Savings vs Spending

There is a trade-off between savings vs spending. Our savings is comprised of how much we have saved (if any) during our lifetime. Unfortunately, our expenses today just keep going up and up. Many seniors have some money in savings, but the COST OF ALL LIVING EXCEEDS ALL SAVINGS.

Interest Rate

The interest rate is low right now. You worked hard during your lifetime and had counted on the interest from the money you had put away in savings to help with your daily expenses. The problem is that there is not enough buying power for the necessities of life.

The government cannot afford to let interest rates rise. Our government owes so much interest on the national debt that it consumes about 6.8% of the federal budget. As interest rate rise, so will the interest the federal government must pay on the debt. Consequently, the government must do everything they can at the present time to keep rates low.

The Prime Rate

The Fed continues to hold its benchmark interest rate at a level intended to stimulate economic growth by encouraging borrowing and taking risks. The interest rate it controls, better known as the prime rate, remains in a range from 0.5 percent to 0.75 percent.

However, when inflation raises its ugly head, the Fed must slow the economy. Raising the prime rate is one way to accomplish this. The reverse is also true, if the economy is not growing enough, a solution is to lower interest rates to encourage borrowing. Since rates have been so low for so long, there is simply no way to lower the rates much more than it is now.

Simply put, the government is between a rock and a hard place.

Inflation and Our Dollars

This does not help us. Especially those of us who counted on interest income from our savings for our daily living. It is almost impossible to squeeze extra dollars out of our savings by investing at our reliable bank. Today interest rates do not keep up with inflation. Every day we are losing buying power.

That same dollar tomorrow will buy less than it does today. If you need proof, just go to the grocery store and see what your groceries cost compared to what you paid last year or last month. Those same fruits and vegetables keep costing more and more.

Real Estate

We must figure a way to get more money from what we have. Investing in real estate is just one way but it is not for everyone. There are two reasons to invest. One is for the monthly income it will generate. The second reason is that the real estate will be worth more tomorrow than it is today. When you sell that property, you hopefully will reap the benefits. Maybe and maybe not.


Taking a chance on real estate investing is so difficult. A sure thing would be so much better. We want to know that if we purchase real estate it is the right decision. However, there is no sure thing in life. Is it worth the “gamble”? You must educate yourself and then make an informed decision on what is best for you considering your special circumstances.

Read more about buying rental properties before jumping in. It may be just what you need or it may be more than you can handle. Savings vs spending can be so tricky. The post Buying Rental Property – Desirable or Detrimental is one starting point.

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