Simple math

Almost daily, I come across a story on television or in the newspaper concerning the national deficit and how the our country continues to spend seemingly without regard of the money it has or what it already owes.

Sadly, people aren't much different. Whenever talking with friends or coworkers about personal finances, I'm not often surprised to hear they depend heavily on fuzzy math and a prayer. I've always considered myself sensible in terms of money management – tracking every purchase, keeping every receipt, stretching every paycheck, and ensuring that every dime is accounted for. On a grander scale, I would way I'm somewhere between “fiscally responsible” and outright “cheap.”

I think personal finance is a simple concept. I have two piles of money, one coming in and one going out. My goal – and I say this without any so-called expertise as a financial advisor – is to be sure the pile going out is smaller that the one coming in. That in mind, I've created my own personal budget through the black magic of Microsoft Excel. It's a simple process, really. I plug in numbers and it does the math for me, allowing me to see what I spend on everything from groceries to gas to gifts. In the end, I can pinpoint where it's possible to cut back on spending and save a little.

Why more people don't actually do that is something I can't understand.

But whether I understand or not, most people I talk with simply choose not to. When asked why, I hardly ever get a good answer. The one excuse that still makes me bite my fist is, “I'm happier not knowing.”

If someone’s losing money and can't say how or why, how can they be happier not knowing? According to a 2011 Gallup poll, I'm in the minority when it comes to budgeting. Only one in three Americans actually crowd the kitchen table to put together a practical budget using realistic numbers on a regular basis. Compare that to the more than 160 million Americans who have at least one credit card and the average credit card debt of $15,000 per household. Just yesterday, I received credit card offer saying I was pre-approved for a plan with 13 percent interest. I'm not exactly jumping to pay 13 percent more than I need to for anything.

To be honest, I thought one in three was high. Like I said, I'm the only person I know who still budgets. So to believe approximately 33 percent of Americans actually have some sort of financial plan just seems unbelievable.

When my wife and I married in 2009, we were broke. Not quite fishing for change in the couch cushions broke, but broke enough. It didn't take long to learn that every dollar spent adds up, and that a cup of coffee here and there could be the difference between paying the electric bill when it comes in a white envelope, or paying it when it comes in a pink envelope the next month. It also didn't take long to learn only so many recipes call for boxed macaroni or Ramen Noodles.

Since we started tracking our spending and following a budget, we've built up a healthy emergency reserve account, which came in handy during days I drove my old Pontiac... but I digress.

If there's a lesson to be learned in all this, I think it's pretty straightforward (and if common sense statements make you slap your forehead, get prepared). Spend less than you earn. It's an elementary rule that would go a long way.

When it comes to the national deficit, I hate to think it was really this simple.

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