Happy Friday, everyone! Today is Jenny and I's wedding anniversary! I am lucky to be married to such an amazing woman. We plan to go to Trattoria, an Italian restaurant we haven't been to, in Browne's addition. Thank you for joining me today for two minutes on the economy, an interesting story, and a financial planning secret.
Economy – Huge Rate Cut
The rate cut came in at a whopping 0.5%. Twice as much as analysts had predicted. The market liked this news, with the Dow making all-time highs yesterday. This significant cut shows that the Fed is becoming more concerned about the job market rather than inflation. Powell expects the unemployment rate to increase from 4.2% to 4.4% this year. The Fed has historically been too late to raise and cut rates. Cutting rates too quickly can be more damaging than being too slow if inflation is allowed to get out of control again like it did in the 70s.
Interesting Story – Exploding Phones and Walkie-talkies
Israel has carried out two waves of attacks that we haven't seen before. It's believed that Israel, by using malware, they were able to simultaneously and remotely overheat and explode the phones and walkie-talkies of Hezbollah members, a terrorist organization.
Financial Planning Secret – Watch Out For The Creep
As a financial advisor in Spokane, I work with many clients on projecting their retirement and working with them over time as they reach their goals. One of the biggest obstacles I see happening to couples is lifestyle creep. Lifestyle creep happens when you start making more money and your standard of living rises along with your income. Instead of sticking to your previous budget and lifestyle, you spend more without realizing it. This typically happens when income increases.
Most people don't realize lifestyle creep is happening to them. You need to track your expenses to determine if you're experiencing it. Your expenses will automatically increase yearly because of inflation. This should be taken into account. To calculate lifestyle creep, take the difference between last year's expenses and this year's and subtract what inflation was for the year; the remaining amount is your lifestyle creep.
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About the Author
Noah Schwab CFP® is a financial advisor in Spokane, Washington, specializing in helping couples with 401k five years from retirement.
- Fiduciary. No commission, no products
- Investment management and financial planning
