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The value of our dollar depends strongly on the values of the dollars of other countries, exchange rates and interest rates. The interest rate in the United States from the Federal Reserve dropped to 4.75% in September 2007. Other banks around the world did not follow when this happened. This means that the European Central Bank (the home of the euro) has a higher interest rate right now than the Federal Reserve. Basically holding a Euro in your hand would be worth more in interest than holding a dollar in your hand. At this time in the dollar’s life, which would you choose?

Because of this difference in interest rate, other countries around the world are thinking like you and I are. They’re diversifying their holdings from dollars to Eruos and even British pounds for this same reason. In a supply and demand aspect, this situation causes there to be a large supply of dollars making them worth less. This loss in value caused the oil industry to charge higher prices, hence the skyrocket this past summer. Other countries don’t want the dollars they get for oil so they exchange them for Euros. It’s an endless cycle that has only gotten worse, despite understanding the root of the problem.

The dollar dropping is a double edged sword. On one hand, many manufacturers want to produce their products in factories in the United States, bringing us jobs. The reason manufacturers want to bring their factories here because it’s so cheap to run because of the low dollar value yet they can sell them overseas for the value of the Euro. On the other hand, the low dollar causes inflation. We know how bad that can be. Everything becomes more expensive in order to make up for the dollar value going down. Companies still want to make a profit on their goods so the cost of everything rises.

In order to get bonds to sell, they will be cheaper and have higher interest rates. These interest rates correlate to mortgage rates which don’t seem to be dropping anytime soon. Our weak dollar is also scaring away foreign investors who are now afraid to own stock in US companies. Foreign nations who have a lot invested in the dollar have the ability to cause a nuclear financial meltdown for the United States. They could easily exchange their dollars for something else, releasing our money into circulation, causing the value to plummet.

All in all, yes the dollar is worth 20 times less than it was in 1913 but a year or two ago, we knew that and we were used to it. Right now, on top of the 20 times less, it is losing more value in front of our eyes. I’m no one to give financial information but now that you know about the value of the U.S. dollar, just watch what you do with it. Buy and sell carefully because this is a delicate time for our economy.

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Did you ever think that you might be able to find hidden money right under your own nose? What would you do with an extra $1,000-$1,500 per year?

America is all about convenience, but how much is “convenience” costing you? Little indulgences you enjoy on a daily basis might be putting a bigger strain than you realize on your wallet.  Here’s how to add an easy $1,000 to your bank account:

Skip the Starbucks: (okay, you can still have it on special occasions) But seriously, coffee you make yourself is nearly free in comparison to the high priced lattes. Skipping the expensive name even just one time a week can put an extra $200 per year right in your pocket!

Eat out less: I know it’s cliché, but the truth is, spending $5 a day on lunch at McDonalds really adds up. By bringing your lunch, it’s possible to eat for around $1.00 a day. If you work 200 days per year, this results in a savings of $600 per year right into your wallet! Not to mention the added health benefits by skipping the fattening fast foods!

No more bottled water: Not only is it bad for the environment, bottled waters costs $1 a pop or more. By installing a filter for your tap, you can save over $200 per year!

Get a library card: A new novel costs around $30 in the bookstore and can be bought in a used bookstore for $5 to $10. If you read a couple books a month, go to the library and check them out for free. Total savings of $500 per year or more!

Drink wine at home instead of the restaurant: You can usually buy the same bottle of wine for what restaurants/bars charge for the glass. Enjoy it in the comfort of your own home with friends and family and save big!

Clip Coupons: Coupons are easy to clip and many people are able to save big bucks by strategically using coupons for things they already buy. While savings will vary by the time you invest, simple changes like shopping on days when your local grocery store offers double and triple coupons can mean big bucks back in your pocket.

Save on Dry Cleaning: While some articles of clothing must be dry cleaned, the truth is, not everything has to be. Use your good judgment to determine what can really be washed at home. Another option is to wear things more than once before having them cleaned. Many people who work in an office don’t dirty clothing with just one wear. If a clothing article isn’t really dirty, why have it laundered at the price of several dollars per item?

There are many other ways to take a look at little indulgences that really aren’t necessary. Take a look at your weekly spending to determine what unnecessary spending you can cut back by keeping a log of all your expenses for at least one week and then evaluating what you really need versus what is a nice to have. You can thank yourself for your “sacrifices” by rewarding yourself in a year with a fantastic vacation or a great pair of shoes fully paid for by your savings!! 

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