Financial journalist Kristin Myers joins Cheddar News to talk about how the U.S. defaulting on its national debt could trickle down to your wallet. 



<div class="block">Financial journalist Kristin Myers joins Cheddar News to talk about how the U.S. defaulting on its national debt could trickle down to your wallet. </div>

Wake Up With Cheddar

Stretching Your Dollar: How a U.S.  Default Could Impact Your Wallet

And welcome back everyone to news I'm for and I'm and now we are stretching your dollar. You might not think the federal debt limit has anything to do with your personal finances. You'd be wrong. If the US defaults on its debt, it could have huge implications for everyone to help us understand how it will affect your life. We're joined by financial journalist Kristen Myers Christen. Welcome. Thanks so much for having me. We're excited to have you. So in Lehman's terms, what exactly is going on with the debt ceiling right now? Yes. So essentially we are hurdling towards what everyone is calling X date and that's the date when essentially the United States is pretty much not going to have any money really to pay for its bills are the obligations that the government has already said it is going to pay. I want to be very clear, it's not new spending that we're going to be dealing with here. This is spending that essentially the government has already promised to pay. So think about those military salaries, social security payments, Medicare, things like that. We're not going to have money to pay for it anymore. Ok, so let's talk about those in particular that you mentioned social security, Medicare payments. A lot of people rely on those a lot. How could these people be impacted here? And what happens? Let's just say if we miss that deadline on June 1st, what happens? Right. And we don't entirely know if it's even going to be June 1st. It could be June 1st, it could be June 15th. It could be July 1st. No one entirely knows when we're going to hit that date. But right now we are using June 1st is really sort of the provisional date when we're going to hit that cliff. So if you are someone who is going to be relying on social security payments, if you are someone who gets a salary from the US government, unfortunately, you probably are not going to be receiving that money, those payments, you will get them eventually. Of course, once some sort of deal is reached between the Republicans and the Democrats, but those payments are going to definitely be delayed. But again, we don't entirely know how these things are going to be impacted because I should be clear. This is actually never happened before in all of us history. The debt ceiling has been raised multiple times in the over 50 years that we've actually had this and we've never actually reached essentially going over and hitting that X date. So again, this really depends on the plan uh that the government really comes up with, if we go over that debt ceiling, do they choose to prioritize uh interest rate payments on treasuries and paying back investors for that are holding us bonds or do they choose to prioritize paying? Perhaps folks that are on Social security, it really is going to depend on their priorities. How could this affect savings like your 401k? Yeah, if you have a 401k, especially if you're older, you probably have rotated more into fixed income, things like bonds. And so you're probably going to see things like treasuries really start to take a wild ride right now. Treasury yields actually have been popping at least for short term bond holders. Um But if you are someone who is a little bit younger, you're going to see a lot of volatility in that 401k. But again, this is not a time that anyone should be advocating that you pull all of your money out of the market or that you pull all of your money out of your investments. That would be one of the biggest mistakes that you could possibly make right now. You really want to add up and pad those savings in case you need to rely on them a little bit in case those Social security payments are halted or are paused for any length of time. If those Medicare payments are paused, you really want to make sure you have enough savings to be able to rely on pay down that debt because interest rates are probably going to go up, leave those money that we have about 30 seconds left. Any financial advice for people who are really worried right now? Yeah, and I, I know a lot of people are so, yeah, really? Just again, make sure you increase that savings. Keep that money inside those investment accounts. Any type of recession or impact is probably going to be very short lived, avoid taking on any new debt and make sure to pay down any debt that you might have really great advice. So thanks again to financial journalist Christie Myers for breaking all that down for us. Kristen. Thank you so much and we got more wake up coming your way, including the opening bell on Wall Street right after this quick break.