Your Family Budget

Today I am an average American.  Okay, many of you would say I am below average and this is a step-up.  You guys can be quiet.

I am an average American.  I am married.  I have 2 amazing children, ages 8 and 6.  We live well, but we are definitely middle-class.  I spent a couple of years in college but never got a degree.  These days I work for an HVAC company as a technician.  The money’s decent.  But in the current economy, my hours have been cut back a bit.

My wife is beautiful and she works part-time doing medical billing from our home computer.  Together our take home pay is $49,777 per year.  That comes to $4,148 per month.  We have a nice house and two nice cars.  We take a nice vacation every year with the kids.  Both kids are into lots of things: piano, dance, travel soccer, art classes, T-ball…you get the idea.

So, the problem is every month we’re spending a bit more than we make.  But that’s everyone these days, right?

The fact is right now we spend $7,288 per month.  Yeah, I know.  It’s more than the $4,148 we bring home every month, but like I mentioned, we like to live a nice life, nothing crazy, but nice.  It’s important that the kids have nice stuff and lots of good activities, right?

I know, I know.  We need to spend less.  We can’t keep spending $3,140 more than we make every month.  Every month we just end up with $3,140 in more credit card debt.

So, last night I sat down with my wife and we went through the budget.  I mean everything.  We looked at how much we spend on food, utilities, clothes, vacations, eating out, our Disney timeshare, travel sports, car payments, etc.  I crunched every number I could and I found that, if we really tried hard, we could cut our spending by $57 a month.  Pretty good, right? My wife was even more aggressive and she wanted to cut $114 a month.  I know, I know, it still means we’ll be adding somewhere between $3,026 and $3,083 in new credit card debt every month.

And um…I should probably mention we already have $325,807 in credit card debt right now.  Is that a lot?

I think we’ll try my wife’s plan, or maybe somewhere in between.  Either way, I feel like we are on the road to recovery because now we are only going to be spending somewhere between $7,174 and $7,231 per month.  Sure, we’re still only making $4,148 a month, but at least we’re closer, right?

By the end of the year, we’ll have around $353,000 in credit card debt and we’re only making $49,777 per year.

In 5 years, we’ll have around $510,000 in credit card debt.  I sure hope my minimum monthly payments and interest rates don’t start going up, or my credit will be ruined and I’ll lose everything.

So here’s the big question: is the way I’m handling my finances moral?

Should I keep spending the way that I am?  Or should I start spending only from what I have and spend it on necessary items first?  Do I have a moral obligation to make drastic cuts and attempt to live within my means?

In case it’s not already obvious, my family finances are exactly the same as the federal budget. The same level of overspending, the same staggering debt, and the same laughably low proposed spending cuts.  Somehow when all the talk is trillions and billions, I think we lose sight of what’s really going on.

Now anyone out there would look at a family overspending on this catastrophic level and say, “What a disaster!  What irresponsibility! Stop now before you end up on the streets!”  And this outrage would be correct.  Overspending your family into oblivion is obviously immoral.

But why does it seem to be okay when our government does the exact same thing?  Why do we let them?

We – or rather our children – are on the hook for all these expenses.  Let’s face it, even if we stop overspending right now today, we are still just like a family with $325,000 in credit card debt and making only $50,000 a year.  Think about that.  Think about how long it would take a family to dig out of that hole.

The politicians in Washington on both sides of the aisle need to make meaningful spending cuts now, none of this $30 billion, or $60 billion, or even $100 billion.  That would mean nothing.  That would be as laughable as the bankrupt family cutting $57.

The moveon.org’s and others who claim that cutting any spending is immoral have it utterly backwards.  Failing to stop this overspending right now is the truly immoral choice.  Let’s stop spending our families into oblivion.

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18 thoughts on “Your Family Budget

  1. Cindy says:

    That is all fine and dandy Patrick, but my complaint is that the cutting they are doing isnt in the big spending area’s. They wont even touch defense spending. Why? What you have is them cutting programs that benefit the poor and lower income families. Barely a dent when you look at the big picture. So if they are to get serious about cuts, then they need to look at defense first in my view. But you wait, they won’t. They won’t even think about it. How can you offer tax cuts to the richest in this country and call yourself serious about getting out of debt? That is a question I will never get a serious answer too. We need to raise taxes for a while, but I’m sure you are not in agreement with me on that. We have a revenue problem in the country and an ideology problem in the country as well. [I don't think any area of spending should be off limits for cutting. I do think a case can be made that defense should be the top priority of a government. After all, if we are dead or under attack that really limits our freedom! But there is no reason that we can't make some cuts in military spending. As for tax cuts, that seems to be one of the best ways to stimulate growth in the economy. When you make it cheaper for people to invest they do, when you make it more expensive, they don't. We tax cigarettes to discourage smoking, so why would we tax potential investors and expect that they would invest more not?]

    1. Brian C says:

      I agree that no area should be off limits to balance the budget, and that should include being open to tax increases. I am assuming that the brackets above are Patrick’s response to Cindy’s original post. Are you (Patrick) suggesting that we need more tax cuts, lower than the Bush tax cuts from 2001? If so (or even if you are suggesting they remain where they currently are), how can you explain that we effectively* balanced the budget at the end of his term? We need massive spending cuts AND tax rates returned to those of the Clinton years. Are any Republican candidates open to even the possibility of tax increases to balance the budget? If there was a pro-life candidate who promised to use all available means (spending cuts and tax increases if necessary) to balance the budget, I would probably commit right now to voting for them without knowing anything else.

      *deficit in 2000 was $17 trillion, compared to $300 trillion or more in 1995, 2005, 2011, etc. I’d be very happy with a $17 trillion deficit right now.

      1. Brian C says:

        Sorry that the last comment was not clear, when I say ‘effectively balanced the budget at the end of his term’ I mean Clinton’s term.

      2. GW 3 characters says:

        Brian, where are you getting your numbers? Annual US GDP is ~ 15 trillion. Total federal debt is ~13-15 trillion. The deficit is the how much money the government spends minus how much it takes in and is now on the order of $1.7 trillion.

        Where did you get your 300 trillion number?

    2. Cindy says:

      So bascially we really do live in a world where we are beholden to the idea that we stand, only if my violence can conquer your’s. When you compare our defense spending to the rest of the world’s we as a nation spend so much more. When will enough ever be enough? Again, Patrick, why are the poor and lower income the ‘only’ ones being sacrificed right now? Why can’t the Paris Hilton’s or Charlie Sheens of the world be asked to pay a higher percentage? They can afford it, more so than removing heating for low income families or taking pell grants off the table for lower middle class families so our children can go to college. Why do the lower income folks and children have to the the one’s who suffer? Why? Taxes were even higher under Reagan than they are at present. We are in like 3 wars now. Yet, lets hit the poor and children. They can bear this burden for the country. Not the wealthy. [Thanks for the reply - As I mentioned earlier, defense spending could also be cut. The reason we spend a lot on defense is that lots of people want to kill us, and I would argue the primary role of a government is to make sure its citizens don't get killed. After all, if the government guarantees you healthcare and a great retirement but someone blows up your family, the healthcare and retirement are kind of not important anymore because you are dead. I'm not sure where you got the idea that I'm in favor of "sacrificing" lower income people or making them bear a burden??? As for increasing taxes on wealthier citizens, that is a good way to discourage investment which is a principal driver of economic growth. I don't think we should do anything right now that will obstruct economic growth. -Patrick]

      1. Tim says:

        Cindy,

        We are beholden to such an idea because we do, indeed, live in such a world. Or have you not been paying attention?

        Of course, this has nothing to do with the validity of defense spending cuts, which are probably warranted.

        I’d like it as much as the next guy if we could live in a peaceful world. But pretending to when we don’t is the height of foolishness.

  2. Katherine says:

    I would suggest you not cut those things that allow you to earn an income (transportation to work, etc), those things for your children and the basics of life (food, housing). Give up the excessive armed security guards for your home and to attack your neighbor and the high tech devices that go with them. It really is far in excess of yoru legitimate needs. Spending a quarter of your income on personal security is really over the top.

  3. Realist says:

    Comparing household budgets to the spending of the government or private corporate entities is inane. You’re comparing apples to orangutans. Can your family issue bonds? How much money does your family spend on military expenditure? I could go on…[Sorry, overspending by 75% is just plain stupid. And it's poor stewardship, even if you are spending it on lots of good things.]

  4. Hugh Macken says:

    Nicely put. I realize you’re referring to the US government’s spending. And you are absolutely right, it is insane. But you ask the question, rhetorically, I realize, as to why we taxpayers let the US government spend so irresponsibly. And I think the very sad reality is that many US taxpayers are in a very similar boat and have spending habits that are just as bad as that of the US government. Frankly, and I realize I will be villified by some for saying this, but US home mortgageship is largely responsible for this. The illusion of home ownership is the biggest lie of our times. People that put down $10,000 for a home that is supposedly worth $250,000 do not own their homes. Their homes own them. And so does their debt. I believe we as Catholics need to start living within our means and stop the ludicrous amount of debt we are piling on top of our ourselves. Maybe if we got our respective ships in order, the US government that we currently oversee with our vote, would get its act in order too. When we point one finger at the US government, trust me there are three fingers pointing right back. At us.

  5. TJC says:

    I’m not afraid to say this. You NEED to do something drastic and you need to do it now. How much do you pay on cars? How much does that time share cost you every month? How do you expect to support your family when you die with 100k in debt?

    Sell the cars with debt, buy clunkers with CASH. Sell the time share. Please for the love of God, get Dave Ramsey’s book, Total Money Makeover. If you can sacrifice your “nice life” for a couple years you could be completely out of this nonsense. And stop lying to yourself, how can you have a nice life when you know you have nearly unsurmountable debt looming over your head and nothing to give your children when you go?

    I’m sorry if I’ve offended you but get with the picture, you’re setting your family up for ruin. The federal government wont have creditors calling them in the middle of the night to harass them, you will.

    1. The Merry Catholic says:

      Hey TJC, relax. That’s NOT the real financial situation of Patrick’s family. This is SATIRE. It demonstrates what it would be like if a typical family acted as irresponsibly as the federal gov’t.

  6. Ted Seeber says:

    My advice to this family would be to get jobs for the kids- immediately- and also get more eduction and stop falling for the usury con game entirely.

    In other words, spending cuts alone won’t do it. We need to *drastically* increase revenue, at least until the debt is paid off. And when it comes to a government, there are only TWO options, raise taxes or conquer land.

    And AFAIK, there ain’t no land left to conquer.

    Which leaves us with raising tax revenue. And in this attitude of “we want all the joys of living in a civilization but don’t ask us to pay for it” out of the ownership class of this society, I don’t see any solutions coming from there.

    Seems to me the best thing to do would be to go bankrupt, disband the federal government, and let the states go it on their own.

    1. Jeff says:

      Everyone agrees that we can’t keep this level of spending going forever, of course, but where we differ–and where the debate becomes moral–is in the discussion of what is cut, and with what priority. There is a sizeable portion of American politicians who would like to blame this current mess on American seniors, workers, and the poor. If only they weren’t so *greedy*! If only they hadn’t asked for so *much*! Never mind the two deficit-funded wars, unfunded tax cuts, and the recession. American politicians decided to increase outflow at the same time they decreased inflow, and now they want to make up the difference on the backs of the most vulnerable.
      The moral element lies in deciding what to cut. His portrayal of a budget dominated by “a nice house and two nice cars… a nice vacation every year with the kids. .. piano, dance, travel soccer, art classes, T-ball” is disingenuous. The debate is more complicated than that, and the consequences of cuts more drastic in human impact and suffering. Obviously this family could downgrade to a more modest house, make do with one car, forego the vacation, and cut back on activities a bit—but what if we complicated the story a bit? What if one spouse wanted to cut back on medicine for the children, or drop their medical insurance, or stop paying for heat in the winter? What if they cut back on food? These would be truly drastic measures, only taken for the most extreme reasons. Would it be moral for a spouse to demand those cuts while at the same time insisting on the latest car, computer, and widescreen TV?
      No, it would not be, and that is the point—the moral weighing of priorities—that both the folks over at moveon.org and Bishop McCormack in New Hampshire have been trying to make. “The Church and our broader society have a fundamental obligation to care for the poor. The bishop’s message is a challenge to ourselves and our elected officials to never waver in our obligation to care for the most vulnerable of society.”

      1. Cindy says:

        A perfectly stated point Jeff.

      2. Patrick Thornton says:

        Jeff,

        Thanks for the post!

        You said: “There is a sizeable portion of American politicians who would like to blame this current mess on American seniors, workers, and the poor. If only they weren’t so *greedy*! If only they hadn’t asked for so *much*!”

        Who are all these politicians doing this? I must have missed this.

        You mention “unfunded tax cuts”. But is there really such a thing? If you go to the store and buy something for 20% off, did the store have to “fund” anything? Or did they just allow you to keep more of your own money. When the government takes less of your money, it doesn’t have to “fund” taking less of your money. It’s your money, not theirs.

        My point in listing the items where money is spent was to highlight that many of these expenditures are GOOD. They are just not worth running up debt. For example, I love the national parks. Should we borrow money to keep them open? Or should we shut them down temporarily until we can afford them? I think space exploration is awesome and accomplishes many good things. But should we borrow money in order to do it? Maybe we should put all those plans on hold until we can afford it.

        No one is calling for giving people less food, or taking away their medicine, or hurting the poor.

        Maybe I’ll post my version of federal budget cuts.

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