None of us is all one thing.
To be human is to hold two conflicting thoughts in our minds at the same time.
IE
‘This is a dangerous activity, and also I love this activity;
‘This is a crazy person, and also I love this person’
‘I really need these rates to come down, and also these rates may be stuck for a long time’
Duality!
I’ve been biting my tongue, no really I have, on the topic of interest rates for the past couple of years. Partly because the game seems to have changed so much, with experts, experienced economists, and otherwise brilliant people all admitting on the regular that ‘nobody really knows anything anymore‘ when it comes to interest rate trends. So why add my voice to the mix.
Mainly though, as an optimistic person I don’t like to be labeled ‘negative’.
I believe that tomorrow will be better than today, generally speaking.
Maybe not for you individually, or for me individually, but on the whole things will be better. There is no question that on average today is a much better day to be born than 100 years ago, or even 50 years ago. ‘Everything’ is better for ‘everyone’ – again generally speaking… globally speaking.
So ya, we can be optimistic about life in general, but we also have to face reality.
And one reality is that there may not be any change to interest rates anytime soon.
This message is even less popular today that it was when I delivered the same thought in a presentation way back in 2010 to a room full of Real Estate investors. I suggested that the 2.75%-ish rates of the day didn’t ‘have to go up‘ and that in fact rates could languish right where they were (more or less) for 10 more years. People laughed out loud at me.
Any yet there was every possibility this could happen. And then it did.
That room though, that day, it groaned with skepticism and buzzed with many theories on why rates HAD to go up, and that they had to go up soon… uh-huh.
Today, and for a few hundred days really, I’ve been harbouring a similar sentiment about the rates we now face; ‘rates don’t have to go down‘ – not a popular comment in a crowded room these days. And yes, rates really could languish right where they are for ten more years.
Of course I don’t know what will happen.
Nobody does.
But I do know that I need to be prepared, individually, to weather another 8 years of these rates.
I need to be prepared mentally, emotionally, and financially… maybe not in that order.
Hope isn’t a strategy, but it can be a tactic though, because hey, hope is useful… in measured doses.
Your budget is your strategy.
Knowing how long your savings will last you, when set against a shortfall of income less current expenses is important.
Building a plan to fix the shortfall on your own.
Increasing income.
Decreasing expenses.
These are things we need to monitor, regularly.
A budget is a living breathing thing.
Stay on top of it.
I always see the glass as half full, but I know that I’m the one responsible for filling it.
The Bottom Line; Don’t count on a rate drop in June – hope for it sure, just don’t rely up on it.
And yes, this was written by a guy who gave notice on his primary contract 4 months ago.
Hmmm, what sort of budget mgmt strategy was that?!?
More on the Hernan Cortes life strategy in the coming weeks.
DW