Jan 25 2008

Are you a ‘winner’ or ‘loser’ with the interest rate cut?

Everyone is talking about the economy these days. We’ve got an “economic stimulus package” coming our way, the Fed dropped rates, and pundits are screaming, “A recession is coming! Hide!”

I guess I’ll throw in my two cents (BTW–what are two cents really worth nowadays? Probably not worth much more than a bag of hot air. But then again…on a day when it’s -3 F, I’d say that’s worthwhile. heh.).

First, I’m looking forward to our $1,200 from the “stimulus package.” Many PF bloggers have already sounded off on what they’ll do with the money.  Some will save; some will be patriotic and spend.

I like Punny Money’s awesome plan–$300 Target gift cards for everyone! Lol.

As for us, we’ll put at least $1,000 into our emergency savings account. Gotta beef it up–especially if a big long bear of a recession is heading our way. The remaining $200 or so will go toward things we’ve been planning to buy, but have been putting off. What that will be come June, who knows.

With interest rates dropping (and possibly dropping more soon), now is a great time to consider refinancing your mortgage or other loans. Hmm. We have no mortgage, but we do have a car loan. We’ll see if it drops enough to be worth refinancing.

Also, if you haven’t already called your credit card company to ask for a better interest rate, now is a great time to do that.

This article spotlights some ways the rate cuts will help certain people, and hurt others.

It’s kind of a bummer that interest rates on savings accounts are dropping.

But ya know what? It’s OK. They’ll go back up. The economy will be booming once again. And then it won’t. And then it will. And then it won’t. It’s a cyclical thing–and as long as we remember that, spend and save wisely no matter the economy–we’ll be just fine.

What do you think about all of this? What will you do with your tax rebate? Are you going to refinance anything?

11 Responses to “Are you a ‘winner’ or ‘loser’ with the interest rate cut?”

  1. I can’t wait for the check to be in the mailbox! I need mine for credit card bills…may they RIP after that!

    It’s definitely a time to consider refinancing that is if you fall into one of the following categories: You have an ARM loan that will be adjusting soon, you are in an interest only loan, or you have a loan with an interest rate higher than 5.5%. However, rates could drop again next week!

  2. I’m not really sure I understand the tax rebates — whether or not I’m eligible and what exactly I’ll get back, but like my tax refund, half will go into savings and half will go to my debt.

  3. Hmm I don’t know what we’ll do. I’d like to spend it on something we otherwise wouldn’t get (like plane tickets to California to see my husband’s grandparents), but he will want to put it all towards our school loans… I think a lot of it will depend on what we need come June. There’s a lot of time between now and then! :-)

  4. Hey, I wanted to say I just love reading your blog.
    I stumbled across it while blogsurfing at work around the holidays.
    I felt compelled to write you today to tell you thank you for linking to the Chief of the Family blog. She had a link for recalled toys & I clicked on it b/c there were my son’s blocks that he got for Xmas.
    I have called my pediatrician to make sure he doesn’t have lead poisioning, so in essence, b/c of you I am deterring a what could have been a much larger problem.
    Thank you!
    Plus your blog really rocks too! LOL

  5. I am not sure if we will qualify for the stimulus package, but if we do, we will do what we always do with “extra” money. We will put it into savings of some kind and, yes I know that is not so patriotic, but why waste money for the government? We pay our taxes already, I don’t need to go buy a big screen TV to show I am patriotic. :)

    Now, is a good time to refinance if it would benefit you in some way, the rates are low and that can help a lot people save money and potentially avoid foreclosure.

    I agree that this is a cyclical thing and nobody needs to panic. Spend and save wisely and we should all be able to ride this out in style! :)

    Take Care


  6. I am looking forward to this money. We are planing a trip to Cailifornia in June so if it comes in time then we will have a little “extra” money to play with, but mostly it will go toward credit card debt. Once we are out, I am cutting the cards up and sayin’ hasta la vista baby!

  7. Personally I feel it’s a short-term band-aid to a long-term problem, but, hey, I’m just a lowly taxpayer. Bush is going to do what he wants to and has shown that throughout his presidency…..

    Anywhoo, moving on I will surely put the money towards debt/and or savings. I don’t feel personally responsible to keep stimulating the economy. I am sure there will be lots of spendy folks that will go ahead and do that for me! :)

  8. I am watching the rates because now is a great time to refinance my mortgage.

  9. I’d say I come out on top.

    It’ll go straight into my Roth and if I don’t touch it until I’m 59.5, it will have appreciated 1369%!

  10. I think the most important step is to be realistic in what you can and cannot do. I’ve seen so many first time home buyers jump into something they cannot afford only because they have big dreams.

    Do your homework done first if you are thinking about taking out a loan or mortgage. The time spent looking into your options can save you a good deal of money later on.

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Hey! I'm Kacie, wife to Shane and mother to Jonathan (7), Vivienne (5) and Amelia (2) . I write about my family's finance: how we save money, improve our spending, and plan for the future.

I hope I can inspire and encourage you to improve your situation. See disclosure.

I'm adopting a much slower-paced posting schedule, and treating this as a hobby blog now.

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