To continue our last blog on debt, we’ll go over another type of debt one can accrue.
Presenting... government debt.
Government debt is its own special class of debt and is now probably the greatest threat to the entirety of civilized man. It is important to see that debt incurred by Federal and State governments, which includes all foreign governments as well, has ballooned to levels that are completely unmanageable -– BY ANYONE. The interest on the US debt alone will exceed our total military budget this year. Scary. Multiple states (e.g., Illinois, California and others) are on the verge of bankruptcy due to underfunded pension plans for state workers. Their solution is, was, and will always be to tax your hard-earned income to pay these debts. Like it or not, you will inherit this debt through taxation. You will simply have to produce more to maintain a status quo lifestyle. The definition from our previous blog on debt still applies. “COMMITTED FUTURE PRODUCTION.”
World leaders are committing your future production as well as your children, grandchildren and perhaps further down the family tree at this rate. There will be a tipping point in the not too distant future where they simply cannot tax more and will have to default. It will be a bad day.
Back to what you can do. It takes a tremendous effort these days to save any money. Thirty years ago, I read a book called “The Richest Man in Babylon”. I’m sure it is still in print or on Amazon. I will attempt to distill the book down to one simple maxim – ALWAYS SAVE 10% OF YOUR INCOME OFF THE TOP, ADJUST YOUR SPENDING TO MAKE IT HAPPEN AND STAY OUT OF DEBT. There is far more useful wisdom in that book than my statement here. I strongly recommend you read it if you haven’t.
Being DEBT FREE is a special kind of financial freedom. Your production and your money belongs to you. Moreover, your income is actually worth more to you than a similar person buried in debt. If you earn $50,000 a year and have no debt, you actually have more money to budget logically for future expansions.
If you are in debt – GET OUT OF DEBT.
If are not in debt – DON’T GET INTO DEBT.
Life will be much simpler and you will own your future.
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