by Jim Stovall
It is difficult to make good financial decisions even under the best of circumstances. There are a myriad of tools and an endless supply of information available to us, but it’s difficult to sift through the debris and get to the true treasures that lie underneath.
In listening to one of the recent political debates, one candidate who felt his opponent was bending the truth was heard to say, “My opponent is certainly entitled to his own opinion, but he is not entitled to his own facts.”
As we try to boil down financial news into information we can utilize, we must separate the fact from the fiction. Here are a few examples.
If you follow the news reports and talk shows, you might think that rich people don’t pay enough taxes or don’t pay their fair share. This fiction would paint a picture of idle rich people frivolously spending hoards of money without contributing to the tax burden. The facts are that the wealthiest few percent of people in America pay the majority of taxes while over half of working adults pay virtually no tax at all.
The fiction one might derive from the media would tell us that most U.S. consumers buy and consume goods that were made in China. While China has a robust, thriving economy and will certainly play a significant part in global financial matters for the foreseeable future, the financial facts are that only 2.7% of goods purchased by Americans were made in China. Over 88% of American money is spent on goods and services provided in America by American companies.
Another Chinese fiction would have us believe that China owns virtually all of our government debt which they might refuse to refinance at any point in time, putting the American economy into a tailspin. The financial facts are that China owns 7.6% of our U.S. Treasury debt. Our own government owns three or four times more than China, and state governments, municipal governments, and private investors like you and me own more than anyone else. Our growing national debt is a concern, and once again, China is a factor, but when we’re evaluating the situation we must deal with fact, not fiction.
An alarming fiction tells us that the majority of the energy that the United States uses to keep our economy and defense going is imported from unstable or unfriendly governments in the Middle East. While the amount of oil imports is certainly a concern and we can all agree that energy independence would put the United States in a more stable position, the fact is that currently the United States imports 9.8% of its oil from the Middle East. This is down nearly a third over the last decade. Almost half of our energy is produced right here in the United States with twice as much coming from Canada and Mexico as comes from the Middle East. This means that approximately three-quarters of the oil consumed each day by the United States comes from right here in North America.
There are plenty of facts to be worried about without creating anxiety over fiction.
As you go through your day today, make good financial decisions based on facts, and eliminate the fiction from your thinking.
Today’s the day!