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For an organization that keeps announcing it hasn’t made a decision yet, the Federal Reserve sure gets a lot of media attention. And yes, the discussion of when and if the Fed is going to raise interest rates can get a little tedious, but it still probably deserves some of your attention because interest rates are woven so deeply into the fabric of household finances.

The following is a look at what’s up with the Fed, what it may mean to you, and what you should do about it.

Recent Fed meetings — much ado about nothing

For over a year now, there has been rampant speculation that the Fed is getting ready to raise short-term interest rates. By way of background, the Fed lowered rates to unusually low levels as a response to the Great Recession. Low interest rates help stimulate growth by making borrowing cheaper, and they also support asset prices from housing to the stock market.

At the same time, rates can’t stay near zero forever. When interest rates are too low, it can encourage inflation. It also leaves the Fed with very little room to lower rates the next time the economy enters a recession.

By the way, as you have probably noticed if you’ve been looking at savings account or CD rates over the past five years, current monetary policy also leaves savers with precious little interest earned on their deposits.

Officially, the Great Recession ended over six years ago, meaning the current economic expansion is already longer than the average post-World War II expansion. So why hasn’t the Fed begun raising rates?

Consider market rates while the Fed calms investors

For much of the past six years, the economic recovery seemed fragile and halting. More recently though, the Fed seems overly concerned with not upsetting stock market investors. Following meeting after meeting, the official release from the Fed has referenced waiting for employment and inflation to get stronger. And yet, job growth has been strong for over a year now. Inflation has been running above the Fed’s stated target since the end of January. Yet after each Fed meeting, the word on raising interest rates is essentially “not this time.”

The bottom line, though, is that whether or not the Fed takes action, if employment and inflation continue to rise, market interest rates are likely to follow. What are market interest rates? These include investment yields on the bond market as well as the type of interest rates you encounter frequently in everyday life, such as deposit rates at banks and rates charged to borrowers on things like mortgages and credit cards.

Here’s where interest rates could affect you

Specifically, what does all this mean to you? Here are some examples of how you might be affected by rising interest rates:

  1. Buying a home could get more expensive. Recent years have seen record low mortgage rates, but any lender making long-term loans is going to be very sensitive to signs that inflation is on the rise. When mortgage rates start to rise, they can move very quickly.
  2. Selling a home could get more difficult. On the other side of the ledger, if mortgage rates make buying more expensive, would-be buyers will have less money to put into the price of the home — and that could come out of your end of the deal.
  3. Even renting could become more expensive. Higher interest rates could affect your housing costs even if you don’t plan on owning a home. Landlords are affected by higher mortgage rates, and you can expect them to pass on whatever costs they can to their tenants.
  4. Credit card debt could get more expensive. Carrying a balance on your credit card is very costly — such balances are charged an average of 13.49 percent, according to the most recent Federal Reserve figures. If inflation continues to rise, expect that number to go up too.
  5. You could finally start to earn some income on your deposits. The plus side of higher rates is that people who have been earning next to nothing in savings accounts and other deposits could finally start to earn a decent rate of interest again.

Some of the impact you can’t do anything about, but there are ways you can prepare for rising interest rates nonetheless.

What should you do about rising rates?

Since interest rates may start to rise with or without the Fed’s intervention, here are some things you might want to do to be prepared:

  1. Refinance while you have the chance. Mortgage rates have been rising generally since April, and could go even higher if inflation continues to firm up. If you haven’t taken advantage of the opportunity to lock in a lower mortgage rate, now may be your last chance. If you can afford a higher monthly payment, consider refinancing to a shorter mortgage to get an even lower rate. This will cost you less interest in the long run because you will be paying interest over fewer years. Also, if you have an adjustable rate mortgage, it might be a good idea to refinance to a fixed-rate loan before rates rise much more.
  2. Be decisive about buying a home. No one should rush into buying a home; but if you have thought it through and were planning to move ahead, you might want to bump it to the top of your list of priorities. Getting in before mortgage rates rise could save you money for years to come.
  3. Shop actively for savings account and CD rates. When interest rates start to rise, some banks are going to react sooner than others. When it comes to savings account and CD rates, you want to look for the banks that raise rates first and farthest. A rising rate environment is a time when some active shopping for bank rates can really pay off.
  4. Keep CD maturities short. Speaking of CDs, keep maturity dates on the short side so that you can roll them over more frequently as rates rise. You might consider a CD ladder so that you will have money coming available for reinvestment regularly. An alternative is to look for CDs with relatively mild penalties for early withdrawal, so you can continue to earn the higher rates of CDs with a longer term and yet break out of the CD at a reasonable cost should rates rise sufficiently.
  5. Pay down credit card balances. You should be trying to do this anyway, but think of rising interest rates as added motivation.

The bottom line is that when interest rates rise, savers win and borrowers lose. That is yet another reason you should strive to get yourself more on the saver side of the equation.

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Whether you’re planning a very special trip next year or just travel a lot, there’s currently a limited-time offer you really ought to think seriously about. The Discover it® Miles-Double Miles your first year card is effectively offering double miles for the first year after new cardholders (but not existing ones) open their accounts.

Here’s how it works: After the first consecutive 12 billing periods that your new account is open, Discover will double all the miles you’ve earned and apply them to your account in the next billing cycle. Cardholders earn 1.5x miles per dollar spent on purchases, then double all the miles you’ve earned at the end of the first year.

A good travel rewards card
This would be of less interest were the Discover it Miles not a pretty good travel rewards card already. But it is, because:

  1. You can fly any airline at any time — with no blackout dates.

  2. You can redeem any number of miles you want, from one up, at any time.

  3. You can redeem miles against travel purchases made on the card within the previous 180 days. These travel purchases include airline tickets, hotel rooms, car rentals, travel agents, online travel sites and commuter transportation.

  4. You can also redeem miles for cash as an electronic deposit to your bank account.

  5. It has no annual fee.

  6. There are no foreign transaction fees.

  7. Discover pays you back for your in-flight Wi-Fi fees (up to $30 a year) with an automatic statement credit.

  8. There’s no cap on the miles you can earn.

  9. Rewards never expire, although Discover will credit your account with your rewards balance if your account is closed or has not been used in 18 months.

  10. You get a 0 percent APR introductory rate on purchases for 12 months (then a variable purchase APR applies, currently 10.99-22.99 percent, based on creditworthiness).

  11. There’s no fee for your first late payment, and paying late won’t increase your APR.

All this, and Discover has just introduced the Freeze ItSM on/off switch, which lets you prevent new purchases, cash advances and balance transfers on misplaced cards in seconds by mobile app & online.

Getting the most out of this offer
If you’re planning a big trip and want your rewards to cover part of the cost, you’re probably going to want to use your card for most or all your travel and non-travel purchases prior to departure. The tricky bit is timing when you buy your tickets and pay for other upfront travel-related expenses.

Remember, you can only use rewards to pay or partially pay for travel items purchased within the previous 180 days. Discover doubles all the miles you’ve earned in your first year during your 13th billing cycle, so depending on the timing of your plans and the purchases you make on the card, there may be a bit of a gap when it comes to redeeming all of your miles.

One possible solution is to buy tickets and so on less than six months before you travel, taking advantage of the Discover it Miles card’s zero percent introductory APR. That way, you can avoid interest and maximize the contribution your points make to the final cost — although you are going to have to make at least minimum payments during the months between buying the tickets and redeeming the rewards. Ideally you probably want to clear the balance during that 13th billing cycle, which is not only when your bonus rewards become available, but also when the variable APR kicks in.

By all means use your card while you’re on your trip to build up more rewards, and provide triggers (hotel bills, car rental, rail tickets …) for other rewards redemptions. After all, it doesn’t charge the foreign transaction fees — typically 3 percent — that many cards do.

However, you should note one possible drawback. This concerns Discover’s acceptance by merchants in certain countries. You need to check the map on the company’s website before you travel to make sure your card’s going to work at your destination. Oh, and don’t forget to call Discover with your itinerary details before you set off or there’s a good chance your international activity will set off fraud alarms and see your plastic temporarily frozen.

Not looking for a travel card?
There’s no doubt the Discover it® Miles-Double Miles your first year is currently exceptional, but not everyone’s on the hunt for a travel rewards card.

Indeed, you may find cash back more desirable than miles, in which case you probably should explore Discover’s other offerings. Discover is currently offering to double all the cash back you’ve earned at the end of your first year automatically (again, only for new cardmembers) on cards including:

  • Discover it®-Double Cash Back your first year

  • Discover it® card-Double Cash Back your first year

  • Discover it® chrome for Students-Double Cash Back your first year

As always with credit cards, the trick is to match the plastic available to your personal requirements, desires and spending patterns.

Visit CardRatings.com to learn about these limited time Discover credit card offers and to read a full review of Discover it® Miles-Double Miles your first year.

Advertiser Disclosure: Many of the credit card offers that appear on this site are from companies from which ConsumerismCommentary.com receives compensation. Compensation may impact which cards we review and write about and how and where products appear on this site (including, for example, the order in which they appear). We recognize that our site does not feature every card company or card available on the market.

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It’s the heart of the baseball season and, whereas 20 years ago talk about the sport would have centered on the All-Star Game, the trade deadline, and how the pennant races were shaping up, now the chatter is filled with terms like “Wins Above Replacement” and “Defense-Independent ERA.” For better or worse, advanced metrics have taken hold in baseball.

What is interesting about the transformation of so many sports nuts into statistics geeks is that Americans don’t generally apply the same quantitative rigor to their household finances. That’s a shame, because finance is far more suited to statistical analysis than baseball, and the right set of numbers can give you a clear, objective view of your financial condition. For example, here are a dozen metrics that could give you some valuable financial insight:

Wage growth. Obviously, how much you make is important, but the rate of change tells you where you are headed. If your wage growth is not keeping pace with inflation, then you are headed in the wrong direction. In contrast, if your wage growth is up in the high-single digit percentage range, you should be on your way to a wealthier future, even if you still have a ways to go at the moment.

Total compensation growth. While your wages have the most immediate impact on your lifestyle, don’t neglect the importance of benefits — things like 401(k) matching contributions, healthcare benefits, and other extras your employer might provide. People tend to take these benefits for granted when they have them, but they certainly miss them when they don’t. So, you should factor benefits into the value of any compensation package. Nationally, the total compensation growth rate fell to a low of 1.4 percent shortly after the Great Recession, but recently recovered to a six-year high of 2.6 percent, which is still somewhat meager.

After-tax growth. While pre-tax compensation measures how much you earn, it is after-tax compensation that really affects your lifestyle. If after-tax growth is lagging badly behind pre-tax growth, think about what you could do (e.g., tracking deductions better, moving to an area with lower taxes) to stop taxes from taking an ever-growing bite out of your income.

Spending growth. It’s bad enough if you have trouble making ends meet now; but if your spending is growing faster than your after-tax income, then you are on course for real trouble.

Savings growth. This is a reality check for the income and spending growth measurements. If income appears to be growing faster than spending, you should check to see if this is showing tangible results in the form of an increasing rate of savings growth.

Current net worth. An important measure of your financial progress is to tally up the current net value of everything you own. Two things to remember about doing this. First, the “net” part of this is very important — you have to subtract the amount of debt you owe from the value of any assets. Second, when you consider the value of any tax-deferred retirement savings, keep in mind you are likely to have to pay taxes on those savings when you ultimately access them.

Net worth growth rate. Financially, where you are now is often less important than where you are heading and the rate at which you are getting there.

Debt-to-income ratio. Having some debt can be a normal part of financial management, but the larger that debt grows to be relative to your income, the more you risk it getting out of control.

Debt-to-asset ratio. On a net worth basis, there may be little difference between having virtually no assets or debt on the one hand or having a large asset value offset by an equally large debt burden. However, the latter is riskier, because a setback in the value of your assets could suddenly leave you with a significantly negative net worth.

Retirement savings rate. The percentage of your income you put aside for retirement savings may start out small early in your career, but you should strive to get it into the double digits by the time you reach 30.

Projected retirement income. Use a retirement calculator to project what retirement income your savings program would produce. This will give you a glimpse of the lifestyle you are on track for at your current pace.

Projected retirement income gap. If your projected retirement income does not seem adequate for the lifestyle you want, measure how far it falls short and start to figure out how to close that gap.

No one statistic is the answer to assessing how healthy your finances are. Instead, these statistics are pieces of a mosaic giving you a glimpse at part of the picture. If sports fans these days can spend so much time obsessing over statistics, a little quantitative examination of your finances now and then shouldn’t be too big a burden.

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Twelve years ago today I started a blog called Consumerism Commentary. On that date, I was about one year into my journey of improving my finances. I had the bright and forward-thinking idea to track my progress — both in my bank accounts and in my skills of money management — publicly but anonymously, and by the end of the day I had a new website up and running. You can see what it looked like in 2003, in the graphic below, thanks to the Internet Archive’s Wayback Machine.

I’ve told the story a few times before. Here’s my most recent and succinct retelling of how I found myself in grave financial circumstances and, through the help of blogging and later the business that grew from it, improved my financial situation and my life substantially, from a negative net worth a few months before I started writing to a seven-figure net worth today. It’s not just about the money, though. I’ve met lovely people including and especially my girlfriend thanks to this website and the community, and I seem to have grown into a fully-formed adult (after starting the website as a late-model adolescent of 27 years).

I sold this website to a lead generation company called QuinStreet three and a half years ago. It was a good acquisition for the company, as they really wanted to ensure their own advertising was being served to the high-quality search engine traffic from which this website was benefiting. It was a good sale for me, because I saw revenue from search engine traffic as highly volatile and unpredictable, and I was happy to offload that risk for a good price.

After the sale, I became an employee, continuing to write for Consumerism Commentary, manage the blog, and offer consulting on blogging and community building as the company was interested. I negotiated a healthy salary — but six months after the sale, the company determined I was too expensive and laid me off. For some reason that baffles many (sometimes including myself), I offered to continue as a contractor, reducing my consulting role but continuing to manage this website and write occasionally.

The frequency of my writing has dropped off significantly since then, especially in the past couple of months. My “freedom” date was approaching. I had many years to prepare to move on, and I had a plan to do so. As luck would have it, after another reorganization at QuinStreet, I got a call the other day from the new supervisor of QuinStreet’s blogs asking me to reduce my role even further. I declined, choosing instead to move on. I imagine I’ll always be welcome to contribute an article for time to time at QuinStreet’s freelancing rates, but I expect I won’t have much to write here that couldn’t be published elsewhere.

I plan on launching a new financial website soon, and in the mean time, working on The Plutus Awards, the Plutus Foundation, a drum and bugle corps I work with as a volunteer, my photography, and other projects will keep me more than busy. Please follow me on Twitter, Facebook, and my LukeLandes.com website to stay on top of my current projects — and consider reading or joining my new financial website once it is launched.

There was no financial blogging community in 2003 when I started Consumerism Commentary. Today, thousands of blogs cover financial topics from thousands of angles. The community today is one of the most supportive groups I’ve had the pleasure to be a part of. I’m not leaving the community; in fact, I’ll be more involved than ever as I work hard to make The Plutus Awards the premiere event for the community and turn the Foundation into the most important charitable effort for the independent financial media.

The days of an independent financial blogger earning seven figures from advertising are probably over, at least not without an expensive team of professionals helping behind the scenes. I don’t expect any project I work on to be as lucrative as Consumerism Commentary was, but as long as I continue to have passion for financial education, I’ll find a way to express myself and gain something of an audience. I’m not retiring. This isn’t the early retirement everyone promises. I still have much more to do.

From the readers’ perspective, I expect the future of Consumerism Commentary to feature several articles a month from a freelance financial writer.

There was a point earlier at which, had I left Consumerism Commentary, I would have felt bittersweet about the departure. This was my baby; I put my heart and soul and countless hours into writing and working behind the scenes. When I had a day job, I’d come home, eat dinner, and work another eight hours writing for Consumerism Commentary, emailing readers, bloggers, and the “mainstream” media. I put many unpaid hours into building other affiliated sites and projects like the Carnival of Personal Finance, pfblogs.org (the ad-free personal financial blog aggregator), and free hosting for other financial bloggers. This was my life. There are some readers who have been with me since the very beginning. I appreciate that more than anything else. Thank you.

But today, moving on feels like nothing other than the natural course of action.

I wish QuinStreet the best continued success with the website. Thanks for reading.

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Life Is Short: Toxic Financial Attitudes

by Luke Landes
Drinks on beach

There’s a good reason I can’t get into extreme savings for retirement. When desperate financial times call for desperate financial measures, there is a good incentive to cut all unnecessary spending and eliminate bad debt. Many people even wait until they hit rock bottom before reforming their approach to their finances, because the effects of ... Continue reading this article…

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Podcast 175: Carl Richards, The One-Page Financial Plan

by Luke Landes
Carl Richards

It may have been over a year since I last put together a podcast episode, but I’m back today to talk with Consumerism Commentary Podcast guest Carl Richards. Carl is here to talk about his new book, The One-Page Financial Plan: A Simple Way to Be Smart About Your Money. The author will also be ... Continue reading this article…

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Command and Control: From Baseball Pitches to Your Money

by Luke Landes
Matt Harvey

When your life is out of control, nothing seems to go right. You have the worst luck, and you can’t seem to get ahead with anything, whether a project, a goal, or even simple things like taking care of daily tasks. Regaining control of your life is imperative. For your finances, you can do that ... Continue reading this article…

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Can You Blame Them for Not Being Invested in Stocks?

by Luke Landes
Luke Landes

After the stock market closed on Friday, my portfolio was at an all-time high. That was likely also the case for a lot of investors living in the United States who are similar to me: earning income, investing in the stock market with a buy-and-hold strategy for the future, and leaving money invested during the ... Continue reading this article…

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5 Reasons Why New Chip Credit Cards Won’t Reduce Fraud

by Luke Landes
Chip-Embedded Credit Cards

Banks in the United States are undergoing a major transformation in credit card technology, a process similar to the one Europe successfully completed several years ago. Despite the technological advances in mobile payment that have already rendered plastic cards obsolete, the financial industry wants to replace every magnetic stripe credit card in every wallet. When ... Continue reading this article…

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LearnVest Acquired By Northwestern Mutual

by Luke Landes
learnvest

Congratulations to the owners of LearnVest, a financial planning start-up that is in the process of finalizing a deal with Northwestern Mutual wherein the latter will be acquiring the assets and business of the former. In a deal of more than $250 million in cash, a company that provided early funding for the start-up will ... Continue reading this article…

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