A little slice of reality from Dave Ramsey. Federal Budget vs. Household Budget: How Do They Compare? - daveramsey.com Federal Budget vs. Household Budget: How Do They Compare? You can't borrow your way out of debt. from daveramsey.com on 28 Apr 2011 By Dave Ramsey Whenever the talking heads on TV start talking about the national economy, most of our eyes start to glaze over. The gigantic numbers that they throw out there are ridiculous; most Americans have no idea what those numbers mean in practical terms. So, I thought itd be fun to turn those figures into something we can understand a little betterlike a household budget. The federal government will take in $2.173 trillion in 2011. Thats their income, and it sounds pretty good. Until, that is, you factor in that the federal government will spend $3.818 trillion during the year. So, just like many families, the governments outgo exceeds their incometo the tune of $1.645 trillion in overspending. Thats called the deficit. Altogether, the government has $14.2 trillion in debt. What would happen if John Q. Public and his wife called my show with these kinds of numbers? Heres how their financial situation would stack up: If their household income was $55,000 per year, theyd actually be spending $96,500$41,500 more than they made! That means theyre spending 175% of their annual income! So, in 2011 theyd add $41,500 of debt to their current credit card debt of $366,000! Whats the first step to get out of debt? Stop overspending! But that means a family that is used to spending $96,500 a year has to learn how to live on $55,000. Thats a tough pill to swallow. Those kinds of spending cuts seriously hurt, but its the only way out of debt for John Q. Public. If I ever got a call from a family that was spending $41,500 more than they made every year, you would definitely expect me to yell at them for their dumb behavior, right? Kids, no more McDonalds four times a week. Snacks come from the grocery store now. And were not going to the movies for a while, so break out the board games and TV Guide. This family has a problem, so its time to amputate the lifestyle! It works the same way for the government. You cant borrow your way out of debt, whether youre a typical American family or the entire U.S. government. At some point, youve got to say, Enough is enough! and make the hard cuts necessary to win over the long haul.