Financial Wiz-Dumb

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OK, let’s say you’ve given your college-graduated kid a credit card to “get him through some hard times”. Your point is that this is so he (and maybe the wife and kids, if he has them) won’t starve to death while things are rough. Let’s further state that your son has a job, and it’s a pretty good one. Like a lot of people, though, he’s got some student loans and he’s just moved into his first house and … you get the picture. The credit card’s stated purpose is so he can buy gas to get back and forth to work, purchase some household necessities, and so forth. You probably won’t even begrudge him taking the family out for tacos one evening.

Then, you get the credit card statement and see that he’s right up against the limit. You look over the bill and some of it is questionable but OK (that refrigerator he bought is probably a little fancier than he actually needed, but you agree that he needed a ‘fridge). Some of the charges are very questionable (he didn’t just take the kids out for tacos one evening, he’s been buying every meal at local fast food places). And some of the charges are just downright stupid for someone in his place (a Roger Staubach rookie card and a crystal frame to put it in).

So you call him up to gently reem him out about his frivolous ways and he cheerfully tells you he’s taken care of it, the fix just doesn’t show up on the statement ‘cause he only took care of it yesterday. You hang up feeling pretty good. You’re thinking he learned from his errors and has worked out a system to pay off the bank from a new raise at work. Or maybe he’s mowing some lawns or something. At any rate, you’re thinking you raised a nice, responsible son.

That good feeling lasts right up until the bank calls you to tell you that your son came back and asked that the credit limit be increased by 30%. His method of “taking care of it” involves not judicious financial brainwork, but completely injudicious stupidity. What would you do?

Very few people would say, “Good thinking, son! When you hit bottom, rather than being content with that you showed initiative and started to dig!”

Still, he’s an adult. So the best you can do is tell the bank you won’t sign off on the extension and let your son know he’s going to have to work himself out of this hole. You’ll provide advice and you might even help financially with a REAL SOLUTION, but you’re no longer going to be an enabler.

Now that that scenario is firmly ensconced in your mind, let’s try this one on for size: the Federal government has a credit line that they are about to exceed. The reason is that they spend more than they take in. If they had a responsible parent, said parent would tell them to stop that. Cut expenses. Only spend what you take in (and, actually, spend LESS so that you can put some back for future needs). The government’s solution to this problem is to both spend more and borrow more. This will not, of course, work. It’s not just a bad idea, it’s a stupid idea.

Our elected leaders tell us that we’re too simple to realize that governments don’t operate like regular people and this will work out. If we believe them, we really are as stupid as they think.