DjelicS / iStock.com
Kevin O’Leary, an investor and star of “Shark Tank,” recently made headlines based on an interview with Fox Business, stating that we should expect a “downsized America” due to the rate hikes introduced to cool down inflation.
It’s no secret that Americans are still feeling the impact of inflation and the higher interest rates only make matters worse. How policymakers decide to proceed with rates from this point will impact the lifestyles of many Americans.
You are watching: Kevin O’Leary: Expect a ‘Downsized America’ — How You Can Prepare
Here’s a look at Kevin O’Leary’s predictions for what high interest rates will do to Americans’ lifestyles and what you can do to prepare.
“Three years ago, even 24 months ago, you’d get a mortgage at 4.5%. You’re lucky to get one at 8% today,” O’Leary commented while discussing the reality of rate hikes.
The Fed has led one of the most aggressive rate hike campaigns to fight rampant inflation, which reached 40-year highs. As Americans still feel the higher prices in their pockets, they also have to navigate higher interest rates that have made borrowing for a vehicle or a new home astronomical.
O’Leary also talked about the rising rates for borrowing money to finance cars. Instead of getting 5%, you must pay anywhere from 8% to 9%.
Edmunds reported that the borrowing rate for new vehicles reached an average of 7.4% in the third quarter, a number that hasn’t been hit since 2007. This means that Americans are forced to decide between spending more on interest or waiting for rates to fall to make a purchase.
O’Leary summed up his thoughts by saying he believed your lifestyle will be about 20% less if you’re in your early 20s.
See more : Live Review and Photo Gallery: The Rick Holmstrom Band at SPACE • Evanston : Illinois Entertainer
O’Leary believes that rising interest rates have made the cost of borrowing money more expensive, which will impact individual decisions on major purchases.
Here are the examples cited:
Higher interest rates mean that you have to purchase smaller when it comes to your housing and transportation. For most people, housing and transportation are the most important decisions that they have to make.
As a result, Americans will have to downsize until rates come down. You’ll be driving a smaller car and living in a smaller home while also reducing your daily expenses.
O’Leary wants you to save money and build the habit of saving money. Here are some other practical tips to help you prepare financially —
One of the best ways to save money is to pay yourself first with automatic withdrawals from your paycheck. You can set aside 10% of your income, so you don’t have access to it. This will limit your chances of spending the money since you won’t see it.
You’ll want to use some budgeting app to track your expenses to ensure that you’re not going overboard with your spending.
It also helps to review your fixed expenses like insurance or subscriptions to see if you can cut something or negotiate a lower rate. If you don’t know where your money’s going, you’re going to be in trouble.
If you can wait, then you should put off that major purchase for now. This isn’t the time to finance a new dining room or borrow a vehicle. You’ll save a tremendous amount of money by waiting for rates to come down.
See more : Grading Chicago Bears offensive line at the 2023 bye week
You may even want to think about putting off the wedding or waiting for that dream vacation.
It’s time to focus on necessities when it comes to spending money. This might require you to cancel a subscription or limit your dining out.
As frustrating as this can be, you have to remind yourself that this is only a temporary measure. When times are tough, you have to prioritize your spending to have enough money for the basics.
When it comes to borrowing money, you won’t be able to get the same size of a loan, so you’re going to have to downsize certain aspects of your lifestyle. As O’Leary explained above, you’ll have to get a smaller vehicle or live in a smaller space until the economic situation changes.
If you have the money saved up, you can take advantage of opportunities by looking into inflation-resistant assets. Here are some worth considering:
O’Leary wants Americans to be realistic about the current economic situation.
Even though headline inflation has come down, people still feel the impact of higher prices on everyday items. There’s also a chance that the Fed could raise rates again in 2024, so we must plan accordingly.
As we near the new year, consider downsizing your lifestyle for the time being so that you can focus on saving up.
More From GOBankingRates
Source: https://us.congthucvatly.com
Category: Reviews
This post was last modified on 12/05/2023 7:21 pm
The average discount for a 2023 model year vehicle was $4,147. INDIANAPOLIS — It has…
Since a new generation of electric cars went on sale 18 months ago, the results…
Memorial Day weekend is shaping up to offer some of the best deals on new…
CNN — Memorial Day weekend is shaping up to offer some of the best deals…
OPU Coin (OPU) has been making waves in the cryptocurrency world, attracting investors and enthusiasts…
In the ever-evolving landscape of action RPGs, Rise of the Ronin emerges as a promising…