(MENAFN– Mohammad Quqas) in coping with rising interest rates on loans and credit cards.
Tips for dealing with the current financial environment and some of the tips from legendary investor Warren Buffett.
In difficult times like the present one, every individual should evaluate their financial situation just like entrepreneurs do. There have been numerous changes in the economic situation as a result of COVID and other factors. Therefore, these changes have a negative impact on nations and individuals. As a result, the current economic climate, characterized by high inflation and rising interest rates, reduces the ability to save money. Therefore, we must act sensibly to achieve our financial goals.
According to US Department of Labor data released on October 13, the annual inflation rate for the United States for the year ended September 2022 is 8.2%. Additionally, the previous month recorded 8.3, showing a slight drop for September. However, the data came in worse than expected, meaning the economy was unable to weather high inflation rates. In contrast, the FOMC raised interest rates from 3.25 percent to 4.0 percent at its last meeting, hitting the highest level since the 2008 recession.
Inflation severely affects individuals and nations. Consequently, this shows the rising prices and the falling purchasing power of each purchase, as well as higher interest rates. Therefore, exceptional circumstances call for exceptional responses. The current situation is like a double-edged sword, forcing us to confront two primary objects. First, there is high inflation, followed by a rise in interest rates, both important factors affecting our financial health. So how should we approach this situation? How do we deal with high interest rates? What steps could we take to keep ourselves from being dragged into losing? Read on to learn how to navigate the current financial environment.
When the FOMC raises the interest rate, credit card interest rates change. This increase in monthly installments may go unnoticed by the cardholder. In this case, it can take up to two months before you notice it. As a result of notifying a bank of the rate hike, the bank will increase its interest rate for credit card holders. This is especially true for those who carry balances from month to month.
The Federal Reserve hiked interest rates by 75 basis points, or three-quarters of a percentage point. Therefore, after the Fed hikes rates, the interest rate on a credit card will increase by 75 basis points. Consequently, if your current credit card interest rate is 16, this increases to 16.25. Any change in interest rates affects the credit card holder.
But even if credit cards are a trap, you can still get out of them. For a limited time, you can benefit from the card’s promotional interest rate, which is usually well below the regular APR (and sometimes even below 0% APR). The best option here is to use funds from a credit card for debt transfer. You can borrow with a credit card or other line of credit up to your available credit limit. Payday loans often have shorter repayment terms of three to eighteen months compared to personal loans.
Whatever affects credit cards affects loans. We could find a solution for the credit card. There is also an escape room available here. The Escape Room offers us a safe haven to maintain our financial stability in these extraordinary economic conditions. There are different forms of loans; Most banks increase the interest rate on a loan when it goes up and lower it when it goes down, but this loan causes our financial balance to suffer from limited liquidity. Therefore, the best alternative is a fixed rate loan.
A fixed rate loan offers predictable monthly payments and protection against interest rate increases. It is possible to refinance or renegotiate home loans at reduced interest rates. When the lock-in period has expired. Before taking any further action, consult with a home financier.
When businesses cut costs, they reduce expenses and keep records of monthly expenses, bills, and payments. After examining expenses, eliminate any unnecessary expenses and examine the financial statements to see how this will save money. Also, invest the amount saved by eliminating unnecessary expenses, at a rate of 10% per year. Imagine this investment being a monthly rent or a return on a square meter of living space.
Therefore, over time, even a small percentage change can make a big difference. In the meantime, credit cards can help you save money in a number of ways: cashback, 0% interest on balance transfers, and the type of credit card we covered earlier. With a cash back credit card, you can earn rewards for every dollar spent. Depending on your spending habits, you can get a payback rate between 1% and 6%.
Increase your income (side hustle)
While everyone has different jobs, everyone also has talents that can be monetized in their free time. With the right combination of time and effort, and a range of skills, it’s possible to make more money. If you are a teacher, you can use this time to perform online and teach online classes. If you are a nutritionist you might find people looking for online advice; Either way, you could make some extra money.
According to statistics, 46% of Americans have a part-time job to earn extra money that will help them improve their lives. In addition, a part-time job could become a business through the time invested, the experience gained and the hurdles.
Warren Buffett’s tips for dealing with the economic conditions of the past few days.
There’s no better place to learn from than legendary American investor and billionaire Warren Buffet. The man who amassed wealth from scratch. Warren Buffett has explained several times how individuals can fight inflation. In these trying times, he presents the following investment advice and other suggestions that can improve the financial well-being of individuals.
How to deal with high inflation
Invest in yourself
“To achieve a better quality of life and be successful, productive, and happy, one must prioritize investing in personal and professional growth,” said the 2022 Berkshire Hathaway Annual Shareholders Meeting.
Investing in yourself improves both the present and the future. Therefore, self-investment requires regular self-investment, which is widely recognized as one of the best investments.
“Whatever abilities you have, they cannot be taken from you. They can’t really be blown away from you,” he said. “By far the best investment is anything you develop yourself that isn’t taxed at all.”
Investing in yourself may not require a large sum of money. Rather, you must devote your free time to productive activities. The focus should be on your mind and body as well as the knowledge or skills you would gain if you consistently did a specific job of having the best version of yourself when you wake up every morning.
Buffett added, “Unlike currencies, skills are inflation proof. If you have a skill that’s in demand, it will stay in demand no matter what the dollar is.”
Reading: Science books provide the necessary background information, while other publications serve as inspiration. Thus, reading improves prospects, calms the mind, and ensures a good night’s sleep that is restful for the whole person. A simple search of the internet will yield hundreds of articles on the subject.
Exercise: Physical and mental health is promoted through exercise, and it relieves the stress of daily work and combat recordings. Therefore, your body and mind will thank you for the tiny monthly investment in exercise subscriptions. However, to get the full picture, you need to read an article or consult an expert on the subject to learn more about the many ways exercise can improve your life.
Meditation: Meditation as part of your daily practice is one of the most beautiful things you can do for yourself. Trust me, I’ve experienced the benefits myself. A few days into beginning a meditation practice, one of the experiences that arises is a sharpening of focus on tasks, which aids in concentration. This suggests that the skills you acquire through meditation are linked to mind control in the brain and may help you better manage stress and emotions. The only thing required for this exercise is investing time.
Improve your skills and learn new ones.
All this enriches our daily life and makes it easier to cope with. I hope I am not wrong but it is possible that reading this post will enlighten you about secret ways that will give you an edge in life.
1. Invest in good companies with low capital requirements
the challenge that inflation brings to “ride down an escalator”. Buffett once equated
In times of inflation, low-capital companies are more likely to increase their profits, which is a beneficial investment, while high-capital companies need more money to maintain their position due to their higher prices just to control their investment. Consequently, it is beneficial to invest in small and medium-sized companies during times of inflation, as their value and return on investment could increase exponentially.
2. Look for companies that can raise prices during times of higher inflation
“The single most important decision when valuing a company is pricing power,” he added. “You have the power to raise prices without losing business to a competitor, and you have a very good deal,” Buffett told the Financial Crisis Inquiry Commission in 2010.
Some companies benefit from inflation because it allows them to raise prices without losing market share to competitors. The capital invested in such a business has excellent growth prospects. Read literature or consult experts on how to value companies before investing money in one.
A storm strengthens those who survive its winds.
A Dutch artist, Vincent Willem van Gogh, said: “Even in the storm there is peace.”
Formed habits would last a lifetime and benefit both the present and the future. These habits will make us stronger, and as a result we will be better equipped to deal with the current and coming storms.
Inflation is a significant problem for nations and individuals. The first step in creating our financial security is to take this threat as seriously as any other that could threaten our financial stability. However, everyone’s finances will be protected if they understand the current economic climate and act wisely to meet it.
Any time you are considering a move that could have a significant impact on your finances, it is important to consult a reliable financial professional.