Consumer Alert: How to prepare your family for America’s possible debt default
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ROCHESTER, N.Y. – In just eight days our country could default on its debt, and the two sides seem to be no closer to a compromise. Tuesday, we showed you three hypothetical families and how they could be financially affected by a debt default. Now I’m showing how those three families should prepare for default.
Undoubtedly, a debt default would affect every segment of American society. We can’t hide from it. But we can prepare to weather the storm. Tuesday, we looked at an elderly couple, a disabled veteran and a family of four to gauge the financial impact of each family. Now, let’s look at how each should prepare.
First, advice for seniors: The average social security payment is more than $1,800 a month. So for this group of Americans, a default could be especially painful Be prepared for the possibility your social security check could be delayed. I’m a big believer in the power of family, so this is the time for us as children and grandchildren to step up. If family members are unable to help, consider a disability loan. It’s called that because it’s a short-term loan to tide you over until your benefits kick in. Click here for recommendations from Bankrate. Click here for personal loan recommendations from Lending Tree.
And the Monroe County Office for the Aging can put you in touch with other resources.
Avoid payday loans and other predatory high interest loans.
For members of the military and veterans: Be prepared for the possibility your benefits could be delayed. This is the time to dip into your emergency fund. If the fund is low, get emergency assistance from a trusted non-profit that provides temporary emergency aid for veterans like Operation Homefront.
Veterans of Foreign Wars provides grants to veterans in financial need.
And Hope for the Warriors Critical Care Coordination program offers support to military veterans in all kinds of situations including when their benefits are delayed.
For families with retirement funds or a college fund for your kids: While it’s scary to watch your investments shrink in a crisis, don’t panic. Now is the time to talk to your financial advisor. What’s your equity bond ratio? Keep in mind that stocks will be more volatile as the deadline approaches. If you have treasury bills that are already mature or mature soon after June first, advisors recommend you consider selling now and re-investing after the crisis. Also resist the temptation to over invest. When the crisis is over, experts say the stock market will likely have a relief rally.
You might be tempted to jump in when stocks are down. But analysts say over investing may not be a good idea when we’re facing a possible recession.