Some of the things I like about Barack Obama include his quiet confidence and his talk of unity. I also like how he lays out the problem, and talks about a solution. I’m seriously hoping that the vast amounts of money that he plans to spend on economic stimulus will be more than just throwing money at the problem. And it certainly sounds like President-elect Obama means to try to make thoughtful, useful expenditures. He focuses on:
Infrastructure.
Health care reform.
Renewable energy.
Tax cuts.
My favorite points are infrastructure and renewable energy. Investing in these items will actually help us prepare for the future, as well as put people to work and give them a chance to help stymie the foreclosure problem. I like the idea of actually investing in our infrastructure and developing renewable energy. These are vital elements to our national security, as well as our economic vitality.
Tax cuts are nice, and I am glad that they are expected to be aimed at helping the middle class. It’s more of a “trickle up” approach that will hopefully work better than the “trickle down” approach that has been dominating so far. It would be nice, though, if our leaders, rather than trying to encourage us to spend the money, would advise us to pay off credit card debt and make wise investments, rather than engaging in another round of consumer spending. And, of course, I don’t think that Obama’s health care reform goes far enough.
At any rate, the address was reasonaly encouraging overall. But we’ll have to wait until later this month, when the pork starts being inserted into the economic stimulus bill and battles erupt as the new administration comes in.
What do you think of the economic stimulus plan laid out by Barack Obama?
I have a credit card with a $6700.00 balance,with an interest rate of 14%, have a CD which I can cash in to pay this down, CD will yield about $5600.00. Should I use the CD to pay down the credit card? CD is paying about 3.6%
Personally, I am inclined to take the money in the CD and pay down the credit card. The 14% interest that you pay on the credit card more than cancels out the 3.6% you are getting on the CD. Indeed, you will be paying a great deal more in interest than you could earn on the CD. Savings rates are dropping rapidly in a variety of categories, including high yield savings accounts and CDs. It’s what happens as the Fed rate heads lower. In this climate, it might be best to pay down debt while you can, doing your best to free yourself from obligations. Get the credit card paid off, and then start rebuilding your savings.
My only concern is whether or not the CD has reached full maturity. You may have to pay a penalty for cashing the CD in early if the entire term of the CD has not run its course. Do a cost-benefit analysis. Even with the penalty, you may still be saving more by getting rid of the interest payments on the credit card.
Readers: Do you agree with my assessment? Would you pay off the credit card or keep the CD?
May 2009 be filled with opportunities to help you improve your personal finance situation and grow your wealth!
Best wishes for a happy and prosperous New Year!
Every year, many of us consider New Year’s resolutions. And this is not a bad practice. It is a good idea to sit down, consider the past year, look ahead to the new year, and try to be better. I make financial New Year’s resolutions every year. Here’s what I hope to accomplish in terms of personal finance in 2009:
Rebuild the emergency fund to $1,000.
Save up four months’ worth of expenses.
Finish saving up to put in a yard.
Refinance the home with a lower rate, 15 or 20 year fixed mortgage.
Another thing I’d like to do, but don’t put up there as an especially important priority, is to start taking the necessary classes to become a certified financial planner. But we’ll see how that goes. Getting my house in order is my first priority.
Do you make financial New Year’s resolutions? If so, what are they? Leave a comment and let us all know.
I’ve decided that I really enjoy participating in the Carnival of Personal Finance. Not only does it help me get “out there,” but it offers a great resource for personal finance by providing a number of helpful links to great posts. I encourage you to head over to the Fraud Files and check out some of the best in personal finance from around the Web.
(FYI: My post about the new FICO formula is including in this week’s Carnival of Personal Finance.)
At any rate, this is just more proof, I hope, that Americans are starting to look at their spending and saving habits and make some changes for the better. If anything good comes of the current financial crisis and recession, it will be that some Americans will do some introspection and change the way they think about money.
Do you think that this recession is causing people to re-evaluate their personal finances?
Have you cut back on holiday shopping? I know I have to a certain degree. And plenty of other consumers have as well. The current state of the economy means that many people just aren’t that interested in spending a great deal of money right now. And that’s fine. There are plenty other thoughtful gifts (including gifts of time) that you can give — gifts don’t have to be expensive or come from a store.
Online holiday sales fall for first-time ever
Since the advent of ecommerce, online holiday sales have risen steadily year-over-year. Not so much this year. For the first time every, online holiday sales have dropped during the first 49 days of the holiday shopping season, according to ComScore. “Only” $24.03 billion was spent, compared to $24.15 billion last year.
This, of course, goes beyond just meaning that consumers are making wiser spending decisions. It also means that earnings are likely to drop for companies, and that the recession is not going to get any better anytime soon. We could see another round of lay offs and some stock market volatility as the New Year begins.
Perhaps, instead of focusing on big businesses to get money, politicians should start considering a bailout for individuals. That is, if they are serious about getting consumers to spend money in the name of economic stimulus.
Take the poll: How much are you spending on holiday shopping?
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How Much Are You Spending on Holiday Gifts This Year?
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