Mr. Ben Niccum, a former Muncie resident (much former) has been following Muncie’s financial spending. He sent me this email on his thoughts.
Are you financing your next cheeseburger? Muncie is.
When you buy anything with fixed interest, like a car or home, you know that you can save money by paying it off early. Every month that you send in extra money translates into compounded savings that stagger the mind. Typically, you can save a year of payments on your house by sending in $100 extra each month in the first year that you have the loan.
Paying off a loan early is an opportunity that few people consider. Municipalities hate paying off debt. They will not consider it because it limits their ability to spend the money in this year’s budget that would go down to paying off debt. It is much easier for average people and communities to continue spending all of this month’s / this year’s budget while paying the minimum on long term debt.
The economic term “opportunity cost” ,applied here, means that every time you buy a cheeseburger for $4, you are not reducing your 30 year debt by $32. Is that cheeseburger worth $32? Muncie politicians can’t stand up to the scrutiny they would suffer if they were financing a windmill, but that is exactly what they are doing. Muncie is financing a windmill because they choose to continue to hold the debt for past purchases while frivolously spending today’s budget for windmills. Don Quixote would be proud of Muncie