The following is an interview with Sandra Simmons, Founder and President of Money Management Solutions Inc. on the state of  business money management in the United States.

The current economic crisis should serve as a harsh money management lesson to all of us. Every economy, whether large or small, be it a large corporation or the household income, will always be at risk to the degree that it relies upon credit for its survival. It is not that credit is inherently evil or bad; rather, credit and living beyond one’s means is a tempting financial seductress which will always threaten to wreck our financial ships upon hidden fiscal shoals.

The problem with credit is risk. Whenever you take out a loan, use a line of credit, or even use a credit card, you are taking a financial risk to some degree. That risk is that you will have enough money at a future date and time to pay back that financial obligation in full and in a timely manner. There is nothing particularly wrong with using credit as long as there is virtually no risk involved in paying the money back.

There is a lot wrong with living way beyond one’s means and spending virtually every dime one makes to pay off creditors. This can be risky in the extreme, because with just one slip, the whole house of cards can tumble down very quickly.

“I am not against the use of credit,” says money management expert Sandra Simmons. “What I am against, however, is the overuse of credit to create a lifestyle or a business situation which is basically false. Living in a condition based on credit and debt is very, very risky. Done on a national scale, you can see what has now happened.”

Simmons, who is President of Money Management Solutions, Inc. (www.MoneyMgmtSolutions.com), a business-to-business consulting and money management products and services company, located in the Tampa, Florida area, has been warning for years now that the economy was dangerously overextended. Even at the virtual height of Wall Street, Simmons could see the writing on the wall and the danger that was lurking just beneath the surface of the credit markets.

“An economy on a national scale is really just the sum of its parts,” says Simmons. “I could see that individuals and businesses were over extended and relying too much on credit. Because credit was easy to get, people took advantage of it and were living beyond their ability to pay. When an entire national (or world) economy is built upon such a shaky and risky foundation, it makes it vulnerable.”

Simmons’ approach to wealth and financial success is rather old fashioned: You work for it. She says that the best and safest way to be financially successful is to practice good money management: pay your bills, set aside savings and reserves, and avoid using credit.

“Now I know none of you reading this article fall into this category, BUT I call people who are overly tempted to live beyond their means and use credit “Gratification Groupies”. I say this because they fall victim to the credit trap of having to have it now, and worrying about how to pay for it later,” Simmons says in reference to our instant gratification oriented society. “Instant gratification, however, is not the road to wealth and financial freedom. Oftentimes, it is a path that leads to heartbreak and financial failure.”
What is interesting is that it is not so much how much money is made; it is what you do with it that determines wealth and economic condition.

“I have clients who have made millions who were in dire financial straits, and who, despite all of the money they were making were always behind and never had enough to meet their financial obligations,” says Simmons. “And I’ve also had to fix businesses that had millions in sales, but weren’t profitable. In either case, the real problems had to do with the handling of their cash flow and money management. Solving those problems put them on a firm financial footing.”

Simmons’ money management strategies are fairly straightforward. The difficulty is not in understanding them so much as having the fiscal discipline to implement them.

Some of her principles are as follows:

Money Management Principle 1 – Use CASH Not Credit

“Each time you buy something using lines of credit or credit cards because you don’t have the money to pay for it, you are promising your future income to the credit card company,” says Simmons with emphasis. “Those future earnings will undoubtedly be needed to pay your regular household or business operating expenses. That’s when you end up in the pay-for-life program known as the credit trap.”

The only exception is buying property that increases in value, such as usable business assets, or investing in commercial buildings that put more income in your pocket and more profit on your bottom line. Using your money to make more money is smart money management.

Money Management Principle 2 - Don’t Spend More Than You Earn

The most direct route to financial disaster is spending more than you make. You can keep a good quality of life for your business while reducing optional spending. This can be accomplished by acts such as buying used equipment rather than new, or negotiating better buying margins for your raw resources and supplies. Don’t buy something because you only want it, but don’t really need it. It’s just a plain good money management practice.

Money Management Principle 3 - Money Must Be MADE Before It Gets Spent

“If there is some future large purchase you need to make, begin by setting aside small amounts of cash into cash reserves for that purchase and keep that up until you can pay for it with cash,” Simmons says in reference to the safest way to make larger purchases without using credit or going into debt.

On a company level, if you will need to purchase or upgrade equipment for your office, then figure out what the costs will be and work out how much money you have to set aside every week to have the full amount in the month you will need to make that purchase. Plus look for and negotiate to get the best deal possible.

“I know this takes a lot of discipline,” says Simmons, “but it keeps you out of the credit trap. And I would argue that in the end it is more satisfying because once owned, you don’t have to worry about how you are going to pay for it because it is already paid for. It may not be instant gratification, but it is definitely a sense of accomplishment.”

Money Management Principle 4 - Put Away Some Cash for Emergencies and Future Operating Expenses

“You will sleep much better at night with the financial security of knowing you have money stashed away in reserves for emergencies like unexpected repairs to a vehicle or an office machine, increases in employee benefits expenses, or experiencing a big drop in income,” Simmons says. “When you have a cash cushion you can get your hands on immediately, then magically, you don’t even worry about money, and your focus returns to living life and enjoying it, and earning money suddenly gets easier.”

In reality, the primary thing you have to be afraid of should there be another Great Depression or an economic downturn is not having enough (or any) cash reserves tucked away that you could immediately get your hands on.

Out of every bit of income that comes in the door, immediately set aside 10% and stash it in an interest bearing savings account that you have designated for your cash cushion.

The above steps, done on a national scale, would create an enormously stable foundation on which to build a true economy that is rock solid.

“I want business owners to know that there is something that they can do about their economic circumstances and that they do not have to wait and see what further actions the government is going to take in order to try and fix the economy,” says Simmons in conclusion.

“Whether you’re a large company, small business, or an individual, stop relying on credit, pay off your debts, and start setting aside money and get on the road to economic prosperity. I guarantee that it can be done, and my own clients are not worried about the economy because they have applied sound money management principles in preparation for the kind of economic circumstances we now find ourselves in.”
“Their weekly use of our Money Management Solutions software program to plan how to allocate their cash flow in their own best interests, and their implementation of the points in our Business Profits Checklist, among other strategies has put them on a firm economic footing.”

Less than a week has passed since the $700+ Billion bailout plan was passed to handle the financial crisis. The money is gone. It’s all been dished out. Yet the Wall Street stock market crash continues, the economic crisis continues full steam ahead, and the greedy want even more.

Just today, Nancy Pelosi asked for another $150 Billion for the bailout to handle the credit crisis. No doubt her new plan is filled with pork belly earmarks. The government and all the greedy and corrupt officals on Capital Hill are admitting that the $700 Billion is just a start. They say it’s going to take at least 3 times that. I, for one, am not willing for my pocket to be picked any longer by people who have been elected to serve me, who are treating me like their economic slave. All those who voted for the bailout plan need to resign from office today. More appropriately they should be convicted of TREASON – betrayal after trust-Democrats and Republicans alike.

Indictments for treason should also extend to the recipients of the money for their criminal activities. Just weeks after receiving their $85 Billion dollar rescue package, AIG senior management reportedly spent over $400,000 on a week-long vacation retreat for themselves at a ritzy resort in California at our, the taxpayers’, expense. Their spa bill alone for manicures, pedicures, facials and massages ran up a tab of over $23,000. That is CRIMINAL! And that is just the first of the stories like these. A lot of heads need to be put on pikes. They have stolen America’s financial freedom.

I still want Ron Paul for President. He has the sanest money management plan of all. I still want the FairTax Bill voted in and the IRS voted out. It’s going to take an all-out grass roots effort by the American citizens to get the FairTax Bill passed. I believe, as does Ron Paul and the 70 or more other members of the current Congress who support the FairTax Bill, that it can be done.

I just visited the FairTax website at http://www.fairtax.org and read this message on the current economic crisis and the out-ethics activities of our government officials from their Communications Director Ken Hoagland. I couldn’t have said it better myself.

Hometown America Must Save The Nation

At the heart of the financial meltdown now bedeviling Americans is a simple and profoundly ignored fact that does not require an advanced degree in economics to understand: Our government spends more than it takes in—a lot more.

Sure, regulators could have done a better job but, in truth, politicians at every level have frustrated attempts to blow the whistle on bad loans, bad reporting and bad ethics. Why? Because politicians have been buying our votes with our money—and our future earnings—for a long time. And they don’t want any interference from those they are “helping.”

It’s not just the naked bribes represented by “earmarks” for hometown voters; it is new entitlement programs like the prescription drug benefit, new rules governing the behavior of favored banks and investment houses and a headlong rush to buy the votes of the poor by guaranteeing home ownership, irrespective of one’s financial ability to repay a loan. Lest we forget, let’s also add up all the special tax breaks for favored contributors that have bloated income tax code rules to 67,500 pages. It’s a bi-partisan betrayal of our future cloaked as concern for the common good.

Although our nation was founded on the principle that the citizen was sovereign, government spending increases and more and more taxes taken from our earnings, savings and investments have effectively transformed the American citizen into a serf working another’s land for the privilege of taking a fraction of the fruits of his or her own labor.

Just Trust Us

“Trust us,” we are told. “We have the best interests of the nation at heart.” Citizens are now left with no rational choice to protect savings, college plans, and investments but to accept the new aristocracies’ trillion dollar picking of our pockets to prop up institutions that must function. It is not the first time in recent years that we have accepted the grasping hand of the federal government in our wallets to avert a disaster not of our making.

In 1983 a “Blue Ribbon” panel of similar leaders including Alan Greenspan, Daniel Patrick Moynihan and others “saved” Social Security from another big collapse by dramatically raising taxes on earnings of up to $97,500 annually. The promise, then, was that Baby Boomers would actually “pre-fund” their own retirement with astoundingly increased taxes, decades ahead of time. It was also promised as relief to the coming generations so they would be free of crippling taxes. Sounded good.

Lo and behold, the trillions of dollars taken in since then—far exceeding promised payments to senior citizens—have since been spent on everything else. Turns out, that it was nothing more than a new tax levied on those with earnings below $97,500 a year so executive and legislative branch office holders could have more of our money to spend extravagantly on “us” so they could win new terms in office. The FICA payroll tax has become a major factor in keeping the poor that way, retarding new business growth and keeping middle-class earners from moving up. Worst, it also turns out that our children and grandchildren will, in fact, still be burdened by an ever-growing and mind-numbing national debt AND unbelievably high FICA taxes to support their parents.

In yet another example of playing fast and loose with politics and our money, 1986 saw Congress reject the tax policies of the Reagan administration and as consequence, the Savings and Loan industry collapsed. Turns out the definition of the tax value of real estate holdings had been changed overnight by the House Ways and Means Committee and banks no longer met liquidity rules. That politically inspired cat fight cost American taxpayers hundreds of billions of dollars. And worse, we didn’t learn.

It is past time–way past time–for hometown America to save America from our well-intentioned but criminally incompetent, at best, and cynically corrupted, at worst, national leadership. Do we have a moment to lose? Do we really need any more examples of how the new aristocracy can—and will—destroy the pursuit of happiness?

The reform that can save the nation and restore our identity as citizens who have empowered and limited government (instead of the other way around) is called the FairTax.

Because the FairTax allows every American to take home everything that is earned without any federal withholding, millions of distressed homeowners could actually afford home mortgage payments. The elimination of FICA taxes eliminates the highly regressive Social Security and Medicate tax but the FairTax provides a far broader stream of revenue into these faltering programs. Because the FairTax eliminates all exemptions, gimmicks and loopholes, Congress would be removed from the ability to buy votes with tax giveaways and billionaires pay taxes when they spend money. Because the FairTax makes nearly all federal government taxes entirely transparent, the sovereign citizen can know the score and put the brakes on extravagant new spending.

Because the FairTax eliminates the price advantage now enjoyed by overseas producers, American jobs won’t be leaving our shores. In fact, because the FairTax makes the USA the most favorable tax environment in the world, we can expect trillions of dollars of investment rushing into the US economy. With the FairTax, our money is ours first and only secondly devoted to government. Savings growth, investments and business decisions are guided by opportunity and real progress instead of tax avoidance tactics.

We’ve lost more than $2 trillion of our retirement savings in a week’s time and our kid’s future at college is in serious jeopardy. This didn’t happen by accident but at the hands of the very same people who have given the FairTax a cold shoulder. Those candidates and incumbents of either party who would spend our future earnings to stay in office and who reject the FairTax for similarly self-interested reasons now need a strong reminder from voters about whose offices they occupy. Please pay attention to our voting guide and send that message. [See the voting guide at www.fairtax.org]

Finally, our campaign needs your help—as always. We never have enough to do the job right. Send us a contribution if you can, even in these hard times. It may turn out to be the best investment you ever made. If you can’t afford a donation, then help us by recruiting two new supporters. And keep your cards, letters, phone calls, faxes and e-mails going to incumbents and candidates.

The plain fact is, we either now save ourselves from our new aristocracy or suffer the consequences as modern day serfs in a nation never contemplated by our Founding Fathers.

These are the 32 Words in the Bailout Bill intended To End Our Economic Freedom and Destroy the US Constitution as noted by a friend on my email network.

“Decisions by the (Treasury) Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.” – Section 8 of the Paulson Proposal

Bluntly, this clause was put in the Bailout Bill to personally protect the authors of that bill. Why? Because they know it is a bad bill designed to harm the public while protecting the out-ethics companies and company executives whose money management mistakes got them into trouble.

Did you listen to President Bush’s 12 minute address to the nation on the evening of September 24th? In one breath he stated the economic crisis was caused by too much lending of credit. Then 3 times he stated that the solution to the problem is the Bailout Bill which would make it possible for more credit to be given to businesses and families.

So how can what created the problem also be the solution? It CANNOT.

Did you listen to Bush and watch the politicians and so called “experts” being interviewed about the Bailout Bill? Did you notice that rach one of them used the word “hopefully” more than once? – Hopefully this will help, hopefully the housing market will start to recover, hopefully the government can sell the distessed properties that they are buying that ‘We The People’ have to pay for now. The authors of this bill and our political representatives on Capitol Hill doubt this bill will be the real solution. That’s why the authors of the bill added the clause that protects them personally if it doesn’t work – they are merely “hopeful” and are nowhere near certain.

The Great Depression finally materialized when the amount of credit loaned reached a critical mass and far outweighed the public’s ability to pay. That exact same situation has happened and the public cannot pay the credit debt they have incurred. To extend more credit is to send us faster down the slippery slope toward a long and deep recession.

I am against the Bailout Bill. I am for letting the executives who make millions in salaries every year take the hit for their out-ethics money management that created their companys’ and Wall Street’s problems of greed and financial mismanagement. I refuse to bail them out when I have worked so hard to keep my business and household financially sound and out of debt. I don’t want to be punished as the producer while their non-production is rewarded.

President Bush, Mr. McCain, Mr. Obama and all members of Congress, GET OUT OF OUR WALLETS and pay for this out of YOUR multi-million dollar annual salaries instead, since you are so HOPEFUL that this Bailout Bill is the correct solution. Take the billions in salaries made by the executives of Fannie Mae, Freddie Mac, AIG,  and Wall Street brokerages. You were elected to serve ‘We The People’. We don’t work for you!