Imagine you continuously lived above your means and had credit cards to live off of. Once those were maxed out, should you apply for more credit cards? Sounds ridiculous but this is pretty much what the US government has been doing.  

What is the debt ceiling? The US has continuously spent FAR more than it brings in, so we have to borrow money in order to fund the government. Congress places a limit on the amount that the Treasury can borrow. Every time we push up against that limit, Congress has to raise it or else the Treasury can’t borrow more money. And if they can’t borrow more money, we won’t have enough to fund ourselves and the government will be out of money.

The government has said it will be out of money by early June if the debt ceiling isn’t raised. The good news is the President is sitting down with members of Congress today (it might be at the very moment you are reading this!!) to reach a deal. The bad news is, it’s politics and things tend to get messy.    

It’s easy to want to blame the opposite political ideology from you. But it’s not one party to blame. We have ran a budget deficit each of the last 21 years. Both parties are guilty of excessive spending.

Congress has approved to raise the debt ceiling limit 102 times in the last 70 years. This is a relatively straightforward process during years of unified government. But it can be an incredibly tumultuous process in a divided government.  

Whatever you do, do NOT be like the US government. Don’t spend like a drunken sailor. Focus on spending less than you make and invest the rest in index funds so you can build wealth.

If you want to learn how to make more responsible financial decisions than the US government, we are having a big SALE on our “How to Money Like a Millionaire” and “Build Wealth by Investing in Index Funds” courses. It starts a week from today!

As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.‎

‎-Vivi & Shane