Federal Budget Cuts and My Personal Budget
If you want to improve your financial condition, everything you could possibly do boils down to one concept: making better decisions. One decision you might make is very similar to a proposal recently presented by President Barack Obama. Trimming your budget in the midst of a financial crisis is a good decision whether you are the leader of a country or the head of your household.
Now, it’s hard to compete with someone who has the ability, if other lawmakers agree with the proposal, to eliminate $17 billion worth of perhaps unnecessary spending. All the government’s non-discretionary expenses (like your rent, mortgage, or utilities) and discretionary expenses (like your movie tickets and vacations) will be reduced by $17 billion if the President has his way. My personal budget cuts will never reach half that much. But I bet I could do better than Obama, and I bet you can, too.
If $17 billion sounds like a lot of money, that’s because it is a lot of money. Let me search under the sofa cushions at anyone’s house who claims otherwise. Now that we’ve established the fact that $17 billion is a lot of money in any situation, I think we can further agree that $3.4 trillion is a lot more money. That’s the size of the total federal budget — not just any household, the White Household.
From a $3.4 trillion spending plan, the massive $17 billion saved through this cut is a paltry one half of one percent of the total budget.
Let’s put this into a personal perspective. According to my latest Quicken report, my after-tax expenses in April were about $4,000, a little higher than average due to a vacation and several gift purchases. I would love to cut back my expenses like POTUS, so here is what a 0.5% reduction would do for me: $20. That’s one dinner out over the course of a month or perhaps a movie date for two, not including refreshments. If your budget is closer to average, your 0.5% may be lucky if it approaches $5.
I can’t deny that a budget savings of $5 — one Big Mac a month — is better than not doing anything at all. In terms of decision-making as I alluded to earlier, cutting 0.5% from my expenses is an adequate decision, not quite a better decision. Not only do I think that I — and you –beat Obama at his own game, I think you — and I — can do twenty times better. Cutting 10% from the federal budget would be a tall order, bound to infuriate interest groups and pundits. But cutting 10% from your budget won’t anger anyone except perhaps Amazon.com, the entertainment industry, or your physical trainer (I understand not wanting to anger your physical trainer for fear of physical retribution, but I promise he’ll get over it.)
The timing could not be more perfect for your opportunity to prove you’re better than Obama. The economy is not wonderful, people everywhere are still losing their jobs, and loans are difficult to come by if your credit is less than stellar. It’s no wonder that frugal principles are re-entering mainstream thought. Take this opportunity to look at your expenses or your budget and aim for trimming 10% off the top. You could cut back the full 10% in one category of spending if you like or spread it out across the
entire budget.
With your newly discovered 10% now directed towards saving for the future, you will have made a better decision. You will feel a little bit better about your own financial condition and your ability to survive through this recession or any others unscathed. And you will be so confident, you might email Barack Obama’s Blackberry and offer to help the White House administration shave $340 billion, or 10%, off the federal budget. You may not get the job, but you’ve earned it. With a 10% household budget cut, you’ve managed to accomplish something the leader of the free world cannot.
Next stop: world peace.
Tags: budget cuts, Federal budget | Categories: Debt, Saving |
I am sure I can do better than that. I have recently lost my job, and contract jobs have dried up. With my income down to the huge weekly max of $330, our house has had to do some creative cut backs that ultimately do not hurt us at all. It just brings us back to basics and the reality that we all spend too much money on useless “wants”. Good luck to all of you who are making an effort. One big suggestion is to do all you can to let the Fed Gov’t know they are not doing enough and how pathetic are their efforts. God is good all the time and he will provide! Believe and it will be so.
Cool exploration Flexo! I hope we all save and do smarter things with our money!