Local financial advisor discusses how default can impact you - WRCBtv.com | Chattanooga News, Weather & Sports

Local financial advisor discusses how default can impact you

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CHATTANOOGA, TN (WRCB) -

From your 401k plan to social security checks to interest rates on credit cards, a local financial advisor said a government default could affect you and your long-term goals.

Financial advisor Richard Cox usually charges for advice but the advice on WRCBtv.com is free.

"If you haven't called your financial advisor, now would be a good time just to make sure you're following those long-term goals you set for yourself," Cox said.

Cox said a default could affect your retirement by taking a bite our of your 401K.

Interest rates on borrowing could also rise sharply. Along with it, rates on home, cars and credit card loans could surge. But as bad as that may sound, Cox said the worst thing you can do is to panic by making rash decisions based on political events like debt ceiling discussions.

"Don't make decisions for long term goals based on short term events," he said. "We're all so unique. Your financial fingerprint is different from mine so working with somebody who's more of a financial coach who can walk you through where you're at in your life, what your long-term goals are and how this all fits together is invaluable to achieving what your goals really are."

Besides long-term finances, everyday money woes can come if the government can no longer borrow money. Credit card rates could climb or social security checks could be delayed. But those are worst-case scenarios that leaders hope to avoid.

Debt Ceiling: Controls how much money the U.S. government can borrow. Congress sets the limit, which is now $16 trillion. The U.S. has reached the debt ceiling limit and can't borrow any more money.

Default: When the government can't make payments on the interest on the debt.

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