An uncertain economy and rising interest rates are hitting everyone hard. While you can't control what goes on in the world, you can control your part of it. Learn to take charge of your own money so you not only weather financial storms, you profit from them.
Consumers with the necessary skills make informed financial decisions about buying a home, financing an education or their retirement or starting a business will almost certainly be economically better off than those lacking those vital skills.
Though they've been bombarded with financial help from high-paid "experts," Americans are still struggling financially.
Recent reports peg the savings rate of Americans at 0.5%... in the negative. And only four in ten have an emergency fund to fall back on.
The average American has about $3,800 stashed away in the bank and is lucky to be sitting on $35,000 in a retirement account. And at the end of 2004, the average credit card debt per household was $3,560.
At the same time, 570,000 houses were in some stage of foreclosure while at the same time, 1.6 million mortgages were showing past due.
You may even have had to get a loan to cover your bills or had to put all your troubles on plastic. And that will definitely have your stress level hitting the stratosphere.
And no wonder! The average variable interest rate of regular, gold, and platinum credit cards is 13.82%. And at the end of 2004, average credit card debt per household was $3,560... and rising.
So how did we get into this mess in the first place?
How in the world did this happen?
Recently, getting a home equity loan or just about any other loan was about as difficult as saying, "May I please have one?" The way banks were handing out money, you'd think it was a bag of dime-store lollipops.
Good credit, no credit, bad credit... didn't seem to really matter. People who couldn't otherwise have afforded a home or a new car or a college education suddenly found themselves rolling in dough.
After all, who wouldn't salivate at the prospect of a 5% fixed-rate mortgage or a 0% car loan? Unfortunately, folks were so giddy from all their new "wealth" that they walked right into a bottomless pit.
Behind the curtain in this easy credit land of Oz stands the mystical entity known as The Federal Reserve. It's the job of the Fed to raise and lower interest rates to keep the economy humming along. And until recently, the Fed has been particularly generous in lowering interest rates.
But my... how times have changed.
After consulting numerous economists, financial analysts, mathematicians, and political experts, the Fed has been raising the federal funds rate. Over the past two years, this rate has been raised 17 times from 1% to over 5%.
That's a nice way of saying that the easy credit and money ride is over.
You may have already noticed some of your monthly payments rising. Home equity loans, adjustable rate mortgages... even the teaser rates on credit cards. Feel your stress levels rising? You're not alone.
The easy money train is leaving the station, and a lot of people are getting stranded... all because a bunch of stuffed suits sitting in a closed room in a dull grey building in Washington, DC decided that something had to be done about your money. Chances are, they didn't call you first to see if you agreed with their decisions.
If you've been hit by this credit crisis, you already know the definition of nervous tension. Whether it's a home equity loan, credit cards, car loan, student loan, or some other debt that is making your toes curl.
Because while rising interest rates have made borrowing money a real sore spot, that same interest is going to make it easier -- and more profitable -- for you to grow your money in places that pay you to save.
Money savings goal is always a top pirioty. Even if your goals are a little fuzzy and you're not really sure where you want or need to go, you should look into ways to:
a. Creating a cash cushion
b. Getting out of debt
c. Planning your estate
This is the basic guide that you need to put you firmly on the road to financial independence. Find out what you can expect from investing... discover the investments that are best for you... learn how to ride out the inevitable storms in the marketplace. Ask your investment bankers to help you develop a investment portfolio.
Shibuyashopper.com periodically features smart investment strategies, tips and ideas. www.shibuyashopper.com |
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