Just last week, the Senate approved legislation increasing the federal government’s borrowing limit by $1.9 trillion. When signed into law the federal government will be able to borrow more money than at any time in our country’s history, making our total national debt a mind numbing $14.3 trillion. And this will only allow us to pay our bills through 2010!
Using credit for money
Putting this into perspective, according to the Heritage Foundation the federal government will take in an estimated $2.19 trillion of taxes in 2009. Simple math tells us that owing $14.3T while collecting “only”$2.19T is not a recipe for fiscal health. So last week’s vote was essentially the Senate’s way of literally, passing the buck. Recent groundbreaking election results indicate that American’s are telling elected officials to stop this madness.
But maybe leading by personal example is the best way to initiate national change. Instead of raising our personal credit card limits and unsecured debt as many Americans have done in the last decade; let’s consider taking a retro approach to plastic. Prior to the introduction of the binge inducing revolving card, the standard plastic issued was known as a “charge card”. And now this concept is coming back.
What’s the difference? As opposed to revolving credit cards, most charge cards require payment in full at the end of each month. If you can’t pay, typically a late fee is charged. So while old habits are hard to break, after a few late fees you start to think long and hard before putting something in the shopping cart.
Charge cards can be less risky for both consumers and card issuers. For the consumer, it’s obviously more difficult and painful to accumulate debt. Issuers like them because there’s less chance than with a revolving card that someone will be unable to repay them. There’s a much shorter leash.
So go ahead, buy anything you want and put it on the charge card, as long as you can pay for it by the end of the month. And then call your Senator to convey clear grass roots message…”I’m not buying stuff that I can’t pay for in 30 days, repeat after me!”
