Friday, December 28, 2012

Caught Between the Elephants and the Jackasses: “The Common Man’s Guide to Surviving the Fiscal Cliff”

Put your head between your legs and kiss your rear goodbye! It's the end of everything! The Mayans you say? Ha! Don't you wish? No dear friends, it's the "Fiscal Cliff" and everyone is wondering just how it will affect them.

Well, being the kindhearted, encouraging soul that I am, I thought I would take some time and share some of my vast wisdom regarding this glorious journey we are all about to embark upon.

First of all let's be clear, this whole situation is really just a fancy austerity plan (look it up)…in disguise! Don't fall for the whole, "We're trying, but can't come to an agreement" load of bull! Both the jackasses and the elephants know what's happening and both are seeking the same outcome! The bottom line is this; you're going to have less money and that's "the plan". Why? Well, someone has to pay for the mess this country is in and it looks like the American people have drawn the short straw…yet again. So, who is getting stuck? Well, if you pay payroll taxes, your tax bill will go up (that includes just about everyone who works), and your income tax bill will also rise.

Not only will your taxes increase, but many products and services will likely go up which means even less change in your pocket. Again, tax hikes affect almost everyone and everything. For example, if the dairy farmer pays more taxes, you can be sure that will be passed on to all the calcium conscious milk drinkers out there. Bottom line: Everything is going to cost more.

This isn't going to be a "tax the rich" situation; it will be a "tax everyone" situation. Eighty-eight percent of all Americans will pay higher taxes next year, about $3,500 per household on average. The average will be about $2,000 for families earning between $50,000 and $100,000, more for those earning more.

Again, that means you and I will have less to spend. Unfortunately, that also translates to continued woe for businesses especially small businesses. The result: Fewer jobs! In fact, if all this takes place, economists predict the US will face a huge recession and increased unemployment – a more than 1 percent hike in official unemployment figures, to 9.1 percent. You can only imagine how that will affect towns like Dalton already plagued by high unemployment.

Now that we've discussed the reality of what we face, let's think through some strategies we might employ to survive the coming storm.

  1. Spend less! I realize that's not very American of me, but the fact is you only have so much money coming in and soon that amount will decrease. If that is the case, your family needs to be proactive in finding doable ways to adjust for that decrease in income. I could list many practical ways you could do that such as less eating out and buying fewer toys, but in the end those decisions are family specific. Regardless of what you decide to do, spend less!


  2. Save more! The average American household does not have enough funds on hand to purchase even one household appliance that suddenly needs replacing. I've heard a lot of numbers thrown around, but most experts agree on having $1,000 minimum in the bank to cover unforeseen expenses. Without that buffer fund, you are surely doomed to rely on some form of credit and that is a sure way to sink your ship. So, start saving now!


  3. Pay off debt! Even if it's just a small amount each month, start whacking away at debt. Most financial gurus I've listened to suggest starting with your smallest debt. Pay it off and then apply that monthly amount plus your current payment to the next smallest area of debt. Keep that up until it all goes bye-bye! Every dollar you pay off brings you closer to financial security. Along with that, DO NOT add to your current debt load! Paying off current debt is pointless if you continue to add to it, so QUIT USING CREDIT TO BUY STUFF! If you're not convinced this is a sound strategy, just look at the government. Remember, spending more than we have is what got us in this mess to start with! So, pay off debt!


  4. Along with those obvious strategies, may I suggest a few ideas that might help add up to big savings for your household? First, talk to someone about your current tax deductions. It may be you need to adjust your federal and state tax withholdings. If you are currently getting back thousands on your tax return, you might want to rethink that. Most folks insist it is better to have more usable funds now than to get a whooping tax refund once a year. Still, you don't want to slash that too much, especially now that taxes are increasing. Healthy balance…that's the key.

    Next, if you haven't checked around for savings on auto and home insurance, now might be a good time. "A 15 minute call might save you hundreds", or so they say.

    And last but not least, consider saying goodbye to goodies you now enjoy. I know it's tough, but tough times demand tough choices! TV? Do you really "need" cable or satellite TV service? I say no! We haven't had it for a couple of years and it has saved us a bundle. You can purchase a good quality outdoor antenna for around $100. The signal is digital and IT"S FREE! Yeah, you may miss out on a few shows, but most content can be watched online for free if you have internet service. I use "Hulu" quite a bit and I have to say I am completely satisfied. Also, consider saying adios to your land line phone service, especially if you have a cell phone. Small changes here and there can add up to big savings!

Yes, most likely we will soon be taking the plunge over "the cliff", but that doesn't mean we have to perish on the rocks below. It will be difficult, but such is life. The truth is this anyone that didn't see this coming must have had their head stuck in the sand. It's been happening across "the pond" for some time now and you know what they say, what goes down in Europe eventually goes down in America.

So feel free to kick, scream, and protest if you like, in the end none of it really matters. We're still heading over the cliff!

PS – If you're not too crazy about the way Washington is spending your money, vote the Jackasses…and the elephants out in the next election! Allowing the same do nothing idiots to stay in office year after year makes zero sense!