Ceiling
Categories: Company Management, Managed Funds, Education
Assuming you’re inside a building, you can see the most literal example of a ceiling by looking up (feel free to do so now...if you are outside, you might have to wait until later).
Financially speaking though, this usually refers to the top-most level that can be tolerated, or is desired, or can be imagined. For instance, the debt ceiling we often hear politicians talking about is the maximum amount of debt that the country is legally allowed to borrow (until they raise the ceiling). As of summer 2018, debt ceiling is $20.46 trillion (yep, trillion), which means that Congress has approved borrowing up to that amount.
To take it out of the -illion range and into finances we're all probably more familar with: You’re car shopping. You have a budget of what you can spend. There's a ceiling on the price you can afford. That's the max amount you can borrow and still make payments comfortably.
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Finance, a la shmoop. What is a credit limit? Alright people well simply put the
maximum amount you get to charge or use on a loan or credit account, that's a [Credit limit definition written on a 100 dollar bill]
credit limit. So yeah it's that thing that keeps toddler Joey from ordering
two hundred thousand dollars worth of Snickers bars. [Toddler looking at the snickers bar]
If you accidentally you know leave out your Amex. (Illustrative example time) If you have a ten thousand
dollar line of credit or credit card you can't spend $20,000 on a trip to Vegas,
sorry. You might be able to go on a smaller trip to Atlantic City but once [Picture of Atlantic City]
you hit that 10 grand well the party's over until you pay some of that money [$10,000 flashing in red]
back, and by the way taking that smaller trip and then putting everything on red [Chips landing on a roulette table]
22 in hopes of funding your next trip to Vegas? Probably not the soundest
financial planning... sorry, let's keep it real. [Guy putting on a serious face]