Congress seems to be at a standstill again. Us vs. Them. Republicans vs. Democrats. Do nothing vs. Do Nothing. It is amazing… no matter who is in office you can expect the government to be inefficient. As I read the news about Congress yet again not agreeing that the sky is blue, I thought about the movies, something I would like to get back to going to in a post-pandemic world. Have you seen the movie, Dave, starring Kevin Kline who plays the dual role of the President and the President’s stand-in? It is what I call a channel stopper – meaning that if I happen across it on the TV selections – I inevitably stop and watch it. In short, Dave is pretending to be the President Bill Mitchell after the President suffers a stroke while sneaking off with his assistant. Dave, induced by the President’s Chief of Staff and Communication’s Director, pretends to be Mitchell while they attempt a contrived effort to oust the Vice President with the ultimate goal of elevating the Chief of Staff to the presidency. Along the way, a Budget meeting occurs and Dave breaks from his assigned protocol and instead attempts to trim $650 million from the budget in order to save funding for a children’s shelter – a project valued by the first lady (who detests her husband but in the end falls in love with Dave). In the meeting, Dave drills cabinet members on wasted federal funding – such as millions allocated to the Department of Transportation for commercials designed to make American’s feel good about their  purchase of a domestic automobile. The cabinet agrees with Dave, they trim the budget and save the homeless shelter.

The questions of the movie translate to real life…. where is the US going on spending? We know the proposed infrastructure bill will add Billions to the deficit and will cause taxes on many individuals and companies to be significantly increased. There are issues, however, for the good old USA, for starters, the United States does not have the ability to default on its loans and then negotiate a settlement with China and its other debt holders to resolve the debt. While Greece could do such a thing – it’s simply not in the cards for us – for a simple reason – global chaos would ensue. We couldn’t let the banks and AIG fail in 2008 – they were too big to fail – imagine the fall out if the USA fails! Unfortunately, we have left the fate of the economy to the politicians in Washington DC and no matter who you voted for or vote for in the future, politicians seem to all be the same. You on the other hand have your own decisions to make. The decisions you have are the choices that affect your future and your ability to retire.

You can sustain debt if you are foolish enough to do so – so long as you continue to generate income endlessly. As you do – you pay more and more interest and your costs to keep pace with your expenses keep rising. For individuals this is deadly – on two counts – (1) when the time to retire comes and you can’t keep the income up – there is hell to pay in two forms – you need to get rid of the debt and (2) you have NOTHING to retire with because you gave it all away paying interest on your debt all those years. We can solve the first problem – and dump the debt late in life – but we can’t get back the money you wasted in paying interest – that was your future and it’s gone. A similar truth exists for the USA. The USA is not going to retire, and it can continue to generate revenue to cover the cost of the debt. The problem is – where will the revenue come from? It will not matter how much you trim the budget because the interest expense will be the biggest component of the budget. To cover – it will mean higher taxes – for us, our children and our grandchildren – and the taxes will be to cover the interest costs. The only difference is – rather than giving away our retirement – we are giving away the quality of life for our children and their children.

If you are paying $750 per month on your credit cards – and rather than paying interest, if you saved that money at 7% interest for 20 years, you’d have $390,700 – in savings for retirement. The US Debt stands at $20.6 trillion ( ) and we know it’s growing! Just for the fun of it, 3% interest on $20.6 trillion is $741.6 billion per year. Imagine the quality of life we could have without this debt – and worse, imagine how the quality will suffer as it grows, and grows. We can’t stop Congress from spending – excessively or foolishly except via our vote. Granted the issues are tough. I value education, health, social justice and a strong defense. So, the question of how much we spend and who pays the tax bill is difficult. I don’t have the answers to the USA’s issues. I do know that we, as individuals, need to not waste our retirement by paying endless interest on credit card and other debt. This is within our control and it’s a lesson we must implement and teach our children.

Don’t procrastinate… every day of debt costs you money in your retirement. Eliminate the debt now.

Enjoy the weekend – and if you can, watch Dave – it will make you smile. Call today for a free in person or virtual consultation, 248.645.1700. 




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