Click the link to view the article.
Here is a little different way to think about the above editorial from Silicon Valley, which was syndicated into our local paper here in WI.
Let's turn this philosophy on its head and see how appealing it is: What if we all took our personal income and expenses for a whole year and wrote them down, starting with the income at the top and subtracted all our expenses on the way down. When we reach the bottom line, we would either have money left over or not. Let's just call that figure a "PROFIT" or "LOSS". I think you might see where I'm going with this.
Now, say we earned a profit in 2010. First of all, Good Job! What can we do with it? Here's a short, responsible list (I am pretty sure we could all write an extensive, irresponsible, but way more fun list!)
- Save it for a time when you don't earn a profit (a.k.a. rainy day)
- Pay down debt principal
- Make those much needed home improvements or replace your worn down vehicle (a.k.a. spend it)
- Invest it
These are all wise choices. Let's remember, you worked hard all year to earn your money. You've kept your job in a tough economy by providing value to someone who is willing to voluntarily pay you for it. You've not blown your income on unproductive ventures. You've reduced your discretionary income (maybe didn't take a vacation or go out to eat as much), shopped a little more wisely (passed on the designer jeans and bought the generic groceries when you could), and maybe in the past had bought appliances to improve your efficiencies over time. You've even been able to give a little more to your local church or charity, and Christmas for your family is shaping up to be your most charitable yet. Well Done!
According to the author of the aforementioned article and many others like her, you shouldn't have made such a "record profit". How could you?!? Didn't you know we are in a bad economy? You shouldn't have spent your money wisely. You shouldn't be able to use that money to save, invest, reduce debt, or make capital improvements on your property as you see fit. Don't you know there are unemployed people out there? If you would've just spent your money, it would've created jobs. Don't say you pay too much in taxes. People like you don't deserve a tax break. You obviously don't need one, just look at your profit! We should set up a goverment agency to take some of your windfall profits! Haven't you seen all those people who didn't work as well and as hard as you and who didn't make as wise choices as you? We need to help them, so we'll have to go ahead and take those profits from you.
Once upon a time, conventional wisdom thought it wise to spend less than you earn (I know, you are pretty good at math! That would = a PROFIT!). Today, companies (individuals) who make a profit are demonized. If only we could figure out where we went wrong. I wonder if this author would be willing to submit her personal Profit/Loss statement at year end and have someone tell her she either makes too much income or didn't spend enough this year. I'll bet my profit the answer is "No".
