Tuesday, December 21, 2010

On Finances

Yesterday afternoon the United States Postal Service dropped a week's worth of bills, junk mail, mail-order boxes, and Christmas cards in my mailbox.  It's the first mail we've had since last Tuesday, but I digress.

Amidst the Christmas packages and credit card offers was a small envelope from the bank.  It contained the title transfer document for the van.   We recently paid it off, which means that we paid off all three vehicles early.

I took a moment to think about that.  For the first time in a decade, I do not have a car payment.  The truck, the Irish Woman's little beep-beep, and the minivan are all paid off.

It feels very liberating to be able to look at my budget for January and see that nice chunk of a few hundred dollars that can be directed somewhere else.  My plans are to put about a third of it into the general budget to ease up some of the restrictions I've put on our expenditures.  The rest will be used to pay off other debt we have run up over the years.  If I play my cards right we will be debt free except for a mortgage in twelve to eighteen months.

This makes me think about our government and its seemingly endless inability to stop spending money like water.  Every year it seems there's another reason to borrow an even higher level of debt.  One year the Air Force wants a whole new fighter fleet, the next it's a president's pet social project.  My grandparents' generation set up a basic social safety net in the 1930's.  This was expanded greatly in the 1960's, and President Obama is doing his best to expand its scope beyond even FDR and LBJ's wildest imaginations.

Look, I have compassion for poor people and old folks. But I'm also a realist.  Unlike my parents, I fully expect to pay into Social Security and Medicare my entire life and never see a dime for it when I finally stop working.  Unlike the Baby Boomer generation, I understand basic economics to some degree.  I realize that we as a nation can't continue to spend the money our grandchildren will be making and expect for there to be anything left in a few years, much less the two to three decades I plan to continue to work.

Austerity is needed.  Across the board, the government needs to at the very least stop the growth in spending.  Every program that takes money from the public kitty needs to be scrutinized and pared down or eliminated.  The military, as much as it pains me to say this, needs to swallow hard and cancel programs that replace systems that are still serviceable.  There probably needs to be a needs test for Social Security and Medicare.   The money being spent on the wars on drugs and terrorism needs to be evaluated.   All of those nice pet project earmarks in legislation need to be stripped out. Even normally untouchable popular expenditures like student aid need to cut back for the good of the country.

Austerity programs are rarely popular, and usually hurt some more than others.  Life's tough, and it's rarely fair. We've been on a drunken bender of spending for two generations in this country.  We need to wake up, sober up, and grow up.  Until our financial house is in order, we need to be honest with ourselves and stop spending money on things we can live without.  Some will suffer, but we will all benefit.


cybrus said...

Last time I paid a car off, I found "better" places for the money which then became normal places for it and when the car died, taking on a car payment was a serious kick in the pants.

When we paid off our recent car, I kept putting the same amount of money as our monthly payment into an account (separate from our emergency fund) set aside specifically for when we one of our current cars bites the dust and we have to replace it.

From what you said, paying off the other existing debt is a smart move, but then think about continuing to pay into a separate account to give you some padding in the future.

I can't wait for our student loan payments to finish - that'll be debt I won't have to worry about recurring in the future!

DaddyBear said...

Knock wood, all three cars are relatively new and are fixable when they have issues, the problems with the van not withstanding. I'm putting a couple hundred a month extra away in savings, so when we have to purchase a new car in a few years we'll either be able to pay cash or make a large down payment. My goal is to only have one car payment at a time, though. Having three was a killer.

Bob said...

You are absolutely correct. my truck (1994 ranger) million miles and runs ok, 2005 Focus paid cash outright( the look on the car salesman's face was priceless) 2006 Ford Freestyle( no notes) is a great feeling. being able to buy a vehicle outright or having a huge downpayment is a good idea. I wish the gov't believed in austerity measures, unfortunately it will be painful, each entitlement program has a core constituency and the politicians have no spine. I also pay into SS with the full belief that that ponzi scheme will not be there when I retire in 20+ years because it will be insolvent or they will have an income requirement on it since I have 401K and roths and other things I will make too much money since I deprived myself from instant gratification to put money away for my retirement. if our gov't don't pull it together, we will be like greece in 10 years. This from a former MI soldier that been to FSB Augsburg a few times from my stations in Geoppingen and Echterdingen. Always out front

DaddyBear said...

Toujours an Avant, Bob!

I think you're right. Like any other addict, the American people are going to have to hit rock bottom, where no-one will give them their fix of easy money, before the belt tightening goes anywhere beyond households.

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