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Monday Money Report

| April 15, 2024

Happy Tax Day!  It has been said that a person doesn't know how much he has to be thankful for until he has to pay taxes on it.  With that in mind, today is the last day to make a contribution to your IRA or Health Savings Account for 2023.  If you have a side hustle or are self-employed, you have until you file your taxes to open and fund a SEP IRA.

Last week the markets seemed surprised again that inflation is stubborn, and it looks like the Federal Reserve Bank may wait even longer to cut rates. My crystal ball has a few scratches, but my personal belief is that we won’t be seeing rate cuts any time soon, possibly not until the labor market cools down and we see some job losses.

The Federal Open Market Committee, part of the Federal Reserve Bank, sets the Fed Funds Rate, the rate at which banks lend and borrow money to each other to meet overnight capital requirements, the amount of money they must have on hand. We’re currently at 5.33%, which is just above the long-term average of 4.6%.[1] We’ve been spoiled by historically low interest rates going back to the ’08-09 financial crisis.

It doesn’t feel normal, but it is. Which means we can do some things now to help ourselves.  If you have high-interest rate debt, especially credit card debt, focus on paying that off. Pay the minimum on each debt, and put everything else that you can towards the debt with the highest interest rate.

Our brains don’t like deprivation, but they are willing to make choices. You can go out to dinner, or buy that new thing on Amazon, or whatever it is that’s fun and nice but not absolutely necessary. Or, you can put that $30, 40, or 50 towards your debt. Telling yourself you want to be out of debt more keeps our brains happier. Take it a step further by making a game of it.  Put your total on your refrigerator, and every time you make a monthly payment, cross off the total and write the new one. Each time you make a choice not to spend money, make a payment right then, and write the new, lower total of debt.

If you don’t carry a balance on your credit card, put your money to work. The average interest rate for savings accounts in the US is 0.47%.[2]  A High Yield Savings Account or Money Market can pay more than 4% right now. That extra little bit can strengthen your emergency savings, add to your investments, or fund a great experience. While you’ll have to pay taxes on the interest you earn, you’re letting your money make money without any effort on your part.

Your action item this week is to schedule your spring HVAC check-up, and make sure you’re prepared for summer.

Be sure to check out our website at, or our Facebook page, for more information and to register for our upcoming educational events.

CovingtonAlsina is a registered investment adviser.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.  Investments involve risk and, unless otherwise stated, are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.

[1]Effective Federal Funds Rate Market Daily Insights: H.15 Selected Interest Rates | YCharts