With drastic interest rate hikes, do you feel financially safe that you can achieve the American dream or maintain it? What changes in your life style have you made as a result?

31 comments

  1. It’s lower than when I bought my first house, but it was easier then. I bought my house as a single woman in an entry level position in a high COL state (Massachusetts).

    Interest rates aren’t what’s making the “American Dream” difficult right now.

    — as for changes? Profit inflation is really the only issue I have. The cost of hotels is WAY, WAY up. I’m planning more international travel because it’s gotten ridiculous here.

  2. I’ve noticed inflation way more than interest rate hikes but that’s probably because I don’t have any major assets. Because of that my lifestyle hasn’t change at all because of them

  3. Honestly I’ve changed almost nothing. I continue to put money into my 401k each pay period, I have about a years worth of cash savings in a high yield account, I can pay for my necessities and a few wants without really worrying about the cost.

    I’m not saying I’m loving the rent increases or the grocery prices, but I’m able to roll with it.

    That said I have no debt besides student loans which I’ll be paying off very soon, no children, and the wife and I only have one car between the two of us.

    Is this the “American dream”? fuck if I know, but I like the life I’ve carved out.

  7. It’s a privilege to even worry about federal interest rates. The lowest earners aren’t affected by them, except indirectly through inflation.

    We were in the market for a new car and we’ve postponed it so we can save more first. That’s about it. We bought a house before the pandemic and it will easily last us another 10 years. Our finances have been stable and we haven’t been impacted much from inflation.

  8. I’m making a lot more interest from my savings account than I used to, that’s for sure.

  9. Yes. I’ve been able to continually improve my financial standing by moving into higher paying roles. I got on the housing ladder at a low interest rate, which helps me set aside more money for savings. My home has already appreciated $85-90K since purchased which can be used as a higher down payment on my next home.

    I’m very fortunate. But I feel very confident heading into my 30s.

  10. If anything, rates were kept artificially too low for too long. The era of easy money is over. Higher rates encourage both people and businesses to be more fiscally responsible.

  11. I’m currently paying off debt and therefore living well below my means. I haven’t really noticed inflation or interest rates go up.

  12. This is a tough question for people to answer.

    Those rates will affect interest rate hikes elsewhere, of course, making purchases more expensive but that’s largely offset by the slowdown in inflation. The real effect on the economy will be the slow down in economic expansion. Businesses won’t be able to borrow money at the low rates they previously did so some factories, warehouses, offices, etc. that would have been built won’t be. It’s impossible to know where you would be if those things were built, etc.

    I haven’t been too affected by the rate hikes. We refinanced our mortgage when rates were low and I do put everything on my credit card for the points but never carry a balance. My car lease does end in October and at this point my options are pay more, put more down, or downgrade my car. I don’t know what I want to do. I can afford more but I’m not a car guy and don’t drive too much so out of principle I don’t really want to pay more. But I’ve grown use to all the bells and whistles of my current trim package.

  13. The increased grocery costs are annoying, but we’re generally frugal and are currently picking most of the vegetables we eat from our own garden and canning things for winter. That helps. We’ll need to replace a car in the next year or two, so I’m hoping that rates will come back down soon as we’ll probably take out a partial loan to spread out the cost.

    We have a fixed-rate mortgage on our house and no other debt, so we’re not worried about our housing costs changing. We have a small house and no work commute so we haven’t really seen increased fuel or utility costs. We should probably increase our allocation to our savings account.

  14. In 1981… as a lot of the Boomers we all hate were finishing school, finding jobs, starting families or getting promoted and looking to move out of their starter homes… interest rates in the US were the highest they’ve ever been. Not “ever” for that decade, not “ever” for the last 50 years… not “ever” for that century. Ever.

    In the 90’s when Clinton was President, the economy was booming and things went so well that a lot of people point to the ’90s as a top American decade… interest rates were higher than they are now.

  15. Interest rate hikes only hit you (directly) when you’re borrowing money. Inflation is getting everyone. We make *really* good money and have tried to visit small businesses more, be more generous with tipping, things like that, because of this crazy economy. But as it drags on and things get more and more expensive (hey, inflation this year is only 3% over last year’s 9%!), as gas is back up to $3.50/gal, even we’re feeling the need to cut back a bit.

  16. Might move savings to a more high yield account, but otherwise not much else. Bought my house in 2017 and refinanced in fall 2020 into a 2.5% fixed mortgage so I ain’t moving anywhere, lol

  17. My wife and I are lucky. We were able to purchase a house and new cars while rates were around 3%. Have no intention of moving any time soon and plan on keeping the cars as long as it’s financially feasible.

  18. I don’t feel threatened by it…I’m not currently in the market for a home or anything, I already bought and refinanced mine during the pandemic.

    The biggest impact on me is that I’m going to hold off on buying a new car. The car I was going to replace isn’t very old..we’ve only had it for like 5 years. So more of a want than a need.

  19. Yes. Interest rates wax and wain, they’re actually below average right now historically speaking. We just had a decade of virtually flat low rates in the rear view mirror. CDs and savings accounts actually make money now which is nice.

    If you’re thinking of the housing market, the bigger issue is that construction fell off a cliff in 2008 and has not come back at all while the population continued to grow.

  20. “Drastic” The average mortgage intrest rate when my parents first bought was 10%.

  22. I’ve stopped worrying about interest rates at this point. I will most likely never own a home now and I will be lucky to be able to afford another car when mine finally dies. I don’t have a retirement plan because that’s not a privilege afforded to the working class anymore, either.

  23. I’m locked into my interest rate, so not really. If I ever buy a new car maybe I’ll be a little concerned, but not like….cripplingly so. Major thing that it impacts is inflation – we’re cutting back on foods cause the prices have gone up significantly. Shopping sales, couponing, etc

  24. I look forward to all of the macroeconomic experts taking a break from their other areas of expertise.

  25. Interest rates haven’t affected me because I already owned my home before they went up. I haven’t had to change my lifestyle at all.

  26. These are what I consider normal interest rates.

    Historically Savers made about 5% in their savings account. Unfortunately in the last few decades the rate was dropped to zero and given to mortgage holders and other loans in the form of low interest.

    I hope they don’t drop the interest rates again and punish savers

  27. I refinanced my mortgage during COVID and my two cars were both purchased before COVID. So we’re largely unaffected by the interest rate stuff and we are doing fine.

  29. Aside from putting off moving to a new home (and there is absolutely nothing wrong with the one we’re in now, I just know more about what I want in a “forever” home than I did when we bought this one), nothing has really changed

  30. I refinanced last year and paid my car off this year, so unless there are any career changes I have to move for or house-repair emergencies, things will be OK.

  31. Luckily I was able to buy a house before the rates went up. Since the 2008 crisis almost all mortgages have fixed rates. So those of us who bought before the hikes have been pretty much insulated (except for those who have credit card debt or need to get a car loan).

    So for me the only thing that’s changed is that I’m earning more money in my savings account.

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