The dean of the C.T. Bauer College of Business showed students how they could apply potential solutions to the fiscal cliff to their personal finances in Thursday’s Research Café.
Ramchand said her goal was to tell students what the fiscal cliff means for them.
“We tend to see these issues as something far away from us,” Ramchand said. “But let’s say it’s not a Washington D.C. problem, but your problem and my problem.”
Ramchand said the fiscal cliff is the term used to describe what the government has been facing since Dec. 31. It represents the end of the 2011 payroll tax cuts and some tax break for businesses, a rollback of the “Bush-era tax cuts” from 2001 to 2003 and the new taxes related to President Obama’s health care law.
Ramchand also said the national debt of $16.5 trillion is higher than the country’s gross domestic profit.
“We, as a country, are borrowing as much as we are producing,” Ramchand said. “As individuals, we want an education to achieve financial independency; so why aren’t we doing the same as a country?”
She went on to say sequestration, a fiscal policy that cancels budgetary resources as a form of spending cuts, has played an important role lately.
“The term suggests that to make money to bridge the gap between our debt and the GDP, the government has to reduce its spending rather than increase taxes,” Ramchand said.
This can be applied to how students manage their own finances, she said.
Ramchand passed around sheets of paper and told students to write down their income statement and compare the information with their expenses. About 75 percent of the group said they spend more than what they make.
“Everybody needs a budget plan, a relief. We have to set aside money for certain things that are absolutely critical, such as rent, tuition or students loans, and food. Then we need to plan ahead,” Ramchand said.
“We have credit cards, which means easy access to anything. This leads to debt. We have to have a plan and stick to it.”
She said if students are smart about their finances, they can get a degree debt-free and start a successful career.
“Take ownership of your finances. Have goals and plan ahead. Being in Houston is a great asset,” Ramchand said. “It’s diverse, international, and most importantly, your last name does not matter. We live in a city that rewards merit, so plan ahead, budget, and dream big.”
Research Café is a student-led series of interactive discussions the state of the economy organized by the Fellowship of the Tier One Scholars.
“It’s a good venue for informal discussions on different issues that affect us as students now and afterwards when we graduate,” said FOTOS Vice President of Professional Development Merlin Jacob.