Today on MoneyLife

Chuck and co-host Dave Ball begin today talking about new car incentives being offered in November and December. Dealers are making these because of low auto sales in October.

Car buyers need cash or really good credit to take advantage of the bargains. Chuck expects many car dealers to close in 2009, which could cause service problems for car owners.

The good news is that there are a lot of available cars which has created a buyers market. So now is the time to buy a new car if you have cash and plan to keep it for a long time (10 years or more).
Shop around.

After the break, Chuck and Dave talk about the impact of the recent interest rate cut. The Federal Reserve recently cut the short-term interest rate by half percent, federal funds rate down to 1.5%. That lowers the price of borrowing money for banks from the Federal Reserve. It also means banks also can lower their lending interest rate, making it cheaper for everyone to borrow money.

Consumer spending drives 70% of our Gross Domestic Product. Most of that spending is possible because of borrowing. So, lower interest rates lead to more borrowing which leads to more spending.

Everyone wants the economy to grow but borrowing is dangerous to individuals and the country. Interest rates won’t be cut across the board. Don’t expect fixed-rate mortgage rates to come down; they've ben averaging 6.23% for a 30-year.

The interest rate cut may push down adjustable rate mortgages somewhat. Chuck recommends fixed mortgages over adjustables.

Interest rates on fixed-rate home equity lines of credit (HELOCs) are going up and are currently average 8.17%. Chuck discourages borrowing against your home. You could expect some decrease in adjustable rate HELOCs in the next quarter. Make it a priority to pay off your HELOC if you have one.

Chuck tells listeners after the second break that credit cards are the most expensive form of borrowing. The recent rate cut won’t change credit card rates, as they are tied to the prime rate which is at bottom already.

Credit cards aren’t evil, the problem is their misuse. The issue with credit cards is self control. Credit cards can be used wisely for your benefit, such as the various reward features, but you must know how to handle money God’s way or you can get into trouble. Shop around for the best credit card.

The worst impact of rate cut is on those who are saving. Before the bailout, banks were offering higher savings rates to attract deposits and improve their liquidity. The bailout addressed the liquidity problem so savings rates are dropping. CD rates are going to fall soon; they're currently 2-2.5%.

It's best to lock into a longer rate if you are dependent on the income. If it’s money that needs to be protected, park it somewhere safe, meaning covered by FDIC. Be wary of taking on more risk to seek a higher yield.

A money market fund will have a little higher rate than a money market account but is not FDIC insured and puts your money at risk. The good news is the cost of money is going down, so if you’re upside down or need to refinance, you should get better rates.

Many are still adjusting to the results of the election. Elections often bring major change, which creates uncertainty. Some people are happy with the change, some are not.

We can’t put faith in a leader or government. Chuck uses the example of Moses, who had the opportunity to be in Pharaoh’s family, but refused a worldly identity.

Moses would rather be a “nobody” and align himself with God instead of someone with worldly riches. He looked ahead to a greater reward than being important and wealthy on Earth. Moses cared about what God thought more than Pharaoh.

God was so real to him that he feared God more than men. Don’t be fearful today and don’t get too excited either about the election results. Don’t put your hope in a man, put your hope in God, He’s the only one who won’t disappoint.

See these key verses:

• Hebrews 11:4
• Hebrews 11:25
• Hebrews 11:27

Also, please visit our Help, Hope, and Insight area.

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Other Resources:

• ABCs of Money Package
• Career Direct
• God's Principles for Operating a Business
• Business By the Book
• Crown Mvelopes