Nov 2, 2023 By Gary Boatman for The Observer-Reporter newsroom@observer-Reporter.Com 4 min read

At a recent estate planning work shop, I ask that anyone who does not love their grandchildren to raise their hand.

Not surprising, no one did.

I then asked if that is true, how can the United States keep running up so much debt that they will have to pay. No one can operate their household under these conditions for long. They would end up either bankrupt or trying to survive without a residence or any other life necessities. Creditors would just cut them off – yet this is what the government has been doing for decades.

Just this week, the Treasury Department announced they will be borrowing $776 billion over the final three months of this year. They just announced that the 2023 budget deficit will be $1.7 trillion. This brings the total nation debt to around $31.4 trillion. Remember, this is only debt that we have borrowed and not all of the unfunded liabilities for Social Security, Medicare and pensions. (To get a clearer picture, visit www.usdebtclock.org.)

In November, we will be facing another government shutdown. We can not solve the problem then, but we need to make some type of a sensible start. Going overboard could really derail the economy, which would cause a lot of harm. Somehow, Washington must realize this can not go on forever, and that is going to take compromise by both sides.

Yet, we continue to spend money and want to forgive huge amounts of debt to college borrowers. We faced big challenges during the pandemic, but we gave multiple stimulus payments to people who did not suffer any losses. All of this spending has a big impact on inflation that is making it hard for families all over the country. The only way to start taking control is to tell politicians enough is enough. Don’t count on that happening any time soon.

There are several things you can do to help your family. One is live within your means. Credit card debt and delinquencies are rising rapidly. All interest rates have increased since the Federal Reserve started increasing rates, but this is especially true of credit card interest. This can easily be 20% or more for unpaid balances. If you pay your balance in full each month, you pay no interest. The easiest way to do this is by not spending more than you can afford. This is especially important with the holiday season coming up. Make a list and stick to it. Remember, it is the thought that counts.

When preparing for retirement start reducing debts early. It is much easier if your mortgage is paid off and you don’t have auto loans. Debt makes everything more expensive than paying cash. The Fed allowed us to live in a near-zero interest rate environment for too long. This creates bubbles through out the economy and can reward bad behavior by punishing savers. I think they have learned this lesson, and when they do start to cut rates the bottom will be a more normal 2% to 3%. Make sure your financial plan is adjusted for any future changes.

It only makes sense that taxes will have to go up in the future. People with big balances in qualified accounts such as 401(k), IRAs and other will be the most likely target. To save, you must do tax planning, not just tax preparation. Taxes are currently on sale. There are only three more days to take advantage: Dec. 31, 2023, Dec. 31, 2024 and Dec. 31, 2025.

You must act soon before you lose the first date.

Gary Boatman is a Monessen-based certified financial planner and the author of “Your Financial Compass: Safe passage through the turbulent waters of taxes, income planning and market volatility.”