Two ways to get better

Debbie and Frank are really in debt trouble and go to two counselors. The smooth talking counselor’s plan has multiple parts: increase their credit line; get money from a few strangers who have more money than they do; over the next 10 years they will have to spend less than they had planned to – more than they are spending now but less than they had planned on. Debbie and Frank are excited about this new way of saving and promise to plan on spending even more so when they cut back a little the savings are even greater. With this savings plan and the counselor’s optimistic projections about their future income growth, they will be in great shape in about 10 years if all the assumptions work out. The other counselor is not as popular with all their friends, seems be less optimistic and his plan is harder. He does not want them to increase their credit line. He wants them to stop spending more than they take in. He notes that their spending has gone way up in the last few years but their income has not – he wants them to go back to that spending level. And he doesn’t think that a slower rate of increased spending is the same as savings.