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| Stat Of The Day |
| 20% |
Amid the ongoing trade war, Canadians are booking 20% less travel to the States, as Reuters reports. Those Canucks, eh? They’re big spenders. The U.S. Travel Association says they shell out an average of 3x more for vacations than U.S. residents traveling domestically. |
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| Is A Recession Coming? |
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On a special episode we dropped last week, economist Kathryn Edwards breaks down what’s really happening in the economy. Edwards explains what a recession is, why economic indicators have so many people on edge, and how new trade policies could impact our financial future.
As the economic rollercoaster continues, Edwards suggests remembering this mantra: Don’t panic. While your investment portfolio will likely go down, your long-term investments will eventually go up again.
One other piece of advice? Do what you can to get your financial house in order. "If you have a credit card, try to pay it off. If you have some money in savings, try to add a little," suggests Edwards. "Recessions are scary, but we live in a very stable economy and whatever happens, we will get through. It won't be painless, but there's growth at the end."
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| This Week In Your Wallet |
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401(k) = the new "rainy day fund" for a growing number of Americans. As The Wall Street Journal reports, a record 4.8% of 401(k) holders took early withdrawals in 2024 due to financial emergencies. "The 401(k) has become a rainy day fund because more employers are automatically enrolling their workers, including people that otherwise have little savings," reports the WSJ. "Congress has also made it easier to use retirement savings for emergencies." According to Vanguard Group, roughly 35% of people who tapped their 401(k) for emergency purposes did so to avoid foreclosure or eviction.
Inflation cooled more than expected in February – is this the light at the end of the tunnel? As CNN reports, the latest Consumer Price Index (CPI) showed annual inflation was lower for the first time in five months. "After hotter readings in December and January, flat producer prices for February should provide some assurances that inflation isn’t taking off again," Ben Ayers, senior economist at Nationwide, wrote in commentary issued Thursday. "But one month does not make a trend, and the upward pressure for goods costs (even excluding the outsized increase for eggs) is a warning sign that imposed tariffs could drive prices higher in coming months." Stay tuned.
Woo hoo! You’ve paid off your debt. Your credit card balance is $0. Now what? Experts say one of the first things you should do is set a new financial goal – and ideally, one that prevents you from falling back into bad habits, like beefing up your emergency fund. "The biggest things that trigger us to go back into debt are those unexpected expenses," Liz Davidson, founder and CEO of Financial Finesse, tells HerMoney. "An emergency fund is an automatic failsafe." Make sure you also take a look at your longer-term goals, like retirement. For example, now is a good time to make sure you’re taking full advantage of your employer’s matching 401(k) contributions so you’re not leaving money on the table. |
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| Things That Save You Money |
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Let’s have a moment of silence for Southwest ending its free checked bag policy. Next, check out these roomy travel backpacks that HerMoney readers say can help you avoid checked bag fees altogether. |
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Tick tock. Time is running out to claim a piece of the $20 million Apple is paying out to settle a class action lawsuit, which alleges certain models of its watches have faulty batteries. If you have a first-generation, Series 1, Series 2 or Series 3 model, the deadline to submit a claim is April 10. Here’s everything else you need to know. |
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Have they no sole? Consumers toss roughly 300 million pairs of shoes every year. Here are the keys to keeping your kicks for longer, starting with buying quality (think leather) in the first place. |
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| Ask Jean |
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| Q: |
Today’s question comes from KT. She writes: We have to redo our floors. Is a home equity loan our best option or is there something else out there? I’m new to all this! |
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It depends, KT. If it’s doable, I recommend paying in cash to avoid incurring debt. It sounds though like it might be too big of an expense, so let’s dig into some other options.
First, the home equity loan. With a home equity loan, you’re borrowing against the equity you have in your home. The rates for these are usually lower than unsecured loans, or credit cards. The interest you pay may also be deductible. The big downside of a home equity loan is that you’re using your home as collateral.
A home equity line of credit, or HELOC, is similar to a home equity loan. It is a revolving line of credit where you borrow against your home’s equity. It works like a credit card—you use it for what you need and pay it back as you go. With this option, the interest you pay might also be deductible. That said, there are a couple of downsides. HELOCs typically have variable interest rates (which means if rates rise, your payments rise — same if they fall). Right now, it looks like rates are trending downward, but depending on how long it takes you to repay the debt you could be eventually looking at a larger monthly outlay. As with a home equity loan, there’s also risk of losing your home if you can’t pay.
You could also consider a personal loan, which doesn’t require you to pledge your home as collateral. However, personal loans normally have higher interest rates than home equity loans.
Last but not least, credit cards. If you can get approved for a credit card with a 0% APR for an introductory period, and then pay the balance off before the promo period ends, this might make sense. If you wouldn’t be able to pay the balance off within the promo period, don’t go this route. Once that promo period ends, interest rates are typically high.
What option is right for you? If you have significant equity in your home and are comfortable using it as collateral, a HELOC or home equity loan might offer the most favorable terms (especially when it comes to interest rates). If risking your home makes you nervous, you may want to take out a personal loan or find a credit card with a 0% APR, so long as you can pay it off before the promotional period ends. |
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