Debt 101 — Debt Limits for Dummies – Debt Ceiling

word20I’m going to make this easy.

Debt for individuals:

1. If you use a credit card to buy something because you don’t have the money, the “borrowed” money is DEBT.

2. Debt makes you a servant to the lender. (Proverbs 22:7)  You have to go by their rules: When to pay it back, how much each payment has to be and how much interest you must pay.

3. Interest is the extra money you pay, for the privilege of borrowing money. It’s extra debt on top of the debt you already have. So now you owe the original money PLUS the interest money.

4. If you get a credit card, it gives  you a “debt limit“. You CANNOT go over that limit. If you go shopping and give them your credit card, but you have hit your limit, THE SALE WILL BE DENIED. YOU CANNOT PURCHASE THE ITEM. You go home without the item.

5. If you call the credit card company and “raise your debt limit” you can now borrow more money, and you will accumulate more interest. If you go shopping again and buy more stuff, you now owe more money and more interest.

6. If you pay back only the minimum payment each month, you will never be out of debt. They own you.

7. If you buy a car on credit, and you don’t make the car payments, they can come take your car back.

Pretty simple, eh?

Now apply the same rules to a country. Go ahead.   Ahh, now you get it.

Obviously, the answer is not to borrow more money. The answer is to live within your budget. No big vacations to Hawaii. No new dresses for every occasion. No caviar and champagne.

This is not about Democrats and Republicans. It’s about Common Sense. If you don’t know Common Sense, leave a comment, and I will introduce you.

Next time: Inflation 101 – The Federal Reserve Banking System and what 1913 means to you.


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