JACKSONVILLE, Fla. -- The possibility of the United States defaulting on its debt is something that has quite a few people talking.
There are several factors that would have a direct impact on you. Read on to find out how you can protect yourself starting now.
1) Your credit cards could be impacted
Like many Americans, Lisa Bonawitz, of Bethlehem, Pennsylvania, has a credit card. The idea of a default has her concerned.
"The possibility of rates going up," she explained. "Not being able to pay it off."
If our nation defaults on its debt, you could see a significant impact on your credit interest rate and your monthly bill. You will want to pay down as much short-term debt as you can.
Wealth management adviser Mike Halloran with Northwestern Mutual recommends paying the full balance if you can. He said paying the minimum balance will just cost you more in the long run.
Also, he said to consider getting a consolidation loan on your credit cards that is at a lower rate than you currently have.
2) Mortgage rates could go up.
In case of a default, home buyers and prospective home buyers wouldn't be able to enjoy currently low rates. Halloran recommends locking in mortgage rates of near 4 percent now. He believes they'll go up no matter what happens.
3) Jobs would be impacted, too.
Bevelon Jacobs, of Jacksonville, is unemployed. It may take her longer to find a job because employers might be reluctant to hire.
"I'm feeling a little worried," Jacobs said "Because it's a lot of people out there that looking for work that's already having a hard time."
Jacobs said while she is worried, she will not let that concern stop her from her job search.
Candace Moody, Vice President of Communications for WorkSource, said Federal contractors would be affected by a default, but most area employers are smaller and wouldn't be dramatically impacted by a default.
"It's really not a good idea to stop your job search because of these kinds of issues," Moody explained. "Keep going, push through and by the time something really starts to happen with your search, in a week or two, things may be very different."
4) What happens to your 401k in case of a default?
Halloran said in the short run, it will be affected by market fluctuation. In the long term, it shouldn't be affected. He said to remember to diversify your portfolio with things like stocks, bonds or real estate, based on how much risk you're willing to take.
5) Keep an emergency fund
It is also good to remember that it is best to keep anywhere from three to six months of your monthly expenses as a reserve. Halloran said save it and keep building it in something like a savings account or money market account. Those are examples of assets that can be turned into cash quickly in an emergency.
6) Think about investments
With your investments, try to think long term. According to NBC News, if you've got money in stocks that you need in the next five years, it does not belong there. If you are thinking long term, you would have time to ride the situation out. In the short term, focus on cash savings. Build up your cash reserves by putting money into assets like a savings account.
First Coast News