The debt ceiling is a limit set by Congress on the amount of money the federal government can borrow to finance its operations and pay its debts. If the debt ceiling is not raised and the federal government is unable to borrow more money, it may not be able to meet all of its financial obligations, including paying its bills, salaries, and other expenses. Furthermore, failure to raise the debt ceiling could also result in a downgrade of the U.S. credit rating, making it more expensive for the government to borrow money in the future. This could lead to higher interest rates and borrowing costs, which would have a negative impact on the economy as a whole.
How could this affect me?
Impact on Social Security and Medicare: If the debt ceiling is not raised and the government runs out of money, Social Security and Medicare payments may be delayed or reduced. This can impact millions of Americans who rely on these programs for their retirement income and healthcare needs.
Impact on the economy: Failure to raise the debt ceiling can also have a negative impact on the economy. It can lead to higher interest rates, which can make it more expensive for businesses and consumers to borrow money, slowing down economic growth and potentially leading to job losses.
Government shutdown: If the government is unable to borrow money, it may have to shut down non-essential services and furlough employees. This can impact government employees and contractors, as well as the businesses that depend on them.
Uncertainty in financial markets: Failure to raise the debt ceiling can create uncertainty in financial markets, leading to fluctuations in the stock market and other financial instruments. This can impact people’s investments and retirement savings.
What can I do about it?
As an individual, you have limited direct influence over the debt ceiling since it is determined and managed by the government. However, there are several actions you can take regarding the debt ceiling:
Stay Informed: Educate yourself about the debt ceiling and its implications. Understand the potential consequences of reaching the debt ceiling and how it can impact the economy, interest rates, and government spending. Stay updated on news and developments related to the debt ceiling to make informed decisions.
Engage in Financial Planning: While you may not have control over the debt ceiling, you can manage your personal finances responsibly. Develop a budget, track your expenses, and prioritize saving and investing. By maintaining sound financial habits, you can protect yourself from potential economic uncertainties caused by government debt-related issues.
Advocate and Engage: Communicate your views and concerns to your elected representatives. Contact your local representatives in Congress and express your opinions about the debt ceiling and responsible fiscal management. Encourage them to seek bipartisan solutions that address the underlying causes of increasing debt, such as spending reforms, revenue enhancements, and long-term budget planning.
Vote and Participate in Elections: Use your voting power to elect representatives who prioritize fiscal responsibility and work towards finding sustainable solutions to manage the national debt. Research candidates’ positions on fiscal issues and support those who align with your views.
While you may not have direct control over the debt ceiling, your voice and actions can contribute to the broader discussion on fiscal responsibility and responsible governance. By staying informed, participating in the democratic process, and managing your personal finances effectively, you can make a positive impact within your sphere of influence.
About the author: Alex Borgardts is a co-founder and financial planner at Next Bloom Wealth LLC. He serves clients in the Kansas City area with a focus on holistic and comprehensive financial planning.
This article is for educational purposes only.