Fed Cutting Rates Again

The Fed is ultimately trying to protect the American Way of Life by cutting interest rates with the hope of stimulating the economy and preventing a recession.

Let's take a moment to think about over-indulgent American way of life and decide if the status quo is worth keeping. What are we really protecting here?

1. 1/3 are obese and 2/3 are overweight
2. 25% don't qualify for prime lending because of irresponsible money habits
3. Most spend more than they make and don't plan for the future

Maybe something is needed to shake things up and snap people into reality that they just can't keep spending money they don't have and they can't keep eating calories they don't need. Where is the self-restraint?

I think American's need a dose of inspiration and a sprinkling motivation to get their lives turned around. Perhaps a new President will do just this by offering hope for change. Go Hillary! (How could Ms.Money not vote for a WOMAN President, especially one who was at the Ms.Money offices for our official ribbon cutton and launch of Ms.Money to the world.)

What will a rate-cut mean for your mortgage? If you have an ARM, expect your monthly payment to get more affordable and you just might be able to stay in your house a little longer. If you are one of those speculators (25% of home foreclosures are on investment properties), this is a good time to take a deep breath and assess the damage and put a plan together for either selling or renting those properties.

To your credit cards? Start negotiating a lower interest rate today on your outstanding balances, if your issuing bank doesn't lower them automatically with the fed rate cut. If you missed a payment or two or have a very low FICO score, don't expect a Fed rate cut to impact you much. I have heard consumers paying up to 36% interest on their balances. Yikes! If this is the case, I would cut up all my credit cards, except one of emergencies (and to rent a car) and pay down that debt immediately.

Your money? If you have stocks, typically there is a rise in the market after the fed cuts rates, however with the housing crash distorting everything, it is hard to say what will happen over the long haul even if rates continue to drop.

Even after a full point rate cut this last quarter it didn't seem to stimulate the economy much or stop the unemployment rate from rising. The unemployment rate is 5% overall, though only 2% in the professional job sector.