Fed Gives You $30,000 and Drew Interviews the Guru

The Federal Reserve just cut the federal funds rate by 0.25% to 4.50%.  They cited a slowing economy and the housing slump:

The central bank predicted in its statement accompanying the decision that “the pace of economic expansion will likely slow in the near term” as the housing slump intensifies.

The federal funds rate is not to be confused with your mortgage rate. The two do not directly effect each other. However, the prime rate (which is the federal funds rate plus 3%) is directly related. Many people have home equity lines that are tied to prime. For example your home equity rate may be prime plus 0.25%. In which case your interest rate just went from 8.0% to 7.75%.

You might be wondering about the title. Well, yesterday showed how investing the savings from the reduction in your prime rate could yield almost $30,000 over thirty years.

Changing topics.

Drew Meyers, from Zillow.com, interviewed me this morning for a podcast. For what it’s worth head on over to his website to listen. Then you can pust a voice to my face! Enjoy.

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