So I read an article by Suzy Orman on CNN last week that not raising the national debt ceiling is like not paying your credit card bill. Check out what she said:
As we all know, if you run up a balance on your credit card and then decide not to pay the bill, there’s a huge price to pay. Your interest rate goes up, your credit score goes down and that triggers all sorts of costly dominoes to start falling. To not raise the debt ceiling is akin to refusing to pay your credit card bill.
Unfortunately Ms. Orman is sadly mistaken in this analogy. A better comparison would be saying that raising the national debt ceiling is like taking out another credit card so you can pay your electric bill.
You see, the entitlement programs we have developed were meant to help people out. Unfortunately we’ve been funding those programs on credit. This means we really couldn’t afford those programs to begin with. Now, our society has moved to a point where in order to continue funding all the programs we have in place it’s becoming an exponential curve (meaning the rate of growth over time is increasing…it costs more every year to continue funding these programs).
I have parents and in-laws nearing retirement age, and I’m watching as they’re trying to figure out what to do if programs like Medicare and Social Security go away. The culture we developed of “if I work until I’m 62, I’ll have money to live on” just isn’t sustainable. So what’s the solution?
Employers don’t want to keep on employees as they age due to increasing cost of healthcare and risk of lost work. We also have more younger workers in the workforce that are thought to be more productive, so just continuing to work indefinitely is not so much an option.
We need people to get creative with how to help out those who are struggling without putting it on the shoulders of the government. Those who have should help, but only with strings attached. A “free lunch” doesn’t help people get back on their feet. Rather, educating them and holding people accountable to be wiser with their finances is what people need. If people aren’t being responsible, you stop enabling…much like refusing to enable a drug addict.
I know this sounds harsh, but with a national debt 100% of GDP, we are headed very quickly for a larger crash than what we experienced several years ago. Let’s get our heads screwed on straight and start taking individual responsibility for our financial stability rather than giving it to our government.
