Best of the Week
Most Popular
1. Dollargeddon - Gold Price to Soar Above $6,000 - P_Radomski_CFA
2.Is Gold Price On Verge Of A Bottom, See For Yourself - Chris_Vermeulen
3.Dow Stock Market Trend Forecast 2018 - Nadeem_Walayat
4.Gold Price to Plunge Below $1000 - Key Factors for Gold & Silver Investors - P_Radomski_CFA
5.Why The Uranium Price Must Go Up - Richard_Mills
6.Dow Stock Market Trend Forecast 2018 - Video - Nadeem_Walayat
7.Jim Rogers on Gold, Silver, Bitcoin and Blockchain’s “Spectacular Future” - GoldCore
8.More Signs That the Stock Market Will Rally Until 2019 - Troy_Bombardia
9.It's Time for A New Economic Strategy in Turkey - Steve_H_Hanke
10.Fiat Currency Inflation, And Collapse Insurance - Raymond_Matison
Last 7 days
China Is Building the World’s Largest Innovation Economy - 21st Sep 18
How Can New Companies Succeed in the Overcrowded Online Gambling Market? - 21st Sep 18
Golden Sunsets in the Land of U.S. Dollar Hegemony - 20th Sep 18
5 Things to Keep in Mind When Buying a Luxury Car in Dubai - 20th Sep 18
Gold Price Seasonal Trend Analysis - Video - 20th Sep 18
The Stealth Reason Why the Stock Market Keeps On Rising - 20th Sep 18
Sheffield School Applications Crisis Eased by New Secondary Schools Places - 20th Sep 18
Precious Metals Sector: It’s 2013 All Over Again - 19th Sep 18
US Dollar Head & Shoulders Triggered. What's Next? - 19th Sep 18
Prepare for the Stock Market’s Volatility to Increase - 19th Sep 18
The Beginning of the End of the Dollar - 19th Sep 18
Land Rover Discovery Sport 'Approved Used' Bad Paint Job - Inchcape Chester - 19th Sep 18
Are Technology and FANG Stocks Bottoming? - 18th Sep 18
Predictive Trading Model Suggests Falling Stock Prices During US Elections - 18th Sep 18
Lehman Brothers Financial Collapse - Ten Years Later - 18th Sep 18
Financial Crisis Markets Reality Check Now in Progress - 18th Sep 18
Gold’s Ultimate Confirmation - 18th Sep 18
Omanization: a 20-year Process to Fight Volatile Oil Prices  - 18th Sep 18
Sheffield Best Secondary Schools Rankings and Trend Trajectory for Applications 2018 - 18th Sep 18
Gold / US Dollar Inverse Correlation - 17th Sep 18
The Apple Story - Trump Tariffs Penalize US Multinationals - 17th Sep 18
Wall Street Created Financial Crash Catastrophe Ten Years Later - 17th Sep 18
Trade Wars Are Going To Crash This Stock Market - 17th Sep 18
Why Is Apple Giving This Tiny Stock A $900 Million Opportunity? - 17th Sep 18
Financial Markets Macro/Micro View: Waves and Cycles - 17th Sep 18
Stock Market Bulls Prevail – for Now! - 17th Sep 18
GBPUSD Set to Explode Higher - 17th Sep 18
The China Threat - Global Crisis Hot Spots & Pressure Points - 17th Sep 18 - Jim_Willie_CB
Silver's Relationship with Gold Reaching Historical Extremes - 16th Sep 18
Emerging Markets to Follow and Those to Avoid - 16th Sep 18
Investing - Look at the Facts to Find the Truth - 16th Sep 18
Gold Stocks Forced Capitulation - 15th Sep 18
Hindenburg Omen & Consumer Confidence: More Signs of Stock Market Trouble in 2019 - 15th Sep 18
Trading The Global Future - Bad Consequences - 15th Sep 18
Central Banks Have Gone Rogue, Putting Us All at Risk - 15th Sep 18
Gold Price Seasonal Trend Analysis - 14th Sep 18
Growing Number of Small Businesses Opening – and Closing – In the UK - 14th Sep 18
Gold Price Trend Analysis - Video - 14th Sep 18
Esports Is Exploding—Here’s 3 Best Stocks to Profit From - 13th Sep 18
The Four Steel Men Behind Trump’s Trade War - 13th Sep 18
How Trump Tariffs Could Double America’s Trade Losses - 13th Sep 18
Next Financial Crisis Is Already Here! John Lewis 99% Profits CRASH - Retail Sector Collapse - 13th Sep 18
Trading Cryptocurrencies: To Win, You Must Know Where You're Wrong - 13th Sep 18
Gold, Silver, and USD Index - Three Important “Nothings” - 13th Sep 18
Precious Metals Sector On a Long-term SELL Signal - 13th Sep 18
Does Gambling Regulation Work - A Case Study - 13th Sep 18
The Ritual Burial of the US Constitution - 12th Sep 18
Stock Market Final Probe Higher ... Then the PANIC! - 12th Sep 18
Gold Nuggets And Silver Bullets - 12th Sep 18
Bitcoin Trading - SEC Strikes Again - 12th Sep 18

Market Oracle FREE Newsletter

Trading Any Market

Get on Top Of Debt Before It Gets on Top of You

Personal_Finance / Credit Cards & Scoring Feb 18, 2018 - 03:36 PM GMT

By: Boris_Dzhingarov

Personal_Finance

The financial markets are in a constant state of flux. Judging from the current volatility in equities markets, one would be remiss not to pay attention to economic indicators when making trading or investment decisions. For example, one of the most important components of investment-related decision-making is interest rates. On Wednesday, 21 March 2018, the Fed FOMC will be meeting to discuss another possible rate hike. The federal funds rate (FFR) is expected to rise 25-basis points in the region of 1.50% – 1.75%. The current probability of such a rate hike taking place is 83.1%. This has far-reaching ramifications on a typical US household’s ability to manage debt repayments.


For starters, every time the Fed increases interest rates, it has a knock-on effect through banks. Stock markets do not take kindly to multiple successive rate hikes, given that this is more than a once-off phenomenon – it is a pattern. When the federal funds rate rises, this means that the loans held by listed companies are subject to higher repayments. This eats into company profits and reduces the bottom line. More importantly, it affects companies from the consumer side – lower levels of personal disposable income result in lower purchases of goods and services. Clearly, the domino effect of rising interest rates and the broader economy is evident.

What Techniques Are Households Using to Effectively Manage Debt?

The first element of effective debt management is acknowledgment of debt. Once you are aware that debt is an issue that requires urgent attention, you have taken the first step in a proactive approach to debt elimination. The statistics are unequivocal in this regard: Household debt in the United States for example is approaching $13 trillion, meaning that an increasing portion of every paycheck is going towards repaying the interest and principal on debt. Rising interest rates do not bode well for those with high levels of debt, and especially those with variable debts. Here in the UK, a similar problem exists. UK household debt has steadily been rising, and as much was attested to by John McDonnell, the shadow chancellor of the UK.

By the end of 2018, it is expected that the average UK household will be indebted to the tune of £14,000. By 2019, this figure could increase to £15,000 +. If projections are correct, that number could spiral to £19,000 by the end of 2022. This is part of a much bigger economic quagmire that currently grips the UK and the global economy. For many years after the global financial crisis, we witnessed quantitative easing – monetary accommodation replete with low or near-free access to lines of credit.

As the global economy started to mend, central banks wanted to prevent inflation from taking root. They do this by raising the interest rate. The Bank of England, the Fed, the Bank of Japan, and the European Central Bank all follow the same textbook rules. When inflation starts to rise, interest rates must rise to drain excess money from the economy. Increased interest rates encourage higher levels of saving, and simultaneously discourage higher levels of loans.

One way to manage debt on a personal level is consolidating all similar debt such as credit card debt into a single figure. Once that figure has been evaluated, and audited for accuracy, a debt consolidation loan could be used to pay down that debt. The merit in such a technique is the lower interest rate on the debt consolidation loan versus the high APR on the credit card debt. Britons across the board are using this resource for managing debt repayments on unsecured debts like credit cards. It is a useful tool that can certainly put more money towards savings and retirement as opposed to paying down high interest on loans.

By Boris Dzhingarov

© 2018 Copyright Boris Dzhingarov - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules