How to Cope with a Slowing Economy Video

Get it off your chest – be the first to comment on this video!

How to Cope with a Slowing Economy

Kevin McCormally: I am Kevin McCormally of Kiplinger's. I am here with Janet Bodnar, the Deputy Editor of Kiplinger's Personal Finance Magazine, to talk about financial advice for an economic downturn. Janet, some people say, it's a recession, we know it's a lousy economy. What kind of financial advice can we give people? Janet Bodnar: Well Kevin, in the economy like this, people always say and it's true that cash is king, meaning you don't want to take on any long-term commitments that you might not be able to meet. You want keep your money liquid, so that you can get out of it if you need it. Kevin McCormally: So, what you really need is a big cash dash going into this. Janet Bodnar: That's right. Kevin McCormally: Okay, let's say, you don't have it, where are you going to get it? How you are going to build it up at this point? Janet Bodnar: Well, some things are obvious; you might just have to cut back on some of your discretionary expenses. Things like the fun stuff, like entrainment, needing out things like that. But there are some things that you can do that really can save you bigger bucks even than that. Kevin McCormally: Okay, I need some examples. Janet Bodnar: Well, some examples might be increasing the number of withholding allowances from your paycheck, that can put money in your pocket. Another big thing is to just raise the deductibles on, say, your home owner's insurance or your car insurance, that can save you 15% or more on your premiums. Nowadays, with gas prices being what they are, just keeping your car tuned up and in good shape can save you a $100 and more a year just on gas. Kevin McCormally: Okay, I can see this money coming my way, what do I do with it? Where do I save? Interest rates are so low, how do I save this money? Janet Bodnar: Well, probably the best place to put it is an online Internet bank because those banks do tend to pay higher rates than brick and mortar branches. Also, again, keep it short-term; don't take on any longer-term commitments with your money so that you can advantage of higher interest rates. We do think that interest rates are going to uprise inevitably and you will be able to take advantage of that. Kevin McCormally: Okay, when we talk about lower interest rates, can we expect lower rates that we have to pay on a credit card debt? Janet Bodnar: I think you can. Certainly, if you have a variable rate credit card, you can expect that eventually those rates are going to go down. It might be a little tougher if you have a fixed rate card because creditors, the situation being what it is now, may not be too eager to lower your rates but you do have leverage if you have good credit and if you are a good customer and if you can say, "Hey! Look, I know the rates are going down, I have the options with other lenders, what can you do for me?" Kevin McCormally: Okay. Again with low interest rates, is this a good time to borrow money? Janet Bodnar: Well, you know, it really could be. If you have a good balance sheet, clean balance sheet, you don't owe a lot of money, you are secure in your job and you are in the market for something like a house, mortgage rates are attractive, prices are down. Also, if you would like to buy a car, in order move their merchandise and their inventories, car dealers are now offering dealer incentives again. So again, if you are in good shape financially, it could be a very good time to borrow money. Kevin McCormally: Thank you, Janet.

Kiplinger Timely Trusted Personal Finance

Personal Finance Business Resources Retirement and Financial Advice

http://www.kiplinger.com

Featured Links:

Japanese Economy Slowing

More evidence of the recession the Japanese economy seems to be sliding into, unchecked. Industrial production tumbled at the fastest rate in five years in August, and the unemployment rate rose and household spending fell. Factory output fell 3.5%

http://www.articlesbase.com/investing-articles/japanese-economy-slowing-587802.html/9461024403

Kevin McCormally: I am Kevin McCormally of Kiplinger's. I am here with Janet Bodnar, the Deputy Editor of Kiplinger's Personal Finance Magazine, to talk about financial advice for an economic downturn. Janet, some people say, it's a recession, we know it's a lousy economy. What kind of financial advice can we give people?

Janet Bodnar: Well Kevin, in the economy like this, people always say and it's true that cash is king, meaning you don't want to take on any long-term commitments that you might not be able to meet. You want keep your money liquid, so that you can get out of it if you need it.

Kevin McCormally: So, what you really need is a big cash dash going into this.

Janet Bodnar: That's right.

Kevin McCormally: Okay, let's say, you don't have it, where are you going to get it? How you are going to build it up at this point?

Janet Bodnar: Well, some things are obvious; you might just have to cut back on some of your discretionary expenses. Things like the fun stuff, like entrainment, needing out things like that. But there are some things that you can do that really can save you bigger bucks even than that.

Kevin McCormally: Okay, I need some examples.

Janet Bodnar: Well, some examples might be increasing the number of withholding allowances from your paycheck, that can put money in your pocket. Another big thing is to just raise the deductibles on, say, your home owner's insurance or your car insurance, that can save you 15% or more on your premiums. Nowadays, with gas prices being what they are, just keeping your car tuned up and in good shape can save you a $100 and more a year just on gas.

Kevin McCormally: Okay, I can see this money coming my way, what do I do with it? Where do I save? Interest rates are so low, how do I save this money?

Janet Bodnar: Well, probably the best place to put it is an online Internet bank because those banks do tend to pay higher rates than brick and mortar branches. Also, again, keep it short-term; don't take on any longer-term commitments with your money so that you can advantage of higher interest rates. We do think that interest rates are going to uprise inevitably and you will be able to take advantage of that.

Kevin McCormally: Okay, when we talk about lower interest rates, can we expect lower rates that we have to pay on a credit card debt?

Janet Bodnar: I think you can. Certainly, if you have a variable rate credit card, you can expect that eventually those rates are going to go down. It might be a little tougher if you have a fixed rate card because creditors, the situation being what it is now, may not be too eager to lower your rates but you do have leverage if you have good credit and if you are a good customer and if you can say, "Hey! Look, I know the rates are going down, I have the options with other lenders, what can you do for me?"

Kevin McCormally: Okay. Again with low interest rates, is this a good time to borrow money?

Janet Bodnar: Well, you know, it really could be. If you have a good balance sheet, clean balance sheet, you don't owe a lot of money, you are secure in your job and you are in the market for something like a house, mortgage rates are attractive, prices are down. Also, if you would like to buy a car, in order move their merchandise and their inventories, car dealers are now offering dealer incentives again. So again, if you are in good shape financially, it could be a very good time to borrow money.

Kevin McCormally: Thank you, Janet.

Transcription by: Scribe4you Transcription Services