You might have heard the alarm bells going off with interest rates increasing. Yes, they’ve been historically low since the 2008 economic crash. Most people seem to have forgotten that we have an interest rate at all. Mainly because savings-type accounts earn pennies. Interest rates do not make for the most exciting chat topic. I have a friend that rolls her eyes every time I talk about the economy. Little does she realize that the interest rate has many tentacles.
We’ve been on an interest holiday since the Great Recession. Mesopotamians paid higher rates in 3,000 BC.
In late October, 2008, the fear had set in. A writer from Newsweek chose to report on the edge of positivity but, really, there was none to be found. Everywhere you turned, there was more bad news.
Even the run on foreclosed properties had a downside. The article reports that foreclosed owners often left feces on doorknobs and banisters. That’s a reflection of the anger level of homeowners that had to abandon their homes. Many were on the verge of bankruptcy.
The “Ownership Society” rallied by President Bush was meant to include every American into the homeownership club. That went down in flames, taking the rest of the country with it.
Today’s first topic is asset diversification
I promised to talk about asset diversification and I know you’ve heard of this. You may feel a yawn coming on. I know, it’s not very exciting. What is exciting is knowing that your hard-earned investments won’t be wiped away in an instant if “Wall Street” makes a bad decision.
Today’s flashback to 2008 follows the buyout of Bear Stearns, how their executives knew the financial reality and how the subsequent fallout of the failure of the large financial institutions was forming. CNBC aired a special, Crisis on Wall Street, on the frenzy of reactions during mid-September 2008 to deal with the quick domino-effect of the bankruptcies of the country’s largest banks. If you didn’t watch it, you can probably catch a rerun.
On today’s vlog session, I’ve gathered the following topics – all related to debt:
Flashback to 2008 – Bear Stearns: the precursor of the Great Recession
Assessing stocks – the most important company metric is debt and risk level
Book review: Squeezed. What the author describes as new for our economy is actually not new at all. And by maintaining low levels of debt, you can maintain a high level of resiliency when responding to changes in the financial environment.
How are you managing your debt or is your debt managing you?
When it comes to saving money, there are many ways to economize. Taking your lunch to work is a great way to avoid overspending. Then, there’s finding better alternatives. A generic store brand is worth a try and may be just as good as a name-brand item. Ultimately, there’s doing without. However, the habit of doing without may offer diminishing or detrimental returns.
Frugal, froogal, froot-gle. Nothing good can come of acting out a word that sounds way goofy. I’m reminded of 18th-century farm living where vocabulary was as limited as the society’s vocational opportunities. No one’s saying that you can’t adjust some habits downward, but developing an austerity habit may not help your future as much as you think it will. Frugalizing to the nth degree can be harmful to your well-being.
Today is as good as any day for making financial changes, but maybe today’s not the day. Are you truly ready to change? What’s stopping you?
Instead of thinking about all the reasons why not, take the pressure out of the equation and, well, try.
When I took my Dale Carnegie class, each session involved standing in the front of the room and speaking for approximately three minutes. The most compelling presentations had a beginning, middle, and end. What I didn’t know was that this started in the first session. I thought we would have a warm-up session, not jump right in. I felt sick to my stomach and barely managed to get through. Continue reading “Making Financial Change”