Back in my pre-Dave Ramsey days I actually had three credit cards. And like most Americans, I had all three of those cards maxed out--and was making only the minimum payments every month. Eventually, I got myself into some financial difficulty and was having real trouble making ends meet. That was when one of the credit card companies (for reasons I will never understand) actually gave me a credit limit increase of $1200. You would have thought that I had won the lottery! An extra 12-hundred bucks to spend? It was like a gift from above that would serve as an answer to all my financial problems. I came up with this "plan" to put all of my expenses on the card for two months--save up cash to pay off other debts--then get "back to even" from that point forward.
Care to guess what actually happened? If you thought I went right up to the new credit limit and failed to pay off any of the other debt, you would be absolutely correct. The extension of more credit didn't provide me any further financial security, it instead created more financial problems--which took years to fix and a whole lot of personal sacrifice.
Well, the Federal Government finds itself in the very same position that I was back in the late 1990's. Congress is about to vote on raising the Federal Debt Ceiling from its current $14.29 TRILLION DOLLARS to something around $17 TRILLION. The Obama Administration is like me in the past--continue current spending and we'll try to not take on so much debt in the future. Paul Ryan and some other members of Congress trying to tie spending cuts to the debt increase are like me now--if we don't change our spending habits, we will be right back here again in a few years looking for ways to take on even more debt.
The President is lucky. He doesn't have bill collectors calling him at the White House all day wanting to know when he is going to start paying back the money he has borrowed--and no one is threatening to take the Fed to court to collect. But that doesn't mean he shouldn't make the same positive changes that I--and millions of other Americans have made the last ten years: to get out of the debt trap and to start living within our means.