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π° Where to Stuff Your Hard-Earned Cash
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Drug dealers like to bury their money underground or stuff their money in a mattress. Not you though, because you want that sweet rate of return. β
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One of the pros of a high-interest rate environment is that cash no longer becomes trash. Here is where I would keep my cash in order.
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Today we are going to show you the best places to park your cash.
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1. High-Yield Savings Account: The video suggests using online high yield FDIC insured savings accounts. I love Ally because of their savings buckets or CIT bank.
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2. Money Market Accounts: These are FDIC or NCUA insured accounts. The rates for these accounts are similar to savings accounts, I have seen rates as high as 5.25%.
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3. No Penalty CDs: These are Certificates of Deposit where you can withdraw your money anytime after a certain waiting period (either 7 or 30 days depending on the CD) without any penalty. The rates for these are also similar to savings and money market accounts.
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4. U.S Government Bonds (T-Bills): Short-term U.S government bonds or T-Bills are suggested as the fourth option. The rates are slightly higher than the previous options, ranging from 5.36% to 5.48%. These are backed by the U.S government and are free from state and local income tax.
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5. iShares iBonds Treasury ETF: This is an Exchange Traded Fund (ETF) that holds many different bond investments. These ETFs actually come to an end at a certain date (for example, December 2024), and at that time, you get back your investment including any interest it's earned. These are a way to get exposure to short-term U.S government bonds without having to buy specific T-Bills.
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π If you Canβt Afford a House itβs Not Youβre Fault
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The cost of housing is astronomical.
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But what happened in the last 4 years is the real problem.
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If you canβt afford a house, itβs not your fault.
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Let me show you why:
Letβs take a time machine back to 1995.
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The average house was worth $130K
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If you put down 20% thatβs $26,000. Interest rates were 7.86%.
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Principal and interest would be $735/mo.
Now to 2019, the average house cost $260K.
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20% down would be $52K. Interest rates were 4%.
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Principal and interest would be $993/mo.
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Hereβs where the jump happens....
In 2023, the average home jumped to $419K.
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20% down would be $84K and interest rates were 7.24%.
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Principal and interest would be $2,283/mo.
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This is a $1,290 jump in 4 years. Between 1995 - 2019 it was only $258.
That's bad. But it's not the whole story.
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Now let's look at the Average income between all 3 years:
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- 1995: $29,000
- 2019: $56,000
- 2023: $56,000
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It gets worse.
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Hereβs what percentage of your income would be used for housing:
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- 1995: 31%
- 2019: 21%
- 2023: 49%
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Not to mention, a college degree in 1995 cost $10,560 for a public state school. Now, it will set you back $100,000.
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This is where the problem lies. From 1995 - 2019 the housing market was pacing fine. The last 4 years have been the problem.
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This is when millennials started complaining (and for good reason).
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If you buy a house that is 49% of your income, you will be house poor.
What can you do? It depends on your location:
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. Keep renting until rates drop
. Consider house hacking
. Live-N-Flip
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There are truly no good answers. As with anything patience is the key in navigating this. I will tell you this. There is NOTHING wrong with renting.
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