An article in TIME Business & Money gives an explanation of how the debt ceiling works:
"The debt ceiling is the statutory limit of allowable federal debt, currently set at $16.7 trillion. Up until about one hundred years ago, Congress approved every individual new bond issue, but early in the 20th century Congress began to expedite the process by simply creating a debt limit and allowing the Treasury Department to borrow as it sees fit any amount below that. More recently, politicians have been squabbling over the debt ceiling and essentially threatening a default. Nobody is sure what the outcome of a default would be, but financial markets–which depend greatly on U.S. debt as a source of liquidity–would likely freeze up."
Although you can call your credit card company and ask for a credit increase once you’ve maxed out but in order to be approved the creditor needs to trust in your propensity to pay the money back.
When an individual is in position where they have more money going out rather than coming in, credit will eventually run out.
The United States has reached the debt ceiling and without an increase, they need to find a way to either increase income or decrease spending.
Increase Income – For the government the best way to increase income is to raise taxes. As an individual it’s not as easy to increase your income but here are a few ideas:
- Pick up a side job – Apply for a weekend or evening job that will help you bring in more cash each week.
- Sell things you don’t use – We all have clothing, furniture and other items we no longer use. Purge and de-clutter your home buy selling these times through a consignment store, or an online site such as eBay or Craigslist.
- Start your own business – Do you have a skill or a talent that you can market? From mowing grass to creating art there are a lot of ways you can turn a hobby into extra cash.
- Pick up extra hours – Inquire at your existing job about the opportunity to put in extra hours. Your efforts may even be rewarded with a promotion down the line.
Decrease Spending – When our government cuts spending they have to choose between valuable programs and decide where to decrease funding. As an individual you can stop buying coffee at a café every morning or pack your lunch and see an improvement on your bottom line. Here are some other great ways you can cut costs:
- Decide on necessities – If you are in debt and have both a cellular phone and a home phone it’s probably time to let one go. Can you live without cable? Think about some luxuries you have that you could live without, at least until you pay down your debt.
- Drive less – Gas is expensive. Consolidate car trips to save money.
- Plan meals – Stop eating out and plan your menu to cut down on your grocery bill.
Making small changes can make a big difference in your spending each month. If you implement a few of these ideas to both decrease spending while also increasing your income.
Time will tell if the debt ceiling will be increased or not. As an individual making changes to change your income and debt will go a long way on the road to being debt free!
If you are close to defaulting on your debts it's time to talk to a Chicago Bankruptcy attorney.about your options. A good place to start is by downloading our FREE book, "12 Things You Must Know Before Filing For Bankruptcy." Struggling with debt is not something you have to do alone. Suburban Legal Group is here to help!
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