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This week on the Sunlight Tax Podcast, I’m discussing how recent interest rate hikes are affecting personal finance and the broader economy. I’ll share practical advice for managing debt, building savings, and navigating investments in a changing economic landscape.
Also mentioned in today’s episode:
00:10 Introduction to Market News and Interest Rates
02:07 The Power of Small Cohorts in Business Programs
04:36 Announcing New Business Setup Intensive Cohorts
06:39 How the Fed Uses Interest Rate Hikes to Control Inflation
07:33 Predictions for Future Interest Rate Increases
08:19 Implications for Personal Borrowing and Debt
09:32 Opportunities in Savings and Investment Accounts
10:54 The Importance of Investing to Combat Inflation
12:10 Promoting the Business Setup Intensive Program
13:21 Actionable Steps for Financial Health and Growth
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Episode Links:
Check out my 2-day Business Intensive
My upcoming in-person workshop with The Art Students League of New York
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Order my book: Taxes for Humans: Simplify Your Taxes and Change the World When You’re Self-Employed
Transcript:
Hannah Cole (00:07)
Hello beautiful. I'm so happy to be with you. I hope everything is good in your life. I have a little just a little reflection to share. I have been running this new program, this business setup intensive. And you know, it's so interesting and humbling and enlightening to run a new product or program.
you know, it's good to remember I have offered the same thing for a long time and felt very kind of locked in on all my processes. And I've really been changing a lot lately, learning a lot, interviewing people about what they need and want. And you know, it's such a humbling experience. and you know, I'm sure
I'm sure you've had this experience as well when you offer something and you're really excited about it and then you remember, right, I have to spend a lot of energy like marketing this, just like telling people what it is and what it's gonna help them with, right? Like that just takes a long time. It's humbling to remember how much effort goes in.
To that side of a business, you know, especially after you spend all this effort building a thing and you feel like, well, it's beautiful, it works so well, it's awesome. And you're like, all right, but I have to tell people about it. So that's been happening. the cohorts, you know, because it's brand new, have been very small. And think there's a part of me, maybe an older part of me, that would have been disappointed in such a small cohort. But I would say actually.
It's felt more like a learning opportunity for me and also just so awesome to be with a group of people that's tiny because you know, spending two days together, it's so personal. You know, I get to really like spend a lot of time working out the kinks of these individual people's businesses. So it's it's pretty great. my beta cohort, the sort of like first
version that I ever ran was a cohort of four people. Interestingly all who had a lot of experience. So they were setting up some ventures that were a little newer, but they had all this life experience, right? So that was pretty interesting. And then the cohort I'm running this week, and I'm actually recording this on day two of this second cohort, it's only two people.
inside. And I was a little bit like, you know, two people. I wish more people signed up. But on the other hand, I decided to run it anyway, not to cancel. and it's really lovely. These are two absolutely wonderful human beings. one is in real estate, which is you know, it's a it's a group of people that I have served before. I've actually been hired by real estate firms before to give
Tax workshops to their real estate brokers because real estates brokers are independent workers, right? so it's it's interesting. I'm really having a great time with these two people. And it just ends up being just a lot of personal one-on-one time. So it's actually really great. I'm feeling like I get to serve them to a degree of excellence that feels so good. that I'm kind of like, you know what? Small cohorts are pretty great. So,
If that business setup intensive appeals to you, by the way, you can always go check it out. I did open three new sessions for later this fall. I have one in late October, one in early November, and one in early December. I may add a weekend one, we will see. but that's what I've got for now. And I've gotten rid of the wait list on the sales page, so you can just go ahead.
See what it costs, pick the cohort you want to join and join directly. So it's a little bit of a new process that I built on the back end. Alright, so if you're interested in checking that out, no pressure. But if it appeals to you, that sort of intense build your whole setup with me over two days. You can find more info at sunlighttax.com/intensive All right. Today I want to give you a market report.
there's stuff going on in the economy. I pay a lot of attention to this. I listen to market news every single day. and just try to stay on top of like what is happening in the larger culture with money these days. And you've probably been hearing this stuff, and I don't know how much you pay attention to market news, but I just thought I would bring you an episode today about interest rates. because of what's been going on in the news and just
Give you a sense of what that actually means for you as a person, an individual operating in this economy. Okay.
So what happened? Well, last week, you know, there's been inflation has been getting higher, much, much higher, right? to a point of concern, I would say. And inflation is really bad.
Inflation is you know, a little bit is natural in an economy, but runaway inflation is incredibly dangerous. It's actually how a lot of governments fail. runaway inflation makes governments fail because it means, you know, when you're working full time and you cannot make ends meet, you get mad, right? So it's a really, really big deal. It's very concerning.
Like we're not trying to have a loaf of bread cost a wheelbarrow full of cash, right? So rightfully the Fed is interested in curbing that. And the the chief tool that they have to curb inflation is raising interest rates. This is sometimes referred to as taking the punch bowl away. In other words, interest rates are the cost of borrowing money. When interest rates are low, it's cheap to borrow money and it encourages
businesses and consumers to a degree to borrow a lot, make big investments, make big moves, and just have lots and lots of economic activity, right? But when this happens, there can be inflationary pressure that causes prices to rise. Okay. So taking away the punch bowl is the way that it's often phrased, but basically raising interest rates tends to dampen that fever among
businesses. It encourages them to be a little more conservative and to keep their hold their prices steady rather than raising them and sometimes if interest rates get high enough, even dropping them. And this is a counteracting activity to inflation, right? Now you need to keep that in balance with job creation and jobs. And so that is a you know it's a it's a balance and a blunt tool that the Fed has, but that is the power they have. So they just
Did an interest rate hike for the first time in a long time. And I think it's a good thing, but you know, pay attention. So you may and it's it's predicted, of course, none of us know the future, but we think, and there's been some signaling, that interest rates are going to continue to get raised by the Fed. So they tend to start kind of conservative with like a quarter point percentage raise at a time. But you might be able to, you know.
Mm, maybe predict that interest rates are gonna keep going up a little bit over the next couple of months and year in order to bring inflation down. Okay. So what does that mean for you? Well in a sense it it means a little bit of a slowdown economically.
again inflation is bad, and we're trying to counteract that. We want a slowdown in that sense. We don't want inflation. But on the other hand, we're not trying to cause a recession. This is the careful balance here. So for you, this means you're gonna experience some higher interest rates on some of your consumer debt. So, what that means? Your credit card. credit card interest rates are gonna go up, mortgage rates are going up, auto loan interest rates are going up.
This can really affect you if you need to borrow money to make big ticket purchases. I would say from a personal finance perspective, I always want to caution you away from carrying a balance on a credit card and having a lot of unsecured debt is what we call credit card debt. It's not secured by collateral, the way that, for example, a house is a mortgage is secured by the house. that's your collateral in that
loan. Same with a car. so unsecured debt tends to have higher interest rates, so like a credit card. And so those rates are gonna go up and they're already high, right? So watch yourself there. And I would say if you have the opportunity to pay down credit card debt, this is the time, okay? Because those rates are headed north. Okay. You will on the positive side.
You will experience some better savings rates, right? Better interest rates. And it may be a good time to shop around because banks tend to be a little bit slow to increase the interest rates they pay out to you, the consumer, and a little bit quick to decrease them. So you may want to shop around if you're looking for a high yield savings account to park cash in a sort of short to midterm time horizon.
so yeah, look around. Maybe some of the banks are offering higher high yields on those high yield savings accounts. That can be a good thing. Also, certificates of deposits or CDs. These rates are going to go up a little bit. So that is a way to park cash that you actually cannot access easily. but a CD CD rate should be going up a little bit. So it's time to look around and see what that looks like.
In general, inflation eats away at the value of the dollars that you have, right? And inflation is the chief reason that it is not wise to just park money in a savings account that doesn't have much interest on it. Okay? So a high yield savings account is one way to counteract this, but the even more aggressive and better way to counteract the effects of inflation, and of course build wealth for yourself, is to be investing. So
if you have never taken a move towards investing, I want to encourage you in that direction. It's a good time to check it out. I certainly have resources to help you and feel free always to reach out to me if you want to know what those are. But in general, you want to make sure that if you haven't started investing, if you don't have an investment plan, now's a good time to take a look, right? Because you want to make sure that your money is growing faster than inflation is devaluing.
your money. Okay. That's the key. All right. Well that's I'm gonna keep it short and sweet today. That's what I've got for you about sort of how the increased interest rates affect you as a consumer. I want you to sort of understand the personal finance side of the things you might hear in the news, you know, when you hear that Kevin Warsh voted with the rest of the Fed.
Raise interest rates. It's you know, it's good news in the sense that the government is actually stepping in and doing something about inflation. Okay, so it's positive in that sense. Okay, that's all I've got for you. I have a little announcement. I mentioned this at the top of the episode, but have opened three more cohorts of my new business setup intensive where you actually build.
your business setup alongside me over two intensive days live on Zoom. It comes with a one-on-one consult with me before and a second one on one consult with me after. So it really walks you through any snags. It's very personalized. I realize a lot of people are feeling overwhelmed these days. It's hard to know what information to trust. So I thought I would just direct my energy towards a more personal
hands-on experience with you. I do think some people have thought that business setup means it's only for new businesses. This is actually not at all the case. A lot of the people I'm working with are older people with more experience out there in the world, which doesn't mean I'm not open to anybody young. but tuning up an existing business is absolutely part of it as well. and like I said the cohorts are so small it's very, very custom. So if you're interested
You can check out what that program looks like. It's really cool. you can see some of the feedback I've gotten from the original cohort members at sunlighttax.com/intensive if you have any questions about it, of course, reach out to me. I'm here to clarify.
And I hope you go forth, kick the tires on all your accounts, look around, see if you can find a higher high interest savings account, maybe a better CD, and definitely take some action towards learning how to invest and making sure your investments are working for you at this moment. Again, you can always reach out to me at @sunlighttax on Instagram or hello@sunlighttax.com. So happy that you're here.
And if you have found this little marketplace report interesting or helpful to you, could you leave a review, share it with a friend? That really helps me and I'm so grateful. All right, I will see you next week. Bye.