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What a Debt Ceiling Decision Means For You

Note: This piece and podcast were written and produced with the information available as of May 24, 2023.

You've probably heard a lot about the debt ceiling lately. Negotiations, a looming default, why we're even talking about it, and the global consequences that could follow.

What does any decision mean for you? With the deadline quickly approaching, words like "default" and "debt" can make anyone a bit nervous - especially at a global level. The current economy already has families across the country concerned.

The truth is that the debt ceiling can be moved similarly as it was established. The "ceiling" is an agreed upon limit that totals the amount the U.S. borrows.

The limit on your credit card is your own "debt ceiling" minus one major difference. Your limit is up to your credit card company, while the U.S. can decide how much it can borrow. Simply put, the country's credit limit is up to them.

It's not always clear how decisions and spending of this amount impact individual homes. Decisions in Washington DC impact communities everywhere, but with this one, it's harder to see the impact it'll have directly on your family.

At FitMoney, we're passionate about starting conversation and starting these discussions young. Research shows financial habits are formed by age seven, much earlier than we even learn about credit, loans, budgeting, etc. (that is, if we're lucky to receive financial education).

What precedent or model is the government setting for young consumers newly aware of the existence of credit? If our own government can decide how much they can borrow and consistently add to that amount... then, can we?

These recent discussions making headlines for weeks are sparking an important idea: consumer financial literacy doesn't always perfectly apply to other things happening in finance.

We sat down with returning FitMoney Podcast guest Taylor Sohns to ask what the debt ceiling is and what a financial concept like this models for consumers both new and old.

Listen now to the special "Pocket Change" bonus episode now, and stay tuned for more discussions on the show every other Wednesday.

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