Sorting through the news lately has been an emotional, stressful experience that has everyone worked up. While it's important to understand how things came to be and the who's who of what's happening now, it's just as worthwhile (and maybe more so) to know how the Wall Street mess affects you and me. Here are some points to consider when trying to make sense of the various moving pieces.
- Employment: Hiring has slowed and employers are cutting back — employers that are hiring are holding more rounds of interviews and being more selective. Layoffs lead to a decrease in consumer spending, which can cause businesses to cut back even more, and so on. If you have a job, it may be more difficult to get a raise because your employer feels the pinch of a weakened economy.
Discover how borrowing and cash are affected when you read more.
- Borrowing: Lending standards have been elevated for everything from auto loans to business loans. Credit card companies are reducing limits on some cards because they can't afford a customer who may not be able to pay their bill, and lenders are lowering limits on existing home equity lines. Mortgage approval has become more difficult, especially for those without stellar credit, and you'll definitely need a down payment.
- Cash: Even if you don't have investments that have been sloshed by the market, there are issues with keeping your money in cash. It's still the safest thing out there, but if the government keeps printing money like it's going out of style, your savings will essentially lose money because of inflation.