Did Your Personal Budget Include That Increased Income the Government Gave You?
Your personal budget includes all your income sources and all your expenses. For income sources, you need to include your salary from work, interest, dividends and capital gains from investments - basically anything that increased the money in your pocket.
And now we can all pat ourselves on the back and enjoy a nice bump, courtesy of the government. So, congratulations!
What? You didn't know you had more income? Is it possible you didn't see the news? Personal income is up. Really.
The announcement came on June 26th of 2009 last year, in case you missed it. Now I admit I was a bit skeptical, even wondering is this was another "green shoot" the government had cooked up. You know, to make us all feel better. (You remember the "green shoots" from last year, don't you?) So what was it all about?
It turns out that yes, personal income did go up last year(2009). But it's not because we're making more in salary, interest, dividends, capital gains and all that good stuff. It's because of a decrease on the expense side. Expenses go down and your income automatically goes "up" - get it?
So where's that big bump from? It's reduced personal taxes and an increase in "social benefits." Social benefits includes any welfare programs, extensions of unemployment benefits - basically anything the government's giving away to anyone, anywhere, for whatever the reason.
Naturally, if you don't get any government benefits, you wouldn't be seeing any of that money. And if your personal taxes did in fact go down, you may not notice it yet, unless your withholding was decreased on your salary check, or your received a bigger than usual tax refund for 2009. Oh, and the increased benefits and tax reductions are very specific and, at this point, temporary.
Soooo...did your personal income really go up? Maybe for some of you it did. Enjoy it. For the rest of us, we won't be uncorking the champagne anytime soon.
And, by the way, where does the money come from that allows a reduction in personal taxes and an increase in government benefits? Borrowing of course. The government, which doesn't have any "extra" money to fund increases in government benefits, has to borrow the money. They do that by issuing more treasuries. And people are still buying those treasuries that they issue. As long as people keep buying up treasuries, you can be sure the government won't be shy about issuing more of them - which means they'll be borrowing even more money.
And who is on the hook for this borrowing? The taxpayer of course. And who is the taxpayer? You and me.
Lessons: It's probably a good idea not to pay too much attention to numbers thrown around by government - or Wall Street for that matter. When government's numbers sound good, a lot of the time it's got something to do with politics: keeping some constituency happy, or assuring the rest of us that everything's going to be just fine. When Wall Street puts out happy numbers, a lot of the time it's got to do with them making us open up our pocket books so we'll start investing more - so they can make more money.
As for my personal budgeting, I didn't see any more net income last year over and above what I expected. And if I even see any more net income this year, I'll do my best to forget that either I or my children will simply have to pay back any of that "windfall" at some point in the future, since that's just what we'll have to do. Sometimes it just gets depressing to think about stuff like this too much, doesn't it?
And now we can all pat ourselves on the back and enjoy a nice bump, courtesy of the government. So, congratulations!
What? You didn't know you had more income? Is it possible you didn't see the news? Personal income is up. Really.
The announcement came on June 26th of 2009 last year, in case you missed it. Now I admit I was a bit skeptical, even wondering is this was another "green shoot" the government had cooked up. You know, to make us all feel better. (You remember the "green shoots" from last year, don't you?) So what was it all about?
It turns out that yes, personal income did go up last year(2009). But it's not because we're making more in salary, interest, dividends, capital gains and all that good stuff. It's because of a decrease on the expense side. Expenses go down and your income automatically goes "up" - get it?
So where's that big bump from? It's reduced personal taxes and an increase in "social benefits." Social benefits includes any welfare programs, extensions of unemployment benefits - basically anything the government's giving away to anyone, anywhere, for whatever the reason.
Naturally, if you don't get any government benefits, you wouldn't be seeing any of that money. And if your personal taxes did in fact go down, you may not notice it yet, unless your withholding was decreased on your salary check, or your received a bigger than usual tax refund for 2009. Oh, and the increased benefits and tax reductions are very specific and, at this point, temporary.
Soooo...did your personal income really go up? Maybe for some of you it did. Enjoy it. For the rest of us, we won't be uncorking the champagne anytime soon.
And, by the way, where does the money come from that allows a reduction in personal taxes and an increase in government benefits? Borrowing of course. The government, which doesn't have any "extra" money to fund increases in government benefits, has to borrow the money. They do that by issuing more treasuries. And people are still buying those treasuries that they issue. As long as people keep buying up treasuries, you can be sure the government won't be shy about issuing more of them - which means they'll be borrowing even more money.
And who is on the hook for this borrowing? The taxpayer of course. And who is the taxpayer? You and me.
Lessons: It's probably a good idea not to pay too much attention to numbers thrown around by government - or Wall Street for that matter. When government's numbers sound good, a lot of the time it's got something to do with politics: keeping some constituency happy, or assuring the rest of us that everything's going to be just fine. When Wall Street puts out happy numbers, a lot of the time it's got to do with them making us open up our pocket books so we'll start investing more - so they can make more money.
As for my personal budgeting, I didn't see any more net income last year over and above what I expected. And if I even see any more net income this year, I'll do my best to forget that either I or my children will simply have to pay back any of that "windfall" at some point in the future, since that's just what we'll have to do. Sometimes it just gets depressing to think about stuff like this too much, doesn't it?
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