So, maybe you've heard that the Government may be shutting down pretty soon? Nice that they would choose to do that as you file your taxes to pay for government services. Timing is everything. The new Republican powers-that-be and previous Democrats powers-that-were in Congress are not playing nice for everyone to see. Amazingly though, the sun will still shine, the earth will still spin, and I'll still not at the weight I would like to be for my wedding. Sure, some of my comrades in federal government in the D.C. area will be home for a few days--maybe a week--and that's no fun. But when Congress is your boss...well, for those of you in the private sector, maybe your boss isn't that bad after all...
What I just mentioned...the government closing down for a few days, has to do with the simple fact that Congress needs to approve a budget. You can, and probably do, operate without an approved budget every day. The lesson to be learned here is, if you are single, look over your budget and decide if it is appropriate, and if you are with someone, go over your budget together and approve it. Talk to someone else whether it is a family member, or a trusted friend, or maybe your dog. Decide if it makes sense. If you see that you are spending more money than you are making each month, start over, repeat, and don't leave your kitchen table until you are spending less money than you are making each month (P.S. you may be getting a smaller kitchen table after you are done, but it will be YOUR kitchen table).
Now, all that I just mentioned, about the upcoming government shutdown, is small potatoes. You just have an operating budget. Our fearless leaders have something else pretty nifty...it's called a "Debt Ceiling". Yeah, don't get on your toes to try to touch it like your real ceiling. The Debt Ceiling is simply the legal amount approved by Congress that the United States may be in debt for. The Debt Ceiling is 14.294 Trillion dollars, or $14,294,000,000,000. I know what you're thinking, that's alot of zeros. Let me bring it home for you. As of the 2010 U.S. Census, the population is 311,111,909. So if we maxed out our debt ceiling, our share of the debt would be $45,701 each. As a side note, who are currently the largest owners of the United States debt? China has the gold medal with 26.1% of our total debt, and Japan has 19.9% for the silver. Since we expect to reach our debt ceiling sometime in May, that means that you will owe China $11,928 and Japan $9,095. Check please!
So what could happen if the U.S. Government hits the debt ceiling? Congress has to vote to increase the debt ceiling. Will this happen? Would it be the end of the world if they didn't? Well, it would cause havoc in the markets, because U.S. Government debt, commonly U.S. Treasuries, Notes, etc., is considered the safest possible debt. And if suddenly we didn't issue any new debt, or couldn't issue any new debt to pay for shortfalls in tax revenue, the debt is no longer the safest out there. People on Wall Street who usually trade these Treasuries will start acting all crazy, not to mention the Far East contingent who would be "Flying like a G-6" toward the continental United States to collect the money we owe them if we stopped paying. Again, my opinion, it's a big game of chicken, and Congress will likely vote to raise the debt ceiling, which means, yes, we will simply owe even more money than we already do, and will be paying off for generations to come. Problem solved.
So, yeah, we're probably going to always live in a country that operates with debt...just like maybe you'll always have a mortgage, maybe a line of credit, an auto loan, and eeeeeeeeeek, yes that is the sound of my fingers screeching down the chalkboard at my displeasure, any credit card debt you may have. But you, and again, your significant other, can sit down and make a decision on an annual basis, what your debt ceiling should be. Add up all your debt--secured or unsecured--look at the number, and if you are trying to get out of debt--maybe that is just not possible for the next 6 or 12 months--make a decision like Congress, and say, if you owed $142,000, your personal debt ceiling will be $150,000. No matter what...except for an act of Congress, your debt will not increase more than the chosen number. You cannot go into debt more than $150,000. And maybe, just maybe, if you eat a few less fish tacos, work on getting that bonus at work, and put a little more toward paying down your debt, you could lower your debt ceiling. Should you be saving? Always, but that is not the point. It's about being realistic and appropriately managing your debt. It's what America is doing every day. Live the dream...get your debt ceiling on today!
