Personal Economics 101

Our national debt has soared to a record $31.3 trillion. Yet our federal budget deficit fell sharply in fiscal year 2022. The national debt continued to rise in FY2022 because the government spent more money than it received in revenues. The budget deficit for FY2022 fell sharply because federal spending to fight the COVID-19 pandemic declined significantly, but it was still a large deficit. The budget shortfall declined to $1.375 trillion, compared to the 2021 deficit of $2.776 trillion. President Biden has been trying to take credit for the huge decline in the budget deficit, but in fact his policies prevented the budget deficit from falling even further. America's growing national debt is the result of simple math — each year, there is a mismatch between spending and revenues. When the federal government spends more than it takes in, we have to borrow money to cover that annual deficit. And each year’s deficit adds to our growing national debt. Historically, our largest budget d...

You do not want to get caught in the debt trap. Credit Card Debt is the most damaging to your financial freedom and welfare. See Getting Out of Debt  or I'm In Debt. How Do I Get Myself Out of This Mess. Total household debt balances continued their upward climb in the third quarter of 2022 with an increase of $351 billion, the largest nominal quarterly increase since 2007. This rise was driven by a $282 billion increase in mortgage balances, according to the latest Quarterly Report on Household Debt & Credit from the New York Fed’s Center for Microeconomic Data . Mortgages, historically the largest form of household debt, now comprise 71 percent of outstanding household debt balances, up from 69 percent in the fourth quarter of 2019.  An increase in credit card balances was also a boost to the total debt balances, with credit card balances up $38 billion from the previous quarter. On a year-over-year basis, this marked a 15 percent increase, the largest in more than twen...

From March 2020 through June 2022, the federal government added $7 trillion in debt. To put that in perspective, the federal debt reached a total of $7 trillion in 2004, covering a span from George Washington to the first term of George W. Bush. That means the federal government has racked up 215 years’ worth of debt in just 27 months. While some amount of deficit spending might have been hard to avoid during the worst of the COVID-19 pandemic, Washington kept breaking out the credit card to continue an unnecessary and wasteful spending spree, oversaturating the economy and making inflation problems inevitable.

Massive spending increases for various bureaucracies is the most offensive part of Biden’s new budget. These huge budgetary increases (well above the rate of inflation, unlike what’s happening to incomes for American families) were not the most economically harmful feature of Biden’s plan. That dubious honor belongs to either his massive expansion of the welfare state or his big tax increases. The Wall Street Journal editorialized a couple of days ago about what the president is proposing. A President’s budget is a declaration of priorities, so it’s worth underscoring that President Biden’s new budget for fiscal 2023 proposes $2.5 trillion in tax increases over 10 years. His priority is taking money from the private economy and giving it to politicians to spend. …Raising the top income-tax rate to 39.6% from 37% would raise $187 billion. Raising capital-gains taxes, including taxing gains like ordinary income for taxpayers earning more than $1 million would snatch $174 billion. Raisin...

From " The Truths We Dare Not Speak " by Victor David Hanson, Phd.  Everyone knows the government cannot keep running up astronomical annual deficits. It is piling up a near $30 trillion national debt, printing trillions of dollars—and hoping to keep inflation down to 7 percent per year. Everyone knows that, and no one wishes to talk, much less do anything, about it. Instead, we simply will go on redistributing money, inflating the economy, and hoping that the middle classes are naïve enough to believe that their inflated paychecks outpace their greater inflationary costs that, in truth, have more than wiped out all their wage gains. When the interest rate hikes invariably come—the longer we wait, the worse will be the reckoning—we will again know the stagflation of the 1970s and 1980s. The only calculus the Democrats weigh is whether they can print their way to a semblance of normality through 2022, in hopes the helium-over-inflated economy blows up only after the elections....

Buried in the Budget Reconciliation Is the End of Right-to-Work, Independent Contractors; Climate Change Among the various major provisions of the PRO Act is effective nationalization of California's AB5 law that passed in 2019. This law makes hiring independent contractors much more difficult and specifies that contractors must be reclassified by businesses that hire them as employees, unless they meet specific and rigorous standards allowing them to stay independent. Read full article... Biden on Energy Crisis: Begging Others to Save Him From Himself It is on the costs of energy where Biden’s failures are most starkly visible. On his very first day in office, Biden scrapped the Keystone XL pipeline, killing 11,000 jobs in the process and making good on his campaign promise to be hostile to the fossil fuel industry. Continuing his assault on natural resource development, Biden suspended oil and natural gas leases in Alaska. Former President Donald Trump had propelled America to en...

 I got this question on Quora today. It's a common question. The answer I provided is below.  I got into debt young as I didn’t realize how important it was to have a good credit score. How can I get myself out of this mess? I’m worried it’s going to affect future relationships. You really must to want to be debt-free. There is no other way. It’s a process, of both knowledge of personal finance, and modifying your financial behavior. But it is something you can achieve, if you create a plan and follow the steps of sound financial planning. I’m going to tell you up front that it will take quit a bit of work and effort on your part, depending on how much debt you have, and what you are willing to do. We had a saying in the military about what needed to be done do accomplish our mission: “Whatever is necessary.” This will be the same kind of thing. So you have to develop the same mindset. Be hungry. Personal finance is 20 percent knowledge, and 80 percent behavior. When I starte...

I always suspected that living paycheck to paycheck did not involve your income, but was influenced by bad behavior and outright ignorance of how to handle your personal finances. And throw in some vanity, and you've got a recipe for eating cat food in retirement. Or maybe you'd prefer dog food.  Been there, done that, so I'll include myself in this category, until I shook off the insanity and put things right. I'm on a ribeye diet, nicely retired, thank you. Here are some facts, as reported by Business Insider. In a survey this June, 60% of millennials earning over $100,000 said they live paycheck to paycheck. Some of these millennials - known as HENRYs - prefer a comfortable, expensive lifestyle. In today's economy, $100,000 is considered middle class in the US. High-earning millennials feel broke. Sixty percent of millennials raking in over $100,000 a year said they're living paycheck to paycheck, found a survey this June by PYMNTS and LendingClub, which ana...

Higher taxes and increased government spending will generally slow economic growth. This correlation has been supported throughout history many times, but it's something not generally discussed by Democrats or the mainstream media.  Here's some examples to get started on the subject. Not everyone is in agreement, but I generally take the position that higher taxes and/or higher government spending takes resources from the private sector, which has a moderating affect on growth: Higher business taxes and lower investment 'not a plan for growth' What Is the Evidence on Taxes and Growth? Tax Rates and Economic Growth Does Government Spending Affect Economic Growth? High Implicit Tax Rates Trap Poor People in the Quicksand of Government Dependency Regardless of where you'll end up deciding what is the "truth," the fact remains that the U.S. taxpayer spends too much money on taxes. According to a recent study by the Bureau of Labor Statistics (BLS), Americans s...

by E.J. Antoni Texas Public Policy Foundation CNBC recently published an article whose original title demonstrated a fundamental misunderstanding about inflation. The wording was so misinformed that it prompted intense criticism and CNBC changed the article’s title. It originally read “The upside to inflation: rising wages” and was changed to “It’s not certain rising wages will be enough to outpace inflation.” Ironically, after posting a critique of the CNBC headline, Fox Business posted its own article with an equally misinformed headline: “Inflation inflicting near-term pain, but promises long-term gain for seniors.” These headlines misconstrue the fundamental mechanism that causes inflation. As Milton Friedman frequently said, inflation is always and everywhere a monetary phenomenon. Inflation occurs when the amount of money in an economy grows faster than the growth of goods and services in that economy. The ultimate power to create fiat money lies with America’s central bank—th...

As you may have noticed, “buy now, pay later” (BNPL) options are exploding, with retailers ranging from department stores to airlines allowing customers to pay for goods and services in installments rather than all at once. In fact, in 2021 over half of consumers have used a BNPL service such as Klarna, Afterpay or Affirm to finance their purchases. These plans been around for many years, however, mostly as "buy now, use our card or credit plan, pay no interest for a year", or more. Pay no interest for 5 years! We've all seen them. But that said, there are some significant potential gotchas to think about before you give it a try. Let’s take a look at how BNPL services work—so that you can understand their pros and cons—and make an informed decision about when they may (or may not) be a good choice. BNPL plans work like an old-fashioned layaway plan in reverse. Instead of having the merchant hold on to the item until you complete all your installment payments, you receiv...

In an amazing display of deception, Biden declared after the Labor Department had its worst report in decades, “This month’s job numbers show we are on the right track.” He then went on to say how important it was to spend another $4 trillion on "jobs" and "recovery" programs. House Speaker Nancy Pelosi stated, “The disappointing April jobs report highlights the urgent need to pass President Biden’s American Jobs and Families Plans,” referring to the additional $4 trillion of spending bills now being proposed. As one commentator stated: "We are witnessing a witches’ brew of stupidity that, taken together, amounts to the American people piling on yet more debt for the privilege of stopping an economic recovery." The U.S. economy added just 266,000 jobs in April after economists predicted it would add a million, according to a Department of Labor report released Friday morning. The U.S. remains nearly eight million jobs short of the 2020 peak that the econom...

See also: The State of Health Care at the end of 2020  

Sen. Kirsten Gillibrand (D-N.Y.) took the bold step of expanding the definition of infrastructure to an unrecognizable state on Wednesday, as she and other Democrats work hard to sell Americans on President Joe Biden's $2 trillion "infrastructure" plan that includes a whole lot of non-infrastructure-related initiatives. Gillibrand declared on Twitter, "Paid leave is infrastructure. Child care is infrastructure. Caregiving is infrastructure." However, a quick search reveals that infrastructure "is often considered to refer to transportation, roads, bridges and items of that nature." Merriam-Webster's Dictionary says infrastructure is "the system of public works of a country, state, or region," or "the underlying foundation or basic framework (as of a system or organization)." NBC News published an analysis April 7 acknowledging that Biden "threw everything, including the kitchen sink, into his $2 trillion-plus 'infrastr...

Question: Is 695 a good score for a 19-year-old? I do everything I can do to increase it. What else can I do to make it better? Answer:  In the U.S., age can have a factor on your credit score, because the length in time of your credit history comes into play. For example, if you have an account which you have payed on time (such as a credit card) for 20 years, this will contribute to a higher score than if you’ve only had the account 1 year. Other than that, the credit bureaus don’t care how old you are. But, 695 is not a bad score for someone your age. If you continue to make on-time payments, keep your credit utilization low, and don’t continually open new accounts, you’ll see your score go up. There are some good articles about credit scores here: Credit Score Advice - Credit Advice by Experian The average credit score for someone in their 20s, as reported by wallethub, is 662. So your score is above average. What Is the Average Credit Score in America? Average Credit Scores by...

If you mean do I pay extra toward my principle, then yes. While many financial advisors — and many “armchair” internet “experts” — will tell you not to do this, because you can get a better return in the market, that’s not always the best case. That you have to figure out yourself. Here’s a couple of reasons to starting paying down your mortgage: You don’t have enough equity (the difference between what you owe, and the home’s value). If you don’t have at least 20%, pay it down. You’re getting closer to retirement, you’re debt free, and you’re saving at least 10 percent toward retirement. Use the extra funds to pay it down. If you hit retirement with a home free and clear, you’re going to be glad you did. Having no mortgage, especially if you’re already retired, gives you the option of using the equity in your home for retirement funds, such as a reverse mortgage. I wouldn’t recommend this for everyone, but it is an option. (Having a sufficient retirement account and income is the best...

A home equity line of credit, or HELOC, has long been a popular way to tap the equity in your home and get your hands on a quick infusion of cash. In the past, one big plus of using a HELOC—rather than an unsecured loan or credit card—was that you could deduct the interest you paid on up to $100,000 of the balance. But under the new Tax Cuts and Jobs Act of 2017, the rules have changed. And if you're not clear on how the new law affects you, you could make some mistakes with your HELOC that could cost you big-time! Once you make these errors, it can be difficult or impossible to undo them. So, it's crucial that you're clear on what you can (and can't) do with a HELOC today. 1. Not understanding the new HELOC rules If you opened your account before Jan. 1, 2018, you could take out a HELOC and spend the money on anything. Whether you spent this cash to fund a child's college tuition or foot the bill for a wedding or even a new boat, you could deduct the interest on ...

For a score with a range between 300-850, a credit score of 700 or above is generally considered good. A score of 800 or above on the same range is considered to be excellent. Most credit scores fall between 600 and 750. Higher scores represent better credit decisions and can make creditors more confident that you will repay your future debts as agreed. Credit scores are used by lenders, including banks providing mortgage loans, credit card companies, and even car dealerships financing auto purchases, to make decisions about whether or not to offer your credit (such as a credit card or loan ) and what the terms of the offer (such as the interest rate or down payment) will be. There are many different types of credit scores. FICO® Scores* and scores by VantageScore are two of the most common types of credit scores, but industry-specific scores also exist. What Is a Good FICO® Score? One of the most well-known types of credit score are FICO® Scores, created by the Fair Isaac Corporat...