All eyes are on the Fed as a rate decision looms this month. Markets are pricing in an almost certain chance of a 25-bps cut to the Federal Funds Rate. This would reduce it to 4.25-4.50% from the current range of 4.50-4.75%. Most economists do not expect more cuts in 2025 because inflation remains stubbornly above the Federal Reserve’s target rate of 2% year-over-year and growth of the domestic economy has remained robust. The most widely regarded measure of inflation is the Consumer Price Index, which tracks the price changes of various goods every month. In November, headline CPI ticked up one basis point to 2.7% year-over-year and Core CPI for the year held firm at 3.3%. As a reminder, Core CPI excludes food and energy prices to give economists a better idea of the underlying stability of prices. Food and energy prices are extremely volatile and can often move in the opposite direction of prices from all other sectors. Individual sectors that stand out in the Bureau of Labor Statistics’ CPI report for November include energy, food, and vehicles. Price increases in food at home, or food you buy at the grocery store, outpaced the prices of food away from home. Food at home prices increased by 0.5% in November, led primarily by an 8.2% increase in the price of eggs and a 3.1% increase in the price of beef. Gasoline prices rose 0.6% in November, notably reversing a deflationary trend. Finally, the prices of new and used vehicles are up 0.6% and 2.0% respectively on the month. The most important outcome of the FOMC meeting on December 18 th is going to be the language that emerges in Jerome Powell’s remarks afterward. This will give an indication of the strategy that the Federal Reserve is going to implement moving forward. Most economists expect that his language will strongly indicate that the situation will be left as is following this cut.

Many opinions have been thrown out there about the effect that Trump policies will have on the domestic economy. As a message to naysayers and unabashed optimists alike, fiscal and foreign policy matter far less to the state of the economy than the actions of the Federal Reserve. Trump policies are likely to have some effect on growth in the United States, but Chief Global Market Strategist at Invesco Kristina Hooper notes that “we have to recognize that some Trump administration policies will likely act as countervailing forces to other Trump administration policies.” Businesses and individual investors alike are extremely optimistic about deregulation and the continuation of the Tax Cuts and Jobs Act (TCJA). Deregulation will favor financials and the crypto environment, and Hooper notes that the TCJA will likely benefit shareholders in Real Estate Investment Trusts (REITs). These policies will foment growth and domestic investment, but other Trump policies are likely to have a simultaneous negative effect. Protectionist trade policy, mass deportations, and a
closed border could result in labor shortages, price increases, and reduced economic activity as a result. Another point of consideration is that many of these policies could be implemented in different forms than markets expect them to be.

Plans continue to move forward for new kid on the block TXSE (Texas Stock Exchange) as it seeks a permanent home in Dallas, Texas. Starting this spring, the stock exchange will enter a temporary base of operations in the Knox-Henderson District of the city. Other attempts have been made in the past to unseat those two stock exchange heavyweights based in the northeast, but this time could certainly be different. The TXSE has the backing of securities companies Blackrock and Citadel, and the benefit of a thriving state and region. More than 1,500 publicly traded companies operate throughout the southeast, and the TXSE is focusing its efforts on wooing those companies away from the NYSE and NASDAQ. It will begin facilitating trades in 2025 and host listings in 2026. Only time will tell how successful this new competitor will be, but they are already making waves.

Merry Christmas and a Happy New Year to all reading. Enjoy the time spent with family and friends. Rest assured of the knowledge that Traditions Wealth Advisors is on top of the latest market movements and economic readings for your investment needs.

Here are 6 money moves to consider making so you can enjoy your holidays and set your finances up well for the new year:

     1. Money left in your FSA may be lost if not used by year-end
     2. Are you considering a Roth conversion?
     3. Make sure you've contributed to tax-advantaged accounts
     4. Could charitable contributions lower your tax bill this year?
     5. Remember RMDs if you are 73 or older
     6. Think about harvesting investment losses
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It's never too late to start planning! If you don't make this year's deadline for some of the things you hoped to accomplish, you may have a chance to do it next year. If you need help getting started, consider reading the full article here or contact us at [email protected] or 979-694-9100.

I do like cars. What I don't like is the process of buying a car—because there are a lot of car-buying mistakes you can make. I know from experience. I've owned at least 10 cars since my dad bought me my first one, a '91 Chevy Corsica, when I was in high school. Since then, of course, I've had to buy my own vehicles, and I've learned a lot—sometimes the hard way.

For instance, when I was in my 30s, I bought a used sports car from a family friend. I fell in love with it (a 2002 black Porsche 911 Targa). Because I trusted the friend and assumed the car had been well cared for, I didn't do the research I normally would have done. I bought the car purely on emotion, and it turned out to be nothing but a money pit. Plus, it was totally impractical for a new dad. There was no room for a car seat!

Buying on emotion is just one potential car-buying mistake. Here are seven other common ones and what you can do to avoid them.

Mistake #1: Not considering your budget and savings plan. Don't be misled by recent news about the price of cars coming down. Buying a car today, whether new or used, is a big financial investment that takes planning. According to online car-shopping guide Edmunds, the average price for a new car in the first quarter of 2024 was $46,992, and the average price for a used car was $27,113. If you jump into the luxury market, you're looking at nearly $61,000 for a new car, according to Kelley Blue Book. While these numbers may be down from post-pandemic highs, it's still a lot of money.
So here are two important questions:

1. Have you saved or do you have a plan to save for a down payment?
2. What can you afford in a monthly payment?

Just for context, a 60-month loan at 7.4% on a $40,000 vehicle with $2,500 down is almost $800/month. Don't let your desire for a high-priced car send your budget into a tailspin.

Mistake #2: Overspending on a car at the expense of other goals. Good money management starts with prioritizing your goals. Where does a car fit into yours? Will buying the car you have your heart set on keep you from saving for another, maybe more important goal?
It's a balancing act. On the one hand, we know a car is a bad investment because it's a depreciating asset. On the other, many people feel a car represents our personal brand. It's part of our identity and we get attached to it. That's why we might overspend on a car rather than putting that money toward something else. Consider what type of car will represent your personal image without putting you in a financial bind.
Here's something to think about: 61% of people who earn more than $250,000 a year are more likely to be driving Hondas, Fords, and Toyotas, according to an Experian Automotive Study.
Bottom line: Don't spend money to look wealthy. Save money to be wealthy.

Mistake #3: Not doing your financing homework. Know your financing options before you talk to a dealer. Comparison shop at banks, finance companies, and credit unions. Ask about interest rates, loan terms, and financing charges. Explore how a larger down payment or a shorter loan term might bring down financing costs.
Car loan calculator. The SchwabMoneywise.com car loan calculator can help you explore different payment scenarios. Use this car loan calculator to figure out the total purchase price with interest payments.

• Car Loan Calculator

Get the numbers before you shop, so you know what you can really afford.
With this information in hand, explore dealer financing. Some dealerships may offer special rates and terms on certain vehicles, but you won't know if it's a good deal if you haven't researched what other lenders are offering. In fact, don't settle on one dealer. Comparison shop here, too, for the best financing rates and terms, as well as car prices. This will help you avoid the next mistake.

Mistake #4: Focusing only on the monthly payment. Pay attention. This is an important one. Let's say you're at the dealer, negotiating a price and talking about the monthly payment. If you are asked, "What can you afford to pay each month?" stop right there. Because when you negotiate you want to look at the total cost of the car.
The monthly payment is important, but focusing on that alone can distract you from negotiating down. A dealer knows this. You may get to the monthly number you want but end up paying more for the car over time. Instead, find out what the dealer paid for the vehicle—not the sticker price—and start from there. Then discuss financing options.
Remember too, that there are taxes and title fees. Ideally, you want to pay cash for those and not wrap them into your financing. That will save you on interest and lower your payment.

Mistake #5: Not considering a used car. We all like the look and smell of a new car, but remember a new car could lose up to 20% of its value in your first year of ownership. Buying used might get you a better car, or more car for the money.
My best car purchase was a 3-year-old 2008 Infiniti G35 with 29,000 miles on it. I drove that car for seven years and never had any major problems. It looked good. And I got a lot of compliments on it. But more importantly, I did my research and knew it was reliable.
There are lots of used car options—a former lease or loaner car, a certified pre-owned car, a 1-year-old car with low mileage. Any of these could be a good move. But like I did with my Infinity, (and not the Porsche!) do your research before you buy.

Mistake #6: Ignoring insurance and maintenance costs. Auto insurance, like everything else these days, is going up. In fact, auto insurance premiums increased over 20% from '23 to '24, according to the Bureau of Labor Statistics. Rates vary by state and by car type, so again, do your research before you buy.
And don't forget maintenance. Consumer Affairs estimates that maintenance and repairs average around $900/year. That too varies by car make and model. The annual average to maintain an Acura is around $680 while an Audi might set you back over $1,300/year.
With these costs in mind, you'll definitely want to avoid the next mistake.

Mistake #7: Not planning how you'll cover repairs. You may be okay handling routine maintenance, but what about a major repair? Some cars today have a 4-year or 50,000-mile warranty. But if you plan to keep the car long term or if you buy used, you might consider purchasing an extended warranty.

Having an emergency fund is always something I recommend. But I like to keep that for other major emergencies and cover car costs separately. However you do it, make sure that when you have a car problem, you're not stuck on the side of the road.
One last piece of advice from my father. If you're going to trade in a car as part of your purchase, know its value before you make a deal. Here's where Kelley Blue Book is your friend and can give you a starting point for negotiating.
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It's a lot to think about and, like me, you've probably made some of these mistakes. But live and learn. Knowing how to get a good deal on your next car can make driving it even more fun.