These days, there is a lot of uncertainty going on in the financial world. With America dealing with inflation that hasn’t been seen in decades and the COVID-19 pandemic still raging, you may be wondering how the current US debt crisis could impact you, your business, your family, and more.
So what is the US debt crisis and how can you plan ahead? You have come to the right place to find out.
Let’s get started!
What is the US debt crisis?
When it comes to figuring out how to plan for the US debt crisis, the most important thing is to really know what it is and how it could impact you. For years, the United States has actually been in debt. It may seem strange that the richest country in the world deals with debt, but after decades of war, social security payments, and other budget deficits, the government has loaded up quite a bit of debt.
In fact, budget deficits are introduced every time a new spending program is released. While tax cuts are good to everyman, typically, they can have a major impact on the amount of money that the government can actually spend. This situation is made more pronounced and worse given the high level of polarization in Washington as well, as Democrats and Republicans duke it out for control.
Currently, the United States’ national debt is at $28.8 trillion, and it’s rising every day.
Should you care about the US debt crisis?
This is another important question. If the debt is a somewhat constant thing, does it really impact you? What is important to know is that the United States government continues to raise the debt ceiling. That means that they can continue spending on federal programs even though they are in debt. However, as debt continues to rise, there is a strong chance that the rules regarding private borrowing will change. This deals specifically with the interest rates connected to things like loans and mortgages.
So while it has been quite cheap to borrow money for many years, that could soon change. That means that it may become harder for people to pay for big-ticket items, start a business, get home loans, and more.
The other thing that is important to know is that if the debt ceiling was not to be raised, that could have a major impact on the economy. We are already dealing with shortages of labor and products, and the debt ceiling not being raised would strongly impact the buyer and lender confidence going forward.
How to plan ahead
When it comes to planning ahead, the most important thing is to try to square away your personal debt as best as you can. You will not want to worry about taking out loans if the interest rates are improved, and you will want to make sure that – even in the event of a depressed economy – that you will be able to provide for your loved ones and put food on the table.
There is no great reason for concern yet, but knowing what is going on and staying informed is the best way to avoid feeling the burn of the increased level of debt that the US government is dealing with.