen TVs, Ipads, SUVs, oversized homes) and spent money on ventures that couldn't pay for themselves (Pets.com)

The only way I can think of to curb that desire is to turn off the main thing in your home that's there expressly to whip up that desire. That's your TV.

And yes, I AM the pot that calls the kettle black.

Rob Mack

Roger that !!! I owe, I owe it's off to work I go.

I wonder what would happen if Dave Ramsey was given his own territory and allowed to set up his government in such a way that they never borrow, nor do they ever go into debt. The only option is to live within your means.

I wonder how well that country would do given the global pressures of conformity?

j razz

The problem, as I see it, with living beyond your means, is that no matter how much your income increases through the years, your wants/needs will always increase at least as much. If you can't learn to live within your income as a 20-something making very little, you're still going to be spending more than you make when you're a 40-something as making quite a bit more. It's a hard lesson to learn (I had to learn the hard way!), but it's more about a mindset than an income level. There's always some new gadget, some new upgrade, some new toy (new iPhone or shoes as a 20-something, 4-wheeler or boat as a 40-something) that later is replaced by braces & college for your kids that keep you on the debt wheel without rest. And if you haven't not only lived *within* your means but *below* your means (so you can save/invest), then you'll soon find yourself a 60-something with nothing but a paltry social security check to retire on.

Folks can piss & moan about not having enough money or they can DO something about it. After two good pay raises in successive years that were sure to be my "final solution" to not having enough money, I still didn't have enough to cover all the bills. My wants had magically outpaced my income at each step. It was hard, but I had to adjust my attitude right then & there to not only pay off the credit card each month but start putting money away. The savings started small, but with each subsequent pay raise, I only used half to increase my spending, the other half went towards savings.

The vast majority of folks earn themselves pay raises between the ages of 20 & 40, yet the vast majority (of Americans) find themselves at age 40 with absolutely zero savings and plenty of debt. I'm not especilly brilliant & this ain't rocket science -- I'm just saying ...

Cultivating a savings habit is really important for individuals. Unfortunately, governments can't do that (well, Representative Republics and Democracies can't. I suppose totalitarian states can horde wealth).

People are encouraged to spend every dime.

Locally, a lot of municipal employees have been coming into a lot of criticism because they've nearly doubled their income due to O.T. While this is totally unfair to taxpayers, I can also see the bind these people are going to be in if they lose nearly half their income. Most were probably been spending it. Those that were socking it away will be a lot less hurt if they lose their O.T. since they hadn't been using it to boost their standard of living in the first place.

So there's a double advantage to saving. You have something to fall back on in bad times and you also weren't living too plush a life in the first place.

So how do you get a government to do that? In the U.S. neither of the two main parties are capable of it, despite the party ideologies.

Cultivating a savings habit is really important for individuals. Unfortunately, governments can't do that...................So how do you get a government to do that? In the U.S. neither of the two main parties are capable of it, despite the party ideologies.

"Ideologies" are a fictional impression created in the minds of Americans by the corporate news media. The problem is that citizens first have to know what is actually going on that affects their lives and the vast majority of Americans do not regardless of educational background.

The US House of Representatives is shown live on C-Span 1, The Senate on C-Span 2, The Hearings from Congressional oversight committees is shown live on C-Span 3. That's what I watch. When I compare what goes on live right before my eyes to 97% of the news media reporting about our parties and what they are doing particularly on Cable and Network news television programming and especially talk radio the two absolutely do not match. Most people do not and will not believe that so they won't spend the time watching the Congress live in action or watch the Oversight and judicial inquiries live. What is actually happening would be blatant and obvious if they did, but the vast majority of people would rather read or watch or listen their favorite propaganda instead and accuse the fraction of us that know what is happening of being conspiracy theorists with no basis for the accusation other than mental rejection of what we are saying. They don't want to prove it to themselves so they believe their favorite visual, audible, or written propaganda instead. That's because the self-serving corporate media have a variety of presentations of their piles of $hi$ custom created for every type of citizen, 97% of it false. What makes the propaganda true in most citizens minds is done through simple and simplistic repetition. Repeat falsehoods over and over again and they become "true". Then the citizens go out and repeat it to others.

John

The UK is NOT [art of the Eurozone. We do not trade with Euros nor spend our money in Euros - we have Pounds. As we are not PART of the Eurozone we are not tied to assisting ANY Eurozone country that is failing. So no money from the UK to go to Greece. However, and like the US, we supply money to the IMF (International Monetary Fund). If Greece has approach that fund then we are all in the same boat.

If anybody would =like to put me straight on these matters I am always willing to learn.

The UK is in Europe - but we are NOT part of the Eurozone - and for those not understanding this, it relates to those countries who do not now have their own currency: France, Germany Ireland, Italy, Holland etc etc . . . . but now have the "Euro" - hence Eurozone.

France, par example, doesn't have the Franc any more - they have and trade, buy their food in Euros. But that Euro in France has the same value as in Holland. Clever huh?

Grazie

If anybody would =like to put me straight on these matters I am always willing to learn.

Grazie,

Please understand that we get very little "foreign" news information in the US as part of our regular news content. So that you understand this even though it seems incredible to you, most of our regular "news" coverage is like your tabloids in the UK in terms of content. In fact your population knows far more about what goes on in the US than our own citizens do here. And while you mentioned Greece, the connection between the failing Greek economy and US corporate giant Goldman Sachs has not even been covered in our media despite extensive coverage in the rest of the world media, particularly the BBC. The corporate media here protected corporate giant Goldman Sachs instead. The vast majority of Americans on this forum reading this are hearing it for the first time even though it's not new to the rest of the world. Example: Read the Wall Street Journal article about it and you will see how they never mentioned Goldman Sachs, but rather concentrated on everything else but. It typifies the rest of the reporting here regarding the failure of the Greek economy particularly the "Greedy Civil Servants in Greece" line of BS. The rest of the media did the same providing a false platform from which to launch an assault on Public Servants here in the US falsely claiming that they too may bankrupt the US just like they did in Greece.

John

Just to expand on what Grazie said the problem isn't so much the common Euro currency but that each member country still runs their own economy. They're supposed to obey certain rules but some have been using creative accounting to appear that they were sticking to the rules.

It arguably doesn't matter that much. If the Euro slides it really isn't end of the world. The USA economy is a much bigger problem. Although both the Euro and the USD are fiat currencies the USA has so much foreign debt that the only forseeable way it'll ever get paid is if the US prints a lot of it. As the USD is the global currency that would have huge impacts, a lot of countries would be mighty pissed off, China in particular.
China itself has a problem as well. Only 30% of GDP is for domestic consumption and that's not good for them in the medium to long term. They're carting off our iron ore and coal as fast as we can dig it up. Mostly Australia gets paid by what China sells to the USA and the USA pays for this by borrowing more from China. At some point as history shows the rat stops running around the treadmill. For as long as the rat keeps going our government is handing out lots of money, not all of it arguably wisely but everyone prefers free ice cream over roads and schools

Bob.

The USA economy is a much bigger problem. Although both the Euro and the USD are fiat currencies the USA has so much foreign debt that the only forseeable way it'll ever get paid is if the US prints a lot of it.
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Take a look at the proposed FY 2011 "official" budget breakdown:

They falsely claim that the defense budget portion is lower than it actually is. What you pay (or don't pay) by April 15, 2010, goes to the federal funds portion of the budget. That does NOT include Social Security. Social Security is part of the federal trust funds portion.

The government practice of combining Trust and Federal funds began during the Vietnam War, which made the human services portion of the budget seem larger and the military portion seem smaller. Example of Govt Pie Graph: Pie Graph of 2010 budget

Using these false methods of calculation they generally come up with a percentage for Defense Spending of around 20-25% if the budget.

Current spending for the Department of Defense and the military portion of other departments is actually around $721 billion accounting for around 30% of the budget. But that's not all. Past debts (both the US occupations of Iraq and Afghanistan were funded by borrowing money from China, etc and adding it to the national debt mostly without an eyebrow raised by the media through "supplemental budgets" and not in the regular budget) account for another 18%. That is $399 Billion for the interest on the money borrowed to fund the occupations, and $123 Billion for Veterans benefits.

That makes the total actual portion of the budget for military and corporate defense contracting expenses 48 percent of the federal budget at $1,398 Billion.

The media hardly ever discuss that portion of the budget, but rather concentrate on the nickel and dime stuff, particularly when it comes to the portions of the budget that provide needs and service for the people. Repeated over and over again. For example Time Magazine (owned by Time Warner that also owns CNN) analyzed the proposed budget and left out the Defense Budget completely in it's analysis several months ago.
CNN reported on Feb 1, 2010 in an article entitled Things you should know about budget the following:

Defense

Notice what's missing? That's right -- there's no indication of what total defense spending is. Not even the false one the government puts out as I described above.

They did however point to several drop-in-the-bucket items, such as "End grants to manufacturers of worsted wool. Annual savings: $5 million" and "Terminate Christopher Columbus Fellowship Foundation, aimed at fostering "new discoveries in all fields of endeavor for the benefit of mankind." Savings in 2010: $1 million."

That gives their viewers and readers an intentionally distorted view of the relative amount of spending on defense and things like worsted wool grants.

They further go on to distort the tax analysis portion of their reporting by claiming:

Debt reduction

What does "high-income families" mean? CNN intentionally doesn't say. People are then (through repetition in the media) led to believe the falsely repeated notion that Obama is letting their tax cuts expire.
The proposal would only affect individuals making more than $200,000 a year and families making more than $250,000 a year. Only their tax cuts would expire which is approximately only 2% of American households.

"High-income households" ... "highest-income households" ... "wealthiest Americans": those are all vague and misleading phrases -- but that's all CNN gives us. CNN is deliberately obscuring the fact that only people making more than $200,000 and families making $250,000 will be affected. Purpose or their lies: To Protect the current tax cuts for people making OVER $250,000 a year.
The other media outlets are largely doing the same.

John

I think (without being an authority) that the budgeted US defence spending (2010-11) is $664B (12.7% of the total budget). This amount involves various economies to which the U.S. House objects (various impacts on regional interests) and they've signed off (voting 59:0!) on $729B (13.9%). Other countries, such as the UK, are looking at cutting defence rather heavily. Here (Australia) our defence spending is about A$27B (9.3% of total government 2010-11 budget), or around 2% of our GDP.

A problem for Europe is that by adopting the Euro as a common currency, they have lost the power to adjust the value of their own currency to suit their local economic situation. In the past Greece (and Ireland, Spain, Portugal) would have devalued their currency to make imports more expensive and exports of greater value, and paying labour with depreciated currency. Now they can only borrow more money and try to balance the books by making drastic cuts to spending. So a common currency without common management is a recipe for financial problems. Retaining the pound was a good idea.

Good points Serena.

I wish governments would dedicate as much effort and resources on making friends, then their defence budgets could be a fraction of what they are. Can't imagine what it must be like to be an armaments employee, spending your working life making devices designed to kill other people.