Every year, you probably take the time during spring to clean and organize your home. But that's not the only important aspect of your life. If you didn't spend time on your finances, make it a priority now. Take the time to cancel subscriptions you hardly use or cut back on things you don't really need. Here are a few things to keep in mind.
1. Check your credit score and look at your report
You can request a credit report from all three major credit reporting agencies once a year. It's recommended you space out your requests so you can keep tabs on your credit throughout the year. (This shouldn't affect your credit score as it's just a personal report for your records, unlike a loan or credit card application.) Along with your score, you'll also receive a detailed report with your loans and credit cards listed. Pour over this list. This is the best way to determine if there has been any illegal activity on your account. Report anything that you don't recognize. It's also a good way to keep tabs on loans you've taken out. Make sure you pay on time every month to keep your credit score in top shape.
2. Clean up your wallet and key ring
How many loyalty memberships do you have? Do you really need all of them? Probably not. Take all of those cards from your wallet and your key ring. Figure out which ones you actually use and get rid of the rest. Take it a step further and examine which memberships you could probably cut. Maybe you don't need to spend so much at your local bookstore. Also, you should check out all your credit card accounts. There might be a couple that you don't need any more and can cancel. Limiting how many credit accounts you have will also help your credit score.
3. Go through your recent bank statement
Check your bank account for recurring charges, like Netflix or a gym membership. Cancel any subscriptions you have that you don't use. This also might be a good time to cut back on subscriptions you don't really need. Maybe choose between Netflix and Hulu. Or cancel that gym membership you honestly never use. (Financial health is just as important. You probably don't need a treadmill; you can always run outside.) While you're looking over your transactions, maybe also think about other purchases you can cut to save your budget.
4. Examine your bank accounts
It's likely that you have a checking account and a savings account. If you have more accounts, do you need to close any? Do you need to open another savings or checking account? Maybe you want to start investing in your retirement or save up for a trip. Whatever your purpose is, streamlining or organizing your bank accounts will help you keep your life in order.
Staying on top of your finances is the best thing you can do for yourself. Don't let some gym take your money if you don't use your membership regularly. Keep track of your credit score so you don't get caught off guard when you're applying for a new card, or a place to live. Physical and mental health are very important, but so is your financial health.
The Federal Reserve sets the guardrails for the federal funds rate, and through that helps control the money supply for the nation.
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 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.
diy gifts
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.
