So the headlines and some Twitter feeds are making mention of a story that seems to be getting tired (and I am not even an American). The US Government is again in the position of having to make 11th hour decisions and agreements to raise the debt ceiling so that it can meet its obligations that it does not have the cash to pay for. I say tired because this is not the first time that the US has been in this position and suffice to say that it won’t be the last. Without a plan or without making very difficult decisions these types of last minute fires are hard to avoid.
I realize that developing, implementing and managing a plan for debt repayment is not as simple as it sounds. Many individuals, families and businesses have difficulty doing this let alone a government. There are also many variables at work that tend to create noise and cloud the issue even more. It can be hard to filter the noise from the underlying issues and even more difficult to plan for getting out in front of those issues.
Borrowing money by itself is not the problem – not knowing why you are borrowing the money and more importantly having a plan to repay it are the problems that arise from debt. If the US Government shut down maybe it would send a message not only to the market but to people as well. Too big to fail? Not if you fail. I have a tremendous amount of hope that there is usually a lot of good that can be done by letting situations run their normal course of action. Continuing to prop up your finances with debt is never a good situation and eventually you will run out of the ability to borrow resulting in having to face tough decisions. The tough decisions are difficult to make but once made can produce a result that is not only sustainable but leads to other improvements.
Consider a family or a business that is forced to re-visit its finances due to being over leveraged. As they face the reality of their circumstances they begin to make decisions such as budgeting their money, changing their lifestyle and ultimately positioning themselves for a more solid future based on having to learn new financial habits.
The US Government is not alone in trying to balance their finances. Most people and businesses are as well. Sometimes the hardest part is taking the first step in the right direction. Getting motivated to change direction can take more work compared to just letting old habits continue however once you get started and make the decision continuing to keep moving gets easier and easier.
The secret of getting ahead is getting started. – Mark Twain