There has been a lot said about the “fiscal cliff” the past few weeks. According to news reports, Congress has avoided the fiscal cliff by approving a plan yesterday that will avoid the dreaded automatic tax increases and budget cuts that took effect January 1, 2013.
Prior to the Congressional action, President Obama commented that Congress should stop playing games, scaring the American people, and just simply do their job of passing laws to make a budget.
Neither side of the political aisle wanted to appear weak in their negotiations, so they procrastinated on a vote. The Democrats wanted to raise taxes on the most wealthy citizens to compensate for deficit losses, and the Republicans did not want the fact they voted for a tax increase to be a part of their resume.
So, Congress waited until the time line had lapsed before they acted. This way, the Republicans could say they were voting for a tax decrease because the laws that lapsed into effect on the January 1st increased everyone’s taxes. Likewise, the Democrats can now boast they increased taxes on the wealthy because the new compromise includes an increase on the most rich.
So, who ultimately won in all of the political posturing? Certainly not the average American citizen who had to endure the stress associated with the unknown. On a popular late show, the host interviewed people on the streets to see if they really understood the fiscal cliff and what it represented. To a person, no one really understood the concept; they were just simply scared. Mission accomplished!
The fiscal cliff that Congress portrayed as a lingering economic disaster was really an imaginary possibility of where the economy might go if Congress failed to act. Just like the Mayan imaginary apocalypse, nothing happened, and we are still here. Surprise, surprise!
But what happens in real life when an individual does face a financial fiscal cliff?
Certainly you might feel you are falling off a financial cliff when you ultimately realize you are headed directly for bankruptcy. Can you avoid the fiscal cliff of bankruptcy?
If you are facing a real financial crisis in your life, unlike the fiscal cliff the government’s economist dreamed up, you will know when you have fallen off a financial cliff the moment you realize there is not enough income for you to stop your own deficits. You won’t be experiencing a recession in your financial matters, you will be facing a full blown depression where you simply won’t have enough money to make your expenses.
The real question then becomes “is this the end of your financial world?”
The answer to that question is “NO, it is not.” Just like life continued on the day after America fell off the fiscal cliff, life will go on when you fall off the fiscal cliff of bankruptcy.
You will simply have to address your financial short fall in a similar manner President Obama suggested to Congress. You will need to stop playing games with yourself, address the reality of bankruptcy, and do your part to overcome a bad financial situation. In your case, that may mean you will have to file for bankruptcy protection in order to begin over financially.
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