Debt & Deficit

On a personalized level …

Now, I’m no economist and the subject generally makes me sleepy or distracted, but I was wondering how to compare the ginormous US debt and deficit to, well, a typical family of four, a family like mine. In a really, really simplified fashion.

I did a quick google to find the latest figures. It seems the US debt is (predicted to be) 15.8 trillion dollars, and the annual federal deficit is (predicted to be) 1.2 trillion dollars. I know, I know: it’s other people’s money. Other people meaning you and me.

Anyway, if you round down to 15 trillion and 1 trillion, and divide both figures by 300 million (the approximate number of people in the US), you get a debt of 50,000 per person and a deficit of 3,333 per person.

Multiply each by 4 to get what the share of debt and deficit fall on the average family:

$200,000 in debt

$13,000 in deficit

Gee, makes my sleepless-night financial situation infinitely preferable. Although now it seems I’m paying for two mortgages for the one house I live in.

Now, let’s politicize this a bit.

Let’s say you hired an advisor to run your family’s finances: deposit your paychecks, pay your bills, buy your clothes and groceries and miscellaneous household supplies, invest in your future (retirement), invest in your children’s futures (college), and overall make sure your assets grow and your liabilities shrink. This is because your previous advisor nearly doubled your family’s debt, so you canned him.

When you canned the old advisor, four years ago, your family debt was at $133,000.

The new guy promised to lower your debt and make sure you’re not running a deficit, so as to maintain your good credit rating, for instance.

Well, four years later, you’re looking at a $200,000 debt and a $13,000 deficit.

The advisor is all smiles. He wants his contract renewed for four more years!

Plus he’s telling you that other guy you’re considering – “Don’t hire him! He’s only gonna make things worse!”

What do you do?

What do you do?

I know what I’d do …