The greatest economic threat since the Great Depression has exposed a serious weakness in our collective fiscal management policies. Money management expert Sandra Simmons explains how to avoid the next big economic crisis.

Wow, what a roller coaster ride. Not since the Great Depression has the U.S., nor the world wide economy, come so close to falling off of the financial precipice. And while we are not out of the woods yet financially (not by a long shot), the current economic crisis does serve to illustrate a very harsh fact of life: The lack of an ethical, disciplined money management philosophy will eventually come back to haunt you.

 While our economic leaders are scrambling to put out the fires and rescue our economy, the big question on the minds of many is how did this happen and who is responsible?

 “The answer to the question of who is responsible for this economic crisis is both “everyone” and “no-one” from a philosophical perspective,” says well known money management expert Sandra Simmons. “What I mean by that is all of us are responsible for the global economy to a greater or lesser degree, but it is hard to really “blame” anyone because there is no consistent financial money management philosophy that everyone knows and can agree upon.”

 What Simmons is referring to is not necessarily capitalism versus communism, liberal versus conservative, or Republican versus Democrat, for there is a common element that virtually every econo-political philosophy has in common: money.

 “We can-and probably will-debate and argue the pros and cons of the various political philosophies forever,” says Simmons, “but at the end of the day, there is one thing that all governments, corporations, businesses and individuals must manage correctly and that is their money and cash flow. The correct money management philosophy, in fact, undercuts all of the various political points of view and deals in the most basic of financial principles.”

 In other words, the fundamentals of money management are actually the same regardless of your political views, and when those fundamentals are violated, there can be a heavy price to pay.

 “The essential centerpiece of any successful money management system is ethics and discipline,” states Simmons. “If you are not disciplined when it comes to the handling of money and cash flow, it doesn’t matter if you are an individual, small business, Wall Street, or the government. A lack of financial discipline is eventually going to come back to bite you and lead to financial crisis regardless of the scale.”

 Discipline enters into the money management equation because money management, correctly done, is going to lead to a very high level of financial stability. When an entity is financially stable, it can withstand the economic threats that will inevitably arise, and create a rock-solid economic foundation from which to operate.

“When we talk about money management discipline, we are talking about paying your bills and getting out of debt properly, eliminating the over-reliance on credit, building reserves, and always planning and predicting where money and income are going to come from, among other factors,” explains Simmons. “The easiest thing in the world is to fall into the credit trap. It is very seductive. But you can see what happens, and I think our current economic crisis is an excellent lesson of what can happen when governments and the biggest financial institutions in the world fall victim to the allure of living beyond their means.”

 “When we talk about economic or financial “ethics”, we are not necessarily talking about violations of the law,” continues Simmons, referring to the fact that the collapse of Wall Street will not necessarily involve the indictment and prosecution of any corporate executives. “Ethics has a lot more to do with judgment and decision making. A successful money management system is going to automatically encourage this because the objective is security and stability. Obviously ethics was sorely lacking considering our current economic crisis.”

Although we are currently in the middle of crafting an economic bailout that is going to involve astronomical financial numbers, according to Simmons, there is a basic money management principle that is always at play: It’s not how much you make; it’s what you do with it that determines your financial condition.

 Whether you’re a government, corporation, small business, an individual, or Wall Street, the following are the money management principles that Simmons recommends:

 Money Management Principle #1: SPEND LESS THAN YOU MAKE

Cut your expenses back to operate within your income. This may seem difficult, but building a budget that includes everything you need to run your business is essential. If you know exactly how much you are spending to run the business, and where the money is going, you can identify areas of waste or even areas where more needs to be spent to get the income up and increase profitability. Most UNDER-ESTIMATE what they need financially by 10 – 13%–a critical mistake when you are aiming for an income target that is too low.

 Money Management Principle #2: PUT 10% OF YOUR INCOME AWAY IN SAVINGS OR RESERVES

Set aside regular amounts of cash from your income for the future – put the money in savings toward gaining financial freedom and don’t ever spend it. Put a minimum of 10% of income into savings out of every dime earned. Note, even government is recognizing the importance of building reserves as California Governor Arnold Schwarzenegger wants to see this become a part of that state’s budgetary process.

Money Management Principle #3: DO NOT BUY ON CREDIT

Pay cash instead. Debt is a disease that you should avoid contracting. If you already have some credit debt, a successful money management philosophy will show you how to get it paid off fast.

 This, of course, lies at the very heart of our current economic crisis. Too many people in the U.S., getting into too much debt, played an enormous factor in creating an economic collapse. It can be said with a high degree of confidence that had everyone from end users to financial institutions followed this money management principle, we would not be in financial straits as a nation.

 If you need to buy something that is expensive, put money away towards the purchase every week until you have the cash. If you absolutely must use credit for a home, office, or equipment, only use credit when you are 100% positive that it can easily be paid for without undermining your financial security.

Money Management Principle #4: FIND WAYS TO MAKE MORE MONEY

The cost of doing business goes up about 8.5% every year, so you need to make more money just to keep up. Look over your line of products and services and figure out how to sell more of the profitable items. Be willing to discontinue items that are not bringing in enough profit for the time, effort and cost to sell them. Find out what new products and services you can offer your clients to increase your gross income. Look at every financial decision you make with an eye on the return on investment you will get for the money you spend. Don’t spend your hard-earned income on “fruitless” expenditures.

 Money Management Principle #5: USE YOUR MONEY TO INCREASE YOUR INCOME

After paying the 10% into savings and paying your bills, use any money left over in ways that increase your ability to produce more income.

 Why is controlling the flow of money so important? It is the energy and life blood of a business. It is necessary to pump it through the income producing areas first to keep it running well. Everything runs smoother when cash is available.

 “I hate to say “I told you so” but I saw the current financial debacle coming several years ago,” says Simmons. “When the fundamental principles of sound money management are violated, it becomes a ticking time bomb. Without the right kind of fiscal discipline, economic pressure is going to expose money management weaknesses.”

 If we survive the current economic crash, perhaps the biggest tragedy will be the next time this happens if all of us don’t get our financial houses in order.

Sandra Simmons, President of Money Management Solutions has years of experience helping business owners and individuals manage their money to achieve financial freedom. Claim your FREE Debt Reduction Solutions Guide.

With all of the doomsday news about THE ECONOMY as if it were an entity unto itself, it should be pointed out that THE ECONOMY is actually made up of millions of smaller “economies” called businesses, companies, corporations, and sole proprietorships. The indicator of how well each of these smaller entities handles their money management responsibilities is what makes up the general condition of THE ECONOMY.

I saw the economic crisis coming years ago, and I’ve been warning my readers and my business owner clients about this dangerous financial condition for the past several years. The current economic condition is never the fault of THE ECONOMY. The money management practices of businesses, the government and American households create the economic condition.

Let’s take AIG (American International Group, Inc.) for example, since they just received a bailout loan of $85 billion from the Federal Government. This is a multi-national company selling insurance, investments and retirement accounts. That means their income comes out of the pockets of individuals and other companies, and they have a fiduciary responsibility to pay their clients’ insurance claims and invest their investor clients’ money in things that are supposed to make the client money.

This company, with trillions of dollars in assets, is not just experiencing financial instability, they are beyond broke. They had to have a huge bailout loan to have a prayer of surviving for one more day. And what did their press release say? They said, “Policyholders of AIG companies around the world can rest assured that AIG’s commitments will continue to be honored.” What I feel must be said is that they committed TREASON [Treason: Betrayal After Trust] against their policyholders and drove their company to the brink of bankruptcy and could not honor their commitments to their policy holders, so ‘We The People’ have to bail them out and now We The People own this company which is collateral against the loan.

Is this debacle the fault of regulatory mistakes? To a degree it possibly is. Is it due to the current “economic scene”? No way! This is a company that is so large that it has massive effects on creating the economic scene. You don’t drive a trillion dollar company into bankruptcy overnight or over a few months. And I’m not singling out AIG here. Look at what is happening to the banking, mortgage, real estate and investment companies.

There is no confusion in my mind about how this happened. The treason starts with small violations of sound financial policies and continues to evolve into gross financial irregularities, all in the name of posting a profit and making the stockholders happy. The senior executives of any publicly owned company consider it their first duty to please the stockholders every quarter, year after year, even if it is at the expense of their clients. The senior executives in power at any given time do not want to be the ones bearing the bad news to the stockholders and, in doing so, put their personal reputation and their million dollar salaries on the line. So little violations begin, and then bigger and bigger ones, until complete betrayal of not only the policy holders but, the shareholders as well, becomes reality.

And make no mistake, the consumers and clients of those companies are also committing treason against themselves. According to the newest data from the Federal Reserve, as of December last year revolving consumer credit card debt stood at 943 billion dollars. Revolving debt is set to reach one trillion dollars later this year. That’s *trillion* with a “tr”. Earlier in 2008, a Vice President of a U.S. bank stated that over 24 Billion dollars was paid out in interest, late fees and over-limit fees last year on credit cards. That means Americans are committing financial irregularities and treasonous acts against their own households’ economic well-being. But the credit companies are equally to blame for granting that much credit to consumers who can’t pay the bill.

The early warning signs of this economic crisis were evident 3 years ago. It’s been in the news for that long as well. Were the corporate executives and the American consumers just not paying attention? Did they hear the warning signs and ignore them? Well, the financial condition of THE ECONOMY that each of us as individuals create with our financial actions is going down for the count. So what are YOU going to do to take responsibility for your own financial condition?

While the media is spinning story after story about the Presidential Campaigns, and Obama and McCain are chanting “Change, Change, Change,” I am asking “How, How, How are you going to do that?”

First, and most obvious, there is no power vested in the power of the President to enact law. That power is fully invested in the power of the Congress according to our Constitution. Let me repeat that. The Constitution does not empower the President to make law.

Executive Orders issued by the President that bind the entire nation are illicit because, as noted above, “All legislative powers” are possessed by Congress. An Executive Order that binds only the employees of the federal government (such as granting a holiday) is proper because the President should be considered to be the holder of power much like that possessed by the CEO of a company. But the entire nation is not in the employ of the President.

What power does the elected President have? The President does have a role in lawmaking with his possession of a veto. He can veto a measure approved by Congress (which can be overturned by a two-thirds vote in each house of Congress), or simply allow it to become law by doing nothing within 10 days, “Sundays excepted.”

Both candidates are saying they are going to cut income taxes, balance the budget deficit, straighten out the US economy, stop the wasteful spending, rehabilitate the Social Security system or provide affordable healthcare and health insurance to every citizen but, what they aren’t telling us is how they are going to get Congress to do that.

Second, it is an obvious mistake to think that cutting taxes will fix the government’s economy and allow the budget deficit to get handled. Any ordinary individual knows that in order to pay off debt, more income is needed. If enough income were made in the first place, of course, there would be no need to take on debt. Debt is simply a function of spending money you don’t have.

Since the government produces no income of their own and they just take it from us taxpayers, then if they take less income from us, they will have to borrow more money to fund all of their projects and that means a BIGGER budget deficit.

Smart money management requires working both ends; consistently raising gross income while cutting unnecessary spending to live within your budget. In all the years I have been around, I have never seen the US government demonstrate their ability to do this simple money management survival action.

What is the price of attaining financial freedom? It really is very simple. Make a ton of money, spend less than you make, don’t contract for any debt you cannot immediately pay with cash, and set money aside for the future survival of the organization.

Wednesday, September 17th, is Constitution Day – a day specifically designated by an act of Congress when Americans are supposed to honor the remarkable document that created our system of government. The date was chosen because the Constitution was approved at the original Constitutional Convention on September 17, 1787. How well do you know your Constitution? How well do Mr. Obama and Mr. McCain know our Constitution? Perhaps we should ask them about this by insisting they tell us HOW they intend to make all of these new changes which require new laws be passed.

Today, Wednesday, September 17th, is Constitution Day – a day specifically designated by an act of Congress when Americans are supposed to honor the remarkable document that created our system of government.

The date was chosen because the Constitution was approved at the original Constitutional Convention on September 17, 1787. The act that created Constitution Day mandates that all publicly funded educational institutions provide educational programming on the history of the American Constitution on that day.

Let’s see how well the schools have done their job. Ask a recent high school or college graduate to take the following brief quiz. I would be interested to hear how many of the 25 questions he or she answers correctly. And be sure to take the quiz yourself, too. Even if you score 100%, it’s good to be reminded of some of the fundamental principles that our country was founded on.

1. Has the Constitution always guided our country?

1. No. Originally the nation functioned under the Continental Congress and the Articles of Confederation. Eleven years after the Declaration of Independence, the Constitution was written, agreed to, and sent to the states for ratification. When ratified by nine states (as the document itself prescribed), the Constitution was declared to be the new governmental system. That occurred on September 13, 1788. The new government was ordered to be convened on March 4, 1789.

2. What are the three branches of government named in the Constitution?

2. Legislative, Executive and Judicial.

3. Does the Constitution allow the Supreme Court to make law?

3. No. The very first sentence in the Constitution states: “All legislative powers herein granted shall be vested in a Congress of the United States….” Any Supreme Court decision is the law of the case that binds only the plaintiff and the defendant. The meaning of the word “all” has not been changed.

4. Does the Constitution empower the President to make law?

4. No. Executive Orders issued by the President that bind the entire nation are illicit because, as noted above, “All legislative powers” are possessed by Congress. An Executive Order that binds only the employees of the federal government (such as granting a holiday) is proper because the President should be considered to be the holder of power much like that possessed by the CEO of a company. But the entire nation is not in the employ of the President. The President does have a role in lawmaking with his possession of a veto. He can veto a measure approved by Congress (which can be overturned by a two-thirds vote in each house of Congress), or simply allow it to become law by doing nothing within 10 days, “Sundays excepted.”

5. Does the Constitution give the federal government any power in the field of education?

5. No. The Constitution contains no mention of any power “herein granted” in the field of education.

6. Where in the Constitution is there authorization to dispense foreign aid?

6. No such authorization appears in the Constitution.

7. Does the Constitution mandate a minimum age for a Senator?

7. Yes. To be a senator, one must be 30 years of age. He must also be nine years a citizen of the United States and an inhabitant of the state he will serve as a senator.

8. What are the Constitutional requirements for a person to be President?

8. A President must be a natural-born citizen (not an immigrant who became a citizen), must be 35 years of age, and must have lived in the United States at least 14 years.

9. Did the Constitution give the federal government power to create a bank?

9. No. Congress was granted power to “coin money,” meaning it was to have power to create a mint where precious metal could be stamped into coinage of fixed size, weight and purity. There is no constitutional authority for the federal government to have created the Federal Reserve.

10. Can the provisions of a treaty supersede the Constitution?

10. Absolutely not. Thomas Jefferson responded to those who consider treaty-making power to be “boundless” by stating, “If it is, then we have no Constitution.”

11. Does the Constitution allow a President to take the nation into war?

11. It does not. The sole power to declare the nation at war is possessed by Congress. Congress last used this power at the beginning of World War II when war was declared on Japan after the attack on Pearl Harbor. (Germany declared war on the U.S. the next day.) A congressional vote to authorize the President to enforce UN Security Council resolutions should never be considered a substitute for a declaration of war.

12. Can you name any of the four crimes mentioned in the Constitution?

12. The four crimes mentioned are: Treason, bribery, piracy and counterfeiting.

13. Should the Bill of Rights be considered part of the original Constitution?

13. Many do hold that view because if the promise to add a Bill of Rights had not been made during the ratification process, some states would not have ratified the Constitution.

14. According to the Constitution, how can a President and other national officers be removed from office?

14. The President and other high officers of the federal government can be impeached by a majority in the House and tried by the Senate. Impeachment does not constitute removal; it should be considered the equivalent of an indictment that must be followed by a trial. Two-thirds of the senators “present” must approve removal at the subsequent trial to effect removal.

15. What authority does the Constitution give to the Vice President?

15. The Vice President stands ready to take the office of President if a president shall die or become incapacitated (as defined in the 25th Amendment). He is also the President of the Senate and has the power to break a tie vote should one occur.

16. How many amendments have been added to the Constitution?

16. There are 27. The first ten (the Bill of Rights) can be considered part of the original Constitution. Amendment 18 was repealed by Amendment 21. This means that, in 220 years, only 15 other amendments have been added. The process was deliberately made difficult to keep anything dangerous or silly from being added to the Constitution in the heat of passion.

17. How is an amendment added to the Constitution?

17. Congress can propose an amendment when two-thirds of both houses of Congress vote to do so. Any proposed amendment must then be ratified by the legislature or a convention in three-quarters of the states. Amendments can also be proposed by a federal constitutional convention called by two-thirds of the states. Any amendment arising from a constitutional convention must also be ratified by the legislature or a convention in three-quarters of the states.

18. Does the Constitution say anything about illegal immigration?

18. Not directly. But Article IV, Section 4 assigns to the federal government the duty “to protect each of them [the states] from invasion.” It does not specify that the invasion must be military. When 20 million enter our nation illegally, it is an invasion that should be repelled by the federal government.

19. What is the process mentioned in the Constitution for adding new states to the union?

19. By a majority vote in each House of Congress, a new state can be added to the union. This was done twice in 1958 to welcome Alaska and Hawaii as the 49th and 50th states.

20. Is the term of a President limited by the Constitution?

20. Yes. In 1951, Amendment 22 was added to the Constitution to limit any president to two terms. The only president who served longer than two terms was Franklin Delano Roosevelt, who held office during a fourth four-year term. He died in April 1945 shortly after beginning his 13th year in office.

21. Which part of the federal government holds “the power of the purse”?

21. The House of Representatives. Article I, Section 7 states: “All bills for raising revenue shall originate in the House of Representatives….” If a majority in the House (218 of its 435 members) refuses to originate a bill to raise revenue for any particular purpose, no funds can be raised for that purpose.

22. Does the Constitution provide a method for expelling a member of Congress?

22. Two-thirds of each house has the authority to expel any of its members for cause even though the member has been elected by voters.

23. What does the Constitution say about financing an army and a navy?

23. Congress can raise an army but “no appropriation of money” to fund it shall be for longer than two years. And Congress can provide for a navy without that same restriction regarding funding. Why? The men who wrote the Constitution feared the possibility that a standing army housed within the nation might arise and seek to take power. But they did not fear that a navy would try to do so, because a navy and its weaponry did not reside within the nation, only at sea or at coastal seaports.

24. How many times is the word “democracy” mentioned in the Constitution?

24. The word “democracy” does not appear in the Constitution. Our nation is a Constitutional Republic, not a Democracy. The Founders feared Democracy (unrestricted rule by majority) and favored a Republic (rule of law where the law limits the government). James Madison wrote: “…. Democracies have ever been spectacles of turbulence and contention; have ever been found incompatible with personal security or the rights of property; and have in general been as short in their lives as they have been violent in their deaths.”

25. Does the Bill of Rights grant the people free speech, freedom of the press, the right to possess a weapon, etc?

25. No. The Declaration of Independence, which provides the philosophical base of our nation, states very clearly that our rights are granted to us by our “Creator.” The various rights noted in the Bill of Rights were not granted by government. The purpose of the Bill of Rights is to prevent the federal government from suspending any of those God-given rights, including the right to possess a weapon. Those who claim “Second Amendment rights,” for instance, make a big mistake with such a statement. If the right is granted by the Second Amendment, meaning by government, it can be taken away by government. If the right is granted by God, only He can take it away.

It wasn’t as easy as you thought it would be, was it? I wonder how well the President and the members of the Congress would score on this quiz, both Democrats and Republicans alike.

What would this country be like if the Constitution were fully and honestly enforced today? Would the US Economy be suffering from the current meltdown, or would the US be at war? Would better money management principles be in use when spending our income tax dollars? I hope some day we’ll come a lot closer to finding out than we are today.

RECOMMENDED READING: This recommendation is not meant to imply you are a dummy. This book just avoids getting overwhelmed by the difficult, scholarly academic language that tends to put you to sleep, or into a tailspin, or diving into a dictionary every 3 seconds.

Constitution For Dummies

U.S. Constitution For Dummies