If you live in America, chances are you’ve heard about the “fiscal cliff” — that hit to the economy that is supposed to come when the country returns to common sense and spends less than it takes in.

Our Personal Fiscal Cliff

The fiscal cliff might be a new phenomenon for a government, but to most of us it’s old hat. We have a fiscal cliff every year… right after New Year’s Day.

The holiday season in America has traditionally been the time when we spend the most. Some retailers rake in 75% of their entire year’s revenue between Black Friday and New Years Day. That’s three times the entire rest of the year put together!

This is the season when we trample others at the door to get our bargain first, the time when we’d rather be dead than without a present. It is also the season when we spend more than we make. And, when we don’t have the money to afford the gifts we buy, we traditionally put it on our credit card.

Those balances, of course, need to be paid off in the New Year, and so that’s what we do. Or at least we make a dent in those balances. Or we try. Or we, well, plan to try… and add it to our New Year’s Resolutions.

During the months that we pay off our credit cards, we spend less than normal. We have to. If we don’t we don’t have enough extra to pay down the cards. Those months when we tighten our belt and spend less, that’s our fiscal cliff. And we do it every year, right along with losing weight and getting fit.

It seems we have become so used to our annual fiscal cliff program we don’t notice it any more. But when the government has to do it, it becomes news. What’s interesting about the fiscal cliff debate at the national level is everybody seems to agree that it’s necessary, but everyone is afraid they will have to bear more of the pain than their neighbor. I’m all for the closing of unnecessary military bases to save money, but the people working on those bases and the businesses serving those people think cutting farm subsidies is a better solution. If reduced farm subsidies drive up food prices I’m unhappy about that. And so it goes. Everyone agrees the country needs to take in more money and spend less, just not at my personal expense.

This conundrum is as old as democracy. Actually, it’s older than that. When bad crops led to hunger in 18th century France the government increased taxes on the poor and took their food for their palaces. As we know, modern democracy came out the French Revolution, which was caused in no small part by Louis XVI’s mishandling of their fiscal cliff.

What Do We Do?

Well, all of that might be very interesting, but what about us? What are we going to do about our fiscal cliff?

The first thing to do is to minimize its scale. Spend less this Christmas on everything: the parties, the gifts, the wrapping and other celebrations like Christmas trees and so forth. Eat at home rather than out. Set a budget for the season, one that eliminates any credit card charges, and stick to it.

On one hand it might seem to dampen the holiday spirit, but there are other ways to rekindle that spirit. For example, instead of a family of four buying 8 gifts back and forth, why not make a joint gift to the Salvation Army or the local Rescue Mission? If you’ve ever done that, you know the joy something like that brings. If you haven’t, it’s something to try at least once.

You can also give valuable gifts which are free. What might those be? One possibility is your knowledge: if you can pass something on to a coworker, friend or relative that puts money in their pocket, you are giving a valuable gift. And it doesn’t cost you a penny.

This may sound as corny as all get out, but consider this: if anyone you know is not having Stailey Insurance do their insurance and you make the recommendation, they could be saving $100 each and every month. How’s that for a gift that beats the fiscal cliff? Like I said, that may sound self serving and corny, but what do you think that person would rather have? A Starbucks gift card for $10, or a $100 per month? If you were in their shoes, how would you feel? If they’re halfway normal, they’d go for the referral… and buy YOU a Starbucks gift card… and they’d still come out ahead. Think about it — what have you got to lose?

Merry Christmas!

From everyone at Stailey Insurance, Merry Christmas to you… and may your New Year be so prosperous you don’t even notice the fiscal cliff!


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