Nightly News   |  October 14, 2013

Personal finance tips for surviving a debt default

If the U.S. defaults on its debt, how does that impact everyone’s savings? Finance expert Suze Orman offers advice on navigating the fallout if Congress fails to make a deal on the debt limit this week.

Share This:

This content comes from Closed Captioning that was broadcast along with this program.

>>> we are back now as promised with some answers concerning the justifiable fears a lot of americans have over their money right about now. unless there is a deal on this debt limit this week, 401(k)s, mutual funds , any money in the stock market could take a big hit . that's why we have asked the personal finance expert suze orman to join us tonight with some guidance. suze, the tentacles of this, when you stop and think about it, reach all the way down through american society .

>> you betcha' it does. everybody needs to be prepared. what is important to understand here, brian, even if they have a deal, they have just kicked this can down the road to january or february. so you might as well use this advice to prepare for then, because it's going to happen at that time if not now. if you are younger, you have time on your side and you're invested in the stock market within your 401(k), can you just do me a favor and do nothing and stay there and keep putting your money in every single month. if you think about it, when this happened in 2008 , we went down considerably. if you would stay in at that time, you would have quadrupled right back up here. so don't make the mistake that many people made in 2008 . if you are older, however, retired, you have been forced into the stock market because interest rates are so low. where are you going get the income on your money? if you are in the stock market in high-yielding dividend-paying stocks or exchange-traded funds, you're getting income from your investments, stay put as well. because all you care about is the income. however, if you are in a bond mutual fund , a mutual fund that buys bonds, i would be getting out of that if i were you and going into either individual bonds or dividend-paying stocks.

>> we've had a lot of furloughed folks watching us. today the department of energy put out a memo that said to all the furloughed employees, you can go ahead, and they recommend finding positions with coffee houses , gift shops, clothing, department stores , this is to make money as a second job, teaching things like yoga or foreign languages , and creative writing . for the folks who don't have the time or ability or the openings, what should furloughed workers, people affected by this know?

>> you need to prioritize your debts and your bills. what should you pay and what should you not pay? obviously, keep paying your student loan debt, if you have it, if you're younger, because that cannot be discharged in bankruptcy. but if you are older and you really have -- you don't have that emergency fund that i've been asking you to have forever, look at your debts. look at your bills. and if the one bill that has to be sacrificed, because you can't pay it, it should be your credit cards , believe it or not. keep paying your rent. keep paying your mortgage. keep paying your car payment, but also understand that you have the ability to withdraw money from a roth ira if you have it at any time you want in your original contributions without taxes or penalties. so there are ways for you to get money.

>> now we have you on tape telling you to put things on credit cards . suze orman , good to see you, even under these circumstances. we'll