Free From Broke

A Personal Finance Blog for Regular Folks

Kevin Mulligan

What’s This Federal Reserve and Why Is It In the News All the Time?

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We hear about “the Fed” or the Federal Reserve doing various things in the news, but what exactly is the Fed?

How can one institution be responsible for rising and falling interest rates, and why does the stock market bounce around every time the Federal Reserve Chairman speaks?

Understanding the Federal Reserve System

How can you understand a quasi-Federal agency that is still independent, has mysterious meetings that impact the nation’s economy, and can cause the stock market to go wild?

Here are some key areas to understanding what the Federal Reserve is, what it does, and the tools it uses to achieve its goals.

What is a Central Bank?

The Federal Reserve is the United States’ Central Bank.  A central bank is a quasi-government institution that manages its country’s money supply and interest rates.  Most central banks also are in charge of regulating the banking environment of the country.
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College Savings or Retirement Savings – Which Should I Save For First?

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There is a deep, deep instinct within parents to care for their children. Every parent I’ve ever known wants their children to have it better than they did.

Often this means Mom and Dad sacrifice for their children.  These sacrifices can be small such as not ordering dessert when eating out or driving the old beat up (paid off) car one more year before buying something manufactured in the last 5 years.

Other times the sacrifices made by parents can be financially devastating.

The desire to provide for children is so strong that choices are made that can make things worse than they need to be.

The classic question of saving for your children’s college funds or for your retirement falls right in line with this idea.  Is it a terrible idea to set aside your retirement needs to save some extra dollars for the college fund?  Or can you justify putting off retirement savings to make sure there is enough money to pay the college bills?

Deciding Whether to Save for College or Retirement

Here are 6 factors to consider when making the decision of whether to save for college education costs or your retirement.

1. Why Not Do Both?

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Stocks Drop 2% This Week and Links

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The US stock markets dropped about 2% this week.

Is it time to abandon ship on stocks?

Maybe!  Or maybe not.  How can you tell?

It all comes down to your asset allocation and investment plan.  You shouldn’t make significant investing moves just because the stock market goes up or down.  Your shifting of assets should only occur inside your investment plan’s rules rather than because of an emotional decision.

Not sure how to handle your money or investments? Here are some articles to help out:

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Fixed Or Adjustable Rate Mortgage – Does An ARM Ever Make Sense?

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Adjustable rate mortgages or ARMs are a different kind of mortgage than the standard 15 year or 30 year loans available at your local credit union.

ARMs have a lot of negative stigmas attached to them, but are there situations where using an adjustable rate mortgage is a wise financial move?

Pros and Cons to Having an Adjustable Rate Mortgage

Before you jump onto the adjustable rate mortgage train, consider the following:

What is an Adjustable Rate Mortgage?

Most of the mortgages now available post-financial crisis are less risky investments for the lenders.

Gone are the days of getting a mortgage without income documentation.  The most common loans are 30-year fixed loans and 15-year fixed loans.  Fixed rate loans give stability to the payment for the borrower.  Your mortgage is $800 today, $800 tomorrow, and $800 10 years from now.  The stability in the payment makes it a lot easier to plan for your financial needs for years to come.
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Balance Transfer Credit Cards – When Does It Make Sense to Use Them?

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Dave Ramsey and other popular financial pundits are fond of saying things like “You can’t borrow your way out of debt!”

The advice is to those that would like to open up a new credit card for a balance transfer, or get a new home equity loan or home equity line of credit in order to pay off their current debts.

And generally speaking, borrowing money to pay off borrowed money is a losing game.

Their advice is for those that can’t handle the financial responsibility of paying off the debt and spending less than they earn at the same time.

If you continually spend more than you earn, no amount of balance transfers or new lines of credit will save you.

Since many people calling into the financial shows can’t handle that responsibility (they are up to their eyeballs in debt currently, right?) the advice points against this strategy.

However, that doesn’t mean transferring a balance from one credit card to a new one is always a bad idea.

If you are smart about how you handle the balance transfer it can actually save you thousands of dollars in interest and result in you being debt-free a lot earlier than you would have been otherwise.

How Does a Balance Transfer Credit Card Work?

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