Economy 2018: It’s Personal

Every January brings a flurry of predictions for the new year. The effects of tax reform will take time to be fully realized, but acclaimed economist Dr. Elliot Eisenberg says some provisions will stimulate the U.S. economy in 2018 if businesses gain more access to cash and choose to repatriate money, though the effects on inflation and real gross domestic product remain to be seen. Dr. Eisenberg has some practical advice for consumers to bolster their personal economic health and growth in the new year:

SAVE MORE.

Americans save approximately 5% of their incomes according to the Bureau of Economic Analysis, but the number fluctuates. Dr. Eisenberg advises consumers to set aside more money for unexpected events.

ATTACK HIGH INTEREST.

Evaluate your debt and direct your dollars toward obligations with the highest interest rates. For example, if you have a mortgage with a 4% interest rate, an auto loan at 6% and a credit card at 10%, Dr. Eisenberg suggests eliminating higher interest accounts before making an effort to pay off lower interest loans sooner.

REVIEW YOUR MORTGAGE.

Homeowners have 11.8% more equity as of third quarter 2017 than they did a year prior according to CoreLogic. Do you have a Federal Housing Administration (FHA) loan or private mortgage insurance (PMI)? A mortgage professional can help you determine if you can eliminate extra dollars in your monthly payment. It’s also a good idea to have your lender go over other debts and explore whether a refinance is prudent.

INQUIRE ABOUT OPPORTUNITIES.

It’s cheaper to own a home than rent in 17 of the 33 largest metros in the U.S. – and it doesn’t take 20% to buy one. The average down payment made by first-time home buyers is 5% according to the National Association of Realtors, so renters should inquire about low down payment programs and evaluate affordability with a mortgage professional.

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