Can anyone live on a budget?

My wine tonight is Slingshot Cabernet which is from Napa Valley. To quote their website “Our attitude borders on irreverent. “ I like their attitude and the wine is good. For music, I am going with Marvin Gaye’s “What’s going on?”. The title says is all plus it is a great R & B tune to enjoy your Slingshot bottle of Cabernet.

I am not throwing stones here. I am just pointing out the facts. Most of us do not live within our means. I remember my dad listing every expense on a legal pad way before there were spreadsheets and home accounting packages. Did it help me? Yes and no. I became an accountant but living within your means and working in the accounting field are two different things. Up until now I don’t think I ever planned a vacation and stayed within the budget. But I will say the set back I experienced in 2009, has caused us to live now within our means.

At the household level, to live within your means you have to be able to say no. No -to dinners out, no -to that big vacation, no -to that pair of shoes. This is a lesson my college age kids are learning now. It is a matter of spending your money on the appropriate things. Rent, food, internet and cell phone bill in that order. Bottom line someone has to make the tough choices.

At the company level income has to exceed expenses. Simple concept but you would be amazed about how hard it is to do a budget. I recently had to keep the management team in a room for two hours until we rebalanced revenue and cut $ 155,000 in expenses. We had just finished 3 rounds of meetings over the previous 2 weeks and the process did not need to go any further. The key is to make a decision.

At the state level, it is education, healthcare, protection, welfare and pensions that they have to balance.

By the way, there are only eight states in the US who were running a surplus in 2011. They are West Virginia, Wyoming, North Dakota, Alaska, Massachusetts, South Carolina and Virginia. I live in California which loves deficits. We just voted in a tax increase and a super majority of democrats. Does anyone want to bet an over/under bet on our future deficits?

At the country level, you have health care, education, defense, welfare and pensions to balance.

The world has learned a huge lesson in the last 3 years. (Or have we? ) Those who live within their means are the long term winners. Germany is bailing out Europe. Why? -Because their culture avoids debt. Did you know the French call the 500 Euro bill the “The German bill”? It was created because German’s pay things in cash and do not have multiple credit cards. You have Greece, Spain, Portugal and Ireland all on the brink of bankruptcy waiting for bailouts. I joke that Germany should ask for collateral for their loan guarantees. In a few years they will have all the water front property on the Mediterranean Sea.

And then there is the US. We are facing a fiscal cliff which I find interesting. We are running a huge annual deficit. To fix a deficit you need a combination of raising taxes and spending cuts. But the experts are saying we will go over the fiscal because our increase in taxes and spending cuts are too severe. What the hell? How did we get here? Years of no one making the tough decisions. We have no leadership in Washington. You don’t deal with a problem this size in 4 weeks. Check out http://www.usgovernmentspending.com . It is a website which will show you how the money is being spent. You can also look up your state budget as well.

What is the answer? Throw the bums out. We need more middle of the road politicians. We need compromise and leaders that will make the tough decisions. Leaders that will agree to actually cut costs and not make false promises. We need leaders that will put aside their personal interests and vote for the better of the country. We are desperate for a tax structure that is stable and will be in place for the long term. We need a plan that will to pull us back into balance. I think we need a third party.