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Wednesday, April 13, 2011

Why doesn't anyone point this out?
Posted by Jill | 7:48 PM
For about the last six months or so, I'd been running a balance on my MasterCard. I don't like running a balance, especially since my card went from a 7.99 fixed rate card to a 14.9% variable rate card. It wasn't a huge balance, just a few thousand dollars. It got that way from holiday gifts, the second TV I bought last year, the installation of the new Dish DVR in the basement, the big maintenance jobs that the cars needed (four new tires, new brakes, new rotors, and front wheel bearings for the 10-year-old Civic and brakes and rotors for our 7-year-old Corolla), the $1500 of emergency plumbing work.

I could have paid it off out of savings, but with Casa la Brilliant down one income, I like to know that there's money in the bank in case, say, the furnace goes, or we have to replace the air conditioners, or my employer moves another 26 miles farther from home (a very likely prospect) which will mean 100 miles a day and a new car sooner rather than later. So I gritted my teeth, threw away the catalogs, trashed the e-mails about deeply discounted cruises, and set about paying the damn thing off.

And this month I did it. Now I am planning to game the system by using the card for groceries and gas, paying it off every month when the bill comes in, and taking the cash rewards from the bank.

But here's the thing: It took me about six months to pay off a few thousand dollars. Imagine how long it takes to pay off a ten thousand dollar balance. Or twenty thousand. Or fifty thousand.

No one who has that kind of debt gets there overnight. It takes time to rack up that kind of debt, and it takes MORE time to get out of it.

So why isn't anyone pointing out that it's unrealistic to expect the entire federal debt to be paid off overnight, when this country's government (including Republicans like Paul Ryan who now insist that the debt be paid YESTERDAY) spent eight years cutting taxes while starting two wars, one of which was completely unnecessary. It was eight years of stupid, profligate policy that got us into this mess, and it's going to take a decade to get us out of it.

I kind of look at my little debt as being symbolic of the national debt. My few thousand dollars on the credit card is the national debt. The money in the bank is, say, the Social Security trust fund (more of an analogy than you'd think, given that while I've made the deposits, I'm relying on the good faith of the bank to give it back to me when and if I need it). My salary is tax revenue, and the mortgage and bills I pay every month are the federal expenditures. I didn't want to raid the "trust fund" to pay off the debt because I was afraid I wouldn't put the money back in the bank. So I bit the bullet, paid the interest, did without some things I wanted to buy, and oaid it off at a rate of a few hundred dollars a month -- with very little pain.

Why isn't anyone pointing this out? If Democratic politicians are going to parrot the meme that the federal budget is just like that of a family, they ought to realize that those of us who are working on paying off credit cards can't do it in a year. It takes time.

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3 Comments:
Blogger Unknown said...
You're kidding, right? Ryan's plan doesn't even have us stop *adding* to the debt until 2040. Only then could we even *begin* paying off our debt. Hardly a demand to eliminate the debt "YESTERDAY."
4/14/11, 7:52 AM  
Blogger Nan said...
I have heard callers to C-SPAN making exactly that point - if the right insists on talking about budgeting like a household would, no one tries to pay down major debt overnight - but the response from the "experts" is usually similar to completely ignore the point being made and to babble instead about Ryan's brilliance.
4/14/11, 3:16 PM  
Blogger Unknown said...
The federal government is not a household. Unlike a household the federal government is a creator not a user of money and can not be insolvent with respect to debts denomianated in its own currency. The United States of America has no problum with insolvancy. The country is not broke.

A good place to explore these issues is billy blog, http://bilbo.economicoutlook.net/blog/, Not an easy read, but very infomative and woth while
4/15/11, 9:43 AM  
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