Money Management

Not shockingly, higher inflation readings tend to lead to lower stock values. 

Financial experts spent weeks waiting for an inflation reading to come in for January. And on Feb. 14, the Bureau of Labor Statistics released its most recent Consumer Price Index (CPI) reading.

On an annual basis, consumer prices were up 6.4%, which was actually a decline from December’s 6.5% reading. But on a monthly basis, consumer prices rose 0.5%. And that sent the stock market reeling.

Following the news of higher inflation in January than December, the Dow Jones Industrial Average fell by 0.77%. The S&P 500 index dropped as well, as did the Nasdaq.

Interestingly enough, financial guru Graham Stephan predicted that something like this would happen. In an early morning “CPI Day” tweet, he made some calls about the direction stocks would take based on various CPI readings.

If today’s stock market plunge has impacted your brokerage account balance, you’re in good company. And it’s also not really something to worry about.

Why soaring inflation was bad for stocks

Inflation has been putting a strain on consumers, forcing many to raid their savings and rack up scores of credit card debt to make ends meet. But higher inflation also means that the Federal Reserve may get more aggressive with future interest rate hikes. If that happens, it could easily drive up the cost of consumer borrowing across the board. And that could set the stage for an economic recession.

To put things another way, today’s inflation report was generally regarded as unfavorable economic news. And whenever news of that nature hits, stock values tend to plummet.

But that doesn’t mean that stocks won’t recover quickly. In fact, if you check your brokerage account tomorrow, you may even find that its balance is back up. That’s how fickle and reactive the stock market is.

Of course, the frustrating thing is that sometimes, the stock market can react poorly to positive economic news. In recent months, low levels of unemployment, as reported by the Bureau of Labor Statistics on a monthly basis, have caused stock values to drop — the logic being that if jobs are being added and unemployment is low, inflation is less likely to fall.

The point, therefore, is that it’s best to not get hung up on daily stock market movement. Rather, focus on your long-term goals, and think long term rather than day to day.

An important lesson to learn

This isn’t the first time the stock market has fallen on the heels of unwanted economic news, and we can bet it won’t be the last. That’s why a good rule of thumb is to not react yourself to stock market dips. If you see your portfolio balance drop following a news event, just ignore it.

The only way to lose money in the stock market is to sell off assets at a lower price than what you paid for them. If you don’t do that, the losses you’re seeing are more likely than not to be temporary in nature. And while it’s never pleasant to log into your brokerage account and see a lower balance than you had the day before, that’s par for the course when you own stocks. The sooner you recognize that, the less stress you might experience as an investor.

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“Push it to the limit” isn’t a good strategy with your credit cards. 

Maxing out a credit card occurs when you reach its credit limit. For example, if your card has a $5,000 credit limit and a $5,000 balance, then it’s maxed out. This is something you want to avoid whenever possible, because it can cause several issues for you. To understand the potential repercussions, here’s what happens if you max out a credit card.

Additional transactions will be declined

Since you’ve reached your card’s credit limit, you won’t be able to keep using it until you pay down the balance. If you’re unfamiliar with how credit cards work, they’re what’s known as a revolving line of credit. You can keep borrowing from them and reusing them, as long as you pay back what you borrow.

Let’s say you max out your credit card with a $5,000 limit. Then you make a $3,000 payment. That brings your balance down to $2,000 and frees up $3,000 in credit you can borrow from again. Keep in mind that it’s normally better to pay off your full balance, though, to avoid paying interest charges.

There are, however, a couple of situations where you could keep using your card:

You may be able to opt into over-the-limit transactions, in which case you could go over your credit limit. These transactions almost always have an additional fee.Some credit cards are flexible spending cards. These allow you to exceed your credit limit on a case-by-base basis, without a fee.

Your credit score will drop

Your credit score is a measure of your creditworthiness. One of the factors used to calculate it is your credit utilization ratio, or the amount of your credit that you’re using. For example, if your card has a $200 balance and a $1,000 limit, that would be 20% credit utilization.

Lower credit utilization is better for your credit score. A popular guideline is to stay below 30% credit utilization. There are two types of credit utilization that are important:

Overall: The combined credit utilization across all your credit cards. This is calculated by dividing all your cards’ combined balances by their credit limits.Individual: The credit utilization on each card you have.

If you max out a credit card, you’ll have 100% credit utilization on that card. This can have a big negative impact on your credit score. It will be even more significant if that’s your only credit card, since that means you’ll also have high overall credit utilization. High credit utilization can drop your credit card as much as 50 points, according to Rod Griffin, senior director of consumer education of Experian.

You could end up in credit card debt

When you use credit cards, it’s extremely important to be careful about your spending. If you overspend and can’t pay off your balance, you’ll have to deal with credit card debt. Unfortunately, many consumers end up in this situation. The average amount of credit card debt held by consumers is over $5,000, according to recent credit card debt statistics.

Maxing out your credit card doesn’t guarantee you’ll end up in debt. After all, you may still be able to pay off the balance in full by the due date. But many people who max out their cards can’t do that and instead carry around a hefty balance from month to month.

That’s what you want to avoid. Credit cards tend to have high interest rates, and their interest rates even recently hit a record high. The best approach is to spend only what you can afford to pay back.

There are a few things that can happen when you max out a credit card, and none of them are good. Be aware of your credit limit and aim to avoid maxing out your credit card. You’ll be able to keep using your card, and you won’t need to worry about your credit score or credit card debt.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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You can earn free cash for tens of millions of eligible items on Amazon! 

Did you know you can earn Amazon gift cards and cash back by shopping at other stores? The company recently released a new Alexa app feature called “Alexa Shopping List Savings.” This allows customers to get rebates on their favorite items and redeem them for Amazon cash. Here’s how it works.

How does it work?

The Alexa app is a mobile application and virtual assistant designed to help users manage their devices, control their music, and access other features like news updates, weather forecasts, and more. After opening the app, you go to the Alexa Shopping List section to find rebate offers for a variety of different products. All you have to do is browse the rebate offers you want and tap on (+) to add it to your shopping list.

Then you can go to the grocery store and shop for the offers you selected. After you make a purchase, you use the app to scan your shopping receipts and product barcodes. You will then receive cash back rewards based on the items you purchased, helping you reach your financial goals even faster. You must ensure that all your offers have been added to your Alexa Shopping List before you make the purchases to qualify for the rewards.

Where can you use it?

These rebates can be used across any store nationwide that gives you an itemized receipt. This includes most grocery, drug, and nationwide chain stores. And best of all, you don’t have to show anything at the checkout line (as you would with a coupon). Amazon requires that the store receipt show the store name, location, date and time of purchase, total amount of receipt, and for the product(s) that relate to the offer, the quantity, price paid, and product name and description.

Once you scan and upload the receipt to the Alexa app, the cash back will be automatically applied to your Amazon gift card balance. You can use it to purchase any item you want on Amazon. It can take up to one week to get your gift card after uploading your receipt and barcode, but it typically takes 24 to 48 hours for the qualifying rebate amount to be added to your Amazon gift card balance.

Amazon’s new receipt scanning feature makes it easy for shoppers to get cash back rewards from participating retailers simply by scanning their receipts into the Alexa app on their mobile device. The primary benefit of this new feature is that it makes it easier than ever to earn cash back while shopping at your favorite stores — all without having to remember and manually enter coupon codes. It’s easy, quick, and can help you save money on groceries and not go over budget. So if you’re looking for a simple way to earn extra rewards while doing your regular shopping routine, then give this new Alexa app feature a try today.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool has positions in and recommends Amazon.com. The Motley Fool has a disclosure policy.

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Image source: Getty Images
What happenedFive thousand residents of Chicago and 3,250 residents of the surrounding suburbs of Cook County are seeing $500 payments hit their bank accounts as part of a universal basic income initiative. Eligibility for the program is earning 250% of the federal poverty level. That’s $36,450 a year for individuals and $75,000 for a family of four. However, the program targets the city’s neediest, such as veterans, caregivers, and those experiencing homelessness.Similar programs already exist in different cities throughout the U.S., and the hope is that this program will allow low-income Chicago residents to better manage their expenses and maintain a reasonable standard of living.So whatAs many as 176,000 people applied for the grants, which are being funded by money previously sent to local governments in 2021 for pandemic relief through the American Rescue Plan. GiveDirectly, a company better known for helping people in developing countries, is running both Chicago and Cook County’s plans.“University of Chicago researchers are using surveys, in-person interviews and economic, labor, criminal, legal and educational data to track recipients of the money and an even larger control group not selected for the grants,” The New York Times reported.When funds from the American Rescue Plan run dry, Toni Preckwinkle, president of the Cook County Board of Commissioners, said the county project will use revenue from newly-legalized cannabis sales as well as other revenue streams to keep the programs going.”What’s happened in this country historically is these ideas get tried out at the local level, in cities and counties and states, and when there’s enough momentum, they get adopted by the federal government,” Preckwinkle said. “So that’s what we’re hoping will happen.”Now whatThe concept of universal basic income is simple: It’s meant to provide people with a certain level of income to ensure they’re able to meet their basic needs. Ideally, it can also provide financial support during periods of crisis, like recessions, when job loss tends to be widespread.In the case of Chicago’s program, an extra $500 a month could help push some households out of poverty and ensure they’re able to cover expenses like rent, utilities, and food without having to skimp or resort to debt. And it could also give residents a lot more leeway than existing government programs.Some lower-income households, for example, may be eligible for food benefits through SNAP but lack access to housing assistance. Getting a $500 monthly payday that can be spent anywhere could greatly alleviate that burden.What’s more, those $500 monthly payments could allow those who have never had an opportunity to build savings to finally set up an emergency fund. Consumers are commonly advised to save enough to cover at least three months of bills. For lower earners, that target often isn’t feasible. Now, they have more of an opportunity to build themselves a financial safety net.Alert: highest cash back card we’ve seen now has 0% intro APR until 2024If you’re using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR until 2024, an insane cash back rate of up to 5%, and all somehow for no annual fee. In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes. Read our free reviewWe’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy. 

What happened

Five thousand residents of Chicago and 3,250 residents of the surrounding suburbs of Cook County are seeing $500 payments hit their bank accounts as part of a universal basic income initiative. Eligibility for the program is earning 250% of the federal poverty level. That’s $36,450 a year for individuals and $75,000 for a family of four. However, the program targets the city’s neediest, such as veterans, caregivers, and those experiencing homelessness.

Similar programs already exist in different cities throughout the U.S., and the hope is that this program will allow low-income Chicago residents to better manage their expenses and maintain a reasonable standard of living.

So what

As many as 176,000 people applied for the grants, which are being funded by money previously sent to local governments in 2021 for pandemic relief through the American Rescue Plan. GiveDirectly, a company better known for helping people in developing countries, is running both Chicago and Cook County’s plans.

“University of Chicago researchers are using surveys, in-person interviews and economic, labor, criminal, legal and educational data to track recipients of the money and an even larger control group not selected for the grants,” The New York Times reported.

When funds from the American Rescue Plan run dry, Toni Preckwinkle, president of the Cook County Board of Commissioners, said the county project will use revenue from newly-legalized cannabis sales as well as other revenue streams to keep the programs going.

“What’s happened in this country historically is these ideas get tried out at the local level, in cities and counties and states, and when there’s enough momentum, they get adopted by the federal government,” Preckwinkle said. “So that’s what we’re hoping will happen.”

Now what

The concept of universal basic income is simple: It’s meant to provide people with a certain level of income to ensure they’re able to meet their basic needs. Ideally, it can also provide financial support during periods of crisis, like recessions, when job loss tends to be widespread.

In the case of Chicago’s program, an extra $500 a month could help push some households out of poverty and ensure they’re able to cover expenses like rent, utilities, and food without having to skimp or resort to debt. And it could also give residents a lot more leeway than existing government programs.

Some lower-income households, for example, may be eligible for food benefits through SNAP but lack access to housing assistance. Getting a $500 monthly payday that can be spent anywhere could greatly alleviate that burden.

What’s more, those $500 monthly payments could allow those who have never had an opportunity to build savings to finally set up an emergency fund. Consumers are commonly advised to save enough to cover at least three months of bills. For lower earners, that target often isn’t feasible. Now, they have more of an opportunity to build themselves a financial safety net.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2024

If you’re using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR until 2024, an insane cash back rate of up to 5%, and all somehow for no annual fee.

In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes.

Read our free review

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

 Read More