The Federal Reserve has decided to raise the benchmark short-term interest rate today to a range of .25% to .50% from .00 % to .25%, and it will affect you. The immediate outcome from this decision will be slightly higher auto loan, credit card, and mortgage loan rates. However, the long-term impact, particularly for Millennials, could result in many American having to work well past the current social security eligibility age of sixty-five.
Today’s rate hike represents the end of this low rate era and the beginning of continual increases, and Millennials that fail to recognize this will suffer the most. Between ages twenty-one and thirty-six, the average adult will build more debt than any other fifteen year period of their lives. During this small window of time retirement age, household net-worth, and overall financial stability is determined, therefore it is important to limit interest exposure while these liabilities are increasing. Fortunately for most young adults, these increases will be gradual, which leaves the closing low interest rate door cracked open just enough to sneak in before it’s too late.
These increases also bring a bit of good news for those who save. Eventually certificate of deposit rates and other saving rates will also see an increase, and those with savings funds will earn a little more interest. This is especially good news for Baby-Boomers because they could experience a few last minute savings increases before retiring.
After the first quarter of 2016 another rate hike could be on the way, so if this one caught you by a surprise, don’t let it happen again. We are now in a period of financial flux and five to ten years from now those who didn’t pay attention will be left wondering how their debt increased so quickly. Remember, wages are not on the rise though the unemployment rate is dropping.
If you’re reading this and you are a Millennial or a younger member of Generation X, now is the time to position yourself to take advantage of these record low rates before they are a thing of the past. Do what you need to do now to fix your credit to take advantage of these fading low rates, because it will literally save you years of work and stress.
HOW DO YOU USE
You unexpectedly inherit $25,000.
You have a $225,000 mortgage.
You have a $18,000 auto loan.
You have $10,000 in credit card debt, all with a 12% APR.
You have $18,000 in student loan debt that can no longer be differed (5 percent rate).
All your bills are current.
All your other liabilities total less than $1,000.
You haven't taken a vacation in three years.
Your home and automobile are in good condition with no immediate upgrade needs.
You are employed.
Your net-worth can't be determined by another person because it will always come down to the numbers. While people will always try to estimate your financial status based on your material possessions or outward appearance, only the real numbers can reveal the whole truth. Know your numbers and ignore everything else.
Don't let your pride lead you to the poverty. Accept your financial mistakes, learn from them, and move forward. Being a good money manager doesn't mean not making mistakes, it has more to do with your actions after they occur.
D.E.B.T. Tip of the Day
If you want to reach financial freedom, chase your debts, not dollars. Remember, most of your current debts were based on income you've already earned, not earning potential. Therefore, unless you've experiencing an income reduction, the funds needed to pay down these debts are already scheduled to be deposited in your account. If this deposit isn't enough to cover your debts, maybe it's time to chase them down and get rid of them; even if that means going without some of the things you've grown to love.
"When income is stagnant and debts are growing, there is only one way to create stability, stop the growth."
Here are some of the latest and most popular scams to look out for:
Xfinity Phishing Scheme
Xfinity customers are receiving emails that appear to be from the cable company suggesting a recent payment wasn't processed and request an info update via attachment. Legitimate companies never make an info update request through this method, so please delete any emails you see like this. Full article here
The Gift Card Scam
Scammers are stealing card numbers from gift cards before they are purchased and draining them of available funds immediately after activation. It is not clear if these thieves are using scanners or simply writing the card number down, but this scheme is quickly growing in popularity as the holiday season approaches. The best way to avoid this scam is to order gift cards through company websites. Full article here
The Paris Attack Recovery Scam
Whenever a major natural disaster or terrorist attack occurs, scammers always jump on the opportunity to take advantage of people that want to help. Avoiding falling for these scams by ensuring the organization is legit and well established. Do your research before giving any money to any cause. Full article here
It's that time of the year again. We are just a little more than one week away from the annual spending fest known as Black Friday. Retailers are once again posting their top clearance sales and extended store hours to create a two-three day annual increase in sales. The calls to protest or boycott this consumption festival have also returned in response to growing concerns over racial and income inequality. While the boycotts and shopping are widely recognized Black Friday traditions, there's something else that continually accompanies the biggest shopping day of the year, post Black Friday buyers remorse.
What is post Black Friday buyers remorse? It's the purchasing regret shoppers feel days and months after they've stood in long lines or surfed the web to take advantage of one-time discounts. While this feeling is unlikely to accompany all Black Friday purchases, there are always some that will bring on this slightly depressive state. If you're interested in avoiding Black Friday buyers remorse, here's a list of the purchases to steer clear of:
1. Outdated tech items: Every year there are Black Friday Doorbuster sales on televisions and laptops. While some of these sales are truly great savings opportunities, many are not. The difference between the two can typically be found in the spec descriptions of each item. Avoid all electronics that meet the following criteria:
The product is no longer being produced or discontinued
There are reported defects
The product is not compatible with newer software (last five to seven years)
The product can't be repaired or restored
There's not at least a twelve month warranty option
Tablets that have less than 1GB of RAM (this really should be 2GB for regular usage)
Laptops that have less than 6GB of RAM
Cameras with less megapixels than your standard smartphone
DVD's (if you're not going all digital by now you really need to start)
2. Exercise Equipment: If your not committed to getting in better shape, exercise equipment will be useless and just take up space in your home. It's often cheaper to join a local gym or run around the neighborhood with a workout partner. This equipment will also be a wasted purchase if your not going to change your diet.
3.Large household appliances that are not energy efficient: Newer refrigerators, ovens, dishwashers, clothes dryers, washing machines, and most other large appliances use less energy than older models. If you need to upgrade these appliances, do yourself a favor an make sure they are energy efficient. Doing so will save you thousands in home energy costs per year.
4.Tools: Studies have shown that there are more discounts available for tools in December than in November. Spending more than you have to always creates buyers remorse.
5. Outdoor winter gear: These items typically have deeper discounts in January. If you live in a region where temperatures don't dip below freezing until mid-late winter, save your money and wait until after the holiday season for bigger discounts.
While this list does include some of the most common purchases that cause buyers remorse, we realize there are plenty that could be added to it. What would you add to the list?
DEBT Tip of the Day
If your experiencing severe financial problems, don't race to improve your credit score before addressing cash flow problems. While credit scores are important for borrowing purposes, these numbers typically won't help you pay your bills any faster or eliminate your debt. First focus on making changes within your current need based daily/monthly expenses and work on everything else afterwards.
Yesterday's budget hearings/tax payers night session at Baltimore City Hall was full of plea's, threats, and calls for action from local concerned citizens. Baltimore City Council members and the Budget and Appropriations committee listen to testimony after testimony varying from disagreements about recent Baltimore city school administration and staff layoffs to community open space/recreational needs. The most common plea was for one of Monarch Academy's founding members, Jerelle Bratcher, a recent victim of school budget cut layoffs, and all other's that faced the same fate.
Students stepped up to the podium to ask for these cuts to be reversed. They spoke of how invaluable school administrators were to their overall well-being. Parents and school staff members plead with the Budget and Appropriations committee to not remove such valuable resources from their schools. But all of these calls to action were only met with a promise of consideration and revisit during the next legislative meeting. Is that enough for a city experiencing one of it's highest murder rate surges in more than ten years? Is this the best way to respond to Baltimore city citizens that are truly working to create positive change? These weren't the over-publicized local community and religious leaders trying to gain more media attention for the sake of their cause. For the most part, they were nowhere to be found during this session. The only media darlings at City Hall were the people hearing request from the community. The individuals who offered their testimony yesterday are the real voice of the community and they deserve more than empty promises. They deserve real answers and solutions. Remember, when an angry youth needs to vent, these are the people that answer the call. If there are problems at home, these are the citizens that try to provide comfort to our young people. While the process of deciding who to cut and keep within the city's budget is difficult, there are some components which should never be removed. Yes, ensuring we have funds to effectively police local communities is important, but policing doesn't begin with police officers. It starts at home and with the very people we are cutting from the budget, school administrators. Police officers may enforce the law, but these individuals encourage young people to retain the hope that creates compliance. We owe them more than a promise of consideration. They deserve real solutions.
Know when your creditors report to credit bureau agencies. If you know when your creditors report your account activity, you can plan to lower your reported outstanding balances in time to affect your credit scores. Remember, the goal is to keep your reported balances within ten to twenty percent of the available credit line.