You have heard the news about a standstill between President Joe Biden and the Republicans on the debt ceiling. So what exactly does that mean?
Each year, the government money to pay Federal employees and retirees, and pays the debt it owes to other countries. This is similar to how you provide your own budget based on your income and expenses. The government has to work through and come to a compromise on how to spend its money and increase the amount of money it prints.
This time, there are some differences between what President Biden wants and what the Republicans want. For the past few weeks, they are at a standstill. The Treasury Department says Congress has until June 1 to raise the debt ceiling limit.
So paychecks may stop sometime in June or even the following month in July.
There is very little you or I can do to help them come to a compromise, but there are some things you should consider if the parties don’t come to an agreement.
The group most likely affected are people who rely on the government for their income. This includes the elderly, federal government workers, and military personnel.
If the government can’t come to an agreement, these are some things you should consider now.
1. Avoid excess spending
2. Build up your savings
3. Pay off your credit card bills - interest rates could increase
4. If the government goes into default, it is a good time to add money to your investments since they will probably take a hit and go down.
Do you think the government will come to a compromise before it defaults?
This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any significant financial decisions.