Another Week of Fed Speak

 Almost without fail, every time the Federal Reserve Chairman speaks, the stock market declines. This week Chairman Powell reiterated that they will continue to raise rates for as long as necessary. I wonder why we need the Fed at all. A case in point. If a consumer has been putting items on their credit card at 10%, then their rate climbs to 15%, the odds are that they will limit their spending. Where does the Fed fit into this? They do not. That is the rub.

We do not need the Fed raising rates, because consumers will restrain their spending on their own when rates go up. Look at housing and mortgages. When rates go up, it does not affect cash buyers. It only affects people who need a mortgage to buy a house. At a 4% mortgage, they could perhaps have afforded a 2,500 square foot home. However, at an 8% mortgage, they may only qualify for a 1,800 square foot home. Unless they are in a forced move situation like a job transfer, then odds are they will wait until interest rates decline to buy more house for the money. Again, where is the Fed in this scenario? We do not need the Fed to tell us when to buy a mortgage. We can make that decision all on our own.

Therefore, the Fed raising rates only throws gasoline on the fire. The Fed's actions will do a few things, none of which are good for the average person. They will force people to pay higher interest rates. They will force large corporations to lay people off. They will force banks to quit loaning money or make it very restrictive to qualify for loans. The Fed does all this in order to get interest rates to decline. Yes, they raise rates for an extended period in order to get interest rates to decline. In other words, they inflict severe financial pain on most Americans. It is stupid. (My favorite word.)

Later this month, it is now expected that the Fed will raise interest rates another 0.50%. They do not need to do this. People will stop spending on their own. Rates are already high enough to curb credit card spending and mortgages. When the Fed raises rates, they put banks at financial risk, because people with 24.99% credit card rates are going to say, "To hell with it. I ain't paying this no more." The banks who issue credit cards will have to go after these people and their recovery prospects are diminished. There is only so much money banks will spend chasing down bad credit card debt. Most banks will write it off, then sell it to bill collectors who will hound the hell out of people trying to collect.

In my opinion, we do not need the Fed if this is their planned outcomes. Ron Paul was right.

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The Taking Control Plan

The Taking Control Plan is a six step process that focuses on eliminating debt, keeping discretionary spending under control, establishing savings accounts for specific goals, building your emergency funds, moving on to fully funding your retirement accounts, then finally taking excess income and adding it to your investment accounts.

The Taking Control Plan Money Flow:

1. Fixed Expenses Account
2. Under Control Account(s)
3. Savings Accounts
4. Investment Account(s) for Emergency Funds
5. Fully Funded Retirement Account(s)
6. Excess Income to Investment Accounts

For a graphical view of the The Taking Control Plan Money Flow, follow this link: TheThe Taking Control Plan Money Flow

For a PowerPoint Presentation on the The Taking Control Plan, follow this link: Taking Control Power Point Presentation

Most people have been trained differently when it comes to handling debt, building emergency funds, adding to investment accounts and retirement accounts. The old and very ineffective solutions for debt management have been things like refinancing one credit card to another with a lower rate, or perhaps taking out a home equity line of credit and moving the credit card debt over to the home equity line of credit. The worst in my opinion is trying to be on a budget. Budgets are boring and nobody wants to be on a budget. These old ineffective solutions are not very smart strategies.

Those of you that know me, understand that I am totally unemotional when it comes to coming up with the best plan to get out of debt. It does not make sense to contribute to retirement accounts when you have credit card debt at 19.95% interest for example. You would have to exceed 19.95% on your retirement accounts in order for this to make any kind of sense and you would have to do it consistently. This is not feasible, it is not realistic and it is simple not smart.

You really should think about The Taking Control Plan and how it makes so much sense in helping people get out of debt, achieve their short term savings goals and also systematically increase their retirement accounts and investment accounts. The Taking Control Money Flow is important to making this work. It all needs to be done in order. There is a method to my madness, if you will.

Instead of my trying to explain it all in this blog post, I would prefer if you follow the links above where it will make more sense.

If you are in FL, KY, IN or TX, then I can help you right away with The Taking Control Plan. The fee for this valuable service can be as low as $50 a month. This is a very reasonable fee to have total control over your financial life.

If you are in other states, then we need to discuss how I may still be able to assist you through de minimus exemptions or by obtaining additional licensing in advance. You can go to my website at http://www.firstcoastplanning.com/ and click on the Contact button where you can submit me a brief contact request.

Remember the ultimate goal: Get out of debt, achieve Savings Goals, build emergency funds, fully fund Retirement Accounts and add excess income back into your Investment Accounts. It all make tremendous sense and I think you will agree after you review the above links.

Thank you very much.