Posted by: sonofliberty1787 | July 25, 2011

Credit Limits — In Real Life

Sunday my wife’s car battery died.  It was kaputt and we had to replace it.  An expense I didn’t want, but it had to be done.  Anyway, we always use our credit card since we earn more points and it’s more secure than our debit card.  The only problem with this is we are quickly approaching the end of the month, meaning our we are approaching our due day.  So we get the battery and go to pay.  The clerk swipes my card, it’s declined.  I tell him to try it again, same result.  I figure no big deal my card is cracked and the magnet must not be working, let’s try my wife’s.  Again, same result.  Then it hit me — WE REACHED OUR CREDIT LIMIT!

That’s when I get the ah-ha moment, this is just like our very own federal government.  The government is trying to purchase a night out here, groceries or gas there, and a battery everywhere…ok, ok maybe it’s more like welfare here, social security there, entitlements everywhere.  Bottomline, they’ve hit their credit limit and any more borrowing will be declined.

Now for the happy ending.  My wife and I are responsible.  We keep our credit limit low, so we can easily pay it off at the end of each month.  When we hit the limit it means our bank will not allow us to take out more credit, to borrow anymore on our card.  This minor hiccup at O’Reilly’s may have been slightly embarrassing, but we had no problem meeting and paying off our obligations.  Just because our bank wouldn’t let us take out more debt did not mean we couldn’t pay that debt off when it came due.  If we’re already in debt, if my family has already reached the limit of debt we’re comfortable with (our credit limit) would it make more sense to take out a loan to pay off the credit card?  Will it help our finances to raise our limit so we can pay our bill, will more debt ultimately reduce our debt?  This doesn’t make any more sense in your household than it does in mine.  Why would that work at the federal level?

So as Rush would say I live in Reality Heights and it’s lonely.  Let me apply this real life to Washington.  The Federal Government set a debt limit for themselves.  Congress set a limit they were comfortable borrowing, while the limit has been raised many times, this time the people finally elected a few Members to the House who will stand up and say no more raising the limit.  The government has hit the limit and the credit card has been declined.  Now it’s time to settle the bill.  The Democrats want to settle that bill, not by reducing spending, but by borrowing more.  Not only that, they want to raise the limit so they can incur more debt in the future.

We can’t pay off the bill this month, like my wife and I did, but we can start to pay down the debt.  We must first realize we’re at the limits and we cannot continue to increase the limit.  In the real world you cannot pay your credit card off with more credit card debt, the same is true for the government.  Let’s stop the scare tactics, come clean on what’s going on and actually stick to the budgetary limits we’ve set for ourselves.  No amount of pretty speeches or fancy press meetings will change these facts.  When your bill has come due you don’t take out a loan, you alter your behavior.  The bill has come due for the United States, what are we going to do?

From Rational Voice:  There is another facet to all this as well.  The President and the Democrats like to talk about what a catastrophe we’ll face if we don’t raise the debt limit.  Do they care about the larger catastrophe we’ll face if we do and allow us to run up even more debt?  If it goes higher, we’ll only have farther to fall when the day of reckoning comes.  An ounce of prevention today will be worth a pound of cure tomorrow.  I’m happy to say that for the first time in my life the Republicans are talking the way they should be.  They’re not all the way there but they’ve come a long way.  They’re holding firm for a change and despite what the President says, the people are not on his side.  They have woken up.  Let’s just hope they stay awake through November 2012.

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