I haven’t talked about it much, but that doesn’t mean I’m unaware of the current financial crisis our country is going through. I was initially planning to write about how I’m ignoring the meltdown and plugging along because I have faith that eventually things will turn around. But then I realized that it’s not quite true.
I do have faith that things will eventually get better. That much is true. But it does appear that in the short term, things are going to stay bad and probably even get worse.
What isn’t true about my original statement is that I’m ignoring what’s happening in the economy. For one thing, I’ve already reacted by spreading my money around. Instead of keeping almost all of our funds at one bank, we’ve transferred enough money to cover a couple of months’ expenses to two other banks. I hate the added complication to keeping track of our money, but the peace of mind is worth it.
Another thing I’m thinking of doing is stopping some (not all) of my monthly retirement contributions and using that money to pay off my student loans instead. It would accelerate the payoff date to sometime next year, which is tantalizingly soon. It would mean a guaranteed return of 4.5% after taxes. But it would also mean risking a (small) percentage of my retirement savings if the market turns around in the next year (although I could cut the payments and increase my contribution whenever I want to).
I’m also keeping a close eye on mortgage rates again. With the Fed rate cut earlier this week, I’m hoping that rates will go down enough to make refinancing worthwhile. We’ve been in our house for long enough and have a low enough rate that rates would have to get absurdly low for us to benefit while still making the regular monthly payment. But if we are able to refinance to a lower interest rate and continue making the same payment that we’re currently making, then we would be able pay off the mortgage faster and save tens of thousands of dollars in interest over the life of the loan.
Are you doing anything to respond to current economic conditions, and if so, what?
Image credit: Yahoo! Finance.