The debt ceiling is approaching in the US, and it is a problem. But the US government is not the only one with the problem, but also households that reach their limit from their credit cards and loans and cannot make ends meet. What should they do?

Well, in this post, I will talk about the importance of the debt ceiling on the households, how credit cards work if you use them correctly, and how you can save yourself from bankruptcy so stay tuned!

The federal debt ceiling is asking urgently for a spending reform. We are just spending too much money as a country and also helping others. But the US is not the only one with this problem, as many households also are running out of funds in their checking accounts and credit cards and are reaching their debt ceiling. 

In the first quarter of 2023, total consumer debt hit a fresh high of just over 17 trillion dollars, and credit card balances alone total 986 Billion. 

Let me stop here for a second and explain to you why Apple wants to open a high yield savings account now if you own their credit card first. It’s the best business in the world. Lending money to Americans at a 20% interest, and giving back 4%. 

20% interest on 986 Billion is 197 Billion Dollars, that means that every second the banks make $6000 on interest from credit card balances. Every second!!

Americans are watching the government pile up an enormous amount of debt and they are thinking “why don’t I do the same?”. The problem is families don’t have a creative way to raise the debt ceiling. Once it’s reached, it’s game over. You need to start selling the car, selling the jewelry, and selling the house, if you own one.

With inflation peaking at 9% and currently under 5%, households saw tremendous pressure on Food, Gas, Bills, and everything on their debt meaning interest. 

The current credit card balance is averaging just shy of $10,000 per household. During the great recession, it was about 2 thousand dollars more, so we are reaching the limit where there is no turn back and people will never pay the credit card back.

What happens if you never pay the card back? Your credit history is destroyed, a collector will call you a hundred times per day, and you will need to pay everything in cash from now on pretty much. And forget about getting a mortgage. 

People have more credit card debt than emergency savings which worries me a lot. I recorded a video on how to save $10,000, you should check that one out on my tricks on how to save money.

So the government is spending like crazy, and people are also spending like crazy. The difference is government money is unlimited, at least until the dollar loses its world reserve currency, then it will be harder to print. 

What Americans forget is that they need to budget. If you don’t control every dollar where it’s going, you lose focus of your objective which is to save money and end up with money at the end of the month. When you use credit cards, that means the money you have in cash is gone and you are supplementing it with credit. 

A credit card should only be used if you have the money in the bank in the first place or you will receive the money for sure. In a business, people use credit to buy supplies or raw materials and then pay it back with the earnings from the business. 

If I want to buy a $5,000 Rolex with my credit card, I need to make sure I have the 5000 in my bank account first. Do not buy now and pay later mentality or the I’ll pay it back in 36 payments with a high interest. Guess what? Inflation will kill you if you cannot make the payments on time. 

Don’t sit on the money for too long. At least place it in a high yield savings account that gives you 4 to 5% like the Apple one. The apple one requires you to get the credit card, so I don’t like it. It’s a trick to make you get in debt. 

Make sure it is FDIC insured though. You never know which bank is next to collapse and you will lose all your money if it’s not insured. 

There is no real way to raise your debt ceiling in a household, what you need to do is RAISE THE INCOME LEVEL. That way you can spend more and save more without worrying about the end of the month or the next paycheck. 

But remember, TAKE CONTROL OF YOUR LIFE AND TAKE CONTROL OF YOUR MONEY!!