Obama Talks About Balancing His Budget -- His Household Budget

Obama Talks About Balancing His Budget -- His Household BudgetPresident Barack Obama had already addressed energy policy, health care costs, and his philosophy on the federal budget deficit when he was asked a far more personal question at the White House on Wednesday afternoon: How does he approach his own finances? What advice might he have for a nation of people whose experiences with personal finance lately have not been so wonderful?

The president had just arrived for an impromptu appearance at a conference of personal finance writers, confronting a group of journalists more accustomed to covering the real-life concerns of ordinary people -- retirement savings, managing credit cards, household budgeting -- than the policy fare that usually occupies the Washington press corps. The question appeared to disarm him. It was one he had presumably not prepped for.

Obama paused for a moment, a wistful look crossing his face.

"Don't spend all your money," he said.

"My grandmother worked her way up from being a secretary to a vice president of a regional bank," the president continued. "She was from Kansas, and she had a very straightforward view, which was save a little bit of what you're earning and the magic of compound interest applies."

For Many, Saving Has Become a Losing Strategy


It was the sort of sober-minded advice that seems both timeless and irrefutable, yet it was striking to hear from a president now overseeing an economy that has become dependent upon infusions of cheap credit from the Federal Reserve. The U.S. central bank has kept interest rates at close to zero for more than two years in an effort to spur economic activity. This approach played a key role in preventing the economy from sliding into the abyss following the financial shock in the fall of 2008, according to many economists, yet the benefit has come at the direct expense of savers, whose deposits have been rewarded with returns so small they have generally failed to keep pace with inflation.

In short, setting aside a little something and waiting for it to grow into something big has generally failed abysmally in recent times. Wage growth has been poor for most working people. Interest rates on deposits have been measured with decimal points.

As it happens, the steady saving approach was more an aspiration than reality inside the Obama household -- at least in the early years.

"That is something Michelle and I have tried to apply, not always successfully, because we're part of the generation that ended up going to college and taking out a huge amount of debt," Obama said. "I'm very sympathetic to what young people are going through today, because Michelle and I graduated from law school with combined debt of $120,000, and it took us 10 years to pay off."

"It was still a good investment," the president added -- a fitting sentiment for a man who used to make his living as a law professor.

'Spend on Things That increase Wealth'

These days, many students are reevaluating the merits of taking on massive debt in exchange for a university degree. For-profit colleges, which are increasingly raking in federal student loan dollars, are churning out legions of students who prove unable to earn enough in their resulting careers to make their payments. (Then, they learn a post-graduate lesson -- that student loans cannot be discharged in bankruptcy proceedings.) Many law students are finding themselves earning a fraction of what is required to keep pace with their own debts.

So there was something almost quaint about the president's musings on his approach to personal finance: "Spending discipline is important," he said. Who would rise in favor of profligate spending? And yet how much easier is discipline when a household has enough to pay the bills to begin with? This hasn't been a problem in the Obama household of late, where a pair of best-selling books has provided the sort of income about which the vast majority of Americans can only fantasize. For most people, savings comes from more modest and ordinary source -- their paycheck.

These days, of course, paychecks are harder to come by. Generating more of them will entail something other saving on the part of the government, the president asserted, endorsing a strategy of measured borrowing and investing in areas that hold the promise of catalyzing economic growth, from clean energy to education.

This is as true for the nation as it is for households, he suggested, settling on a balance between opportunistic saving and investing in assets of value.

"Our first starter home was a $180,000 condo," Obama recalled, offering a smile-worthy reminiscence for a nation now well-familiar with the concept of being underwater on a mortgage. "That was still a good investment, and we were able to make the payments."

What matters as much as saving, the president concluded, is the quality of spending and investment.

"It remains smart to spend on things that increase wealth," he said. "That's an important distinction that we as a country have to make."

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COMMON SENSE

Obama handles his home budget live the people he represents. He charges everything to the tax payers . Don't believe me. How many vacations has he taken?

July 17 2011 at 10:58 PM Report abuse rate up rate down Reply
scottee

The 26th amendment (granting the right to vote for 18 year-olds) took only 3 months & 8 days to be ratified! Why? Simple! The people
demanded it. Of the 27 amendments to the Constitution, seven (7) took 1 year or less to become the law of the land...all because of public pressure.
This is one idea that really should be passed around and demanded of our reps in Washington.

Congressional Reform Act of 2011

1. Term Limits.

12 years only, one of the possible options below…

A. Two Six-year Senate terms

B. Six Two-year House terms

C. One Six-year Senate term and three Two-Year House terms

2. No Tenure / No Pension.

A Congressman collects a salary while in office and receives no pay when they are out of office.
3. Congress (past, present & future) participates in Social Security.

All funds in the Congressional retirement fund move to the Social Security system immediately. All future funds flow into the Social
Security system, and Congress participates with the American people.

4. Congress can purchase their own retirement plan, just as all Americans do.
5. Congress will no longer vote themselves a pay raise. Congressional pay will rise by the lower of CPI or 3%.

6. Congress loses their current health care system and participates in the same health care system as the American people.

7. Congress must equally abide by all laws they impose on the American people.

8. All contracts with past and present Congressmen are void effective 1/1/11.

The American people did not make this contract with Congressmen. Congressmen made all these contracts for themselves. Serving in Congress is an honor, not a career. The Founding Fathers envisioned citizen legislators, so ours should serve their term(s), then go home and back to work. If each person contacts a minimum of twenty people then it will only take three days for most people (in the U.S. ) to receive the message.
It is time.

THIS IS HOW YOU FIX CONGRESS!!!!!

June 14 2011 at 9:10 AM Report abuse rate up rate down Reply
THER1929

Solar Power. GE windpower. ge batteries, ge bulves. ge hEATHLCARE, nATIONWIDE Trains, roads, trucks only only the right side, MPH35HRS for autos, Doctors need special help for Soldiers in Walter Reed Hospital. Make sure we
make our products here & sent to other countries,

June 13 2011 at 12:16 AM Report abuse rate up rate down Reply
democracks0

OBAMASAFAILURE

June 12 2011 at 10:50 PM Report abuse rate up rate down Reply
wlouche

It will interesting to see how much travel the flying Obama's do after the White House when they have to pay for it.
Will michelle invite 40 friends on their trips?

June 12 2011 at 5:44 PM Report abuse +2 rate up rate down Reply
NAlexanna2

America is an experiment which is not working. Now we're ranting on a machine, instead of protesting
in front of the white house and pushing our politicians back. They will never pass reforms that
make them "work and participate with the American citizenry"or leave before they've taken root in the floor
under their seats. These are slimy criminals who are supported by the lowest common denominator
of business and corrupt world leaders, Obama is even worse than Bush. He's screwed all of us in some
way. Brings to mind the "tin man" who has no heart. His so-called policies are a very painful joke. He
is far more stupid than Bush when it comes to international as well as domestic policy( I am not a Bush
fan). His cronies are just as evil as Bush's. If Obama the pedagogue and hollow man had a brain in his
head he would just shut up regarding saving. There are people ind desperation who were not
irresponsible and lived within their means who have been decimated by those who spent like drunken sailors.
The 0 interest rate is killing the middle class who no longer can AFFORD to save. Then they are telling
citizens that we need to SPEND to get the economy going again. SPEND WHAT???????????????. They've sucked up
everything-out sourced our jobs, throw us out of our occupations by defunding the most relevant sectors
necessary to civilized society, don't put caps on the healthcare ****** to prevent their bilking us into
bankruptcy. Obama and Congress don't care about our pain The Hula girl should just shut up about
"budgeting". His grand parents came from better times for American citizens. There was some
respect and fear of the masses at that time. Now there is only authoritarian and repressive contempt.
Do you feel free? Another question-what nuts would name their daughter Stanley!!!???

June 12 2011 at 12:31 PM Report abuse +1 rate up rate down Reply
wlouche

Traveling to England for 3 days with 500 staff, 200 secret service, 35 cars, 6 doctors, personel chief with his staff and food, helicopter and fleet off shore shows real concern for budget and economy. Biggest spender of all times and worst president ever.

June 11 2011 at 1:44 PM Report abuse +1 rate up rate down Reply
milcon

Obama. The great economist and financial expert. If he runs his personal finances like the country he and his family is doomed.

June 11 2011 at 9:49 AM Report abuse +1 rate up rate down Reply
scottee

this is how WE fix congress. we don't have to continue to be their victims! demand they pass the 28th amendment.

Congressio­nal Reform Act of 2011

1. Term Limits.

12 years only, one of the possible options below…

A. Two Six-year Senate terms

B. Six Two-year House terms

C. One Six-year Senate term and three Two-Year House terms

2. No Tenure / No Pension.

A Congressma­n collects a salary while in office and receives no pay when they are out of office.
3. Congress (past, present & future) participat­es in Social Security.

All funds in the Congressio­nal retirement fund move to the Social Security system immediatel­y. All future funds flow into the Social
Security system, and Congress participat­es with the American people.

4. Congress can purchase their own retirement plan, just as all Americans do.
5. Congress will no longer vote themselves a pay raise. Congressio­nal pay will rise by the lower of CPI or 3%.

6. Congress loses their current health care system and participat­es in the same health care system as the American people.

7. Congress must equally abide by all laws they impose on the American people.

8. All contracts with past and present Congressme­n are void effective 1/1/11.

June 11 2011 at 9:31 AM Report abuse +2 rate up rate down Reply
1 reply to scottee's comment
NAlexanna2

If only this could be accomplished C-your plan is perfect but try and pass it through.Those
moldy morons and crooks in congress would skewer you. I wonder if they are wise
enough to check out public opinion. Oh, I forgot, we're just "the great unwashed."

June 12 2011 at 1:37 PM Report abuse +1 rate up rate down Reply
COMMON SENSE

Yep!! Tax and Spend Democrats. How is that Hope and Change working for you?? Tell me one thing Obama has done that has helped the economy? The President should run on his accomplishments. With Obama he has accompolished Bankrupting America and keeping gasoline prices high by not letting the Oil Companies drill. We are the fools for electing these idiots.

June 11 2011 at 12:04 AM Report abuse +1 rate up rate down Reply