PITTSBURGH (KDKA) — As politicians in Washington fail to compromise on the nation’s debt ceiling, local financial analysts worry about the impact on us.
“If the United States Treasury does default on its debt, then there could be serious ramifications, repercussions for every individual watching,” Rick Applegate, a financial planner, said. “It starts with the inability to pay those people with Social Security, those people who receive military pay, government workers — it just continues to spill on down the line.”
Applegate says that’s bad enough, but 401ks, pensions and investments in the stock market could take a big hit.
“If this comes to fruition, you could actually lose a substantial amount of money quickly, given the decline that is going to occur,” he said.
Financial advisor Bob Fragasso says even those with no government check or market investments will feel the impact.
“Interest rates will go up because our credit worthiness in the world will be questioned as a result of our inability to fund maturing bonds,” he explained. “What does that mean to a homeowner? All interest rates will go up, charge card interest rates will go up, mortgage interest rates will go up because the market will drive it. It will be very costly to the average person.”
Both advisors say there’s not much you can do to protect yourself either because it’s difficult to pull out of the market and re-enter it without losing more money.
So what can you do right now?
“Tell your elected representatives who are responsible to you what you think should happen, financially,” Fragasso said. “You’ve got a very vested stake in doing that.”