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World Bank chief warns of financial crisis World Bank chief Robert Zoellick on Saturday warned of a "new and more dangerous" time in the global economy...
US Recession Risks Rises The threat of a new recession is rising in the United States, economists say, as they slash their ..
Unsafe US debt remains safe haven US Treasury bonds remain a hot ticket for investors looking for a low risk investment in a volatile market despite the unprecedented ...
US borrowing tops 100% of GDP US DEBT shot up US$238 billion (S$287.2 billion) to reach 100 per cent of gross domestic project after the government's debt ceiling was lifted
Consumers consumed by debt The average consumer may feel far removed from the heated debates concerning the $14.3 trillion debt ceiling. But the truth is...
Financial Crisis II. Get out of debt now There is increasing talk among traders and financial analysts that the latest slump in global share markets
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US borrowing tops 100% of GDP: Treasury

 

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US borrowing tops 100% of GDP: Treasury

US DEBT shot up US$238 billion (S$287.2 billion) to reach 100 per cent of gross domestic project after the government's debt ceiling was lifted, Treasury figures showed. The new borrowing took total public debt to US$14.58 trillion, over end-2010 GDP of US$14.53 trillion, and putting it in a league with highly indebted countries like Italy and Belgium.

Public debt subject to the official debt limit - a slightly tighter definition - was US$14.53 trillion as of the end of Tuesday, rising from the previous official cap of US$14.29 trillion a day earlier. Treasury had used extraordinary measures to hold under the US$14.29 trillion cap since reaching it on May 16 2011, while politicians battled over it and over addressing the country's bloating deficit. The official limit was hiked US$400 billion on Tuesday and will be increased in stages over the next 18 months.

Looking at these statistics, it is not hard to see why debt generates so much news and discussions. The average American family devotes at least 25 percent, some 50 percent, of its spendable income to paying outstanding debts. And that's during sound economic growth. In financially difficult times, indebtedness can imperil our survival. Unfortunately, indebtedness has become a pillar of America's financial framework. Both nationally and domestically.

 

Can Amercia continue to meet financial obligations. Unlikely. Ratings agencies have warned the country to reduce its debt-to-GDP ratio quickly or facing losing its coveted AAA debt rating. Can you continue to meet your financial obligations - car payments, credit card bills, housing instalment loans, and the like - if you lost your job? We now have to view debt through the window of possibly one of the greatest financial crisis since the Great Depression. We have to find answers that will enable you to approach debt with a proper perspective.

Debt is not something that seems to to really bother buyers in good times. Yet borrowing money has its price - and it is a cost far greater than you realize. Anytime you use credit to borrow money, you precommit your future income. The effects of such obligations can range from simple inconvenience to financial devastation. Many are now paying that price today.

There are two simple principles to keep in mind if you want to work to strengthen your financial position. First, you must increase your financial flexibility, and second, you must reduce your financial constraints. If borrowing money limits financial flexibility, the absence of debt makes for a lifestyle of financial freedom and opportunity. With no, or even low, financial precommitments, you will be at liberty to pursue your goals and desires.

For Christians, the freedom from the financial obligations of debt can spell all the difference in how effectively personal resources can be used by God. Getting rid of any debt, whether it is large home mortgage or a relatively small credit card balance, is a guaranteed profitable investment.

How to get out of debt? Whether your debt is due to unwise overspending or an unexpected calamity, one thing is certain: Getting out of debt is always harder than getting in. The most effective way to get out of debt is to cut your spending. Establish a realistic repayment plan and discipline yourself to follow it. Beware of overambition. Once your strategy is in place, all you need is the self-discipline to make it work.

Ultimately, it all boils down to 3 simple rules in financial planning: First, spend less than you earn. Second, avoid the use of debt. And lastly, save up for financial uncertainties.

The Bible does show many ways to overcome any financial crisis. Many of these principles are laid out in our successful course, the Scriptural Financial Freedom series. To learn more, you can download the Small Groups kit from our estore.

 

Today's Bottom Line

Debt does not have to threaten your survival or that of your family. Debt may be a monster, but it is a beast you can tame.

Calculate your mortgage, credit card repayment, loan interest as well as your compounding interest and more with our 25 calculators!

 

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Financial Freedom Tips & Toolbox

Today's Pick: Money, God and us Money, God and us by [Ian Goligher]

 

 

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