CNN reported recently that 1 in 6 Americans rely on some form of assistance from the government. In case you are keeping track, that is 16.67% or roughly 51.8 MILLION people.
While I could certainly talk about how that kind of support is unsustainable and especially how that kind of support will kill the economic and fiscal viability of any nation, I think it is more important right now to figure out how to not be part of the one.
The national debt and our current situation certainly seems hopeless, and it especially seems impossible for any one person to combat and make a difference. However, there is one thing you can do: Be one of the five in six who do not rely on that assistance.
To be clear, I’m not attacking those on assistance. I’m not saying that there is no valid reason to be on assistance. Those programs exist, like it or not, for a reason, and despite the obvious abuse that does happen, I believe many people use them as they should be used. My own family has used some programs in the past when our real needs were outside the realm of our ability to handle them. That’s what they are there for. However, all of that being said, I am criticizing people who live in ways that demand that lifeline. I am criticizing people who chose to actively engage in lifestyles, choices, and other decisions that drive them to being one of six. There’s a real difference between having no choice to be one of six and choosing to be one of six. If you are choosing to be one of six… get off your butt.
Step 1–Control Your Debt
I thought about calling it “get out of debt,” but I realize there are some I’ll never convince about debt. I just won’t. I also recognize that despite my own personal feelings on debt, and especially credit cards, not all feel the same. So instead, control it. Learn to live within your means. Learn to delay self-gratification by building a plan and following through. Learn maturity. Dave Ramsey says that delaying gratification is a sign of maturity. It shows that you are thinking logically about your life and your situation and doing things in a manner that doesn’t compromise your future in favor of the now.
In regards to retirement, Dave Ramsey also says that living in the now is a key dysfunction in our ability to actually save for retirement because we forget the future. I’d add to that by saying that living in the now is a key way to forget that you have a future, that what you do today does impact tomorrow.
So control your debt. Eliminate what you can, don’t go into needless debt, and especially don’t expect others to bail you out when you play stupid with debt. Doing this one step alone can generally virtually guarantee you always stay on the side of the five in six in all but the most significant emergencies.
Step 2–Get an Emergency Fund
While controlling your debt is a great start and will provide peace of mind and financial security in most situations, getting an emergency fund is the rest of the equation.
I have gone through two periods of unemployment, the first lasting roughly five weeks, the second lasting roughly ten weeks. The difference in the two is marked mostly by the difference in our emergency fund. The first period of unemployment was somewhat unexpected, and we were largely unprepared. We had managed to save about two months living expenses, and although we didn’t have any major expenses on the horizon, those five weeks still stand out as particularly stressful. I worried daily about how I would feed my family, how we would pay our mortgage, and how I would accomplish even the most basic tasks.
The second period of unemployment was twice as long AND it included the birth of my youngest son PLUS a major roof repair. It was also completely out of the blue. You’d think that the second time would have been even more stressful than the first, wouldn’t you? And you’d be wrong. Those ten weeks still stand out as some of the most enjoyable in recent memory. Sure I was stressed and worried, but nowhere near as stressed and worried as the first time. I found those ten weeks enjoyable. I played with my oldest child, went for long walks, planted a garden, canned the tomatoes from the garden, worked on several hobbies, and generally relaxed and had a good time while searching for work.
The difference between the two experiences? Our emergency fund. The first time, we had a nascent emergency fund. The second time? We had a full six months.
Emergency funds act as insurance for those times when you may not be able to pay for life. They stand between you and the storms that come, kind of like an umbrella. Dave Ramsey talks about how the average family will experience a $5,000 emergency at least once every ten years. My family sees that annually. Well, at least we have seen it annually for the last five years. That’s $25,000. For many, that would be a crushing experience financially, emotionally, and even spiritually.
For us, we just wrote a check and then spent the next year rebuilding our emergency fund.
Having an emergency fund is a sign of maturity and personal responsibility. And more than that it is a really warm blanket for the winds blow and the storms rage.
One final note on emergency funds: Credit cards are not emergency funds. Think of it this way: You have a $5,000 emergency, and your answer to that emergency is to put $5,000 on a credit card and pay interest on it? Talk about trying to put out a fire with gasoline. Not only will that extend your emergency for potentially years and years, but you’ll add to the originally emergency exponentially with interest payments. Yep… that sounds brilliant.
Step 3–Budget, Budget, Budget
Avoiding debt and having money set aside for a rainy day (three to six months preferably), is the goal. Those two alone will get you 90% of the way to helping guarantee that you are not one of the 51.8 MM people who do rely on welfare.
Effective budgeting does most of the rest.
Some basic tips:
- Budgeting is not a process of restricting spending. Budgeting is a process of identifying spending. As long as you think of budgeting as a restriction, you will not succeed. If, however, you see budgeting as merely identifying and organizing your spending, you’ll find it remarkably freeing and liberating. My wife is a perfect example: She originally fought budgeting. We’d agree to a plan, and then she’d go out and torpedo it with the first trip to the grocery store. It wasn’t intentional on her part, but it still happened and it did nothing but lead to money fights.
When we reinterpreted budgeting as identifying and organizing spending, we both learned rather quickly that it meant that she could go and spend that money because we had decided that that is how it would be spent. She found herself with more money than ever, no fights because it was being spent as we both decided, and increased control and harmony.
- Budgeting requires buy-in from both of you, and one person can’t force the budget on the other. Dave Ramsey’s budgeting lesson (look it up in one of his books) is a classic ideal for budgeting.
- If you don’t give every dollar a name on paper before it hits your bank account, you’re going to lose the money.
My wife and I have been budgeting since day one of our marriage, but we’ve only effectively budgeted for the last three years. The difference is obvious.
Another benefit to budgeting? Your results will be different, but for Courtney and I, budgeting helped us identify errors and places of waste to the tune of almost $1,000 a month. That’s basically like getting a $12,000 raise except that it is post-tax money. That’s straight to your pocket.
If you’re having trouble figuring out how to control your debt and build an emergency fund, do a budget.
Step 4–Give Charitably
Last but not least, give some of it away. Being one of the five of six Americans who do not rely on welfare assistance is nice, but it’s infinitely nicer when you do good things with that money.
I’ve already expounded on all of that, so….
The point is this: We all have a personal responsibility to each other to do good and do right. Part of that is the personal responsibility to provide for yourself. Like I said, there are valid reasons to need help, and I have no issue with that (although I strongly disagree with the manner in which that is done… another blog for later). But if we are able, and almost all of us are, we have the personal responsibility to do our part, carry our own load, and, if we are blessed to do so, provide additional support for others.
The fiscal problem facing this nation can be summed up simply by saying that too many people are greedy (both people who hoard their bounty and people who demand that others share with them), too many people lack personal responsibility, and too many people are losing sight of that vision. The end result can be nothing other than fiscal breakdown where everyone loses. Not just the poor, not just the wealthy, and not just you and I.
You can make even a small difference by not being one of six and being a responsible member of the other five.