Social Question

josie's avatar

What will YOU do if interests rates go up. Way up?

Asked by josie (30931points) July 28th, 2011

One of the threats that loom over the current budget debate is the possibility that Moody’s will lower the US bond rate below AAA.
That means that interest rates will go up, since lenders will not be as comfortable with investing in the US. That means all interests rates will go up-credit cards, ARMs, plus the Federal budget since the increased interest liability becomes part of the budget. How will that affect you?

Observing members: 0 Composing members: 0

27 Answers

woodcutter's avatar

Not much as far I know, I’m not going to borrow,and we have been living off the “stems and seeds” of life for so long I don’t see us losing much. We are living the revised version of “The American Dream.”

josie's avatar

@woodcutter Specifically, without being too personal, what does stems and seeds mean. Never heard the expression, but I get the inference. What would I do to live off of stems and seeds.

SpatzieLover's avatar

We already use a 0% credit card…Our house is paid off…so nothing different. We won’t go out loan shopping or spending on regular credit cards again, that’s for certain.

RealEyesRealizeRealLies's avatar

Nothing will change for me. I’ve always paid cash since day one. Never understood the logic in buying something that I couldn’t afford. Never felt the need to pay extra for stuff either. I’m happy home renter.

woodcutter's avatar

@josie Heh, It’s an old pot reference when all the bud and shake is gone all there is left is the wood, or junk (S&S) , that is usually binned. Or thrown back into a bag just to make it weigh more. What it means for us is we get by on the least amount as humanly possible, Of the 3 vehicles we have, two have a clear title, and the truck I work out of will be paid off in a year. That’s it. We get our necessities and if there is any money not consumed by bills or the Perpetual Payment to the Physicians Trust we do something completely reckless and go out to dinner.
I don’t know your situation to say but I suppose trim off dead weight, or some such. We weren’t always doing life this way but since our kid is grown and out and we have both, my wife and I ,have gotten to the point we aren’t getting around well. We just don’t buy stuff. It sucks I know, and we sure aren’t doing our part to spend this country out of the ditch but we changed our mindset to not want much. When that is achieved there are almost no disappointments.

woodcutter's avatar

Oh yes the cards, we never have used them unless the debit cards are counted but its pretty hard to overextend that way. Its like cash. I didn’t start using mine until this year so I had to go through many a tutorial at the checkout before I was comfortable doing it. I just prefer cash.We are probably weird people compared to most Americans and we don’t have much, but when the shit hits the fan, hopefully we won’t have to wipe very much off ourselves.

josie's avatar

@woodcutter Got it. I figured as much. I pay cash.
But the problem is, if rates go up, the Government will need even more cash to service the debt. The debate will not be who pays taxes or not, but how much everybody pays whether they like it our not. Then what will you do?

gondwanalon's avatar

A credit card interest rate increase wouldn’t effect me as I paid the balance each month. Also I suppose that I would start collecting more on my investments.

RealEyesRealizeRealLies's avatar

“Then what will you do?”

Render unto Caesar. And then bitch about it like his nagging wife so bad that he eventually changes his spending habits. I hope he doesn’t make me throw a frying pan at his head.

RealEyesRealizeRealLies's avatar

Am I wrong @gondwanalon? It seems to me your investments would get hurt. Companies wouldn’t be able to borrow money for growth, and people wouldn’t have as much credit to purchase their goods and services. Therefor the stock value would decrease. Unless your investments aren’t stock.

woodcutter's avatar

@josie Then what will i do? Why would I need to do anything? We make so little money that it is conceivable that most people cannot wrap their heads around that. Even this computer is a cheap e-machines from walmart. Most would turn their noses up at such a set up but it’s fine for us….stems and seeds.

josie's avatar

@RealEyesRealizeRealLies
That is how I see it.
That, of course, doesn’t play well on Fluther.
Having said it, I figure the Tea Party is the avant garde of what you are talking about.
They are clumsy, poorly trained and appear inept, and like the first wave in a frontal assault, they will get blown away.
It will be fun to be part of the second or third wave.

RealEyesRealizeRealLies's avatar

I just don’t get the TP. They move their lips but nothing comes out but noise.

Ron Paul on the other hand…

CaptainHarley's avatar

I will continue to do what I have been doing for a couple of years now… pay cash for everything, borrow nothing.

Jaxk's avatar

I pay cash as much as possible and always pay off the credit card each month. But there was no way around the business loan. It is tied to the prime and an increase (even small) will hurt immensely. A jump like the 1980s would kill me.

I’ve been searching for a tall building in the area and if the interest rates go up I may ask for volunteers to throw me off. Luckily I believe I’ll find plenty here on Fluther.

woodcutter's avatar

@RealEyesRealizeRealLies I think the TP will become inbred into the republicans and the breed will disappear, as more and more see what they are about if there is any consensus on what they really are .The flavor of the year.

JLeslie's avatar

I will be really happy I have some savings in the bank. I’ll be pissed if I still have not sold my house, because then it might drive down prices even further, and make it harder for people to buy homes.

tranquilsea's avatar

We have a small mortgage and no credit card debt. So although I would hate to pay more money in interest to the bank on the mortgage we would still do ok.

JLeslie's avatar

@tranquilsea is your mortgage a variable rate?

tranquilsea's avatar

Not any more. We locked it in last year.

JLeslie's avatar

@tranquilsea Then why do you say your mortgage will go up? It won’t. It won’t and your money in the bank will be earning very high interest.

tranquilsea's avatar

It’s only locked in for the next two years and I’m sure interest rates will be much higher by the time it comes up for renewal.

JLeslie's avatar

@tranquilsea Oh. Rates are so low, why not get a 30 or 15 year fixed?

tranquilsea's avatar

@JLeslie We were tied to our original term. My hubby’s a banker so I’m sure he’ll re-work it to the best of his abilities when the time comes to renew.

JLeslie's avatar

@tranquilsea Careful, people in the industry tend to believe the stuff they sell. I know a lot of mortgage brokers who had really crappy, can’t afford to pay it, loans. I realizs he is not a mortgage broker, but just sayin’.

tranquilsea's avatar

@JLeslie no worries. I question him harder than most of his clients do, I’m sure. I’m debt phobic so things have worked out pretty good so far.

gondwanalon's avatar

@RealEyesRealizeRealLies True, the stock market will likely go down if interest rate go up and the value of the U.S. dollar will likewise go down.However the meager resources that I may have left to lend will generate a higher return of deflated dollars. A likely lose-lose situation. But what the heck, it’s only money. HA!

Answer this question

Login

or

Join

to answer.
Your answer will be saved while you login or join.

Have a question? Ask Fluther!

What do you know more about?
or
Knowledge Networking @ Fluther