What Does the Fed’s Rate Hike Mean for You?

Caution - Higher Interest Rates AheadEarlier this month, the Federal Reserve raised interest rates again by a quarter of a percent. This is the third consecutive quarterly increase and many economists expect another rate hike this year.

So, what does this mean for you? Here are some steps you can take to protect yourself from rising rates:

Lock in Rates While They Are Still Low

  • Do you have an adjustable-rate mortgage? If so, consider refinancing to a fixed-rate while interest rates are still close to historic lows.

Watch Your Credit Cards

  • Credit card companies are likely to raise rates along with the Fed since most credit cards today have a variable rate, which means there’s a direct connection to the Fed’s benchmark rate. This is likely to to take place over one to two billing cycles.
  • The Fed’s quarter-percentage-point rate hike means you’ll pay an extra $2.50 a year for every $1,000 of debt. On a larger scale, for the 157 million Americans who carry a balance on their credit cards, this will mean nearly 1.6 billion in extra finance charges! Consider a zero interest balance transfer offer or better yet, take aggressive steps to pay down your credit card debt.

Student and Auto Loans May Have Higher Rates

  • If you or a member of your family has student loans, pay close attention to the rates on variable private loans.
  • Thinking of purchasing a new or used car? Shop around for the best rates as many auto lenders will raise rates as well.

Pay with Cash

  • One item not affected by the Fed’s rate hike? Cash. Consider making more purchases with cash and avoid the rate hike altogether!

If you have other questions about what the Fed’s rate hike may mean for you, please reach out to me. I would love to help!

(Source: CNBC, “Fed Hike Will Cost Consumers 1.6 Billion in Credit Card Interest,” 03/15/17)

Life Insurance is for Those Left Behind

Do you have enough life insurance? It breaks my heart to work with families who have lost a loved one and their financial lives are turned upside down. Life insurance isn’t for you – it’s for those left behind.

Many people are underinsured and underprotected. Contact me today for a free life insurance review and let’s make sure your loved ones will be okay if you are not around.

Back by Popular Demand!

Mitigate risk umbrella adWhat mood will the market be in for the remainder of 2017? What impact will rising interest rates have on your investments? Why are your investments not performing with the stock market? I would like to invite you to join me for another Wisdom & Cents Ladies’ Event on July 13 at the Holiday Inn and Suites in Alabaster where we will discuss these questions and what else you can expect from the stock market and economy for the remainder of 2017. This free event is for investors of all levels and is a great opportunity to get educated on a topic that can help you take charge of your investments and financial future.

For more details and to register, click here. Space is limited and registration will fill up fast, so register soon! I hope to see you there!

Do You Have a College Savings Strategy?

Monday, May 29 is 529 College Savings Day. It’s a great time to get started saving if you haven’t already. Did you know that college tuition continues to increase each year, but over 60% of families don’t have a college savings strategy? I can help make sure you are prepared. Reach out to me and let’s talk about a plan that’s right for your family.

4 Helpful Ways to Know You Have Enough Money for Your New Home

Home owner pictureMy husband and I are in the process of buying a new home and, wow, what a process it is!  While it’s been a lot of fun, I feel like every time we turn around someone is trying to convince us we need the latest and greatest, most popular bells and whistles for our new house. “Sure,” they imply, “you can keep up with the Jones’, too!”

Thanks to my 12 years of experience in the financial services industry, Rob and I agreed on some rules of thumb before we started looking at homes. But this got me to thinking, how does the average home buyer who hasn’t held their clients’ hands through this process a gazillion times get started?  Luckily, it doesn’t have to be overwhelming.

Here are 4 helpful tips you should consider to set yourself up for home ownership bliss:

  1.  Compare your bills to your income. Your minimum required debt payments should total no more than 36% of your monthly gross income (that’s your paycheck before taxes are taken out). This includes your new mortgage payment, credit card balances, automobile loans and leases, and debt related to other lifestyle purchases. If all of these add up to over 36% of your income, avoid taking on additional debt.
  2. Don’t forget about other housing expenses. As a general rule, your monthly housing costs, including your mortgage, home insurance, real estate taxes, association fees, and other monthly home expenses, shouldn’t be more than 31% of your monthly gross income.
  3. You need a backup plan. What would happen if you suddenly lost your job or had a major health issue?  Until you save enough money in cash to cover your total expenses for 3-6 months, including those costs associated with your new home, you should wait. Cash is the first step to making sure a financial setback won’t cause you to crash and burn.
  4. A variable-rate mortgage may not be worth the risk. Because the monthly payments are typically lower with variable-rate mortgages, they are generally the easiest to qualify for—and may enable you to purchase a more expensive home. But, keep in mind that it’s typically not wise to take on a variable-rate mortgage simply because you qualify for one. Although these mortgages offer the lowest interest rate, they’re also the riskiest, as the monthly payment can increase to an amount that may prove difficult to meet down the road.

My name is Valerie Leonard and I am a financial advisor who works with folks just like you every day to help them live comfortably for now and in the future. If you need an expert opinion on your situation, contact me and we can pursue your new home purchase together.