Do you ever feel like all of your paycheck goes to bills and you're only just "getting by"? You're not alone: 76% of Americans today are living paycheck to paycheck1. Even if people pay their bills on time, there's rarely anything left over at the end of the month. Over the past decade, student loans have become a big burden, and the average credit card debt is over $15,0002.What about retirement? The uncertainty of how to plan for the future keeps a lot of people up late at night. What about an emergency fund? Studies have shown that almost two-thirds of the U.S. will struggle to pay $500 in an emergency3. It's no wonder the majority of us feel anxious about our finances. If you want to start taking control of your future, LearnVest can point you in the right direction.
Planning for your finances can be an intimidating challenge. LearnVest knows this, and prioritizes your financial planning based on three foundations: getting out of debt, establishing an emergency fund, and planning for retirement. From there, you can set additional goals and work with LearnVest to achieve them.
The team at LearnVest wants to make financial planning accessible and affordable to everyone. With their online dashboard, you can integrate all of your financial accounts (credit cards, bank accounts, retirement accounts, etc.) all in one place. LearnVest uses your accounts to calculate an asset-to-debt ratio showing your total net worth and giving you a bird's eye view of your finances.
Want to be debt free next year? LearnVest can show you how to get there when you enter your debt-free date. The free service also comes with a 15-minute consultation with a real person to talk to and help you decide if you're ready for the financial planner, or you just want to stick to the free online tools. For all you DIYers, you can enjoy videos, daily emails, and a blog with hand-holding resources. This includes detailed articles about, different retirement plans, insurance policies and estate documents, all at your fingertips.
Need a little more hands on help with planning your future? LearnVest can match you with a dedicated financial planner, for a fraction of the cost of a traditional financial plan. Everyone's financial goal is not going to be the same - Your planner tells you what to do month by month, dollar by dollar, so you are staying on track toward the goals you have set for yourself. Whether your goal is saving for your child's college tuition, retirement, or a vacation, for once, you can save and work towards a goal instead of going into debt and incurring a new financial burden.
Most people want help with their finances, but don't know where to start. The first step is actually doing something. It doesn't matter where you are in life. Now is the best time to think about your future and take action today.
LearnVest Planning Services is a registered investment adviser and subsidiary of LearnVest, Inc. that provides financial plans for its clients. LearnVest, Inc. is wholly owned by NM Planning, LLC, a subsidiary of The Northwestern Mutual Life Insurance Company.
* SOURCE Bankrate, Inc. (survey 2013 1, 20163) GoBankingRates (20132)
When you take out a loan for a car, charge something to your credit card, or get a personal line of credit, there is going to be an interest rate that applies to your loan.
A lot of different factors go into what you will be charged, including your own personal credit score. But even those with flawless credit still see a minimum charge that they can't get around. That all goes back to the Federal Funds Rate.
One thing consumers rarely realize is that all of our banks are lending money to each other every night. Banks are legally required to maintain a certain percentage of their deposits in non-interest-bearing accounts at the Federal Reserve to ensure they have enough money to cover any withdrawals that may unexpectedly come up. However, deposits can fluctuate and it's very common for some banks to exceed the requirement on certain days while some fall short. In cases like this, banks actually lend each other money to ensure they meet the minimum balance. It's a bit hard to imagine these multibillion-dollar financial institutions needing to borrow money to tide them over for a bit, but it happens every single night at the Federal Reserve. It's also a nice deal for those with balances above the reserve balance requirement to earn a bit of money with cash that would normally just be sitting there.
The Federal Reserve
The exact interest rate the banks will charge each other is a matter of negotiation between them, but the Federal Open Market Committee (FOMC) (the arm of the Federal Reserve that sets monetary policy) meets eight times a year to set a target rate. They evaluate a multitude of economic indicators including unemployment, inflation, and consumer confidence to decide the best rate to keep the country in business. The weighted average of all interest rates across these interbank loans is the effective federal funds rate.
This rate has a huge impact on the economy overall as well as your personal finances. The federal funds rate is essentially the cheapest money available to a bank and that feeds into all of the other loans they make. Banks will add a slight upcharge to the rate set by the Fed to determine what is the lowest interest that they will announce for their most creditworthy customers, also known as the prime rate. If you have a variable interest rate loan (very common with credit cards and some student loans), it's likely that the interest rate you pay is a set percentage on top of that prime rate that your lender is paying. That's why in times of low interest rates (it was set at 0% during the Great Recession), a lot of borrowers should go for fixed interest rate loans that won't increase. However, if the federal funds rate was relatively high (it went up to 20% in the early 1980's), a variable interest rate loan may be a better decision as you would be charged less interest should the rate drop without the need to refinance.
The federal funds rate also has a major impact on your investment portfolio. The stock market reacts very strongly to any changes in interest rates from the Federal Reserve, as a lower rate makes it cheaper for companies to borrow and reinvest while a higher rate may restrict capital and slow short-term growth. If you have a significant portion of your investments in equities, a small change in the federal funds rate can have a large impact on your net worth.
Whether you're leaving a job involuntarily, departing for something new, or just want to prepare for the unknown, it is smart to understand all your options regarding your 401k.
Frugal gifting often gets a bad reputation. However, this shopping method does not make you cheap — it makes you practical. Frugal gifts often avoid waste and overspending and can be just as meaningful (if not more so) as any other present.
With the National Retail Federation predicting each consumer this holiday season to spend upwards of $1,000 on holiday gifts amidst an economic recession —this year might be the perfect time to reconsider your spending budget. We've formulated the ultimate list of frugal gift-giving ideas to get you started.