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If only the government managed finances as well as you

Most mornings I’m up and out of the house before the 7 a.m. news.  But on the eve of the Mueller testimony, I stayed home.  I knew Mueller would be the big story, but I was more interested in what the networks had to say about the two-year budget deal our representatives in Washington reached, substantially increasing our national debt. 

I shouldn’t have been stunned when it wasn’t the morning’s top story. But I was flabbergasted that the budget deal wasn’t even mentioned.  I eventually left for the office, dismayed that so few seem to care much about our nation’s finances.

For years, I was optimistic our elected officials would eventually step up and take the difficult steps necessary to reduce our debt.  Time and time again I thought politicians would find ways to reduce spending.  But every time they came close, they kicked the can down the road. 

This time it was different.  Both political parties placed the debt issue on a kicking tee, got a running start and kicked any semblance of financial discipline two years down the road. Personally, I find it unacceptable.

Imagine a well-to-do household with a lavish lifestyle maxed out on credit card debt.  The neighbors would see nice cars in the driveway and the kids away at good schools.  Everything would appear to be in fine order. 

Of course, the neighbors wouldn’t know that the family was maxed out on their credit cards.  Or that they had no money in an emergency fund and every month their lifestyle and bills exceeded their monthly income. 

If this family went to a financial advisor, I believe they would be greeted with dismay.  And if they were ignoring the problem and applied for a brand new credit card, the financial advisor would likely fall off his or her chair. 

The bottom line is that our elected officials are poor stewards of our

nation’s financial well-being.  Most households work hard to save and invest, to put food on the table, pay their monthly household expenses and educate their children. 

Over time, some get in over their heads, but most manage their cash flow reasonably well.  Along life’s journey, if prices go up, they tighten their belts.  They’re cognizant of what comes in the front door and goes out the back.  In short, most people manage their households with an eye on both income and expenses.

I’m often asked if a stock market crash is my primary financial concern.  Well, it is near the top of my list, but I wouldn’t consider it my greatest concern. 

Financial markets are naturally fickle.  Investors need to be aware that equity markets are prone to fluctuation.  An international crisis or conflict, for example, can have a negative impact on the financial markets.  In 1987, the markets fell 20 percent in just one day.  And I’m sure the Great Recession of 2008 is fresh in many of our minds. 

I have other financial concerns, such as inflation.  But my greatest concern is the stability of our financial system.  We’re all dependent on it. Ignoring the national debt has the potential to shatter that stability and trigger a major financial crisis.  A crisis that could hurt every household for a very long time.  Even the ones that are well managed.