Imagine that you and your family are headed for a fiscal cliff. In other words, your income is not as high as your expenses, and your credit cards are nearing their limit. What do you do? Let me put numbers to it so that it makes more sense.

Let’s say you make $100,000 a year. You owe $400,000 on your home. You have consumer debt (credit cards and a car loan) of $100,000. You have student loans of $57,000. You go out to eat two times a week. You have a BMW lease payment of $750 per month. Your kids, ages 16, 13, and 9, are all in school, play travel sports, and are used to going south for spring break every year. You realize that in March, 2013, you will no longer be able to borrow money because your credit limits will be reached and no other banks are willing to lend to you at this time.

It’s just before Christmas, 2012. You have essentially three options:

1.  You go to the owner of the company you work for and ask for a raise.  After all, he has a ton of money compared to you.

2.  Or, you sit down with your family and let them know what’s happening, that they’ll be staying home from Florida this year, that spring travel sports will not be happening next spring and summer and that Christmas and birthdays will be a little spartan for a while. You also let them know that you just got back from the BMW dealership, which is the reason there’s a canary-yellow Camry in the garage.

3.  Or, you consult a bankruptcy attorney, wipe out all of the debt, and head to Florida in the spring with a huge burden lifted and no real need to tell anyone about the issues or to do anything hard to deal with them.

What is the problem?

Is the problem that you don’t make enough money? No – you have a nice salary. You know that you have lived beyond your means for too long. That’s why you know option 1 will not take you far. You are essentially asking someone who managed his money well to bail you out after you mismanaged a sizable and fair salary. Option one is not a viable, long-term option. Take advantage of the income source, and you lose your income source.

Is the problem the creditors? In fact, aren’t they the ones who kept lending to you even though you could not afford it? It must be their fault. Right? Wrong. And although you hate these banks with a passion, you know it was not their fault. You did sign the papers. If you’re honest, you even painted the best possible picture of yourself on the loan application so that your loans would be approved. You wanted what these debts would give you, and you would sign almost anything to have gotten them.

So is the problem yours? Did you spend more than you made? Did you allowed this to go unchecked for so long that there is no easy way out? There is always some way out, but not one that comes without some kind of change in lifestyle and sacrifice that everyone in the family will feel. Yes, you know that option 2 is the right one.

The reason we just elected someone who is okay with options one and three is because most of us are. It’s not Obama, or the spend-happy legislators on both sides of the aisle that I’m most afraid of – it’s the people who elect them year after year. It’s like going back to the bank over and over and asking for more. At some point we know that even the kind banker – and smiling politicians – will not be able to help us.