The stock market plunged today in reaction to the credit rating for the United States changing from "AAA" to "AA+". This followed a week of people worrying about the European debt crisis and among fears of a new recession happening in our country.
What does this all mean for the average American? Since this rating cut is unprecedented, nobody knows for sure what the impact will be. Some experts say it might be a little tougher to borrow money and when we do that we may see higher interest rates on mortgages, car loans, credit cards, and other consumer loans.
What will need to happen for the United States to achieve the higher credit rating again? Our government will most likely need to cut more spending and raise taxes.
Am I an expert on any of this? Not even close, but times of financial uncertainty are a great reminder for me of why our family has been trying to live more simply. The American middle class has been hit hard over the past couple of years - our houses aren't worth as much, oil and gas prices are high, and we face huge health care costs.
Over the past year our family has been getting more in control of our money by decreasing our debt, trying to put more money into savings, and spending less. Days like today help me remember that even when the economy is strong, our family really needs to be careful not to over extend ourselves again.
Cross-posted with Simple Living Family
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