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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.
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