According to most financial experts, there are projections about a rise in the US interest rates in 2015 but no one knows when and how much the rise will affect the lives of the Americans. Rarely is it seen that rate increases happen with great velocity. The last time when the Federal Reserve raised the rate of the federal funds, which banks used to lend money, it was done overnight in the month of June, 2006. This had brought about the rate to 5.26% after 17 consecutive increases. In the midst of the financial crisis, by 2008, the federal funds rate was again down to 0, where it had stayed. Another jump in interest rates in 2015 could have yet another financial impact, however, particularly if you’re looking forward to purchasing a home or you have loads accumulated as your credit card debt.
The rates for consumer loans, which include automobile loans and mortgage loans, are bouncing around 3.75%, a quarter percentage point above the historic low level that was reached in May, 2013. Greg Mc Bride, the chief financial analyst for Bankrate predicts a series of continuous rate hikes in 2015 and the year ahead. In fact, Mc Bride also says that this is indeed going to be a very volatile year. With such predictions about the US economy, don’t you think that the consumers need to get an upper hand over their finances so that they don’t fall into unnecessary trouble? Check out the concerns of the article for a better financial lifestyle.
Smart and effective tips for a better monetary lifestyle
Every year, millions of Americans start the New Year by resolving to get their finances in order. However, it is very soon that the motivation wears off and most people start following their old habits and spending patterns. But when you stick to your resolutions, you can gift yourself with a better financial life. Have a look at some smart ideas.
- Start tracking your money in a weekly manner: For the Americans, the B-word budget is perhaps more feared than their diet. Both can prove to be tough to get started. But instead of thinking of budgeting as a restrictive and controlled money diet, you should now shift your perspective and remember that a budget is indeed just a way to track your money in and out. By setting a weekly money date, you can update your budget every week. If you’ve been doing this every month, start doing it every week. When you track your income and expenses weekly instead of monthly, you can create a healthy habit of knowing where you stand with your money. Additionally, if you are investing or lend money to someone, keep a note of that separately so that you do not get confused with all the transactions.
- Boost your savings by at least 1%: Remember that your ultimate goal is to save about 20% of your net income towards different financial goals like debt reduction, building a cushion of cash for emergencies and for your retirement planning. Yet, there are people who get overwhelmed with this number and end up saving not at all. You shouldn’t fall into this trap. Instead, make sure that you start small. Start off by setting aside 1% of your net income towards your financial goals. Then start increasing it every year by another 1% until you reach that 20% benchmark.
- Clear off your debt woes: High interest debt affects us a lot. But instead of getting terrified and ashamed of your soaring debt problems, take some immediate actions to stop it from increasing. Face the facts and get clear about whatever you have. You can either take out debt consolidation loans or get help from the credit counselors to solve the issues. You can also try out some DIY methods like writing down all types of debt, the amount, the interest rates and the minimum payments. This way you will know where you stand at the end of the month.
- Continue checking your credit score: Your credit report is an important financial document that you should be checking once in a while to stay aware of any kind of financial errors or identity thefts. Your credit score and credit history is basically checked by your lenders to deduce how risky a borrower you are. So, when it comes to purchasing a home or a car, you have to show a clean and clear credit report. If you don’t show that you’re in top financial shape, you might be offered higher interest rates and higher fees. Hence, keep a tab on your credit report and score.
So, if you’re someone who doesn’t have the time to check and keep a record of your finances, you can get someone trustworthy to do it on your behalf. Use the different technologies like the smartphone personal finance apps and the budgeting software to stay on top of your finances.