The Ambulance Down in the Valley

'Twas a dangerous cliff, as they freely confessed,
Though to walk near its crest was so pleasant;
But over its terrible edge there had slipped
A duke and full many a peasant.
So the people said something would have to be done,
But their projects did not at all tally;
Some said, "Put a fence 'round the edge of the cliff,"
Some, "An ambulance down in the valley."

But the cry for the ambulance carried the day,
For it spread through the neighboring city;
A fence may be useful or not, it is true,
But each heart became full of pity
For those who slipped over the dangerous cliff;
And the dwellers in highway and alley
Gave pounds and gave pence, not to put up a fence,
But an ambulance down in the valley.

"For the cliff is all right, if you're careful," they said,
"And, if folks even slip and are dropping,
It isn't the slipping that hurts them so much
As the shock down below when they're stopping."
So day after day, as these mishaps occurred,
Quick forth would those rescuers sally
To pick up the victims who fell off the cliff,
With their ambulance down in the valley.

Then an old sage remarked: "It's a marvel to me
That people give far more attention
To repairing results than to stopping the cause,
When they'd much better aim at prevention.
Let us stop at its source all this mischief," cried he,
"Come, neighbors and friends, let us rally;
If the cliff we will fence, we might almost dispense
With the ambulance down in the valley."

It seems to me that many of the entitlement programs out there could be considered an ambulance at the bottom of the valley instead of a fence at the top of the cliff. Giving people 2 years worth of unemployment compensation does not help to solve unemployment. Foodstamps, wic, chip, and other so-called "welfare" programs do little to raise people out of poverty.

I understand the basis of the argument for entitlement programs, yet I also understand the argument for their elimination. I personally believe that the federal government should administer very few if any entitlement programs.

Legitimacy of their existence aside, I take issue with another philosophy as well. Encouragement to sign up for the programs angers me. When I was preparing to come home from my training in the army, one of the briefings that I received was called "re-integration to civilian life" or something like that. I was infuriated by the content of the briefing. There was virtually no discussion on finding work, financial planning, and no emphasis on personal responsibility. Instead, the so-called counselor encouraged us to go straight to the unemployment office and get "signed up". She told us to sign up for wic if we had kids, gave us information on affordable housing and HUD, and gave us information on a slew of other programs. Later, when Nikki and I had Keely, a nurse approached us and asked us if we wanted information on how to sign up for CHIP and WIC. Then again, while getting Keely some shots, another nurse asked us if we wanted to get CHIP.

This encouragement to sign up for entitlement programs aggravates me. I just don't think there should be an effort to recruit people to become participants. If someone inquires about an existing program, great, but I don't think we should go around asking for new enrollments. It's almost like somebody's getting paid commission. It's an affront to me to suggest that I can't take care of myself and my own without the government helping me along every step of the way. I would be ashamed to take federal (and therefore taxpayer) money just because I qualify. Even if a person needs the help, I would certainly hope that he or she would be embarrassed enough about it that they get off as soon as possible.

But I digress (always wanted to say that). Back to my original point. It seems that the government all too often focuses on the symptoms of society's ills instead of the root causes. Perhaps that's because many of the problems that entitlement programs address are rooted in social issues more than simple economic problems. And, unfortunately, you can't legislate human behavior.

Credit or Financial Bondage?

When I was in Russia, I often encountered signs at retail stores that read "купить в кредит". The phrase means "buy with credit" or "financing available". These signs were on all types of stores. Clothing stores, electronics outlets, even grocery stores were adorned with the phrase. I remember thinking to myself, "Who in their right mind would walk into a store and use financing to buy a t-shirt or a pair of pants, or their food?" The concept seemed truly insane to me.

After returning home I got on with my life and forgot about the silly signs. Eventually I got married, found an apartment to rent, started school, and became involved with life. That's when, at the age of 22, I was talked into getting a credit card. I honestly didn't understand the concept of the credit card at the time. I knew the fundamentals of the card (an open line of credit that, if not paid off in a set period of time, gathers interest), but I didn't understand what the card offered me that I couldn't obtain without it. I nonetheless decided to keep the card and my wife and I used it to buy groceries and gas. We were good little cardholders and paid it off at the end of every month.

I soon discovered that this good behavior was rewarded with a higher credit "rating". As my credit score climbed, I was offered cards with higher limits. Before long, cards showed up in the mail offering me limits higher as high as $10,000. That was neat and all, but I saw no need for a fancy card. I stuck with my $1,600 limit gas and grocery card. About 6 months ago my wife and I decided to just stop using the card altogether. Budgeting was just easier without the card.

To this day, I still don't understand the justification for using a credit card. I think it comes back to the same voice in the back of my head that asked while I was in Russia, "Who in their right mind would walk into a store and use financing to buy a t-shirt or a pair of pants, or their food?" After all, that is what we do when we use a credit card. We finance whatever we buy with it.

In my opinion, using a credit card, or any form of consumer credit, is like playing with fire. It may be fun, but eventually you will get burnt. I see nothing that you can buy with credit that you can't buy without at a lower risk. To be honest, if you don't feel comfortable buying something without credit, then it's probably not a good idea to buy it with credit.

What does a credit score really get you? More opportunities for borrowing. So we get caught in this cycle where we assume that in order to succeed in life we have to borrow money and pay it back so we can borrow more money later. And so we borrow, and borrow, and borrow. We don't get any more wealthy as our monthly payments grow. In fact, we probably actually get poorer as our payments grow. It seems that the only people who do get rich are the lenders from which we borrow. I just don't get it.

A financial guru I recently discovered by the name of Dave Ramsey says his entire philosophy of how to achieve financial freedom and wealth is based on his observations of what made the wealthy wealthy and what keeps the middle class in the middle. He discovered, surprise surprise, that the wealthy become such by avoiding debt, living within their means, and budgeting their money while the middle class bought into the myth that you have to borrow money to survive.

I personally believe that wealth is actually measured in units of time, not in dollars. That is to say that a person's wealth is actually measured by how much time he or she can survive if his or her active income dries up. True wealth is when your passive income (dividends, interest, etc) outgrows your expenses. At that point, you are "infinitely" wealthy.

For example, say man 1 has $10,000 in the bank. He makes a measly $20,000 per year, but has no debt at all. His utilities, food, and other necessary expenses total $1,000 per month. This man is 10 months wealthy.

Man 2 has $10,000 in the bank as well, but he makes $45,000 per year. It may be contended that he is "richer" than man 1, but he, unlike man 1, has a $1,500 per month mortgage, a $300 car payment, and his minimum credit card payment is $200. I doubt he's unlike the average american. Let's assume that this man's utilities, food, and other necessary expenses also total $1,000 per month. This means that man 2 is a little over 3 months wealthy. Man 2 undoubtedly needs a higher income to support his needs than man 1 does. Conventional wisdom may say that man 1 is poor, but I believe him to be more wealthy than man 2.

Debt is the greatest hindrance to financial freedom. There's no getting around it. Debt, not income level, is what makes people poor. I'm just amazed how many people willingly tie the noose around their own necks.

Bumper Sticker Patriotism

As I checked my email this morning, I discovered that I was the fortunate recipient of a chain letter that included a smattering of pictures of soldiers, helicopters and tanks. It droned on about the troops out there serving us and how lucky we are to live in a country like this. At the end of the message there was a nice line informing me that if I was truly a patriot that I would forward it on to at least 1o people and that if I didn't do so I dishonored the sacrifice of our men and women in uniform. Upon surveying the subject line, I noticed that at least 4 great patriots had shown their love for this country as I could see as many "FW:'s" there.

Now, don't get me wrong. I don't intend to mock the individual who is touched by a message and forwards it on to a friend. Nor do I want to say that using a blog or email to make a patriotic or political statement is stupid (if that were true, I'd be the stupidest of us all). What I am trying to point out is that emails and bumper stickers should not be the sum of our efforts. Or, rather, I am trying to contrast that to what I view as real, honorable patriotism.

When you go to your town's independence day parade, look for that beat up pickup truck carrying the 70 and 80 something year old guys in white shirts and dark blue hats. There you'll find a handful of patriots.

If you find yourself at a city council meeting, look at those council members who work through mountains of red tape and monotony to serve their fellow citizens. Look at the concerned citizens sitting on the broken metal chairs who come time and time again to ensure that their community is served properly. You'll likely find some patriots there.

This November as you wait in a surprisingly short line to show your support for one or another candidate, look at the gaggle of people in the room with you. There are some patriots among them.

Next time you see a handful of kids from a church group strolling the shoulder of the highway, picking up the trash you threw out your car window, realize you're looking at a handful of patriots.

I guess what I'm trying to say is that involvement, service, and action are the real signs of patriotism. Bumper stickers that read "Obama-nation" or a t-shirts that say "Hope and Change" do nothing to serve the best interest of you or your fellow men. But when you study candidates and place your vote, or when you voice your opinion at a council meeting, or when you volunteer to serve your community, then you have made the brave leap from peanut gallery to patriot.

Patriotism is not shouting, "Yes we can!" It's quietly standing up and saying, "Yes I will."