Wednesday’s need-to-know money news

Today’s top story: Ditching debt while budgeting for a baby. Also in the news: What to do if Hurricane Florence hits your home and/or mortgage, five people who are crushing student debt, and what you can learn from the last financial crisis to help you with the next.

How I Ditched Debt: Changing Habits, Budgeting for a Baby
A shift in priorities.

What to Do If Hurricane Florence Hits Your Home, Mortgage
The Category 4 storm is heading towards the Carolinas.

Meet 5 People Who Are Crushing Student Debt
Tips from the masters.

Here’s what you can learn from the last financial crisis that will help you with the next
Planning ahead.

5 Reasons Your Money Is Safer Today Than 10 Years Ago

Your paycheck doesn’t stretch far enough, and the stock market routinely clobbers your retirement account. You may not feel financially secure, but in many ways your money is a lot safer than it was a decade ago.

The financial crisis of 2008 and the subsequent recession prompted a bunch of reforms that are helping you keep more of your hard-earned cash, even if you’re not always aware of the safeguards.

In my latest for Nerdwallet, five of the most important changes.

Secret Fed recordings should scare you–a lot

watchdogPeople remember where they were when they heard about big historical events, like the planes flying into the World Trade Center buildings. Finance geeks remember where they were in September 2008 when they heard that the Prime Reserve Fund had “broken the buck.” A money market fund’s share price had just dropped below $1 for the first time, and this was a huge deal. Money market funds were supposed to be safe–I almost said “safe as houses,” but given the subsequent real estate recession, maybe not. Anyway, it wasn’t hard to envision this news triggering a Depression-era run on the funds where individuals and institutions stored trillions of dollars of cash. The funds wouldn’t be able to meet all the demands for withdrawals and the banking system would grind to a halt. From there, the collapse of the whole financial system would no longer be a fantasy of end-of-the-world preppers. Of all the bad news that fall–and there was a ton–that’s the story that really made it clear how close we were to the brink.

We avoided the worst, but our close call should have put every financial regulator on his or her toes. Unfortunately, secret recordings made by a now-fired Fed attorney make it clear that watchdogs are instead cuddled in the arms of the financial institutions they’re supposed to regulate. This is a gigantic story, one that financial author Michael Lewis calls “The Ray Rice video for the financial sector.”

Listen to the This American Life podcast here, and read ProPublica’s story here.  This is news you really need to know.

Do you feel richer yet?

Zemanta Related Posts ThumbnailWe’re richer than we were before the recession, according to a new report by the Federal Reserve. The net worth of U.S. households and nonprofit organizations is now a record $80.7 trillion, 14% higher than last year. The previous peak in 2007 was $76.59 trillion in today’s dollars.

If you don’t feel wealthier, though, you’re not alone. Most of the gains went to the country’s richest households, and older people saw bigger wealth increases than younger people. That doesn’t bode well for consumer spending, economists said, since younger and less wealthy households are more likely to spend their gains. An article in today’s Wall Street Journal includes this quote:

“Wealth inequality…has increased over time,” said William Emmons, an economist at the Federal Reserve Bank of St. Louis. “So, there seems to be a disconnect: There are big wealth gains, but not much follow-through on consumer spending.”

Another study by the Federal Reserve Bank of St. Louis found that the average family headed by someone under 40 has recovered only about a third of the net worth lost during the financial crisis and recession, while the average wealth of middle-aged and older families is about where it was prior to the crisis.

Monday’s need-to-know money news

Chevy VoltSaving for the holidays, how to manage your finances while having ADHD, and how letting Big Brother ride shotgun could save you money on car insurance.

Why You Need to Save Now for Christmas
Yes, it’s only September. No, that’s not too early.

5 Years After Financial Crisis: Meet the New Consumer
The financial crisis of 2008 changed the way we shop and spend.

Budgeting After College
Even though you can finally afford more than ramen noodles, post-college life still requires budgeting.

Managing your finances when you have ADHD
Having ADHD can make managing your finances difficult, but there are strategies for making it easier.

Should You Let Your Car Insurance Company Spy On You?
Having Big Brother in the car could reduce your insurance rates.

Friday Follows: What’s interesting out there

Here are some recent, thought-provoking articles that are worth a look:

Get ready: inflation may hit 15%” from Kathy Kristof on MoneyWatch. Alarmist? Maybe, but there’s a lot of cheap money sloshing around in the economy right now. Once the economy heats up, that fuel could catch fire. If you don’t remember the 1970s, this is a good primer in what to do when prices skyrocket.

Daily coupon deals may not work for buyers, sellers” from USA Today. I’ve gotten some great deals–and some real stinkers. Some businesses benefit, others don’t. What do you think?

Bouncing back” from another friend, Melissa Balmain, on Success. How people find the strength to go on in tough times, and how to develop your own “resistance muscle.”

Bulls, bears and bailouts” from ProPublica captures the highlights of a Reddit chat with Wall Street reporter Jesse Eisinger. Jesse’s answer to why more of the architects of the financial collapse aren’t in jail? “Prosecutors have been overly risk-averse.”