How to Get Rich: Don’t Borrow

by

Suppose you are working a job that isn’t certain and doesn’t pay well.

Should you borrow money to buy things you may need?

Or should you wait until you have cash in hand before buying things you need?

If you choose to borrow, you are never going to be rich. What’s worse, if our laws in this country assigned the debt to the children, you could very easily put many generations of your children into debt before they were even born.

If you choose to wait, you are almost guaranteed to be rich, because you will always have the money you need when you need it.

The same is true for states as well. Tennessee has made a hard decision not to borrow but to pay cash for its critical services. This means that as the economy crunched, and revenues fell, Tennessee didn’t have to devote a bunch of its revenue to the equivalent of credit card payments, but was free to change course and rethink its priorities and planning. (link)

Although our state has a balanced budget amendment, crafty legislators and bureaucrats know how to work around that. Rather than building up the reserves needed for a massive project, they run out to raise the capital right away, enslaving the state taxpayer to future bond payments. This is irresponsible behavior and wise legislators would ensure that no taxpayer would ever be held on the line for past choices.

What the federal government has done is not only obscene, but criminal. I’m not excusing past presidents of any party here. But I am particularly blaming the House of Representatives who writes the budget. It seems the last president and congress to get it right were in Thomas Jefferson’s time. During the ’94 Republican Revolution, the congress took President Clinton along to try and balance the budget, but were unsuccessful thanks to the massive liability that Social Security and Medicare are.

Again, it is wrong to enslave future generations because of the choices we made. Every year, we should pay off every debt we have incurred, and that begins without taking on debt to begin with.

My, oh my, what a different state and nation we would be if we had no public bonds and no public debt!

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