Jaqueline Benitez, a teacher at the preschool, relies heavily on the state’s Supplemental Nutrition Assistance Program (SNAP) to to pay for food. In the event that debt limit doesn’t get lifted, SNAP and other federal payments will be delayed. (Allison Dinner/AP)

Should there is a U.S. defaults on its debt, the consequences could be catastrophic for Americans.

Not just for retired people who might not receive Social Security payments on time or military veterans who may be unable to access benefits or federal workers and contractors who could experience delays in the payments due to them. The cost of borrowing money could rise, making it difficult for all to afford cars, homes or pay off credit card loans.

This could cause more problems for families at a time that many already face financial stress. Inflation remains high and Americans have amassed nearly 1 trillion dollars in debt on credit cards. This is an increase of 17% over one year ago as per The Federal Reserve Bank of New York.

The Treasury Department says Congress has until June 1 to increase the debt limit for federal government. Negotiations are still in progress and the time running out, here are a few ways in order to set your budget for the worst-case default in debt.

Basics that have been tested and proven

“We’re suggesting that people prepare for the possibility of a default just as you would in the event of a economic recession” declares Anna Helhoski of NerdWallet.

This means cutting down on excessive spending, creating budgets, and building in emergency savings that will provide the minimum of three months’ living expenses.

As a default in debt would probably send interest rates skyrocketing the credit card debt you’re burdened with could soon be costing you more. Experts in personal finance recommend getting rid of debts that carry the highest rates of interest in the shortest time possible.

As you work to tighten your financials you might find that juggling the cost of your car or home mortgage can be an issue. Helhoski suggests contacting lenders before you do to discuss alternatives to lower your costs, and he also notes that U.S. Department of Housing and Urban Development offers “housing counselors who are able to assist homeowners in exploring alternatives to delinquency as well as anything that will affect their credit for a long time.” the credit score of their clients.”

Don’t panic

The stock market is sure to suffer a loss if U.S. defaults on its debt. At times it could be important to those who have an investment or retirement account.

For those with diverse portfolios, who aren’t yet nearing retirement, experts in investment advise to stay on the path.

“Fight your nastiest urge to react based on information,” says Teresa Ghilarducci an economist in the field of labor and expert on retirement security in The New School. “All research from academics suggests that if you invest and hold, you’ll succeed more than if you attempt to keep track of the market’s trends, regardless of whether that is responding to a crisis in the economy or an economic recession.”

In the past, markets have bounced back after massive drops. The market rebounded after events like the Arab oil embargo of the 70s and 80s. Black Monday in the 1980s, the dot-com boom of the early 90s and most definitely this year’s financial meltdown in accordance with an examination done by MFS Investment Management of market recovery events dating back to in the Great Depression.

Be quick, or put off major purchases

If you’re looking for new home or a car and you’re in the market for a new one, what you can pay today could be over your budget in a matter of weeks. It’s a good idea to finalize the purchase of the new car you want today. Make sure that the interest rate is fixed for the time you’re planning to close on a house.

The real estate website Zillow estimates that mortgage rates could rise to 8.4 percent in the case of a default which could send chills through a market that is already frozen due to the rate hikes that occurred in the past year.

“You’ll witness a drastic decline in buyers. When it happens, then you’ll see home prices drop, and a stop on various construction and home improvements,” says Artin Babayan an officer for home loans who is based at Los Angeles.

By some estimates, housing activity accounts for nearly five percent in the U.S. economy. A slowdown in the real estate market could have a ripple effect, Babayan notes.

“I think it could really mess our economy,”” the economist adds.

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