Wow! This title sounds like the start of a sci-fi movie script. Thank you for joining me today for two minutes on the economy, an interesting story, and a financial planning tip. It just so happens that I'm also writing this while wearing a neck brace because someone landed on my head this past week while helping at True Hope's youth camp at Silver Lake. Besides that, it was an incredible week. Seeing the camp saved by the fires that swept through the area was powerful.
Economy
M2 is what economists use to measure how much money is in our economy. It includes money in people's savings, checking accounts, and other pieces of money. A higher amount of M2 means a lot of money out there chasing the same amount of goods, which can lead to inflation. The Fed has disregarded the importance of this statistic, while others (including our team) believe it's a great indicator of incoming inflation, confirmed in 2022. The drop in M2 from early 2022 through late 2023 is finally having an effect. Consumer prices declined 0.1% in June, the most significant drop for any month since the early days of COVID. We are seeing some softness in economic growth, retail sales, and manufacturing.
Interesting Story(s)
Trump survived a close assassination attempt on Saturday, which has boosted his chances on betting and polling sites.
A global IT outage caused by a content update from cybersecurity company CrowdStrike disrupted flights, stock exchanges, airlines, other financial institutions, and Microsoft services on Friday. The update affected Microsoft's 365 apps and Azure cloud services, causing a spike in issues and resulting in "Blue Screen of Death" errors for some PC users. This incident led to a significant drop in CrowdStrike's stock and raised questions about Microsoft's ability to prevent such issues despite the tech giant not being directly at fault.
Financial Planning Tip
Two popular strategies for paying off debt are the snowball and avalanche method. The snowball method involves paying off your smallest debts first, regardless of interest rates. This approach helps build momentum and motivation as you quickly eliminate smaller balances, giving you a psychological boost and a sense of accomplishment. On the other hand, the avalanche method focuses on paying off debts with the highest interest rates first, saving you money on interest payments in the long run.
Both strategies have their merits. The method I recommend to clients depends on each situation. Even though you'll save the most money on interest using the avalanche method, I still will recommend the snowball method because the positive mental momentum of paying off debt saves money. People will be more focused and make sacrifices when they see debt being paid off quickly.
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
