Sunday, September 12, 2010

The Governments "spend, Spend, Spend!"

GIntroduction: 
This stance is written for the Government's policy of heavily promoting debt, spending, and consumption.  They are under the impression that what doesn't work to increase wealth for individuals, will increase wealth for society, which as we all know is just a collection of individuals.

Stance Summary:
I am not for any government policies!  But there are ones I like better than most, and the policy of promoting debt on a personal and national level is horrid.  The government should cut back spending anywhere and everywhere (especially on the Department of War or rather the Dept of "Defense").  In doing so their in actions, their savings would encourage people within the nation to start saving more.  When the nation spends, most of the people will follow suit

Personal Actions Based on Stance:
I am a heavy saver.  I try to save or invest more than the average person.  Which sadly is easy enough to do right now.  But even in times of wealth proliferation, I try to "beat" the average person in terms of saving.

Expansion:
Spending creates a specific level of living standards at the amount commonly spent.  In addition, saving and investing reduces the future spending necessary to maintain that same living standard and allows you to then spend the same for a better living standard.  Spending more than one has will also boost the living "standard", but only so long as you can spend more than you have.

For example, lets say we have a scale of 0 - 100 of wealth.  0 being horrid wealth, 100 being amazing wealth.  Say it costs me personally $1000 a month to maintain my level of living of around a 15 wealth, and I am able to save $500.  If I boost my spending to $1600 a month I can raise my standard of living from a 15 to an 18.  I have more things, I go out to dinner more, buy a new computer even though the old one is still good enough.  So now I have a better standard of living, but I now dipping into my savings.  Eventually I will run out of savings and start going into debt.  If I'm smart and reduce my consumption back to the original $1000 level, I can reduce my living standard back to 15 and have no accumulated savings in case of disaster (which could wipe me out and reduce my living standard to a 10 or below).  But say I don't reduce consumption and I start pulling out the credit card for that extra $100 a month.  My debt increases, and increases and suddenly it is no longer manageable.  I have to sell off all my goods, my house (i move into a rental place), sell my car and buy a cheaper one, sell my excess clothes.  But I don't lose my job so I can reduce my spending back to the $1000 level and start saving $500 again.  Except this time my living standard has been reduced to a 10 where I was instead a 15 earlier.  And it will take awhile before I can be back to the 15.

However, let's say I continued at a standard of 15 with $500 in savings, and I invested that over time in my life and in valuable things.  At some point the savings could earn interest and earn you a small bit of extra income that you can spend, maybe raising your living standard from a 15 to a 16 (and maybe over the years from a 16 to 17, 17 to 18, ... and up and up depending on how many financial and life disasters occur eating up your savings), and you haven't changed anything!  Maybe you save up enough money that you are able to invest in yourself, a nicer computer for your business (gotta work hard to get more customers!), a dishwasher to save you time and money, house repairs/upgrades that cost a lot of savings, but make your house more valuable in the long run, and other things like that.  They spend your savings, and increase your living standard, but don't get you into debt.  Over time, and it will take time, you will hit that level 18 living standard that you could have gotten to by just spending more but now you are still saving $500 a month and living under your means at a level 18.  At this point, the only limit you have to continue inching up your living standard is your life expectancy!  ;-)

Sources:

Closing:
 

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