Measuring national debt by the president may not be perfectly fair, but it helps add some context to the chart. Why isn’t it fair? The first year or so in office is somewhat out of the president’s control. For instance, Obama took office at the depths of the financial crisis, so there were large deficits afterwards as we tried to get our economy started again. Similarly, Trump was in office during the onset of Covid when a ton of government spending was needed.
It’s easy to point the finger at the opposite political party and blame them for our never ending pile of debt. BUT it doesn’t seem to matter who’s in office. We have ran a budget deficit each of the last 21 years. Both parties are guilty of excessive spending. No matter who they are, we have consistently spent more than we bring in and have racked up an embarrassing amount of debt.
We are now staring at yet another debt ceiling problem. The government has said it will be out of money by early June. If the debt ceiling isn’t raised, they can’t borrow more money, the government doesn’t have enough to pay all of its expenses, and it runs the risk of defaulting on its debt. To prevent this from happening, congress has to raise the debt ceiling.
Whatever happens, the main takeaway is never spend like the US government. Focus on spending less than you make and invest the difference. Consistently do this and you will be shocked what the magic of compound returns will do.
As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.
-Vivi & Shane
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