I read an interesting article yesterday regarding password security. It’s worth taking a look at. I’m not sure if this is something that everyone should be worried about, but it does raise some concern over what information you allow to be available over the internet.
Archive for August, 2008
Today the Federal Reserve decided to keep interest rates steady at 2%, saying that they expect inflation to “moderate” in the future. But think for a second about the amount of money you spend every month. If you’re like most people your expenses have probably gone up a lot more than 2% thanks to the rising cost of energy and food. When the Fed looks at inflation numbers, they generally consider “core” inflation, which does not include food and energy. So the numbers are greatly exaggerated versus reality.
There is a great primer on inflation over at Bullion Vault written by the founder of the Implode-O-Meter website. It is well worth taking the time to read, as inflation is something that has a great impact on your financial well-being.
If you have any debt at all, especially if you’re paying an interest rate greater than 5%, it is wise to pay it off over saving money in a low interest account. Even CD’s at the bank are not likely to earn over 5% interest, which means that you are losing money to inflation if you have cash savings. But then again having a decent amount of cash on hand, around 2-4 months living expenses, can bring comfort in the case of an emergency.
If you must invest your money, commodities are a desirable place to be, although investing in precious metals can be tricky. TIPS (Treasury Inflation Protected Securities) are often touted as a sound hedge against inflation, but keep in mind that the inflation rate used is the CPI, which is horrendously underreported. Personally I think that TIPS are a terrible investment in this economy thanks to rising food and energy costs. Another possible alternative is to invest in foreign currency, but again this is tricky because holding cash means no interest, and earning interest means you need a foreign account.
If you didn’t read the article linked to above, I highly recommend you do. Being able to avoid losing money (and purchasing power) is just as important as knowing how to make money.
I haven’t posted here in a while, but I thought our quarterly net worth update might be an appropriate way to make a comeback.
The results are positive, but we’ve had a small setback to deal with. First the good news. Our debt is down 30% from April, our assets are up 6%, and our total net worth is up a whopping 445% to $12k. Since we’ve started seriously trying to pay off debt in January we’ve paid off over $16,000 in debt. We’re hitting the half way mark, and it feels great. Our assets are up only 6% due to weakness in the stock market, and the only reason it’s gone up at all is because of our 401k and emergency fund contributions.
Now the bad news. My wife has been laid off, which is going to hurt going forward. With unemployment we should be able to easily cover our expenses, but paying off debt is going to go a little slower than it has in the past. Now more than ever being frugal and living below our means is going to be important. As we work hard to save money I should be able to start posting here more often to talk about what we’re going through and to share what we learn.
