Jimmy's Sobering Look at Budgets - Part 1

Me Knows Better Than to Say This… but I will.   Not sure I want to disclose all my finances here, but Jimmy is in some deep, deep financial trouble.  Bottom line: My outflow of cash is a lot more than my inflow.  I know everyone has this problem… but not to this level I hope.   Solutions anyone?

It started in 2008 before the Great Recession hit.  Jimmy was making about $75k a year, and perhaps overspending a bit – like an extra $14k that year.  Hey… I was taking care of grandma and needed a home security system – tough neighborhood you know.  The banks were good and they let me borrow whenever I needed it.

By 2011, over spending had grown and Jimmy compounded it with an income drop to about $65k (tough economy out there).  It was all living expenses, but it still wasn’t enough.   Grandma was eating more than planned and then we brought in a couple of relatives from Canada to live rent free in the basement… and oh - the yearly home security fee was continuing – should’ve read the damn fine print on the contract). 

But even with those problems, Jimmy decided to go GREEN and add a solar panel system for the house thinking it would have a good return on investment.  I didn’t realize it would cost $15k by the time we got it installed and since this is northern Minnesota, it didn’t work that well and soon I had to scrap it out for pennies on the dollar.  Someone should’ve told me it was a bad investment, but it was a friend’s company and I owed him a favor… he helped me get my job down at the government center.  He said it was a good investment (for him apparently).

After that, I still had an itch to buy something else.  I was way over my limit, but what the hell.  I heard GM was desperate.  Why not buy that brand new Chevy Volt that I had been eyeing… great deal.  Got it for $35 grand – fully loaded.   Then the battery caught fire.  All that remained was a smoldering carcass of a car – but the UAW, the new owners of GM, wouldn’t return my money.

But the good news… the bank let me put the entire $50k for the car and solar panels on my American Express so I could defer the payments…  I didn’t have the money so what choice did they have.  They called me a “Preferred Customer.”

However, in order to help defray that extra $50k of spending in 2011, they asked me to start cutting some costs.  I took their advice and decided to skip my morning Starbucks run.  No more Grande Mocha Espresso at $4.50 a pop.  As a reward for my thrifty ways, I kept my afternoon Frappucino in the budget.  That Espresso alone saved me $1155 in 2011.  I tell ya, it’s a sacrifice every morning without that Espresso.  You try getting up at 8:30am every morning to get to work a little after 10 at the Department of Redundancy Department to hand out welfare checks and then rush off at 2:30pm to beat rush hour.

Oh, did I mention the extra $50k for the car and solar panels brought my American Express to a balance I owed to $428,130?  Wow… almost a cool half million dollars.  All I had to do was curtail my Starbucks habit and everybody was happy.  Then the bank sent me a new Platinum VISA, said I was a good customer during their tough times, and they upped my limit.  God bless the Fed.

OK – Jimmy is not that stupid.  If you couldn’t read between the lines, here is the secret:  Multiply the key numbers above by 33.3 million.  These are the actual numbers in the US Federal Budget for 2011 (and 2008).  Now I hope we can agree this is stupid.  So the question is, do we have a spending problem or a tax problem?  I think it’s time to investigate and then you can decide which it is.

See my next blog as I take a look at the data.  Curious to see what your opinion is... Not enough taxing or too much spending?  Careful what you write, I think the results will intrigue you.

For Part 2 -
http://meknowsbetter.blogspot.com/2012/10/jimmys-sobering-look-at-budgets-part-2_25.html