A good budget can do wonders

I have no formal education, so challenging the Cd’A Press or an NIC instructor, may not be the best idea, but I’m going to anyway. I will agree with Sunday’s article “ALICE in TRUMPLAND” that education is important to advance in our society, but it’s not always the case.

However, I disagree with Mr. Richard Tanksley, the NIC political science instructor’s statement; “We’ve seen with other attempts at trickle down economies that money and attractive jobs generally don’t reach the lower end of the scale.” Money and attractive jobs are at all levels of employment, just depends on individual views, and qualifications.

The trickle-down concept of economics has been proven to work and does work when government is out of the equation. When referring to the ALICE category workers, most, not all, are in low paying jobs for a reason — young and/or inexperienced, but not necessarily at the same time. Entry-level positions are designed to do just that, educate the young and inexperienced. Let’s address that entry level concept for a moment. Nurses coming out of college will start at $25 to $30 an hour, a mechanic just out of trade school will start at about $15 to $20, but both are considered entry level positions. They don’t start at the top of the scale; they have to earn it. Same goes for low income employees.

Everyone who starts working is contributing to the trickle down concept of economics, even a paperboy or girl. That continues throughout their lives — as they make more money, they spend more. That includes going places and spending money where low income jobs are prevalent; it’s called expendable income, the backbone of our economy. But let’s think big.

For example, what does it take to build a house, whether it’s the first, second, third, a $200,000 or a $2 million house?

Building a house includes, but is not limited to the following: The land, Realtor, architect, builder, concrete, lumber, electrical, plumbing, windows, carpet, flooring, drapes, furniture, landscaping, upkeep, security, swimming pools and of course, property taxes.

And each industry involved has several layers of companies below them. But the money doesn’t stop there, does it? Everyone who received compensation for building each house also used that income to enrich others. Some hired more workers, paid the landlord or mortgage company, grocer, clothing store, movies, car salesman, insurance, and, of course, more taxes. And the beat goes on, and the money keeps trickling down.

I know wealthy business owners who own four or five homes. They have provided an income to thousands of people over the years, just building their homes. If you gave that same amount of money to the government, do you think it would have provided as many jobs as this one home? And the money they spent, it’s in, and stays in, the local community.

My 50-year business career started in 1962. I started six businesses. Three are still alive and kicking today, and I was a consultant with many more. Made, and lost, a small fortune, but what a ride. What surprised me during my career was the thousands of men and women from all walks of life, all levels of education, background, races and religions, did exactly what I did and in most cases, better. They all had one thing in common, attitude; the “can do” attitude, true entrepreneurial spirit. To achieve something that only about 10 to 15 percent of our working mass gets to do; own a business and provide jobs for others. To them it’s a challenge, so they take all the risks, win or lose, and hopefully, but not always, enjoy the rewards. And the money keeps trickling down.

According to government records, 120 million Americans work for small businesses. (Note: A company with fewer than 500 employees is considered small.) By addressing the massive amount of government regulations now in place, the thousands of small businesses can start hiring again. Example: If a company hires one more person it pushes them up to a higher category with more regulations that increases their administrative cost.

That addresses the trickle down concept in the article. Now let’s address the poverty comment.

It’s not how much money you make that keeps you poor, it’s how you prioritize and spend that money. That includes those who make more than the national poverty rate of $24,000. I’m talking about folks well over the poverty level, by thousands of dollars, who still have financial problems. The concept of prioritizing spending is for most levels of income. For the low income workers, smoking and drinking are the two worst wastes of income categories, and most believe they are entitled to that enjoyment because they work hard. With that attitude, they will always be poor. Nothing will change.

From 1990 to 2000 I started and managed a nonprofit called North Idaho Community Services Corp., serving the five counties of North Idaho. We had two programs, one to assist those in default on their mortgage and the other to teach families how to budget. Most of those who were behind in house payments should not have been given a loan to begin with. Bankers tell borrowers how much home they could buy with 30 percent of their income, as long as they don’t have any other outstanding debt. However, because of the Community Reinvestment Act of 1978, down payments were reduced to 0, and then in 1995, 125 percent of appraised value was introduced. No down payment, no closing cost and a check. Sweet. Then we wondered why we had foreclosures. Although some that I met saw the advantage and made it work.

Here are a few examples in reducing monthly expenses that most were not interested in following.

Mortgage payments should never be over 20 percent of income. Buy only quality used cars, with 20,000 to 40,000 miles on them.

I’ve had clients with five to 20 credit cards and all used. I’ve had clients who were struggling to pay the rent or mortgage, yet they drove new cars with large payments, high interest and insurance costs. Just for the record, I’m referring to those in the ALICE category as well.

Yes, education is important, so let’s start with educating families on how to budget. Money management takes commitment, and I’ll admit, my wife is better at budgeting than I am.

BUDGETING TAKES DISCIPLINE, COMMITMENT, PATIENCE and the PROPER ATTITUDE.

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Phil Colozzi is a Spirit Lake resident.