As widely expected, the Federal Reserve lowered its benchmark interest rate on Thursday, which will make it a bit cheaper to borrow money via credit cards, loans and auto financing.

The rate dropped by 25 basis points to a range of 4.50% to 4.75%. This follows a larger 50-bps cut in September, which brought the rate down from a peak of 5.25% to 5.50% for most of 2024.

The Fed began cutting rates in September to help boost the economy as inflation cools and the job market softens. Before that, it spent two years raising rates to curb inflation, which peaked at 9.1% in June 2022. Since then, inflation has fallen to 2.4%, bringing it much closer to the Fed’s 2% target.

In a September speech, Fed Chair Jerome Powell indicated that another 25-bps cut could happen before 2025 if current economic trends hold steady.

The Fed expects the benchmark rate to dip to 3.4% by the end of 2025, which would further increase savings on borrowing costs.

Below is a breakdown of how the recent rate cuts could impact your monthly borrowing costs. The breakdown includes today’s 25-bps cut and the cumulative 75-bps reduction since the Fed began cutting rates in September, as estimated by Bankrate.

For borrowers with a $5,000 balance:

• Savings from today’s 25-bp cut: $1 per month
• Total savings from 75-bp rate cuts since July 2024: Savings of $3 per month

For a new $10,000, 3-year personal loan:

• Savings from today’s 25-bp cut: $1 per month
• Total savings from 75-bp rate cuts since July 2024: $3 per month

On a new $35,000, 5-year auto loan:

• Savings from today’s 25-bp cut: $4 per month
• Total savings from 75-bp rate cuts since July 2024: $12 per month

On a $50,000 HELOC:

• Savings from today’s 25-bp cut: $10 per month
• Total savings from 75-bp rate cuts since July 2024: $31 per month

You might see a slight rate reduction, although the savings will depend on your loan size, credit score and current mortgage market conditions. However, borrowers with resetting rates may still face higher rates than before.

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This story is part of CNBC Make It’s Millennial Money series, which details how people around the world earn, spend and save their money.

What does a 12-year-old do with $10,000 he earned from a videogame “basically by accident”?

In Steven Guo’s case, he blew through it pretty quickly — but it kickstarted his path to becoming an entrepreneur and founding brands that have brought in millions in revenue.

It all started with a summer project when he was 12 and “super into the game Minecraft,” Guo tells CNBC Make It. “I wanted to host servers so that me and my friends could play on it. Turns out, other people decided to start playing on it as well, and because of that, someone offered me $50.”

That transaction changed everything. “I was super happy and through the moon,” Guo recalls. “I didn’t realize you could make money off the internet.”

Guo kept building his server and selling in-game perks to players. By the end of the summer, he pocketed $10,000.

The high didn’t last long. With his $10,000, Guo tried to start a game development company, “and unfortunately I failed miserably and blew basically all of my money,” he says. “But I learned a really valuable lesson, which was: marketing is extremely important for any business.”

From there, Guo says he became “obsessed” with learning about running a business and making it his career. “Ever since I made my first bit of money when I was 12 years old, I knew that I didn’t want a traditional job,” he says.

Guo, now 24, is the founder of multiple e-commerce businesses on track to bring in a combined $1.7 million this year.

He recently moved from Southern California to Bali, Indonesia, where he splits a villa with friends and spends his free time surfing. As his own boss, Guo is on track to earn roughly $254,000 this year.

Here’s how he spends his time and money.

While Guo fixated over starting businesses as a teen, he didn’t take college as seriously.

Guo studied business economics at the University of California, Irvine, where he “was more focused on my entrepreneurial endeavors, and because of that, I had a 2.7 GPA.”

In some ways, his poor grades motivated him to become a successful entrepreneur. “Because my GPA was so bad, I knew that getting a high-paying job was probably unlikely, and that pushed me to work even harder on my own businesses,” he says.

Guo graduated in 2022 and today runs several e-commerce businesses: an online retailer that sells dates (the fruit) to customers, a K-pop inspired merch store and a company that sells premium car covers with for people with luxury cars.

In 2022, he sold one of his first companies, a jewelry brand called Impulse Modern that brought in over $2 million in revenue within a year.

The brands all ladder up to his main venture, Manifest Five, a venture-capital studio where he helps grow, operate and invest in 8- to 9-figure direct-to-consumer brands across heath, beauty, automotive vehicles and more.

It’s a lot to keep track of, but Guo has learned how to maximize his time and efforts.

Early on, “I spent a lot of time running every single operation in the business, and I definitely got burnt out quite a bit,” he says.

Now, he works with a team, managing 19 employees across the U.S., Philippines, UK and India. “With online businesses, one of the greatest perks is being able to hire remotely and have the best of the best out of anywhere in the world,” he says.

Guo typically works from Monday to Friday six hours a day, or 30 hours a week, and spends roughly 40% of his time doing market research on his clients and the products and services they sell.

A change in scenery also helped him find better balance.

After graduating from college, Guo called Southern California home, but traveled to roughly 15 countries. He enjoyed being able to afford a nice lifestyle at a lower cost in many of them and, in early 2024, made the decision to move to to Bali, where he first visited after high school and has always felt “a magnetic pull.”

“Bali really is a place where my work-life balance finally makes sense,” Guo says. “Mornings are mostly for running my business, [and] afternoons are for surfing, exploring the landscapes or enjoying the vibrant culture here.”

“I’m definitely much happier in Bali because of how great the lifestyle is,” Guo says of his move, adding that he’s blown away by the quality of life he can have at a “fraction of the cost” of what it would be back in California.

“I get to spend tons of time with my friends. I also get to spend a lot of time doing the activities that I like, such as surfing,” he says.

Guo lives with two of his best friends and former college classmates, who are also entrepreneurs and share similar lifestyles.

Tourists and digital nomads have flocked to Bali in recent years, which has created overcrowding and overdevelopment concerns.

Guo acknowledges that many tourists get a bad rap for being “a little bit disrespectful to the local culture.” As longer-term digital nomads, Guo and his peers try to be aware of this and contribute to the local community and economy.

Here’s how Guo spent his money in September 2024.

• Savings and investments: $5,583 toward a Robinhood brokerage account and a Roth IRA
• Discretionary: $1,942 for shopping, gifts, travel and health expenses
• Housing and utilities: $1,691 for his share of a monthly Airbnb rental, Wi-Fi and utilities
• Food: $539 on takeout and restaurants
• Subscriptions and memberships: $430 toward his annual Amex fees, Amazon Prime, YouTube Premium, a personal assistant and a storage unit
• Insurance: $223 on health and travel insurance coverage
• Transportation: $97 on a scooter rental and taxis
• Phone: $30

Guo pays for the majority of his expenses on his credit cards using U.S. dollars, though he covers utilities and transportation in Indonesian Rupiah.

Guo’s biggest monthly expenses go toward his investment accounts. He aims to invest $60,000 per year, or $5,000 per month, in index funds, and he currently has roughly $340,000 shored up. He also contributed the maximum $7,000 to his Roth IRA this year and has over $17,000 stashed in it in total.

Guo splits a four-bedroom, four-bathroom Airbnb with friends in the heart of Canggu, a resort village on the south coast of Bali known for its ideal surfing conditions.

He spent just over $500 on food for the month of September. He rarely cooks and instead prefers to dine out with friends at nice restaurants or local “warungs,” which are small family-run shops.

The expense is well worth it for high-quality food, Guo says: “One of the best parts about Bali is how clean and healthy the food is. When you eat it, you feel healthier, and it just makes you feel better overall.”

The rest of his monthly expenses typically go toward travel. In September, he went on a trip to Portugal and booked future travel to Australia in December. He also paid for a few subscriptions, a personal assistant, health insurance and a scooter that acts as his main mode of transportation.

Guo says being an entrepreneur has made him aware of just how unstable business can be, so he lives frugally to make sure he can weather any ups or downs.

“I typically don’t like to spend too much money on myself,” he says. “Most of my expenses go towards food, but if I do spend money, it’s typically towards gifts for family or my girlfriend.”

As far as what he doesn’t spend on, “I absolutely refuse to spend money on things that depreciate in value,” like luxury goods, Guo says.

In his decade-plus of building businesses, Guo says one of his proudest accomplishments was treating his mom and her boyfriend to a fully paid vacation in Hawaii.

It was a full-circle moment to show appreciation to his mom, who raised him and taught him the value of hard work.

“When I was 7, I immigrated from China to Canada with my mom,” Guo says, “and I really got to see what it was like to grow up as an immigrant. I saw her working multiple jobs and working hard to just put food on the table.”

Seeing his mom’s efforts taught him the value of hard work and money, he says. “Because of that, I wanted to make sure that going forward, my family doesn’t have to go through hardship again. And my mom is definitely one of my biggest inspirations.” 

In recent years, Guo has gotten closer with his father, a former architect living in China who’s also getting into business. “We’re just starting to rekindle [our relationship], partly because we both are entrepreneurs now,” Guo says.

Guo has big plans for his businesses. He hopes to have a $50 million e-commerce portfolio by the time he’s 30.

“My plan to do that is by incubating a variety of businesses through working with students and mentoring them and investing in them,” he says.

As for his personal life, Guo plans to split his time between Bali and Australia, where his girlfriend lives, until she’s able to permanently relocate to Indonesia.

“Bali isn’t just a home,” Guo says. “It’s the freedom to live, work and thrive on my own terms.”  

Conversions from Indonesian Rupiah to USD were done using the OANDA conversion rate of 1 IDR to .00007 USD on Sept. 30, 2024. All amounts are rounded to the nearest dollar.

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The day Lisa Collum started her side hustle in 2011, she went to OfficeMax and bought five binders with the last $99 in her checking account, she says.

She filled them with copies of her fourth- and fifth-grade writing curricula, sliding pages reading “Top Score Writing by Lisa Collum” into the front plastic covers. As she sold them, the five binders became 10, then 20. Within five years, she was selling hundreds at a time from her living room’s makeshift assembly line, with her 8-year-old operating the three-hole-punch.

Today, Collum, 41, is the CEO of Palm Beach Gardens, Florida-based Top Score Writing, which sells K-12 writing curricula and consulting services to schools and teachers across all 50 U.S. states, she says. Her teaching approach comes from her experience helping fourth graders — many of whom spoke English as a second language — write highly structured essays, and watching their writing test scores rise, she says.

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The side hustle outpaced her $40,000 annual teaching salary within four years, she says, and became her full-time job in 2015. That same year, Collum used funds from her business to buy Coastal Middle and High School, a nonprofit private school in Lake Park, Florida.

Top Score Writing now has six full-time employees, 10 part-time staffers and nearly $1.9 million in annual profit last year, according to documents reviewed by CNBC Make It.

It’s all a surprise to Collum, she says: When a school principal first asked to buy a writing curriculum from her, she laughed and responded, “There’s not an ounce of business in me. I can’t write this down and sell it.”

Collum started her teaching career while in her 20s at the Village Academy School in Delray Beach, Florida. She noticed that her fourth-grade students, many of whom spoke English as a second language, were intimidated by the essay portion of the state’s annual assessments — so she spent her first year teaching them how to plan and write introductory, body and conclusion paragraphs.

In her first semester, 95% of her students passed the state test, up from 38% the previous year, she says. Each of the next two years, every fourth grader at her school was deemed proficient at writing, says Collum.

The jump in scores was dramatic enough to raise flags at the Florida’s Department of Education, incurring two separate investigations at the school. Collum eventually became a writing specialist for her school district, and left that job for a virtual teaching position after she had her third child in 2011.

Three days later, principals from her old district asked if she’d sell them her curriculum, she says. She did, charging a mere $75 per binder. Her business grew through word-of-mouth, as local principals talked with their counterparts in other school districts, and then online once Collum digitized her curricula in 2016.

Top Score Writing’s curricula and teaching plans now cost between $125 and $625 apiece, depending on grade level and services offered.

Initially, Collum built Top Score Writing primarily for Title I schools, which receive extra federal funding to help students from low-income families.

Tina Volanti, a former fifth-grade teacher at Clovis Elementary — a Title I school in Clovis, California — found Top Score Writing on YouTube in 2022, and thought it could help her students’ Covid-disrupted writing skills. Her principal allowed her to pilot the program, and the kids became noticeably more confident as writers, says Volanti, who retired earlier this year.

Over the years, Top Score Writing found its way into schools with higher concentrations of “gifted” students, Collum says. There, its formulaic approach to writing received a more mixed reception: A regimented education that prioritizes structure over creativity helps kids learn how to take tests, but not actually write, critical parents and teachers say.

Collum has lost at least one major contract due to parent outcry, she says. Her typical response: All students need to learn fundamentals, even top students are struggling more with writing than math or reading right now and each Top Score Writing curriculum does touch on creative writing strategies toward the end of the school year.

She’ll work with any school willing to buy Top Score Writing’s curricula, she notes — and she’s learned, largely from experience, when to trust the business instincts she’s developed over the past 13 years.

“The first five years, it was really hard to have confidence in myself, even though I had data that what I was doing worked,” says Collum. “I still know bumps are coming, but now I know how to take the hit and see what I can learn from it. … I always go back to what I believe in and what I know students can do.”

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If you look at what President-elect Donald Trump has shared about his economic plans over the last several months, one word comes up again and again: tariffs.

President Trump has said he plans to install a blanket tariff of 10% to 20% on all imports, with additional tariffs of 60% to 100% on goods brought in from China. In the September Presidential debate, Trump characterized the plan as a way to extract money from rival nations.

A sweeping tariff policy will kill two birds with one stone, Trump says: It could find a new source of revenue for the U.S. government, which could offset losses from lowering or eliminating certain forms of income tax, while extracting money from rival governments.

“Other countries are going to, finally, after 75 years, pay us back for all that we’ve done for the world,” he said at the debate.

Economists, however, tend to agree that such a plan would would have the effect of raising prices on everyday goods. “If President Trump raises tariffs on imported goods, it means inevitably that American consumers are going to pay more,” Howard Gleckman, senior fellow at the Urban-Brookings Tax Policy Center, told CNBC.

Simply put, a tariff is a tax on imports, though not one paid by the exporting country. Rather, U.S. companies seeking to import goods from China, for example, would have to pay more to bring them in.

This generally serves two purposes. One is to protect certain domestic industries. By making it more expensive to import a product, the U.S. government effectively prevents foreign firms from undercutting the prices of American companies.

The other is to generate revenue for the U.S. government. The nonpartisan Tax Foundation estimates that a 10% universal tariff would raise $2 trillion in revenue for the federal government from 2025 through 2034, and a 20% tariff would raise $3.3 trillion.

That’s quite a bit of money in raw terms, but not enough to cover the revenue shortfall that would result from making the tax cuts from the 2017 Tax Cuts and Jobs Act permanent, the Tax Foundation found.

Trump has floated the idea that a tariff policy could eventually replace U.S. federal income tax altogether, a convention that the nonpartisan Peterson Institute for International Economics called “literally impossible.”

A side effect of imposing tariffs — and what Trump’s opponents focused on during his presidential campaign — is that importing companies that pay the tax tend to pass the cost along.

“Ultimately, the cost of tariffs will be paid by us, the consumer,” says George Ball, chairman of investment management firm Sanders Morris. “They’ll be buying things at higher prices than they otherwise would.”

Exactly how much higher prices would go is hard to say. The relationship certainly isn’t as simple and direct as some Democrats have suggested by contending that tariffs would function as a “20% sales tax,” says Clark Bellin, chief investment officer at Bellwether Wealth.

“Especially when you throw the inflation we’ve been having into the mix, it’s hard to come up with a line item like, ‘This is how much things have gone up because of tariffs,’” he says.

Trump instituted a new set of tariffs on certain products in 2018 and 2019, and inflation remained moderate throughout his presidency. Those tariffs on certain imported Chinese products, including aluminum, steel, semiconductors and electric cars, have remained in place or in some cases increased during the Biden presidency.

Still, a number of organizations say Trump’s new tariff policy would have a negative effect on American consumers.

Democrats on the campaign trail insisted the policy would cost middle-class families $4,000 a year. That number is in line with estimates from the left-leaning Center for American Progress and the right-leaning American Action Forum.

The Peterson Institute for International Economics pegs the yearly cost at $2,600 per household. The Tax Foundation says a 10% universal tariff would increase taxes on U.S. households by $1,253 on average in 2025, and a 20% universal tariff would bump costs by $2,045.

Financial experts say a more aggressive tariff policy could be viewed as a form of economic saber-rattling, too. “Typically in a situation where a country is imposing a number of new tariffs, what you tend to see is a reaction from the other countries that are impacted,” says Sam Millette, director of fixed income at Commonwealth Financial Network.

“That creates a trade war. And effectively, what that does is create a situation where both impacted countries are seeing this government intervention. It tends to lead to higher prices for consumers in both countries.”

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In 2017, Detroit-native Vincent Orr was working as a production supervisor at Chrysler, when he kept seeing and hearing advertisements for The Detroit Land Bank Authority.

The organization, founded in 2008, offers residents of Detroit, Michigan the opportunity to buy vacant, abandoned, or deteriorated houses and land at auction.

Orr submitted a bid and won a three-bedroom, one-and-a-half-bath house for $2,100. The property had been abandoned for about a decade.

“I wanted to invest my money, so I got up one day and decided to look on the website and saw they had something in my neighborhood for sale,” Orr tells CNBC Make It. “I drove by and decided to bid on it. I never saw the inside, and by 4 p.m. that day, I was the property owner.”

But Orr was in for a rude awakening. When he finally got access to the inside of the house, it had a giant hole in the roof, water damage, and the electrical and plumbing needed replacing. Despite all the repair work that lay ahead, Orr was still excited about purchasing his first home in the neighborhood where he went to high school.

“I thought it had great bones. I liked the architecture, and I was familiar with the neighborhood. I knew the potential of the area and the property,” Orr says. “I was also excited to have a piece of history because the house was built in the 1920s.”

One condition of the winning the auction was that Orr had to renovate the home and make it livable in nine months. He estimates he has spent $40,000 fixing up the house so far and says there is still more to do.

At the end of those nine months, Orr’s mother moved into the home and lived there rent-free.

“Since I was a child, I had been telling her that I was going to buy her a house,” he says. “For her to actually see me carry through was amazing for both of us.”

For Orr, who was 27 at the time, becoming a first-time homeowner and successfully turning the abandoned house into a home was a major accomplishment.

“To be able to own a home that was paid off with no loans, no mortgage and then be able to let my mom live there was a great feeling,” he says.

Just two years after buying the first property, Orr bought the property right next to his mother’s for $1,200 — it had also been abandoned for about a decade.

“I just couldn’t see myself putting all this money in next door and not having it look nice on the other side,” he says.

Orr admits that the condition of this second house was much worse than the first one he bought, but “I really liked the architecture of that one. It reminded me of a gingerbread house,” he says.

“I was excited to get my hands on it and bring it back to life. A lot of people didn’t want to bid on it because it had been in a fire.”

There was no living room floor, and the house had even been on the city’s demolition list before Orr bought it.

After securing the deed from the Detroit Land Bank Authority, Orr got to work. He estimates he’s spent $60,000 renovating it so far.

Orr lived in the house while working on it, which he says was a challenge, especially because it was during the pandemic. He moved out in 2021 and leased it to a family friend. He is also letting them live there rent-free until the renovations are complete.

And as if two properties weren’t enough, Orr bought a third on the north side of his original abandoned home for just $100.

“There was a house on the lot, but it had caught fire, and the city of Detroit ended up tearing it down,” Orr says.

At the time of writing, Orr says he plans to build a new house on the lot and do most of the work himself. He is in the process of becoming a licensed builder, having left his job at Chrysler in 2022 and General Motors in September. In October, he launched his own hardwood and epoxy flooring business.

Orr says he has no plan in place for when he’ll start building the house. He estimates he’ll need $100,000 to $150,000 and does not want to take out a loan.

“I’m just waiting to get the funds in order,” he says.

Orr says his biggest regret is not having bought more properties from the Detroit Land Bank Authority. He estimates the value of his houses has increased since he bought the first one seven years ago.

“I don’t know if it would be possible in today’s climate because Detroit has gained popularity. You have a lot of people moving in and I’m happy to see it, but on the other side, small developers like myself can’t get my hands on anything,” he says.

But the now 34-year-old says he doesn’t ever plan on selling them.

“I believe in ownership, and those homes are part of my retirement plan,” he says. “When I’m too old to work or just want to relax in the later years, I have those properties to rent out and gain income from because I don’t know if we can depend on Social Security.”

And for anyone looking to take advantage of an auction process like the one the Detroit Land Bank Authority offers, Orr’s advice is to not overthink it.

“Don’t waste your time. You’d be surprised if you just get out and try; you can accomplish anything. A lot of people doubt themselves, but if you build it, they will come,” he says.

“I plan on buying more and building more. I want to build apartment buildings and affordable housing.”

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