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Rising Rates, Lower Debt: Optimize Your Retirement · Money In Motion with Klaas Financial

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This is money in Motion with Class Financial, a fun and informative show designed
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to help you get answers to all your retirement questions in one place. This
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is money in motion right here on thirteen ten. Wiba joined this morning by
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our retirement planning professionals from Class Financial, CJ Closs and Malia Quavis. You
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can get to know Cjmalia and the team at COSS Financially. You can also
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learn about their separate divisions all on their website Class Financial dot com. That's
0:29
Klaas Financial dot com. It is a fantastic website. Not only those features,
0:35
but there's also an opportunity there to sign up for the weekly market Paul
0:38
snowsletter. It's a great once a week email. I think they would call
0:41
that weekly email that has a link to the most recent podcast. Also snapshot
0:46
of what's been going on in the markets. Again, that available to you
0:49
at class Financial dot com. That's Klaas Financial dot Com. And the telephone
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number for their studio six O eight four four two five six three seven.
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That first meeting, that a first appointment at Coss Fiancial. It will be
1:00
complimentary to you. Again they're telling phone number six so eight four four two,
1:04
five, six three seven and joined this morning by c J Class and
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Malia Quavis, our retirement planning professionals from Class Financial. CJ, how you
1:11
doing this week? I'm doing great. Sean, how are you? I'm
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doing really really good. Malia, how have you been? Very good?
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Happy to be here. It's happy to have them, happy to have both
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of you along. And we've got an important conversation. It's the D word.
1:23
It's debt end Oh, it's there's never any good debt. And we're
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going to talk about folks entering into retirement or planning for retirement and what that
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debt can do, and of course the importance of trying to eliminate as much
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of it is as you can on your on your balance sheet. A couple
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of cool features as well about the program mentioned of course the website classfinancial dot
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com. This show is podcast as well. If you ever miss part of
1:51
the program, you can always listen back at classfinancial dot com. You can
1:55
subscribe to the podcast there as well. Also a great opportunity just touch base.
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We have that first conversation at Class Financial. It'll be complimentary. Six
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eight four four two five six three seven is the office number, right,
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here in town. Speaking of that number a little later in the program.
2:08
Another great feature of the show is the Class Quiz Question Leak. It'll be
2:12
your chance to win a twenty five dollars gift card this week's class Quiz question.
2:15
Week winner gift card will go to Texas Roadhouse, a great great prize
2:21
there from our friends at Coloss Financial. Little tip if you listen closely to
2:24
the program most of the time. Every time, I'd say almost both the
2:28
question and answer come up during the program, So it pays in a number
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of ways to pay close attention. Before we start talking debt this week,
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let's actually take a look back at last week's program and talk about the class
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quiz question the week at the question and the answer there as well. Yeah,
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so we do have a lot of conversations on this show about things like
2:46
debt, death, and taxes. Last week's no exception. Last week we
2:51
were discussing how your required minimum distributions, how you could look towards using some
2:58
of those toward qualified charitable distributions in order to save you save money on taxes
3:02
while being film fanthropic. So last week we had a great question in twenty
3:08
twenty four, what's a maximum amount individual who is over seventy and a half
3:13
years old can transfer from their IRA into a charity as a qualified charitable distribution,
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we also call them qcds. Is it ninety five thousand or one hundred
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and five thousand? So thanks to so many listeners who called in last week.
3:29
We appreciate your calls, but there's only one winner every week, and
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that was Isabelle of Madison, So congratulations to her for the correct answer,
3:37
which was one hundred and five thousand dollars. Listen carefully to today's show,
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and again it was a really good show last week. As always, you
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can listen back at Classfinancial dot Com. That's Klaasfinancial dot com. And I
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know one of the obviously you guys help people plan for retirement, and one
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of the big issues that often comes up is the amount of debt that folks
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are carrying on their balance sheet. I've got a guess that's that's an important
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conversation, isn't it It is, Yeah, it's one of the most important
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conversations. So for many people, debt does continue to be something that follows
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them into retirement and it can create an additional burden on top of handling regular
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living and medical expenses. Therefore, working towards becoming debt free in retirement,
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in our opinion, is truly the ideal situation and it will provide you with
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many additional options as you begin the next season of your life. So,
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with inflation hitting many people hard the last couple of years, average household debt
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in the United States has reached one hundred and three thousand, three hundred and
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fifty eight dollars as of the second quarter of twenty twenty three. With that
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in mind, credit card debt is still the most common type of debt for
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American households, followed by mortgage debt and car loans. By the way,
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when we talk about these total debt amounts and then we kind of dig into
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what type of debt, there is this concept in debt management called secured or
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unsc So for those who have never really understood what this means, think of
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it as collateralized, so something backing up the debt. If I have a
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home that I purchase and I have a debt on that, it is a
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less risky debt to the bank that has given me that loan because if I
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default, they can just take back the home and sell it, so it's
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a lower risk loan to them. If you think of credit card debt,
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well, often it's used to purchase food and gas, and so there's no
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collateral, so they call that an uncollateralized or an unsecured debt, which of
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course has more risk to the bank that is giving you that loan. So
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often what is driving the interest rate is the amount of risk, and therefore
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unsecured loans have a much higher interest rate than secured loans. So anyway,
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I just wanted to pause and mention that to people in case they've wondered what
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that's all about. So we are still with the numbers of the debt amounts
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growing for people. We are still encouraged by what we see with some of
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our clients. We are still seeing people they get closer to retirement, really
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truly wanting to work towards reducing or eliminating their debt as they get closer to
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say sixty five. But there are a few steps that are involved that we
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want people to focus on if you are planning for having a worry free retirement.
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So here's some steps you might want to consider if you have debt now
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and you don't want to happen in the future. Number one, set up
6:26
a plan to reduce and eventually eliminate your debt. Surprise, surprise. We
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are financial planners, and so we would say without a plan, you're going
6:36
nowhere. There's actually a common phrase that says, if you don't know where
6:41
you're going, any road will get you there, but when you get there
6:45
you may not like it. Let me repeat that, if you don't know
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where you're going, any road will get you there, but when you get
6:49
there you may not like it. So know what road you're headed on,
6:54
know where you're going, create a plan to eliminate your debt, because you
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know, hope we're wishing for it to happen is not enough. You need
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to have a plan. And if you don't want to listen to us.
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We're big proponents of Dave Ramsey Financial Peace University. He has a seven seven
7:08
baby steps to building kind of financial independence and financial security. He has something
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called the debt snowball that he helps people focus on in building a budget.
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So so feel free to look up Dave Ramsey and his Financial Peace University.
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Talking this morning with CJ. Closs and Malia Quavis, our retirement finding professionals
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from Class Financial their website colss financial dot com. That's k l aas Financial
7:29
dot com. What a great website and great resource to learn more about Class
7:32
Financial. Also an opportunity to listen back to the podcast right online at lossfinancial
7:36
dot com. There telephone number six oh eight four four two five six three
7:41
seven. No charge for that initial get to know you appointment deck Loss Financial.
7:44
It will be complimentary to you again their number six oh eight four four
7:47
two five six three seven. Talking this week with CJ and Malia about about
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debt, and I've it's interesting as I've known folks across the income spectrum,
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and typically you think of people who rack up debt as maybe folks who maybe
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just getting by and maybe they're just out of college and doing what they can.
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I've known people who develop just kind of these bad, bad habits and
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they carry them well into their working career and to get them in trouble.
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I've got to guess that's an important thing to work on, isn't it,
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CJ? It is? And you're right, Sean, we see it.
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I would almost call it the well, it's all across the spectrum of incomes,
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but certainly on the high end of the income spectrum. In the lower
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end of the income spectrum is where we see the greatest abuses. Right,
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if you're young and you're don't have a lot of income and you haven't learned
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good savings patterns or spending patterns, you can sometimes rack up debt just for
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lack of understanding and discipline. But then as you get older, you may
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have learned about it and how to manage it. But you create, you
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take on greater risks. Right, So some people will get to a place
8:48
where like I'm making enough money, I just want to buy the big house
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and do the big things. And you do that, and then you lose
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a job and suddenly the house of cars comes tumbling down. So, as
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it relates to all of this, habits are a huge part of what get
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people in trouble. So you may first need to change your lifestyle and spending
9:05
habits, which requires that you start by setting realistic goals. So back to
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the whole. If you don't know where you're going, any road we'll get
9:13
you there. Well. Similarly, you have to set specific goals, make
9:18
them measurable, and then change habits to accomplish those goals. I mean gosh,
9:22
I sound like a personal trainer, don't I. I mean, you
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think about this. For those who don't know, I used to play very
9:26
competitive soccer, and so you know, if somebody came on to a team
9:31
and said, I really want to be a good soccer player, but they
9:33
never showed up for practice, it's laughable, right. We all know this
9:37
in the world of athletics, and yet in the world of finance we see
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it all the time and people don't laugh about it as much. Right.
9:43
They say, I want to have a lot of money and retire with little
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to know stress, and we go, okay, just pay off your debt,
9:50
and I go, I'll try. What do you mean you try?
9:54
Show me your spending and change it. Right, So anyway, I'm kind
9:58
of rambling here, but change some habits. Step number three would be to
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execute on the plan that you have and then pay down your debt. So
10:09
make a game out of it, and when all else fails, put everything
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on autopilot. So this is a big part of good good behaviors. Kind
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of like again, the athlete who goes to practice, they just go right,
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and some days they don't feel like it, some days they do.
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Some days they're in the groove. Some days they're not, but they just
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go so in a similar way with it. When it comes to your your
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patterns and your habits and your disciplines, put them on autopilots. So have
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the debt get paid immediately after your income comes in. Step number four would
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be to be cautious with some things. So one thing would be that people
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say, Okay, I'm going to pay off all my debt and so I'm
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going to stop contributing to my four one K plan, which can be wise,
10:54
by the way, but if your four to one K plan gives you
10:56
a dollar for dollar match, say up to three percent, which is a
11:00
one hundred percent return when you put the money in there, you may want
11:03
to reduce your contribution down to the minimum, but keep a minimum amount going
11:07
in there. Or another problem that we'll see as they really get excited about
11:11
this, I'll say, good idea, I'm going to take out a loan
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on my four to oh one K plan to pay off the loan on the
11:16
credit card, and we go. Maybe not, because loans on your four
11:22
oh and K plan can have especially with interest rates being as high as they
11:26
are right now, can be prime plus one or two percent, which could
11:30
be nine and a half to ten and a half percent is the rate you're
11:33
actually paying on that loan in your four to one K, But that's not
11:35
the greatest concern. The greatest concern is if you lose your job or get
11:39
laid off or get fired or need to move somewhere else, that loan suddenly
11:43
has to be paid off within sixty days, and if you're under fifty nine
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and a half, that's that's all incomes acxible to you if you don't get
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it paid off, and a ten percent additional penalty, not to mention if
11:56
you do that, it could jack you your income up in a year to
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a much higher overall income tax bracket. So really, really, really big
12:03
warning against against using your four to oh one K loan as a means for
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paying off debt. And to a certain extent, for people listening, it
12:13
should feel a little nonsensical, right, it should feel like that, wait,
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I'm going to take on debt to pay off debt. That's again,
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that can be a short term strategy, but it's not part of a great
12:26
long term strategy. So be cautious jumping into the four to one K loan
12:31
and then final thought or consideration for those who are wanting to get their debt
12:33
eliminated before they get to retirement is consider working longer. I know that's not
12:39
an attractive thing to hear, but often a part time job for just a
12:45
few additional years beyond when you had originally planned to retire can help you eliminate
12:50
that debt. You know, obtain benefits like health insurance or maybe a four
12:54
one K contribution while you're working part time, and all the meanwhile not stressing
12:58
yourself out too much because you're not you know, full time let's say at
13:03
that time, and then by the time you're done working, you know,
13:05
you've got that debt eliminated. So we really do believe if you can get
13:09
to a place of having it having little to no debt and the core of
13:13
your retirement, it is a game changer. Somebody once said motivation comes after
13:18
you start, which I think is sometimes the mistake that we make is like
13:22
I got to get motivated at the start, and it's like you're putting the
13:24
card before the horse. You start, and then you get motivated to continue
13:28
doing it. As we talked this morning with our retirement planning professionals from CJ
13:31
from Class Financial CJ. Closs and Malia Quavis the website. That's what I
13:35
wanted to give to a class financial dot com. That's k l aas Financial
13:39
dot com and they're telephon number six so eight four four two five six three
13:43
seven No charge for that initie. You get to know you appointment dechlss Financial.
13:46
It will be complimentary to you again their number six O eight four four
13:50
two five six three seven seedge anything else we want to be aware of this
13:52
in this section. No, I don't think so, okay, perfect.
13:56
Well, we'll continue our conversation and talk about different types of debt you may
14:00
have and different interest rates, what that means and why it's so important to
14:03
get that stuff under control. We'll talk more with CJ. Closs and Malia
14:07
Quavis next as Money in Motion with Coss Financial continues right here on thirteen ten
14:11
wib I. This is Money in Motion with Class Financial, a fun and
14:16
informative show designed to help you get answers to all your retirement questions in one
14:22
place. Talking this morning with our retirement finding professionals from Class Financial, CJ.
14:26
Closs and Malia Quavis the website Class Financial dot Com that's k l aa
14:30
as Financial dot Com and they're telephon number six. So eight four four two
14:33
five six three seven, don't forget no charge for the initial gets to know
14:37
your appointment Debt class financial. It will be complementary to you talking this week
14:41
with CJ and Malia about debt and what about things like different types of debt
14:46
folks make carry and we should be looking at, you know, things like
14:50
interest rates on those different types of debts. What do we need to be
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aware of there, e Melia. Yeah, so we lump it all together.
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We call it household debt, but you know, it's really important understand
15:00
what your household debt looks like. So mortgages, student loans, car loans
15:05
along with credit cards, so each of those carries its own burden when it
15:07
comes to the interest rates we see out there. Just a comment about debt
15:11
in general. You know, what we see with people sometimes is you know,
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we're we're all products of our earliest experiences around money, around our parents,
15:24
kind of what we witnessed and and so what's interesting is that people that
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you know, maybe grew up in a family that debt was something that the
15:33
family just always had. Sometimes those people turn into adults that they are just
15:37
comfortable with debt. And I'm not saying they should be, but they just
15:41
are because that's what they grew up with. Others will come from those experiences
15:46
and say I am never going to put myself in that situation that I saw
15:50
my family go through. So you got kind of two, you know,
15:52
different roads to take. And I think as people become more educated for their
15:58
own future retirements, how they want, how they want to end up,
16:03
reflecting on where they came from is really important and it's never too late,
16:06
I really believe to make some changes in your behaviors and your attitude towards money
16:12
and debt. So we really do understand coming out of the last couple of
16:17
years with inflation, that it's not as easy to stay out of debt sometimes
16:22
as prices have gone up, and if you're raising children and they're inactivities,
16:26
things get expensive. So between the high interest rates and the high cost of
16:30
items out there that you need to purchase, we did see in the last
16:34
couple of years Americans taking on debt to make ends meet. So we looked
16:41
at a January report from Bank Rates Credit Card Poll and it revealed that forty
16:45
nine percent of credit card holders are carrying debt from month to month, and
16:51
fifty eight percent of all households are carrying credit card debt, forty two percent
16:56
are carrying mortgage debt, and forty percent with car loans. The numbers did
17:00
start to pick up the last couple of years. We saw personal savings rates
17:04
decline, which is not a positive for individuals, and hence the debt rose
17:11
as well. So, according to the Motley Fool Fool, total consumer debt
17:17
in the US peaked at seventeen point two nine trillion, and that equates to
17:22
Americans carrying an average personal debt of over one hundred and three thousand. That
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CJ mentioned earlier, So the stats that we specifically don't like to hear include
17:33
those stats with regards to baby boomers. So we're talking about those born between
17:37
nineteen forty six and nineteen sixty four. They're falling in the age of sixty
17:42
to seventy eight, and those people specifically are carrying an average of twenty five
17:48
thousand in credit card debt, auto loans, and student loan debt combined.
17:52
They also average one hundred and ninety one thousand in mortgage debt for those that
17:57
carry mortgage debt in twenty percent of baby boomers age fifty eight to seventy six,
18:04
they'll tell you that the day to day expenses are the primary reason why
18:08
they carry a credit card balance from month to month. So a shout out
18:14
to our listeners. If you're working with a financial advisor and you're falling into
18:19
this category of you're just kind of comfortable with that debt, speak to your
18:23
financial advisor because what I find many times is there's often funds that our clients
18:30
don't want to take out because they know they're making money in the market,
18:33
and yet they call me and they say, and I'll be honest, many
18:37
times it's women. They'll say, I know, I mean, charge twenty
18:41
eight percent on my credit card. I'm like, we got to get this
18:44
evaporated and we need to move forward with better habits. I mean, I've
18:48
tried to be a little nicer than that, but honestly, we can't see
18:52
people just sinking their own ship with choices like that, so we want to
18:56
modify our behavior. We do talk to people, and the polls would suggest
19:02
that more than half of the population out there who's looking towards retirement they do
19:07
intend to enter it retirement. I'm sorry debt free into retirement. But actually
19:12
only a quarter of those people are debt free. So it's not a perfect,
19:17
you know, a line to becoming debt free, but behaviors can help
19:22
you get there. A lending Tree, a national mortgage banker, found that
19:26
on average throughout the United States, almost twenty percent of homeowners over the age
19:32
of sixty five still have a mortgage when they retire. That's not the end
19:36
of the world. Many people choose to have a mortgage when they retire.
19:40
But then there's those who haven't figured out, you know, where they should
19:42
be placing money in order to make sure that they're not having a heavy burden
19:48
every month when it comes to that monthly mortgage. So ultimately, our desire
19:52
is for listeners and clients to be as close to zero debt as possible.
19:56
So some suggestions to help you stay stray away from debt. We love this
20:03
four letter word, which is stop just stop adding to your debt balances.
20:07
Remove your credit cards from your wallet, and now we have to say,
20:11
from your electronic wallet on your phones, reduce the temptation to use them on
20:15
impulse purchases things that you really can't afford. You should not be be making
20:21
those charges. Understand current interest rates, how they're affecting your debt, so
20:26
really prioritize, and we do want you to look at again Dave Ramsey,
20:30
which will suggest oftentimes pay off the high interest credit card debt first and look
20:34
at how you can snowball and continue paying off all your debt. I'm a
20:40
big proponent of using a debt reduction payoff calculator, Creditcarma dot com, calculator
20:45
dot net, many others to have a quick ability for you to look at
20:49
that or to use that app and figure out how can I best extinguish my
20:55
debt quicker. And then again sit down with your financial planner and they can
20:57
give you some some tips on how to do that as well. And finally,
21:03
pay your bills on time. Okay, so late payments they resultant fees
21:08
and they further increase your debt balances. And that's really important. And everybody
21:14
knows all this, they just need someone to tell them this is what you
21:17
need to do. Stop, stop, stop adding to your debt chain,
21:22
modify your behavior little steps and you will get to the final destination in a
21:30
much better way as you enter retirement and such a great reward for that work.
21:33
As well. As we're talking this morning with Millia Quavis and cjt Loss,
21:36
our retirement planning professionals from Class Financial. You can get to know Cjmalia
21:40
and the team at Class Financial on the website class financial dot com that's k
21:45
l aas Financial dot com. Also, while you're there, you can learn
21:48
more about the separate divisions at Coss Financial, as well as sign up for
21:51
the weekly Market Pulse newsletter. Again that available to you at classfinancial dot com.
21:56
Don't forget also there if you miss any part day's program, you cancome
22:00
back to the podcast. Subscribe as well on the website. Telephon number for
22:03
the office right here in Madison six oh eight four four two five six three
22:07
seven. No charge for the initie you'll get to know you appointment dech Loss
22:10
Financial. It will be complementary to you. Again their telephon number six oh
22:12
eight four four two five six three seven. More of Money in Motion with
22:17
Coss Financial continues next right here on thirteen ten do wu ib A. This
22:22
lead is Money in Motion with Class Financial, a fun and informative show designed
22:26
to help you get answers to all your retirement questions in one place. Talking
22:30
with CJ. Closs and Malia Quavis, our retirement planning professionals from Class Financial.
22:36
The website coss financial dot com. That's k l Aasfinancial dot com.
22:41
Their telephone number six oh eight four four two five six three seven. No
22:45
charge for the initial'll get to know you appointment at Loss Financial. It will
22:48
be complementary to you again their number six oh eight four four two five six
22:52
three seven. I'll justo want to hold on to that telephon number. A
22:55
little bit later on in this segment, we'll do the COSS Quiz question the
22:56
weak. Your chance to win a fantastic prize is could say twenty five dollars
23:00
gift card to Texas Roadhouse from our friends at Class Financial. Talking debt this
23:06
week, and as we kind of break down different types of debt and different
23:11
different amounts there should we be looking at those kind of looking at those different
23:17
interest rates in those areas. CJ. Yeah, Malia kind of hinted at
23:22
this earlier in terms of ways to pay do on your debt. So there's
23:25
debt reduction calculators and different ways of paying it. Off. Dave Ramsey kind
23:30
of heralds the debt snowball which is taking your smallest balance and paying that off
23:34
first making minimum payments on everything else, and then getting small wins, so
23:40
that he focuses on a psychological effect of debt snowballing, whereas other calculators will
23:45
focus on an interest rate. We think either way is fine as long as
23:51
you have a plan and you make it robotic, robotic just being don't make
23:53
it an emotional thing where you have to decide between feeding your family and paying
23:57
off the debt. Just make the debt service and meet you. But we've
24:00
got to come up with a plan. Now, within that plan, you
24:03
should be aware generally of what rates are in these different categories. So at
24:07
the beginning of the show we talked about secured and unsecured debt. That should
24:11
already give you a hint as to what types of debt will be the highest
24:15
interest rate. But let's break it down into a few categories and talk about
24:18
what the rates look like today. So, according to Forbes, the average
24:23
credit card interest rate in America is twenty seven point nine percent. I can't
24:30
let me repeat that. Unsecured debt of credit cards average right now in America,
24:33
according to Forbes, is twenty seven point ninety one percent. Now that's
24:37
a big difference since the average APR for credit cards just one year ago was
24:41
sitting around twenty percent. If you have really good credit, you might get
24:45
it between sixteen to twenty percent. If you have bad credit, it might
24:48
be twenty four percent or higher. However, here's what I want everybody to
24:52
understand. This is insane. These rates. Whether you are getting a quote
24:56
unquote good credit card rate at six teen percent, are things you should avoid
25:03
ever paying interest on. Now, I'm not saying you can't have a credit
25:07
card, although, since we're quoting Dave Ramsey on the show, Dave Ramsey
25:11
would say don't have a credit card, so I want to honor what he
25:14
would say. But we aren't saying you can't have a credit card. We
25:18
are saying don't ever pay interest because if you do, there is nothing you
25:23
can do to earn more than that on average. Okay, So some people
25:27
say I'm leaving my money in my investments because they earn more than my debt,
25:30
Well that will never be true on a credit card. Number two home
25:36
loans. Ideally, as you approach retirement, we would prefer that you have
25:41
either little to no or no mortgage debt, but some people have to carry
25:45
that into retirement or fall on hard times, and so we get that,
25:49
but you should know what those rates look like as well. As of February
25:52
ninth, twenty twenty four, the average home rate for a home loan in
25:56
the United States was seven point five six percent for a thirty year loan and
26:00
six point seven percent for a fifteen year fixed rate loan. Now this is
26:04
compared to exactly one year ago, when it was at six point one to
26:07
two percent on a thirty and six point oh four percent on a fifteen year
26:12
fixed So you can see from a year ago those rates have continued to rise.
26:17
Now for many people listening on the air right now, just like me,
26:19
I'm raising my hand right now, you have much lower interest rates than
26:23
anything that I just mentioned when it comes to your mortgage, and that is
26:27
fantastic. Keep it low, but please, please please do not misunderstand that
26:34
as therefore I never need to pay it off. That is just not true.
26:40
Remember, debt equals risk, and as you get later in life and
26:45
closer to retirement. If there's one thing that we hear consistently from our retirees
26:49
is as I get older, I just don't want the risk. If you
26:53
want to de risk your future, pay off your debt, do not play
26:57
the interest rate arbitrage game forever. Listen. We're really good at math.
27:02
I understand math, and I understand the arbitrage that you might be talking about
27:06
when you can get a five percent CD and you're pan two and a half
27:07
percent on your mortgage. But my comment would be, don't play that game
27:11
forever. You need to eventually get rid of that loan. Really good guidance
27:15
there from CJ. Colossim Leia Quavis, our retirement planning professionals from Class Financial,
27:19
the website class financial dot com. That's klaas Financial dot com. And
27:23
they're telephone number six oh eight four four two five six three seven. No
27:27
charge for the initial get to know your appointment at Class Financial. It will
27:30
be complimentary to you again their number six oh eight four four two five six
27:34
three seven. What are some of those other areas out there that we need
27:37
to be aware of when it comes to loans and interest rates? Yeah,
27:41
let's head a few other categories. So auto loans would be the next one
27:45
and As of February twenty twenty four, auto loan interest rates are hovering around
27:48
five point six percent on new car loans. With those who have good credit,
27:52
it's six point eight eight to twelve percent plus or minus for lower So
27:59
for worse and then use car loans. So we'll break it up into two
28:03
categories. Now, use car loan rates are charging somewhere between seven and a
28:06
half and eighteen percent if you're if somewhere in that range depending upon what your
28:11
credit. And then and then those those loans can range from sixty months to
28:18
seventy two months. We've even seen eighty four month auto loans. Now,
28:22
remember what I talked about earlier, our auto loans collateralized, And the answer
28:26
is kind of. They are. If you don't pay on your vehicle,
28:32
then your vehicle will get repossessed, right, the repo person will come for
28:36
you. But why I say kind of is because that vehicle is depreciating,
28:41
right, So as I buy the vehicle, it is immediately depreciating at a
28:45
pretty consistent high clip. So if you get a seventy two or eighty four
28:52
month loan, it is very possible that you will be what we call upside
28:56
down during the life of the loan, meaning you owe more then the vehicle
29:00
is worth, which is not a good place to be in. So be
29:03
cautious with auto loans. I'll be frank with you. When our clients come
29:07
in and say how should I handle vehicles, our answer is, don't get
29:11
a vehicle loan. Save the money into a savings account, and then just
29:14
write a check for it. It will help your behaviors be much better.
29:18
And then when it comes to the payments related to those auto loans, we're
29:21
seeing payments. The average monthly payment for a new car is sitting around seven
29:26
twenty nine dollars a month, and the average payment for a used car is
29:30
around five hundred and twenty eight dollars a month. These are just national averages.
29:33
But listen, guys, I know some of you on the air right
29:37
now are thinking, yeah, I've got one around there. Man. That
29:40
is a lot, a lot, a lot of cash flow going towards a
29:44
vehicle. And remember, your income is one of your greatest wealth building tools.
29:48
So try to keep your outgoing required cash flow to a minimum, which
29:52
means, you know, limit the amount of debt that you have. And
29:56
then finally we'll talk just quickly about student loans. So some people wonder why
30:03
a retirement planning show would you talk about student loans, And for two reasons.
30:07
You might be a grandparent thinking about this for your children or grandchildren,
30:11
or you might be a physician who might be in your forties and fifties or
30:15
even sixties still having a student loan. So the current federal loan interest rates
30:21
are between five and around five and a half for undergraduate federal student loans,
30:26
with unsubsidized graduate and direct plus loans sitting somewhere between seven and eight percent as
30:32
of twenty twenty four. Now, you can often refinance these loans from federal
30:37
loans into private loans, but you want to talk to somebody about whether or
30:41
not you should do that, depending upon the balance and other factors, because
30:44
there are other things to consider besides just the interest rate. But be aware
30:48
of what those student loans are. Remember, payments have restarted on these,
30:52
but the payment requirements are different. So if you are sitting with large student
30:56
loan balances, I really suggest you sit down with a financial advisor to figure
31:00
out how you're going to get that paid off over time. And finally,
31:04
here's the biggest takeaway of today's of today's show, baby boomers and everyone else
31:11
listening, you should do your best to make retiring debt free and even mortgage
31:17
free a top priority. This needs to be done, and at the same
31:22
time, you need to make sure that you're saving enough for retirement. So
31:27
long story short, you may want to consider meeting with a financial advisor at
31:30
some point just to make sure that you have a reasonable plan to get that
31:33
debt eliminated and then to make sure that you can afford retirement. Really good
31:38
content and great information this week, as we've chatted with our retirement planning professionals
31:44
from Class Financial. The website Class financial dot com. That's k l Aasfinancial
31:48
dot com. Great website and resource. Also an opportunity there. If you
31:52
missed any part of the program or want to listen back to previous shows,
31:55
you can always head on over to classfinancial dot com, subscribe to the podcast
31:57
listen back to it as well again. And that's Cossfinancial dot com k l
32:01
aas Financial dot com and their telephone number six oh eight four four two five
32:07
six three seven. No charge for that initial get to know you appointment at
32:09
Loss Financial. It will be complimentary to you again their number six oh eight
32:14
four four two five, six three seven. You want to hold on to
32:16
that telephone number now as well, because it's time for the class quiz question
32:21
of the week. It works like this. In just a moment, I'll
32:22
ask you the class quiz question in the week. You'll then have thirty minutes
32:24
from the en to today's program to call the Class Financial Office right here in
32:28
Madison at six oh eight four four two five six three seven. If you
32:31
are the first call out correct answer to win this week's prize, which is
32:36
a twenty five dollars gift card to Texas Roadhouse. This week's Closs quiz question
32:39
the week my favorite kind true or false? In twenty twenty three, persons
32:45
aged sixty to seventy eight carried approximately twenty five thousand dollars of credit card,
32:51
auto and student loan debt. Is that true or is that false? Telephone
32:55
number six oh eight four four two five, six three seven. If you
32:59
are the first call it correct answer when this week's prize again, which is
33:01
that twenty five dollars gift guard to Texas Roadhouse. Don't forget as well,
33:05
that's Coss Financials Office right here in Madison. No charge for the initial gets
33:07
no appointment at Coss Financial. It will be complementary to you. CJ.
33:13
Malia. It's always great hanging out you guys. Enjoy this beautiful day.
33:15
Thanks Sean. Take care, guys. News is next year on thirteen to
33:19
ten WIBA. This is Money in Motion with Coss Financial Asset Advisors LLC,
33:30
a registered investment advisor registered with the SEC. The content of this show is
33:35
for informational purposes only and should not be considered individual investment advice. Class Financial
33:42
does not offer tax or legal advice. Any opinion offered during the course of
33:45
this show is the opinion of that particular investment advisor representative, and not necessarily
33:52
the opinion of Coss Financial