Have a credit card balance, plan to buy a car or keep money in savings? The Federal Reserve’s latest decision could affect you. The Fed raised its key interest rate by one quarter of a percentage point on September 16. It was the first increase since 2023 and brought the rate to about 3.9 percent. The goal is to slow spending and borrowing as inflation continues to run higher than the Fed would like. That may sound like something that only matters on Wall Street. But changes in this rate eventually reach many of the financial decisions people make every day. Credit cards could cost more Most credit cards have variable interest rates. When the Fed raises rates, card companies often follow. The increase may not look dramatic on your next statement. Someone carrying a balance of about $6,600 at a 22 percent interest rate could see the minimum payment rise by around $1.38 a month. But the bigger problem is that credit card rates were already high. If you carry a balance from month to month, even a small increase means more of every payment goes toward interest instead of paying down what you owe. This may be a good time to focus on your highest interest card, look for a lower rate option or avoid adding new charges that cannot be paid off quickly. Car loans may also move higher Auto loan rates could increase, although the change may take time to show up. A quarter point increase would probably add only a few dollars to the monthly payment on a typical vehicle loan. The larger issue is that new and used vehicle prices are already stretching many household budgets. If you are shopping for a vehicle, look at the total cost and not just the monthly payment. A longer loan can make the payment look better while leaving you paying much more interest over time. Mortgage rates are more complicated The Fed does not directly set mortgage rates. Mortgage rates are influenced more heavily by the bond market, inflation expectations and the outlook for the economy. That means they may rise, fall or remain steady even after the Fed changes its rate. Still, continued concern about inflation can keep mortgage rates elevated. Anyone buying a home should compare several lenders because even a small difference in the rate can add up over a 15 or 30 year loan. People with a fixed mortgage will not see their current rate change. Those with an adjustable rate mortgage or a variable home equity line could eventually pay more. Savers may finally see some benefit There is a good side to higher rates. Banks may increase what they pay on high yield savings accounts, money market accounts and new certificates of deposit. Some high yield savings accounts were already paying above 4 percent before the Fed acted. Do not assume your bank will automatically give you a better return. The national average savings account was paying only 0.63 percent shortly before the Fed’s announcement. Take a few minutes to check the rate on your account. Moving emergency savings to an insured high yield account could help your money earn more while remaining available when you need it. What should you do now? There is no need to make a sudden financial move because of one rate increase. Start by checking the interest rates you are currently paying and earning. Pay particular attention to credit cards and other variable rate debt. If you have money sitting in a low paying savings account, compare it with other insured options. The Fed’s decision may only change individual payments by a few dollars at first. But when borrowing is already expensive and household budgets are tight, those small changes can build over time.

Have you ever wondered how someone decides what a business is worth? It is not always as simple as looking at the profit shown on the financial statements. A buyer wants to know how much money the business is likely to produce after the current owner leaves. That is where EBITDA add backs enter the conversation. EBITDA is one way buyers measure the operating performance of a business. It looks at earnings before interest, taxes, depreciation and amortization. An add back removes an expense that is not expected to continue under new ownership. These adjustments can have a much larger effect than many business owners realize. Imagine that a company identifies a legitimate $100,000 expense that will disappear after the sale. If a buyer values the business at eight times its adjusted earnings, that one adjustment could potentially add $800,000 to the value. But the buyer is not simply going to accept every expense the owner wants removed. What Usually Counts The strongest add backs are specific, unusual and supported by records. A legal settlement that happened once may qualify. The same could be true for the cost of installing a new software system or repairing damage from a rare event. An expense that has nothing to do with the regular operation of the company may also be removed. One example would be a gain or loss from selling a piece of equipment or property. Owner compensation can sometimes be adjusted too. An owner may receive more than the company would need to pay someone else to perform the same job. That difference could count, but the owner needs real information showing what a replacement would cost. The basic test is simple. Will this expense still be there after the buyer takes control? If the answer is clearly no and the records support it, the adjustment has a better chance of surviving the buyer’s review. What Buyers May Reject Problems begin when an owner presents an estimate without evidence. A buyer will want to see invoices, payroll information, contracts or entries in the company’s accounting records. A round number based on memory or a general feeling will not carry much weight. Personal expenses paid by the business can also create trouble. They may be legitimate add backs, but the owner must be able to show that the expenses were truly personal and not necessary for operating the company. Another warning sign is an expense described as unusual that appears year after year. If the company regularly faces the same cost, the buyer may consider it part of doing business. Owners can also lose credibility by claiming an adjustment that is larger than the expense recorded in the books. Once a buyer finds one questionable number, the buyer may begin looking more closely at everything else. That uncertainty can reduce the price or slow down the entire sale. Preparation Should Begin Early The best time to prepare for a sale is before the business is on the market. Owners should document unusual expenses when they happen. A short explanation and supporting records can be much easier to produce today than several years later. Personal spending should be separated from business spending whenever possible. Agreements between the company and another business owned by the same person should also reflect normal market prices. Monthly financial statements need to be accurate and consistent. Revenue, bonuses, commissions and major purchases should be handled under clear accounting policies. This gives buyers confidence that the numbers reflect the real condition of the business. Owners should also think honestly about their own role. Can the company operate without them? Will someone need to be hired? How much will that person cost? Will the owner remain involved for a period after the sale? Those answers affect how much of the owner’s compensation can actually be removed from the company’s expenses. The Real Story Is About Trust Add backs are not just accounting adjustments. They help tell the buyer what the business may look like under new ownership. Good records make that story believable. Weak estimates create doubt. An owner who waits until a sale begins may spend valuable time trying to explain years of complicated transactions. An owner who prepares early can present a cleaner and more predictable picture.  That preparation could help protect the value built through years of work. When the time comes to sell, the numbers should make it easy for a buyer to see what the business can really produce.