Debt Debate: What to Do With Your Money?

By Kim Baldonado, Jeff Scharping and Neil Costes
|  Friday, Jul 29, 2011  |  Updated 7:08 PM PDT
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The debt debate on Capitol Hill has everyone talking about the possibility of a default and its effect on interest rates.  It's a tough situation that has many people scrambling to find out what to do with their money.

KNBC-TV

The debt debate on Capitol Hill has everyone talking about the possibility of a default and its effect on interest rates. It's a tough situation that has many people scrambling to find out what to do with their money.

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Retirees Harry and Connie Heflin met with their financial planner Friday to talk about the debt ceiling issue and how it may affect their nest egg.

For complete coverage of the debt limit crisis go here.

"If there is a default, interest rates will go up, the price of everything will climb," Harry Heflin said.

Financial advisor Chris Haydel is telling all of his clients not to panic.

"If you stay focused on what matters in the long term, you'll do fine and this economy will come through OK. We've been through worse," Haydel said.

Friday morning, President Barack Obama called on Congress to quickly find a bipartisan solution.

"A lower credit rating would result potentially in a rate increase on everyone in the form of higher interest rates on their mortgages, car loans, credit cards, and that's inexcusable," the president said.

Dire predictions like that have mortgage broker Sandra Tuprins' clients in a panic.

"Just as Y2K and Carmageddon, everyone's in a panic. My clients in escrow are calling to be sure interest rates are locked," Tuprins said.

As of Friday, interest rates were the lowest they've been all year.

"It would be a crime to see these interest rates suddenly jump up. It would really hurt the consumer and the economy, which is already weak," Tuprins said.

As for the debt ceiling crisis, the president once again called on Americans to voice their opinions. Harry Heflin did just that by calling his legislator.

"I'm deeply concerned and embarrassed. I feel our legislators, duly elected and highly paid, are acting like clowns," he said.

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