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The Nation’s Debt, Default & You

As I walked my students through the political wrangling of the debt ceiling, I explained the implications of our government not being able to fund national borrowing needs.

Our country is funded by being able to borrow. As long as economic growth exceeds our borrowing needs, this can continue to work.

Unfortunately, the Democrats forced the Affordable Care Act through partisan lines. In turn, the Republicans want to hold the nation hostage in exchange for reconfiguring "Obamacare." It makes me think of kindergarteners fighting in a sandbox.

It is a dangerous game our elected leaders play with our livelihood and prosperity. Management by crisis offers zero leadership. I suppose this continues to reinforce the ideology that it is easy to play with other people's money and tell others how to live their lives.

As I discussed this game of "financial chicken" with my Texas Lutheran University students, April raised her hand.

As I called on the senior finance and economics major, she asked, "What can we do about this?"

April then reminded me that "You have repeatedly counseled us not to worry about things beyond our control."

This is true. I could sense April's frustration with the bad behavior from the people hired to lead our nation and manage our future. And yet, it often appears we could not have hired worse people to carry out the task.

I shared my student's immense irritation. I thought to myself that if Congress or the President worked in our firm, their employment would have been terminated quite some time ago.

Evidently, I am not the only one with such frustrations. According to a Public Policy Polling Institute survey some 85 percent of Americans view Congress less favorably than cockroaches and hemorrhoids. As I thought about the hemorrhoid versus Congress debate, my blood pressure surged, and my temples throbbed.

However, April's question was fair.

So what is the average person to do when things of this nature are well beyond their control?

Even if it leaves us feeling hollow and powerless, we can still vote.

Furthermore, we can live below our means. Just because you can live your life on the edge does not mean you will always have this luxury. Saving for a rainy day is never exciting. However, much like oxygen, financial flexibility is never so appreciated until you are forced to go without it.

Borrow money with great restraint. When you borrow unnecessarily, you back yourself into a corner. At this point, you no longer control your destiny - your lender does. This is true whether borrowing for a big house, an expensive car or just junk on the credit card.

Recognize that money does not give us happiness, but it offers us flexibility.

A job is a privilege - not a right. If you want to excel at your job, get to work early, stay late and figure out how to make yourself in-dispensable. Additionally, if health permits, achieving your 65th birthday is no reason to "retire." The longer we live, the greater the need for income. Plus, it gives us a reason to get out of bed each day.

Continue to enhance your skills. I vividly remember during my last semester of graduate school foolishly telling a classmate, "I will never go to school again." And yet, I have never stopped going to school, obtaining licenses, getting training or finding other ways to stretch my employability. It is the only way to remain relevant. Once we stop learning, it is "game over."

Despite the significant and numerous problems with our society and elected leaders, a recent report from Credit Suisse revealed that worldwide, more than 90 percent of those achieving millionaire status last year were Americans.

Furthermore, as researched in the book "The Millionaire Next Door," only about 20 percent of millionaires in our country inherited their wealth. Most are first generation wealthy, created through entrepreneurship.

This reminded me of a statement from my friend Arnold Van Den Berg: "Capitalism corrects the persistency of error."

In this case, I assume he is referencing the error of our elected leaders.

Certainly, there are significant and unnecessary hurdles weighing upon Americans. However, with a bit of effort, more controllable opportunities for success are still present - despite what the children are doing in Washington, D.C.

Dave Sather is a Victoria certified financial planner and owner of Sather Financial Group. His column, Money Matters, publishes every other week.

Originally published October 15, 2013 at 5:42 p.m. Victoria Advocate