Hitting Your Personal Debt Ceiling

BOSTON (MainStreet) -- While we chide government officials for how they have handled the nation's debt ceiling, many Americans are guilty of similar problems and have the opportunity to learn from Washington's mistakes.

While the government crashes into its $14.3 trillion borrowing limit, households across the nation are struggling with their own debt ceiling.

Households and governments both, generally speaking, spend too much, rely too heavily on borrowing and need to strike a balance between incoming and outgoing money. According to Certified Financial Planner Board of Standards Consumer Advocate Eleanor Blayney, CFP, the issues elected officials must tackle to get public finances into shape are "distressingly similar to those faced by indebted consumers."

"The total amount of debt outstanding for American consumers -- and that takes into account mortgages as well as revolving debt, auto loans and so forth -- is up there in the double-digit trillions as well," Blayney says. "We've got debt on all sides of us. Our government owes money and we owe money. We are a nation of debtors."

As people look critically at Washington, "we are looking in the mirror and seeing ourselves," she adds.

All that debt leads to poor financial choices.

"When you get to the point where you are prioritizing the bills, having to make choices about what to pay, you know that you are in real trouble," Blayney says. "Even if we pay the minimum payment on time to allow us to pay our other bills, we are paying interest charges that are accruing. People are having to pay 18% or more for not being able to pay their bills on time."

Blayley offers five suggestions to rein in overspending and borrowing that can relate to people as well as to government:

1. Set a reasonable budget.
"Our leaders are in a wrestling match about budgeting, but most consumers, I would say, do not have good budgets," Blayney says. "It really does take some hard looking at."

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