A fiscal parable: by guestblogger Lulu

[My friend, and too infrequent guest-blogger, Lulu puts our economic problems in terms the women who voted for Obama might be able to understand.]

Recently I was talking to some bright, educated women about how they wanted to help their children learn the value of money and appreciate receiving things, and to understand that it takes money and work to earn items. One mother complained that her daughter demanded things constantly and the mother, a single mom and not a big earner, simply couldn’t afford to provide her daughter with all these goodies — goodies her wealthier friends could afford easily.

The parents talked about strategies to teach their kids that they can’t spend everything parents earn. Money has to go to bills, savings for college, and myriad other expenses. “Why can’t the kids grasp this?” they pondered.

I made a vague comment alluding to the similarities this had to our national debt situation. Blank and confused faces stared at me. Every one of these women had voted for the man who was driving our nation’s economy into a free fall. The expressions on their faces were not showing anger or political resentment. They simply didn’t connect the dots between wanton government spending and the kind of behavior they were worried about in their kids.

I concluded that the reason they can see the problem spending with their children is because the issues are real, immediate and tangible. Our government debt is all theoretical. We have been hearing about the debt crisis and the fiscal cliff forever.

When it comes to the debt crises’ effect on the economy, besides some minor belt-tightening with higher gas and grocery bills, these folks haven’t experienced much of a change in lifestyle. They may know people who lost their jobs, or college kids who can’t find work, but these people survive. The college grads move back in with Mom and Dad. Their friend on unemployment and food stamps is doing OK.

The economic reality of a debt-ridden government and economy just hasn’t hit their consciousness yet. They are not making rag rugs, soap bars out of soap scraps, and other Depression era survival strategies. They live in California, after all, where voters have never connected the dots between the dismal fiscal situation and the people they vote for.

The only way to convey the situation, I figured, is to explain the macro debt disaster in micro terms, as if it affected only their own family. Here is my parable with these nice ladies in mind:

You finished college and you have started bringing in steady income. Every month with that paycheck coming in, you realize that, in addition to the regular household bills, groceries, gas, health insurance and taxes, you can actually afford some perks. You can eat at restaurants a few times a week and not even feel it. You can buy nice clothes, take a big vacation every year, and, if you use your credit card, you can buy some things you couldn’t afford today, but you can pay off.

Eventually, you get a bunch of different credit cards because each one has a limit. You buy a new car, thousand dollar shoes (why not, I deserve them?), a wind surfboard, a new plasma TV, an amazing sound system, a designer dog, a new stove, dishwasher— heck, a whole new kitchen remodel, a backyard pool, a trip to Paris, season tickets to the ballet as well as the LA Kings, and — “I’m sick of these clothes”—a new wardrobe.

Eiffel Tower

Put together, these expenses vastly exceed your income, but you’re able to make minimum payments every month on each of these credit cards. OK, there’s interest, but you’re managing.

Now you marry a really popular guy with a great smile. He likes to spend too, on popular guy necessities such as great clothes, sharp haircuts, and a luxury car.

Your super cool husband has some credit card debt too. He doesn’t seem to be struggling to pay it off, though, because he constantly spends money on things other than those credit cards. He goes to Vegas often, although he seldom comes back on top. He invested in a solar company and it went bankrupt and he lost his entire investment. He invested heavily in a car company but hasn’t recouped his investments. And he spends, spends, spends.


Wherever your guy goes, he has to treat. He buys dinner for everyone in the restaurant and he insists on paying all the neighbors’ and their kids’ doctor bills.

You scream. “Why do you need to pay that? Those ‘kids’ are 25! Why do you want them to be dependent on you?”

He laughs and accuses you of being stingy and not generous. You scream more loudly, “But you don’t have the money to be generous! Our bank account is empty. We are spending more than we bring in! Last month our combined salaries were $4000 and you spent $7000. We will never pay off our credit card debt that way.”

“Oh, don’t worry about it,” he says soothingly. “I have a plan. It will be OK.”

Casino sign

He goes to Vegas again and lost his shirt. To console himself he takes a luxury trip to Tahiti, golfs and feels much better. He was helped by the fact that he stayed in a 5 star hotel and got massages to calm his nerves. Upon his return from Tahiti, your super cool husband decides to buy a new yacht and puts in the order.

You can’t stop screaming. “We can’t afford the yacht! We can’t afford the vacation! We will already never pay off what we owe!!!”

Hubby reaches over, pats your arm and says, “Stop grumblin’. Mr. Wong down the street has given me a big loan. We are fully covered. He said he has plenty more. And Mr. Mahmoud around the corner was willing to talk. So stop your belly-achin’. Let’s live, baby!”

A few weeks later you discover that you are pregnant with twins. You have to cut back on work. Your income drops.

Although your income is significantly less, your husband’s spending doesn’t go down. In fact, he announces that he has more things he wants to buy.

You plead, “But the babies will need so many things. We need to do their room, buy supplies, begin a college saving program. Let’s watch our budget.”

Mr. Super Cool is unfazed: “I promise it will be OK. When they get to college, college will be free. Why should we skimp now when things will be different when they grow up? Everything will be free for them.” He condescendingly pats you on the head and heads to the golf course with his new set of clubs.

Paying bills

Recently he started hanging out with Beyonce. You sit at home worrying about the two lives that are growing inside you. If you can’t pay off your debts, what will happen to your kids?

When your husband comes home, you plead, “I have been thinking about our kids and their future. We need to change our ways.”

“Don’t worry,” he smiles and cuts you off.

Determined, you continue, “If we don’t pay off our debt, they will inherit it. It is already so big I don’t know if it can ever be paid.”

“Stop your grumblin,” he snaps. “I’ve been trying very hard. I can’t get it completely fixed because these fat cats at work keep interfering with my plans. They don’t get that I can spend as much as I want because our incomes and Mr. Wong’s loans cover everything. I have to pay for the neighbors’ doctor appointments because I’m a caring guy. They look up to me. They depend on me. Don’t you see? So, don’t worry. Don’t listen to Paul. He’s just a blowhard, OK. Smile for me, Sweetie.”

Then the roof springs a huge leak and needs to be replaced. The fridge goes on the fritz. The twins are born and one has a costly medical condition needing a supportive treatment not covered by the insurance. Then the house catches on fire and half of it needs to be rebuilt. It is unlivable for months.

Mr. Wong loans your husband more money but he is not smiling anymore. He is starting to complain.

Four years go by and you divorce. Your ex- husband buys a luxury estate in beautiful Hawaii. Meanwhile you have to leave your nice home and move into a small apartment.

You remarry, a man who is a better financial planner, maybe a bit less charming than your last husband, but a solid working man. Every day he struggles to control the credit card debt, maxed out at every card. Mr. Wong refuses to loan you more money, news that your new husband greets with relief.

You have to stop eating at restaurants. You buy your daughters’ clothes at thrift stores. They can’t take ballet or piano lessons. There is no money for birthday parties and trips to Disneyland.

Every month you pay out an amount that would have once brought you a comfortable, luxurious lifestyle. Instead, it all goes to paying off the credit cards, Mr. Wong, and all the interest.

The twins, growing up in hand- me-downs, knee patches, leftovers and resentments, complain constantly that it isn’t fair. “We get nothing and look how much you and dad enjoyed! When I grow up I will get nothing and I will be paying all my life for your shopping sprees! I will work for nothing! Live in this cruddy apartment forever, all because you maxed out and borrowed from Mr. Wong- who now lives in our old house! And when we have kids, if we ever do, they will still be paying off your shopping sprees!!!”

Garage sale sign

You weep and apologize, hating to see your children suffer and struggle, but the bill collectors are pounding at the door.

I hope this little parable brings our current national financial shape into a clearer picture for those who need to bring the theoretical into the realm of the personal.