CASH OUT MUST EQUAL CASH IN.

When I told my brother, a banker for the past 30+ years that this was an important part of financial planning, his response was "Duh!" Since when is a common sense statement like that worth mentioning? If this is just so much common sense, why are so many Americans trying to fool themselves into thinking that they can circumvent this rule. Perhaps one reason is that you can circumvent it for a short time and, on occasion, you can even circumvent it for a long time, but eventually, you have to face the music. The longer you continue to spend more than you earn, the more painful the eventual correction will be. Suppose you have $5,000 a year to spend on discretionary items and you want to spend 10,000 this year. The result is you have $5,000 less to spend next year which means you have no discretionary income or you can drag it out for five years and have $1,000 lest to spend for the next five years. This is the case even if you have no interest. If you pay 15% interest, a rate not uncommon for consumer credit, you will have $1,000 less to spend for 10 years. I am not one of those guys who hates all debt but you have to ask yourself, Is it worth it? Over the 20+ years I have spent in financial planning I have encountered many who feel that they are entitled to a certain standard of living, even if their income doesn't support it. It may sound obvious if we say that there is no way you can do this forever but that is the simple, unvarnished truth.