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think about how much interest you saved by refinancing ,low auto loans , personal loans , credit card debt.
Americans spent 5.8% of their after-tax income paying interest on mortgages, credit cards, car loans and other debt, according to data from the Bureau of Economic Analysis.
Household interest payments fell to an average of $469 per month , down from a peak of $728 in 2007, after adjusting for inflation. That equals $3,100 a year.
Mortgage interest payments are down 30% from their 2007 peak. Interest payments on other debt, such as credit cards and car loans, are down 50%
think of how much bonds made in capital gains by those who just bought treasury bonds instead of cd's because they paid attention to the fed telling folks don't sit in cash instruments..
think about how little most folks have in long term savings to even get any interest on. very little.
those folks with a decent amount of long term assets of assets don't keep them in cash. other assets did great just because of low rates
low interest rates put far more money in most americans pockets than were given up .
any questions ?
But they are too low. It is border line deflationary and punishes the base of the investment pyramid.
i disagree, cash is NOT AN INVESTMENT. if you truely are in investment vehicles you are soooooo far ahead just because of the low rates .. throw in the fact on the spending side sooooo many things we buy ,use and owe money on are lower and improving our cash flow that overall most folks are ahead .
higher rates go hand in hand with higher inflation.
like i said most americans can not even come up with 10k if they had to so the masses are giving up very little as they have no savings. folks with a fair amount of savings usually have 401k's and other investments so it isn't an issue.
those that think a cd is an investment learned they thought wrong.
Last edited by mathjak107; 01-24-2014 at 05:26 PM..
If you were 65 1/2 and planning to retire in six months you'd probably be just fine once over the shock of just missing the bullet but what about the 58 year old worker who might have less than six figures in retirement savings? $100,000 won't last someone 58 years old very long.
If you're 58 and you make more than $20 an hour in a low cost area, why don't you have more than 100K in savings? The fact that you have no college or special skill set makes savings all the more imperative, and all the more possible if the cost of living is reasonable. I live in a high cost area, have never made more than 52K (about $24 an hour) and I had 100K saved by age 35.
I didn't make it clear enough, that I meant geographic regions as I think the OP meant. This has happened in the South and there are counties that are just flat out poor without a lot of hope moving forward.
Well if you make 50K or 60K in a poor area, then your income is well above the average and you have the ability to have saved a lot more than 100K by the time you're in your mid 50s. For heaven's sake, people need to pull their heads out of the sand, realize they're fortunate, and not take it for granted. If they don't, as another poster said, it's on them.
It would be nice if a guy could decide at age 25 whether or not to kick in another 3% to 5% in order to lower his FRA from 67, 68 or 69 down to 60 or 62.
You can. It's called contributing to your 401k or opening up an IRA.
Cash is an asset class like anything else. Nowhere in history has anyone not been burned by holding the wrong asset at the wrong time and that includes cash. Cash has had negative real returns after inflation and taxed almost 1/2 the time and averaged only 2% real return historically.
The Fed did everything but drop leaflets from helicopters warning folks this is not the time for cash instruments, at least move to treasury bonds.
The fact is most of america lives hand to mouth and money does not remain in an account long enough to get much interest. most of america can't come up with even 8 months emergency money.
Those with savings usually have ira's and 401k's and are well ahead despite low cash returns.
There are really very few that have not benefited in some way from these historically low rates on mortgages and loans .
Anyone with a mortgage has benefited greatly.
I don't care for QE but otherwise you are spot on.
I am beginning to wonder from many of the posts in the various threads if many are making financial decisions based on political ideology and not financial metrics. I guess if you believe in certain Political entertainers and they tell you to buy Gold at $1,700 ounce because the we are on the brink of extinction because of politics you aren't well set for retirement. Also if you sold in 2009 your entire equity stake because of the elections you may be behind the curve today. However if you did those things because of a pure financial analysis that is one thing but because of politics? Hmmmm oh well it is a big country and lots of decisions to make and salesman to help you make them.
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