'We're looking at a downsized America': Kevin O'Leary warned any new house, car and lifestyle you enjoy will be significantly 'smaller' — here's why and how you can prepare in 2024

O’Leary warns new US lifestyle will be ‘smaller’

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Rampant inflation has cooled off significantly in America over the past year, and the Federal Reserve has kept its key rate steady for three consecutive meetings. But if you think now is the time to upgrade your lifestyle, “Shark Tank” star and investor Kevin O’Leary had a wake-up call.

“We’re looking at a downsized America,” he said in an interview with Fox Business late last year. “Three years ago, even 24 months ago, you’d get a mortgage at 4.5%. You’re lucky to get one at 8% today.”

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But the impact of high rates extends beyond the housing market.

Edmunds reported that borrowing rates for new vehicles in the third quarter of 2023 hit an average of 7.4%, a figure not seen since 2007.

O’Leary summed it up by saying that if you are in your early 20s, your lifestyle will be “about 20% less.”

The blunt reality is that while the headline inflation figure is no longer at 40-year highs, price levels remain elevated. In November, the U.S. consumer price index rose 3.1% from the previous year.

Since the U.S. central bank is committed to using monetary policy to bring inflation down to 2% over time, O’Leary believes more rate hikes could be on the way.

Despite this intimidating financial climate, you’re not totally in the dog house so long as you adjust your finances accordingly. Here is how you can do just that:

Take steps to reduce debt and save money when rates are high

As O’Leary indicated, you may have to downsize — particularly for items that require borrowing money.

Reducing debt amidst high interest rates can be daunting, but you can actually save money by consolidating your debt with a personal loan from Credible*.

Credible makes it easy to streamline your debt repayment at an affordable rate*. Their online marketplace of vetted lenders provides personalized debt consolidation loan offers based on your needs, allowing you to pay off your debt more efficiently at a fixed rate without juggling multiple bills.

Debt repayment isn’t the only place you could be saving money in the current financial reality. You can reduce the cost of essential bills like home insurance* and auto insurance* just by taking a closer look at what’s available.

SmartFinancial* is a platform where you can compare the best home insurance rates in your area. With SmartFinancial, all you need to do is answer some quick questions about yourself and they’ll instantly sort through over 200 insurers to find you the best deals available and any discounts.

Bestmoney.com* can help you compare and find the best financial products— like car insurance — for you. When you fill in a bit of information about yourself, besmoney.com will provide you with a list of the best and most affordable car insurance options near you. There are essentials you need to include in your budget, but there’s no reason why you can’t cut down on the costs amidst high inflation.

Find inflation-resistant investments

Inflation-resistant investments can act as a solid safeguard against economic volatility. A report by First National Realty Partners* — a private equity firm that specializes in real estate — stated that in times of market stress, there’s an opportunity to acquire high-quality properties at a discount.

With FNRP’s platform, accredited investors have access to institutional-quality, grocery-anchored commercial real estate investments. And since the investments are necessity-based, they tend to perform well during times of economic volatility and act as a hedge against inflation.

But you don’t have to be an accredited investor to make your mark in real estate. If you want to be able to make smaller investments, you can use Arrived* — an online platform where you can invest in shares of rental homes and even vacation rentals — to get into real estate without taking on the responsibilities of property management.

Getting started is simple. Begin by browsing a curated selection of homes, vetted for their appreciation and income potential. Once you find a property you like, you can choose the number of shares you want to buy. With Arrived, you can start investing in real estate with just $100*.

You don’t have to stop at real estate. You can also take advantage of other inflation-hedging investments such as gold*.

By opening a Gold IRA — a type of individual retirement account that allows you to invest in gold and other precious metals in physical forms — with Goldco* you can diversify your portfolio and stabilize your finances.

If the prospect of a downsized America has you wanting to readjust your financial plan, consider getting a financial advisor to help get you on the right track. Finding a financial advisor that suits your specific needs and financial goals is simple with WiserAdvisor*.

WiserAdvisor’s online platform connects its users to vetted, registered financial advisors after answering some simple questions. WiserAdvisor will connect you with 2-3 personalized matches* that you can read up on and even have an obligation-free phone call with to determine if they’re the right fit for your financial goals.

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.