5 Predictions About Your Money and the Economy in 2014

Odysseas Papadimitriou, CEO of the personal finance websites CardHub and WalletHub, tells us what he sees coming

dollars and coins
Shutterstock/Denis Vrublevski

For the last few years, uncertainty has been the overarching theme in finance. We've gone from waiting to see just how many banks would fail and whether a depression was in the cards to wondering how long the recovery would take and which political standoff might send us back into the economic abyss.

While much still remains to be seen -- the impact of the Fed's tapering plan, for example -- we can certainly make some educated guesses as to what 2014 has in store for our wallets.

Prediction 1: The Economy Will Get Back on Track

From an economic standpoint, 2014 is shaping up to be a lot like what 2013 should have been, if Washington hadn't gotten in the way. The impending midterm elections should keep Congress on its best behavior long enough to get the economy back on track by 2015, especially since a short-term debt deal is already in place, and initial news of the Fed's tapering only sent the market flying higher.

"I'm waiting for the economy to bust out," Emory University finance professor Thomas M. Smith recently told WalletHub. "The problem, however, is that everyone else is just itching for the next recession so they can say, 'See, I knew another recession was [coming]!' If companies start hiring, then the economy will begin moving into another gear very quickly."

Prediction 2: We'll Rack Up $35 Billion in Credit Card Debt

We've added $115 billion in new credit card debt to our tab since the beginning of 2011, and CardHub models project another $35 billion increase in 2014. Our societal obsession with living beyond our means clearly has to change, and it starts with simple budgeting and the realization that pre-recession spending habits are no longer sustainable without the support of the housing bubble.

According to the National Foundation for Credit Counseling, only two in five Americans have budgets and keep close track of their spending. You can't keep tabs on your spending, saving and debts when you don't know exactly how much comes in and how much goes out each month.

Prediction 3: Initial Perks Will Continue to Pay Off Big-Time

The average household has around $6,700 in credit card debt. That's the bad news. The good news is that credit card companies are continuing to offer 0 percent rates for extremely long introductory periods, enabling consumers to transfer existing debt from other cards and save money while paying it off. The best such card on the market, Slate from Chase Bank (JPM), offers 0 percent on balance transfers for 15 months and charges neither an annual fee nor the industry-standard 3 percent balance-transfer fee.

There's a lot of value on the rewards side of things, too. For instance, both the Chase Sapphire Preferred Card and the Barclaycard (BCS) Arrival World MasterCard offer $400 initial bonuses if you can meet reasonable initial spending thresholds. The Club Carlson Premier Card -- issued by US Bank (USB) -- offers up to 18 free hotel nights under the same type of arrangement, and you can score two round-trip domestic flights with the Frontier Airlines Card. All of these offers are among CardHub's picks for the Best Credit Cards for 2014.

Prediction 4: Obamacare Will Be Front and Center

Regardless of how you feel about health care reform and its current trajectory, it's clear that Obamacare will have a major impact on all of our lives. For some, it will mean lower costs or coverage where none existed before. For others, it will mean higher premiums or paying for other states to expand Medicaid.

In the long-run, the law could either prove a drain on the economy or a transformational success. The point is, we're in for some changes in 2014 as far as health care is concerned, and we all better get acquainted with the new environment if we want to minimize costs and avoid unnecessary hassles.

Prediction 5: The Stock Market Will Continue Setting Records

The stock market soared in 2013, with the Dow Jones Industrial Average setting all-time highs 52 times, and both the S&P 500 and the Nasdaq returning to levels not seen since the '90s. The question is whether that can continue in 2014 or if a big correction is in order.

The finance and stock market experts we've consulted recently have mixed opinions on the matter, but the general sentiment and the fundamental data indicate room for growth. Bonds will take a while to become attractive again, and with the economy improving, consumers will have more money to save. Company balance sheets also stand to improve, especially as cash reserves begin to generate more interest revenue. While investors should tread carefully as always, there's reason for cautious optimism in the 2014 market.

Now that you have a better sense of this year's economic landscape, it's time to devise a plan of attack for improving your finances. So make those new year's resolutions ... and stick to 'em!

Odysseas Papadimitriou is CEO of the personal finance websites CardHub and WalletHub. He previously served as a senior director at Capital One.

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What great timing on #5 (the market). With the worst 2 days in years (or whatever). Now for the hard one,,,...can you even pick the winner in last weeks horse race?

January 26 2014 at 3:18 AM Report abuse rate up rate down Reply

That's why stocks are falling cuz of this crap.

January 25 2014 at 4:38 AM Report abuse rate up rate down Reply

Obsama et al must go

January 24 2014 at 12:50 AM Report abuse -6 rate up rate down Reply

seekingthetruth4u******* Talking to one's self is a sure sign of mental irregularities……. but, of course it's well documented that liberals are mentally irregular.

January 23 2014 at 11:17 PM Report abuse -5 rate up rate down Reply

When economists get high on the economy, look out! With true unemployment at levels rivaling or surpassing that of the "Great Depression" I find it hard to be opti,istic about the economy. Government intervention will only make it worse. They are running out of people's money to waste.

January 23 2014 at 8:25 PM Report abuse +1 rate up rate down Reply
1 reply to mbestfrnd's comment

They'll never run out of money, and that is possibly the root of the problem …..

January 23 2014 at 8:28 PM Report abuse -1 rate up rate down Reply

Well you could have not been more wrong so fast on the higher stock market prediction, down almost 200 points the next day. There is a 90% chance stocks will NOT go up this year. That is why I took some $$ off the table end of Dec.

January 23 2014 at 7:22 PM Report abuse rate up rate down Reply
1 reply to vlady1000's comment

There's a good chance that there will be a lot of " profit taking", followed by a large rally. Yellen is Bernanke in drag….. QE will continue. Profits will continue. End of story !

January 23 2014 at 7:34 PM Report abuse rate up rate down Reply
1 reply to obamasam0r0nl's comment

with the world tied together so much more than before financially and instant communications (many are overblown articles), there will always be somebody doing something, somewhere to scare the market. look for volatility this year. I do not see a fall out, nor a bull market. 2014 will be flipping for slim profit on volatility, many times over. I bought some today (the 2 that did hit my limit price).

January 24 2014 at 5:37 PM Report abuse rate up rate down

I don't think sooo -----

January 23 2014 at 7:19 PM Report abuse rate up rate down Reply

two out of five-no too good a prediction.

January 23 2014 at 6:26 PM Report abuse +1 rate up rate down Reply

Also on here is an Obama poll.
I think he's doing very well. He got us health insurance when we had none. The stock market is setting one record after another. He is friends with the Pope.
Unemployment is improving.
And you have to consider what he is up against.
If I was him, I'd be grumpy. The White House kitchen has a four star International chef - basically you can order anything you can think of. I'm talking beef short ribs, ox tail, lobster, puff pastry with chocolate mouse or apricots and fresh whipped cream. But word on the street is you can only get carrot sticks and celery sticks out of the white house kitchen. It's been turned into an organic psychodrome. Poor Joe Biden has to go to the local deli to get a sandwich. From what I can see you can't even get cold cuts, sliced cheeses or real bread out of the White House kitchen
That low calorie rabbit food would make me grumpy.

So I'd say he's doing very well indeed.

January 23 2014 at 6:17 PM Report abuse -1 rate up rate down Reply
1 reply to alfredschrader's comment

I think he's doing very well. He got us health insurance when we had none….. Speak for yourself. Gallup polls show in 2007 70% of the population rated their healthcare coverage as either good or excellent, and 83 percent rated the healthcare services received as either excellent or good.

January 23 2014 at 7:09 PM Report abuse -1 rate up rate down Reply

All wrong!

January 23 2014 at 3:34 PM Report abuse +1 rate up rate down Reply