Budgeting 101

The big news this week is all about the federal budget debate also known as the Shutdown Showdown. We are about halfway through the fiscal 2011 year, and the federal government is still lacking a budget. Of course this makes absolutely no sense, but this is the twilight zone in which Americans currently live. We are waiting to see if our elected officials can be grown ups and reach a compromise. If the government does shut down on Friday, I lay the blame mostly at the feet of Republicans. However, Democrats do share some of the blame for this debacle as I will share later. First, I want to give a short lesson in budgeting 101 to our “brilliant” lawmakers. Now, a budget at its core is based on two things: 1.) Income 2.) Expenses. If you bring home $1000 a month after taxes (and yes, you do have to pay taxes, its non-negotiable), you have a $1000 to spend (I know this is really simplistic, but apparently some people don’t understand how this works). Let’s say that your mortgage is $400, car note is $200, utilities are $200, daycare is $100, food is $100, gas for the car is $100, car and house insurance is $150, cable is $100, and your cell phone is $50. These are just your monthly expenses; I haven’t addressed any emergency needs that may arise. Now, from my calculation your monthly expenses add up to $1,400 per month, but you only bring home $1000. You are essentially over budget by $400 every month. At this point, you must figure out how balance your budget to survive. First, you look at the things that you may be able to cut. Well, you can live without cable and the cell phone; therefore, they are definitely out. You have saved $150 with that move alone, but you still have $250 to go before you break even. You may be able to start taking public transportation to work, but you still need your car to take the kids around and grocery shop so let’s say you are able to save $50 on gas. You are now down to $200. I guess the next thing to go could possibly be the insurance. After all, you are only going to need that if you are in an accident or some tragedy befalls your home; $150 saved (if you make this decision, you may want to consider taking up prayer as your new insurance policy). You still have to cut $50 from somewhere, and you are left with the mortgage, car note, utilities, daycare, and food. Which one of these things is nonessential? I suppose you could get rid of daycare, but you live in a city far from family and friends. More importantly, this is the only daycare that has any room in the whole town. Food for your children is a must as well as electricity, water, and sewage. The car note and/or mortgage could be refinanced, but, unfortunately for you, there isn’t a bank willing to work with you on either of these. You have to now start looking at possible ways to increase your INCOME. You could take on a second job, work overtime, or start a side business that allows you to make more money. This would not only help you balance your budget but also provide a safety net in case of emergencies. My point with this whole scenario is that Republicans keep insisting that Americans are making the hard cuts at home, and we expect them to make the hard cuts in Washington. This is true, but we are also realistic. Americans understand that at some point, there is no more fat that can be cut, and you have to start seriously looking at revenues. Republicans (well, to be fair, Tea Partiers) had no problem voting to extend the Bush tax cuts for the wealthiest Americans last December. Tax cuts which, if lapsed, would have brought in much needed revenue to the Treasury. Now, these same Republicans are trying to cut essential programs to balance the budget because spending is out of control. Well, I call bull crap on that. It is not ok that the wealthiest Americans in this country are becoming richer while Republicans in Congress try to balance the budget on the backs of the poorest Americans. Spending does need to be curtailed, but we also have a serious income issue in this country that needs to be addressed sooner rather than later. I am not letting Democrats totally off the hook here either. If Democrats would have stuck together last year before the midterm elections, they could have passed the 2011 budget in 2010. Republicans threatened a filibuster if the budget was brought up, and Democrats should have let them filibuster to their hearts delight while the cameras were rolling. Thus, the American people could see the legislative process up close and personal. We may have been given a preview of the nonsense that is going on today. I have to always go back to the same point when it comes to Democrats. Democrats do not know how sell themselves or their ideas, and they don’t know how to stick together. It is a fatal and fundamental flaw which led to the shellacking at the polls in November 2010. Now, look at the mess this country is in due to the influx of Tea Partiers into Washington. Although our Democratic and Republican leaders have much to answer for in terms of this budget debate, the American people are also responsible for this mess. In 2010, as voters, we just became detached. There is no good reason why the likes of Michelle Bachmann, a woman who doesn’t even know where Concord and Lexington are on the map, should be in Congress. We as voters should be ashamed. Whether you are Democrat or Republican, if you didn’t vote in 2010, you hold some responsibility for this mess. If you are Republican and you didn’t vote in 2010, you may have allowed a potentially good Republican who understands the art of compromise to be knocked out of the race during the primary. I think it’s pretty obvious to Democrats who didn’t vote your role in all of this. The bottom line is we have to get better about being informed on the issues, and we have to vote. There is no better time to start than the present.