The US economy has improved recently and dollar’s strength has been
confirmed by reflected by the exchange rate in relation to many of the world’s
other currencies. There is talk of an increase by the Fed. in the coming months
although no one is expecting too much of an increase and therefore little
change for US consumers. Few things become cheaper these days, certainly now
that the recession is over, but the fall in the price of oil means that gas is
cheaper and utilities too. It is certainly a bonus because both take up a
reasonable amount of dollars each month for most households.
A Start
The question is how to use this little windfall? The average
household benefit is said to be around 700 dollars on gas alone but it appears
few are making positive use of it, either by saving towards retirement or an
emergency fund, or by taking positive action to reduce debt.
A
recent JPMorgan Chase publication into credit and store
card debt suggests that the money is being spent in restaurants and department
stores rather than many using it in a way to help overall financial positions.
It is worse still if a credit card is used to pay because any month end
balances incur a high rate of interest and it seems many in the USA are
carrying significant balances.
Credit
Card Debt & Personal Loans
If the figures
are to be believed those carrying credit card debt have balances of over
$16,000 on their cards alone. It surely makes sense to reduce and ideally pay
off those balances when this extra money is available? They should certainly
look to ridding themselves of high interest debt, perhaps by getting a more
competitive personal loan from just right installmentloans which is readily available from online lenders. The
$700 does not come as a definitive figure, rather it is achieved by simply
handing over less money each time. The way to achieve the $700 is best done by
putting aside a sum each month, in the region of $60.
There
is then the opportunity to save towards a retirement fund or retirement. They
may opt for the S&P 500 which should provide growth of approaching 10% per
annum. That figure of $700 would grow more than 10 times over in a period of 25
years. It is an illustration of how any saving can grow when compound interest
applies; even $50 a month put away towards the future will grow far quicker
than anyone would think. Think if the oil price remains depressed and next year
there is another $700 to invest. Those who are dreaming of a comfortable
retirement and put those two sums of $700 to good use will have an excellent
addition to their retirement fund if they are still only in their 30s or early
40s.
Time
never stands still and when it comes to reaching retirement will come one day.
The sooner people start to think about saving towards the time when they are no
longer working the more they will have in their retirement fund. Those who
begin in just a small way in their 20s are taking advantage of the fact that
compound interest produces growth. It is harder to catch up starting to save in
their 30s and harder still in their 40s. Those who take no steps to get rid of
expensive date will rarely be able to ensure a comfortable retirement. The Social
Security System, even under is present rules will not do that. The System is
under pressure with the possibility that benefits will actually reduce because
fewer are contributing and more are claiming and living longer.
The
only source of extra money is taxation and that is not popular, certainly with
the majority in Congress but time will tell whether the mood changes. As the
fund gets lower and lower it is possible that public pressure will force a
change. It is impossible to rely on that of course meaning that people who do
not plan their financial future will have less than a comfortable retirement.
There is a good deal of wealth in the USA but also many with financial
problems; there are solutions for those that want to look for them.
Do you have have any questions or suggestions? Write in comment section.
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