logo

America is $23 trillion in debt. What that means for your budget

Jacobs Stock Photography

Worried about your debt?

Consider this: The U.S. is $23 trillion in the red.

Today, the country owes over four times more than it did in 2000, when the national debt stood at around $5 trillion. How did we get here?

"Like any budget that you have in your household, we have too little income and too many expenses," said Ted Jenkin, certified financial planner and CEO and founder of oXYGen Financial in Atlanta.

Our biggest expenses as a country include Social Security, Medicare, defense — and the interest on all that debt.

The rising debt poses risks. For example, it could leave the federal government with less spending power in a downturn.

VIDEO1:4201:42
Ever wondered who owns that national debt?

But it also could have some positive implications for your personal finances, Jenkin said.

Specifically, interest rates aren't likely to rise all that much in the years ahead, he said.

That's because if rates were lifted to 6% or more, Jenkin said, "the net interest on the debt in our fiscal deficit would actually be the No. 1 line expense on our budget."

"We'd suffocate ourselves in our debt," Jenkin said.

Today, the 10-year Treasury is at about 1.8%. Still, the government expects it will pay out almost $600 billion in interest for 2019.

So what does the continuation of low rates mean for your personal finances?

More from Invest in You:
Money mind hacks from bloggers can boost your finances
Retirement luxury on a Social Security budget
If you don't know much about investing start here

It will remain relatively easy to take out loans for starting a business or buying a house, Jenkin said.

Although, in an ideal scenario, you'd come up with a 20% down payment on a house or apartment to save yourself interest, low rates mean that even a 5% or 3% down payment could still leave you with a reasonable bill, he said.

Your savings are likely to fare better in the market than in, say, a certificate of deposit, Jenkin said, adding that people should, "continue to like tech stocks, real estate and defense stocks."

And make sure you're not paying more for your loans than you have to.

"It's probably a good time to refinance student debt, credit card debt or mortgage debt because rates are so low," Jenkin said.

SIGN UP: Money 101 is an 8-week learning course to financial freedom, delivered weekly to your inbox.

CHECK OUT: Why January is a particularly great time to invest your money via Grow with Acorns+CNBC.

Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.