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All About Debt · Money In Motion with Klaas Financial

0:05
Speaker 1: And our phone lines. They are open to you right
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Speaker 1: now if you've got a question for our retirement planning
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Speaker 1: professionals from Class Financial telephone number six oh eight three
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Speaker 1: two one thirteen ten. That's three two one thirteen ten.
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Speaker 1: Love to get you on the other this morning. Join
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Speaker 1: this week by CJ. Closs and Eric Schwartz. As mentioned,
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Speaker 1: they come to us from Class Financial the website classfinancial
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Speaker 1: dot com. That's Closs k l a A S Financial
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Speaker 1: dot com. Our telephon number six O eight four four
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Speaker 1: two five six three seven. No charge that initial get
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Speaker 1: to know the appointment at Class Financial. It will be
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Speaker 1: complimentary to you again their number six oh eight four
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Speaker 1: four two five six three seven. As mentioned, CJ and
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Speaker 1: Eric joining us this morning. CJ, how you doing this week?
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Speaker 2: I'm doing great.
0:44
Speaker 3: How are you, Sean?
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Speaker 1: I'm doing really good. Great to talk with you and Eric?
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Speaker 2: How have you been I have been I've been great.
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Speaker 2: I'm excited for our conversation this morning.
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Speaker 1: It's gonna be a good one.
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Speaker 2: Yeah.
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Speaker 1: We're gonna be talking about preparation of course for retirement
0:57
Speaker 1: and kind of the game plan in debt and talk
1:01
Speaker 1: about debt. So I'll get to that in just a moment.
1:03
Speaker 1: A couple of things keep in mind as we do
1:04
Speaker 1: the show. Don't forget. The phone lines are open. Love
1:06
Speaker 1: to have you join us at six oh eight three
1:08
Speaker 1: two one thirteen ten. I been to the website recently.
1:11
Speaker 1: Head on over their Class Financial dot com. That's Coss
1:14
Speaker 1: k l aas Financial dot com. Great resource to learn
1:17
Speaker 1: more about the team at Coss Financially. You can learn
1:19
Speaker 1: about the separate divisions. You can also sign up for
1:21
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Speaker 1: Clossfinancial dot com. Tell phone number six oh eight four
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Speaker 1: four two five six three seven no charge for that
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Speaker 1: ininitcial gets no you appointment at Class Financial. It will
1:33
Speaker 1: be complementary to you. Don't forget. Also, you're going to
1:35
Speaker 1: use that numb a little bit later on the program
1:37
Speaker 1: with the class Quiz question the week your chance to
1:39
Speaker 1: win a fantastic prize this week no exception, our friends
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Speaker 1: from Class Financially have provided a twenty five dollars gift
1:44
Speaker 1: card to IHOP and we'll tell you a little bit
1:46
Speaker 1: later on how you can win with the class quiz question.
1:48
Speaker 1: Leak just a little tip though, Pay close attention to
1:50
Speaker 1: the program because just about every show the question and
1:53
Speaker 1: answer both come up during the program, and before we
1:56
Speaker 1: get rolling on this week's topic, let's actually roll back,
1:58
Speaker 1: take a look back at last week show and get
2:01
Speaker 1: the question and answer there as well.
2:04
Speaker 2: Yeah, so our question last week was true or false.
2:07
Speaker 2: You may be eligible for a Social Security survivor benefit
2:11
Speaker 2: as a spouse if you were married for at least
2:13
Speaker 2: nine months before their death, and Patty from Oregon knew
2:17
Speaker 2: that the correct answer was true.
2:20
Speaker 1: Fantastic congratulations to Patty, and again you two can be
2:23
Speaker 1: like Patty play close attention and pay close attention and
2:26
Speaker 1: also pays to pay close attention to the program just
2:29
Speaker 1: to win again later on the show a twenty five
2:31
Speaker 1: dollars gift card to IHOP. So see Jay, let's talk.
2:35
Speaker 1: So when you're helping folks prepare for retirement, I got
2:38
Speaker 1: to guess debt is one of those big topics that
2:40
Speaker 1: come up quite a bit. And you know, I think
2:43
Speaker 1: people say, well, how do I get there? What's the
2:45
Speaker 1: game plan? These are really important conversations, aren't they?
2:49
Speaker 2: It is?
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Speaker 3: Yeah, I mean, when you when you do what we
2:52
Speaker 3: do for a living, you come to realize that cash
2:55
Speaker 3: flow management and kind of we'll call it financial behavior
2:59
Speaker 3: patterns are really critical now. Unfortunately, a lot of these
3:03
Speaker 3: financial behavior patterns get set at actually a very very
3:07
Speaker 3: young age. So this could be the way that your
3:09
Speaker 3: parents handled money. It could be an extreme experience of
3:12
Speaker 3: poverty that you grew up with that has caused you
3:15
Speaker 3: to be a huge saver. And truth be told, there's
3:18
Speaker 3: strengths and weaknesses to all of these different shades of
3:21
Speaker 3: the way that you handle cash flow management and saving
3:24
Speaker 3: for the future. We've seen people who you know, maybe
3:26
Speaker 3: we're children of the Great Depression, who have millions and
3:29
Speaker 3: millions of dollars but won't spend a penny because they're
3:33
Speaker 3: so fearful, and that's an extreme. But then we will
3:35
Speaker 3: have other people who you know, grew up with parents
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Speaker 3: that never saved anything, and they just go, I don't know,
3:40
Speaker 3: I heard you can love our social security, so I
3:42
Speaker 3: just spend everything. So you get the idea, these are
3:44
Speaker 3: these extremes that get set at an early age, and
3:48
Speaker 3: so we just want to tell you, hey, while while
3:51
Speaker 3: each approach can have strengths and weaknesses, we given what
3:55
Speaker 3: we do for a living, we get to see some
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Speaker 3: behavior patterns that really work out out well and have
4:01
Speaker 3: high probabilities of success over long periods of time. So
4:05
Speaker 3: we're going to talk about that relative to debt today.
4:08
Speaker 3: So that's one of these weird things that has a
4:10
Speaker 3: way of sticking around and for many people can even
4:13
Speaker 3: follow them into retirement. So you should know, in our view,
4:16
Speaker 3: the best case scenario from what we see across thousands
4:20
Speaker 3: of households that we've worked with, is that heading into
4:23
Speaker 3: retirement debt free really is ideal. Now, some people go,
4:29
Speaker 3: but what about the mortgage interest deduction, And I've heard
4:31
Speaker 3: blah blah blah blah blah. Stop stop. We do this
4:34
Speaker 3: for a living, right. If you don't, then just take
4:37
Speaker 3: a pause. I'm not talking about, you know, tax management
4:40
Speaker 3: or anything like that. I'm just saying from the overall approach,
4:44
Speaker 3: heading into retirement, if possible, being debt free really does
4:50
Speaker 3: give you the best leg up and give you freedom
4:52
Speaker 3: and choice and opportunity and all of that. Now that's
4:56
Speaker 3: not to say that you can't retire with debt. It's
4:59
Speaker 3: just to say, if you're looking for the best option,
5:01
Speaker 3: do your best to not have debt heading into retirement.
5:04
Speaker 3: So of course people say, well, if if I'm not
5:07
Speaker 3: there or if my plan isn't on par What do
5:09
Speaker 3: I need to do to make some adjustments? So I'm
5:11
Speaker 3: going to go through kind of four things here that
5:13
Speaker 3: you can consider. Number One, set up a plan to
5:17
Speaker 3: reduce and eliminate your debt. It starts with a plan.
5:21
Speaker 3: If you don't want to take our word for it,
5:24
Speaker 3: you can listen to Dave Ramsey. I think he actually
5:27
Speaker 3: he might be syndicated on this station as well, if
5:30
Speaker 3: not other stations. But Dave Ramsey's a big proponent of
5:33
Speaker 3: eliminating debt to create financial freedom, and then it can
5:36
Speaker 3: also create generosity in you. So set up a plan.
5:41
Speaker 3: Number two, consider making some lifestyle changes. You might need
5:44
Speaker 3: to tweak your spending habits and set some realistic goals.
5:47
Speaker 3: A lot of folks find success by being aggressive with
5:50
Speaker 3: debt payments first and then shifting to focus on saving
5:53
Speaker 3: for the future. So we would and then finally we
5:56
Speaker 3: would actually say set it on automatic. We have that
6:00
Speaker 3: often people's desires don't match their cash flow, Like I
6:03
Speaker 3: really do want to be generous, but I just can't
6:06
Speaker 3: give right, Or I really do want to pay down
6:09
Speaker 3: my debt, but I just don't have money to do
6:11
Speaker 3: it with. And we would say, well, then your desires
6:14
Speaker 3: aren't matching your behaviors, and so you need to you
6:16
Speaker 3: need to make it automatic. So first of every month
6:19
Speaker 3: you make your large mortgage payment. Number three would be
6:23
Speaker 3: to pay down debt, potentially in lieu of additional retirement savings. Now,
6:30
Speaker 3: one way where we might slightly differ from Dave Ramsey
6:33
Speaker 3: is we really do like people getting their company match.
6:36
Speaker 3: But I'll be frank with you, I don't want to
6:38
Speaker 3: argue Dave on Thus, I see his point, which is like,
6:42
Speaker 3: you've got to have a ruthless attitude about debt at times,
6:46
Speaker 3: I mean ruthless, like I just gotta get rid of it.
6:50
Speaker 3: And if that means you don't save into the four
6:52
Speaker 3: oh one K for a little bit just to get
6:54
Speaker 3: the debt paid off before you retire, we would say again,
6:58
Speaker 3: heading into retirement without debt is the best option. Now again,
7:02
Speaker 3: talk to a professional advisor, talk to your accountant, make
7:06
Speaker 3: sure that it makes sense across your overall financial picture.
7:09
Speaker 3: But generally speaking, given that we are retirement planners, I
7:12
Speaker 3: can tell you those of our clients that don't have
7:14
Speaker 3: debt and retirement tend to have a lot less stress
7:16
Speaker 3: and live a lot more free and are a lot
7:18
Speaker 3: more generous with their kids and grandkids than those that
7:21
Speaker 3: have a mortgage. And then finally there's an option just
7:24
Speaker 3: to work a little bit longer. So we have plenty
7:26
Speaker 3: of clients who do this where they maybe got remarried
7:28
Speaker 3: later on in life, got a home with that new spouse,
7:32
Speaker 3: ended up with a mortgage, and worked, you know, instead
7:34
Speaker 3: of sixty five to sixty seven or sixty eight, just
7:36
Speaker 3: to make sure that they haven't had enough time to
7:38
Speaker 3: get that mortgage eliminated. So there's kind of four practical
7:42
Speaker 3: things you can do to try to eliminate debt before
7:45
Speaker 3: you retire.
7:46
Speaker 1: Talking this morning with our retirement planning professionals from Class Financial, CJ.
7:49
Speaker 1: Closs and Eric Schwartz. You can learn more Onlineclossfinancial dot com.
7:53
Speaker 1: That's Coss Klaas Financial dot com. Great website and resource
7:58
Speaker 1: to learn more about Class. Also sign up for the
7:59
Speaker 1: Week the Market Paul's newsletter. Of course, I know in
8:02
Speaker 1: the mornings, we all know this. Sometimes step out of
8:04
Speaker 1: the car, maybe you're grabbing grabbing coffee, dropping the kiddo's
8:06
Speaker 1: off or the grand kids off at school. You miss
8:08
Speaker 1: part of the program. You can always listen back at
8:10
Speaker 1: Clossfinancial dot com. That's class klaas financial dot com. They're
8:15
Speaker 1: telephone number six, so eight four four two five six
8:18
Speaker 1: three seven, So Eric, that's obviously a lot to consider
8:21
Speaker 1: that CJ laid out there. How much debt are right
8:24
Speaker 1: retirees actually carrying these days?
8:28
Speaker 2: That's a great question, and the short answer is probably
8:31
Speaker 2: a lot more than you might think, especially when we
8:34
Speaker 2: start thinking about not only mortgages, but student loans, car loans,
8:38
Speaker 2: credit cards. Seems like you can kind of borrow for
8:42
Speaker 2: any purchase these days, even even one hundred dollars purchase online.
8:45
Speaker 2: You can say I'll pay that over four months. But
8:48
Speaker 2: the Federal Reserve Bank Front of New York reported that
8:51
Speaker 2: US household debt hit a record seventeen point ninety four
8:55
Speaker 2: trillion dollars in the third quarter of last year. That's
8:59
Speaker 2: a point eight percent sent from the previous quarter, and
9:02
Speaker 2: mortgage debt alone was twelve point five to nine trillion dollars.
9:06
Speaker 2: Data from credit Karma, which this is from April to
9:10
Speaker 2: June of last year, shows that baby boomers specifically, who
9:14
Speaker 2: are either retired at this point or close to it,
9:17
Speaker 2: they carry an average auto loan debt of twenty three
9:20
Speaker 2: thousand dollars, a credit card debt of over eight thousand,
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Speaker 2: and mortgage debt of about one hundred and ninety seven thousand,
9:29
Speaker 2: seven hundred and ninety five dollars. They also this surprising me, actually,
9:34
Speaker 2: they also have an average of forty five one hundred
9:36
Speaker 2: and one dollars in student loan debt. Again as they
9:39
Speaker 2: approach retirement here in the near future.
9:43
Speaker 1: Doug this morning with c J. Klass and Eric Schwartz
9:46
Speaker 1: out retirement planning professionals from Klass Financial and as we
9:49
Speaker 1: kind of break through this, it's pretty eye opening there,
9:52
Speaker 1: and we Eric, when we kind of look at this stuff,
9:54
Speaker 1: what are some strategies to avoid then to to not
9:58
Speaker 1: be adding more debt?
10:00
Speaker 2: Yeah, like CJ was saying that debt tends to be
10:03
Speaker 2: something that I'll stick around for a while. And the problem,
10:06
Speaker 2: especially in a higher interest rate environment like we've seen
10:10
Speaker 2: over the last couple of years compared to you know,
10:13
Speaker 2: the previous ten or fifteen years, it tends to accumulate
10:17
Speaker 2: over time even if you're not adding to it. But
10:20
Speaker 2: in terms of practical tips to kind of address some
10:23
Speaker 2: of this, the first and I think simplest is stop
10:26
Speaker 2: adding to your debt. So leave those credit cards at home.
10:29
Speaker 2: Avoid this impulse spending. Don't don't create more of an
10:34
Speaker 2: issue than you already have. The second one would be
10:38
Speaker 2: know your interest rates, so focus on paying off those
10:42
Speaker 2: high interest debts first. These are often your credit cards,
10:46
Speaker 2: and I mentioned just a moment ago that we've seen,
10:50
Speaker 2: you know, starting in twenty twenty two, we saw interest
10:52
Speaker 2: rates spike and then you know, they've come down a
10:55
Speaker 2: little bit, but they're still higher than they were, like
10:58
Speaker 2: I said, the previous ten fifteen years before that, so
11:01
Speaker 2: you may not notice. But your interest rates, a lot
11:05
Speaker 2: of them are not fixed. They're variable, especially your credit cards.
11:08
Speaker 2: So as interest rates change, your interest rate also changes.
11:11
Speaker 2: So more than likely you're paying more interest on your
11:14
Speaker 2: credit card now than you were three years ago. So
11:17
Speaker 2: take a look at those interest rates and prioritize those
11:20
Speaker 2: high interest debts first. Now you don't have to do
11:24
Speaker 2: this by yourself, so there are some pretty cool debt
11:27
Speaker 2: payoff tools out there. I mentioned credit Karma earlier. Credit
11:31
Speaker 2: karma dot com has some great calculators. Calculator dot net
11:36
Speaker 2: is another place you can go to find out. You know, hey,
11:38
Speaker 2: if I make this payment every month with this interest rate,
11:43
Speaker 2: when will I actually have this paid off? Goes back
11:46
Speaker 2: to what CJ was saying earlier. To make a plan
11:48
Speaker 2: to pay off debt. The last one is pay your
11:51
Speaker 2: bills on time. Late fees add up fast. They can
11:55
Speaker 2: hurt your credit score, and they're really just you know,
11:58
Speaker 2: adding to adding to your issue. And it's it's a
12:01
Speaker 2: pretty simple way to avoid some additional fees.
12:04
Speaker 1: Really good tips, Sara, as we talked this morning with CJ.
12:07
Speaker 1: Class and Eric Schwartz. They are our retirement planning professionals
12:10
Speaker 1: from Class Financial. If you got a question, love to
12:12
Speaker 1: have you join us this morning phone number six oh
12:14
Speaker 1: eight three two one thirteen ten. That's six oh eight
12:17
Speaker 1: three two one thirteen ten. Love to get you on
12:19
Speaker 1: the air again. Join this week by CJ. Closs and
12:21
Speaker 1: Eric Swartz. You can learn more about Class Financial online
12:24
Speaker 1: Class financial dot com. That's Coss k l aa S
12:28
Speaker 1: Financial dot com And they're telephone number six oh eight
12:31
Speaker 1: four four two five six three seven. No charge for
12:34
Speaker 1: the initial get to know your appointment at Class Financial.
12:36
Speaker 1: It will be complimentary to you again the telephone number
12:39
Speaker 1: six oh eight four four two five six three seven.
12:42
Speaker 1: Be talking about different types of debt with Cjen Eric,
12:44
Speaker 1: we will do that and take your call. Next as
12:46
Speaker 1: Money in Motion with Class Financial continues right here on
12:49
Speaker 1: thirteen ten wib A talking with our retirement planning professionals
12:58
Speaker 1: from Class Financial, Eric Schwartz and CJ. Closs. Of course,
13:01
Speaker 1: you can learn more about Class Financial on their website
13:03
Speaker 1: colss financial dot com. That's Class k l a A
13:07
Speaker 1: S Financial dot com. You can learn about the team
13:10
Speaker 1: at Coss Financially. You can learn about the separate divisions.
13:12
Speaker 1: You can also sign up online for the weekly Market
13:15
Speaker 1: Pulse newsletter. That all available to you at Clossfinancial dot com.
13:19
Speaker 1: Telephone number six oh eight four four two five six
13:22
Speaker 1: three seven. No charge for that initial gets to doing
13:24
Speaker 1: appointment at Coss Financial. It will be complementary to you.
13:27
Speaker 1: And again they're telephone number six O eight four four
13:29
Speaker 1: two five six three seven. Talking this week about debt
13:32
Speaker 1: and heading into retirement and left off we were just
13:36
Speaker 1: kind of scratching the service a bit on interest rates
13:38
Speaker 1: and what are some of the things we should be
13:40
Speaker 1: looking for when it comes to different types of debt. CJ.
13:44
Speaker 3: Yeah, good question. So we're going to kind of go
13:46
Speaker 3: through some some different types of debt, secured debt, unsecured
13:50
Speaker 3: debt and different categories that our clients commonly see. But
13:54
Speaker 3: before we do, I just found it ironic. Eric was
13:56
Speaker 3: just talking about it seems like you can finance just
13:58
Speaker 3: about anything today, and then one of the ads you
14:01
Speaker 3: probably caught this, Shan. One of the ads was like, oh,
14:03
Speaker 3: you can finance, and I won't be particular because I
14:05
Speaker 3: want to, you know, but one of the ads right
14:08
Speaker 3: before we came on was referencing being able to finance something,
14:11
Speaker 3: and I just found it ironic. Okay, moving on from that. Yes,
14:16
Speaker 3: so different categories, uh, credit cards. So according to lending Tree,
14:21
Speaker 3: the average interest rate is twenty four point two six
14:24
Speaker 3: percent right now on credit cards, and if your credit
14:27
Speaker 3: isn't great, that rate can jump up to twenty seven
14:29
Speaker 3: and a half percent or even higher. So obviously credit
14:34
Speaker 3: cards are what are a category kind of broadly that
14:36
Speaker 3: we call unsecured debt. Whenever you hear that, everybody just you.
14:41
Speaker 3: Sometimes it sounds overcomplicated, but think of it in terms of, hey,
14:44
Speaker 3: if you default on making your credit card payment, can I,
14:47
Speaker 3: as the bank or the credit card company, come and
14:50
Speaker 3: repossess something that you own to then reduce my risk
14:54
Speaker 3: to sell that repossessed item to then pay off some
14:57
Speaker 3: of the debt. And the answer is no, not with
14:59
Speaker 3: credit cards, because typically you're buying like groceries and other
15:02
Speaker 3: items that you can't repossess, you can't give get title to.
15:06
Speaker 3: That's the key to So we call it unsecured because
15:10
Speaker 3: if you default, there's no recourse. I hope that helps everybody,
15:14
Speaker 3: and of course that's why the interest rate has to
15:15
Speaker 3: be so high to mitigate that risk. The next category
15:18
Speaker 3: would be home loans. Ideally we want to see little
15:22
Speaker 3: to no mortgage debt as you approach retirement. We already
15:24
Speaker 3: talked about that. But as of the first of the
15:26
Speaker 3: week in February of twenty twenty five, the national average
15:30
Speaker 3: for a thirty year fixed rate mortgage is six point
15:33
Speaker 3: nine percent and for a fifteen year fixed rate mortgage
15:36
Speaker 3: it is six point h one percent. Listen, everybody, in
15:40
Speaker 3: historical norms, this is actually not bad rates. It's just
15:45
Speaker 3: just a few years ago it was like, I think
15:47
Speaker 3: the thirty year was at three and the fifteen year
15:49
Speaker 3: was at two, right, And so our brains are used
15:52
Speaker 3: to these insanely low interest rates, and so now when
15:56
Speaker 3: we gravitate back towards a normalized interest rate environment everybody,
16:00
Speaker 3: but he's panicking. Truth be told, these rates are pretty normal.
16:03
Speaker 3: What I would say to you is it doesn't really
16:06
Speaker 3: matter what the rate is. Being debt free is the key,
16:08
Speaker 3: because when you have debt, you have outgoing cash flow.
16:11
Speaker 3: When you don't have debt, you don't have that required
16:13
Speaker 3: outgoing cash flow. So those are the home loan rates,
16:18
Speaker 3: and then and then we're going to get into auto loans.
16:20
Speaker 3: So auto loans. In January of twenty twenty five, Edmunds
16:24
Speaker 3: dot com listed the average car loan interest rate for
16:28
Speaker 3: December of twenty twenty four as six point six percent
16:32
Speaker 3: for new car loans and ten point eight percent APR
16:35
Speaker 3: for used car loans. So again, somewhat of a historical
16:38
Speaker 3: average what we're seeing here on the car loans. But
16:40
Speaker 3: what I'd say to you is listen to that used
16:43
Speaker 3: car loan space. I mean, listen if well, if you've
16:47
Speaker 3: heard me talk about auto loans. I'm actually a big
16:49
Speaker 3: proponent of getting vehicles that are lightly used because there's
16:51
Speaker 3: about a thirty percent decline often off the new car
16:55
Speaker 3: purchase price. That's not always true, by the way, but
16:57
Speaker 3: that's typically true. So get a lightly use used vehicle.
17:00
Speaker 3: The problem with that is, now, if you get a
17:02
Speaker 3: lightly used vehicle that's had a thirty percent reduction off
17:05
Speaker 3: the MSRP and you don't have the cash to buy
17:08
Speaker 3: it with, the interest rate on that thing could be
17:10
Speaker 3: ten to eleven percent. So you get the point here.
17:14
Speaker 3: It's like, oh, man, if I'm gonna buy that used vehicle,
17:18
Speaker 3: I may want to either have cash to buy it
17:21
Speaker 3: with that would be our first choice, or if I
17:24
Speaker 3: don't have cash to buy it with and I need
17:25
Speaker 3: a vehicle to get around, then we get into what
17:28
Speaker 3: we call the length of the loan or what you
17:30
Speaker 3: know in finance or bank terms they would call the
17:32
Speaker 3: amortization timeline. So, unbelievably, you can get auto loans these
17:38
Speaker 3: days that last like up to eight years. For those
17:42
Speaker 3: who don't know, that is insanity. And the reason it's
17:45
Speaker 3: insanity is because the vehicle will be depreciating often faster
17:51
Speaker 3: than you are paying down the debt. Therefore, if you
17:54
Speaker 3: ever go to sell that vehicle, you might be upside down,
17:58
Speaker 3: meaning the vehicle's worth less than you owe. So what
18:01
Speaker 3: we would say is, listen, if you're forced into using
18:04
Speaker 3: an auto loan, although we would prefer that you don't
18:07
Speaker 3: then pay it off quickly, make it like a two
18:10
Speaker 3: or three year loan. And if you go but I
18:12
Speaker 3: don't have the cash flow for that, then I would
18:14
Speaker 3: say you might want to get a cheaper vehicle because
18:17
Speaker 3: pushing out that amortization timeline further. Yes, it brings down
18:21
Speaker 3: your payment, but it also reduces the amount of equity
18:27
Speaker 3: you will have in that vehicle over time. So if
18:29
Speaker 3: you're going to get an auto loan, just be be
18:31
Speaker 3: be very aware of the interest rate and try to
18:33
Speaker 3: get it paid off as quickly as possible.
18:35
Speaker 1: Talking this morning with CJ. Closs and Eric Schwartz. They
18:37
Speaker 1: are our retirement planning professionals from Class Financial website class
18:40
Speaker 1: financial dot com. That's colss k l aasfinancial dot com.
18:44
Speaker 1: And they're tell for number six o eight four four
18:47
Speaker 1: two five six three seven. No charge for that initial
18:49
Speaker 1: gets to know you appointment at Loss Financial. It will
18:51
Speaker 1: be complimentary to you. Again, they're number six oh eight
18:54
Speaker 1: four four two five six three seven. So CJ, what
18:57
Speaker 1: about it's all the new student loans when we need
18:59
Speaker 1: to know.
19:00
Speaker 3: Yeah, student loans are in the news right now. Hey,
19:02
Speaker 3: couple things real quick on those auto loans. Interestingly, enough.
19:05
Speaker 3: The average auto loan right now going back to auto
19:08
Speaker 3: loans is seventy months. Wowsers. Again. I just cannot emphasize
19:15
Speaker 3: to you all who are listening enough to say, if
19:19
Speaker 3: you are doing anything on a vehicle loan over five years,
19:23
Speaker 3: I personally just think that's ludicrous. I would much prefer
19:28
Speaker 3: that it's three years or less. And my first choice
19:31
Speaker 3: for you for your financial future would be that you
19:34
Speaker 3: pay for that vehicle with cash. And what that means
19:37
Speaker 3: because you go, how could I do that? Well, it
19:40
Speaker 3: means you need to pay yourself three or four hundred
19:43
Speaker 3: dollars a month for the next three four five years
19:46
Speaker 3: to build up the resources so that when you need
19:49
Speaker 3: to go buy a vehicle you write a check for
19:51
Speaker 3: that vehicle. What you will find is that when you
19:54
Speaker 3: are writing a check that took you three or four
19:56
Speaker 3: years to save to buy that vehicle, will buy a
20:00
Speaker 3: cheaper vehicle than you would have if you use debt
20:04
Speaker 3: to finance it. Yes, let that sink in. When you
20:08
Speaker 3: actually pre save and use your own money and you
20:10
Speaker 3: write a check for a vehicle, you will on average
20:13
Speaker 3: buy a cheaper vehicle than you would if you financed it.
20:16
Speaker 3: Because something happens with our brains when we are using
20:19
Speaker 3: debt to finance the purchase of something where we just
20:22
Speaker 3: don't make as good of financial decisions. Okay, to this
20:25
Speaker 3: final category of student loans, which, as Sean said, is
20:28
Speaker 3: really in the news right now. I'm not going to
20:30
Speaker 3: get into all the details of why. But there's just
20:32
Speaker 3: a lot of questions right now on what's called the
20:34
Speaker 3: SAVE program and what's going to happen to it in
20:36
Speaker 3: the future, and if deferments are going to go away, YadA, YadA, YadA.
20:40
Speaker 3: But federal student loans for undergrads currently have a six
20:44
Speaker 3: point five to three percent interest rate for the twenty
20:47
Speaker 3: twenty four to twenty twenty five school year. Grad students,
20:51
Speaker 3: on the other hand, see rates as high as eight
20:53
Speaker 3: point eight percent I'm sorry, eight point oh eight percent
20:56
Speaker 3: on private loan or on those grad student loans, and
21:00
Speaker 3: then private student loans can range from three and a
21:03
Speaker 3: half up to sixteen and a half depending upon your
21:06
Speaker 3: credit score. Now, be cautious these ideas of like refinancing
21:12
Speaker 3: and consolidating with somebody outside of the student loan space.
21:16
Speaker 3: This can sound really attractive because you end up with
21:18
Speaker 3: one payment. It's consolidated, but you often are losing some
21:22
Speaker 3: of the federal protections that exist, so be careful there.
21:26
Speaker 3: Or if you're part of what's called a PSLF program,
21:28
Speaker 3: it can eliminate that, so be careful. When we just
21:31
Speaker 3: hear people go I'm just gonna, you know, move it
21:33
Speaker 3: to a private lender and consolidate it all and move
21:35
Speaker 3: it over here, we go, whoa, whoa, whoa, whoa. It's
21:37
Speaker 3: not that we're opposed to that, but you want to
21:39
Speaker 3: slow down and make sure you're aware of what you're
21:41
Speaker 3: giving up in the meantime, so listen. Big takeaway from
21:46
Speaker 3: today is make it your goal to retire debt free,
21:51
Speaker 3: including the elimination of your mortgage if possible. And don't
21:55
Speaker 3: forget you still do need to be saving for retirement,
21:59
Speaker 3: but we think think just the impact of not having
22:02
Speaker 3: that outgoing cash flow for required debt service payments and retirement.
22:08
Speaker 3: Given that, again, given that we do this for a living,
22:10
Speaker 3: that is more powerful than you think. So make it
22:14
Speaker 3: your goal to retire debt free.
22:15
Speaker 1: Talking this morning with CJ. Closs and Eric Schwartz. Of course,
22:19
Speaker 1: they are retirement planning professionals from Class Financial website class
22:22
Speaker 1: financial dot Com that's class k l a A S
22:25
Speaker 1: Financial dot com and they're telephone number six so eight
22:27
Speaker 1: four four two five six three seven. Will do the
22:30
Speaker 1: Class Quiz question of the week. We will also head
22:32
Speaker 1: on over to the Money in Motion Listener question corner.
22:35
Speaker 1: We will do all of that next as Money in
22:37
Speaker 1: Motion with Class Financial continues right here on thirteen ten,
22:40
Speaker 1: WI b A talking with our retirement planning professionals Eric
22:45
Speaker 1: Schwartz and CJ. Closs. Of course, they come to us
22:47
Speaker 1: from Class Financial website colss financial dot com. That's class
22:52
Speaker 1: k l a A S Financial dot Com. And they're
22:54
Speaker 1: telephone number six O eight four four two five six
22:57
Speaker 1: three seven. No charge for that initial gets to know
22:59
Speaker 1: you at Claus Financial. It will be complimentary to you. Again,
23:03
Speaker 1: they're number six SO eight four four two five six
23:05
Speaker 1: three seven. One of the cool features too, I mentioned
23:07
Speaker 1: the website class Financial dot com. That's class k l
23:10
Speaker 1: a A S Financial dot Com. One of the cool
23:12
Speaker 1: features on the website is the opportunity to submit a
23:14
Speaker 1: question to be answered here on the program with the
23:17
Speaker 1: Money in Motion Listener question corner. And Becky writes in,
23:20
Speaker 1: my husband and I are planning on retiring next year
23:23
Speaker 1: and our term life insurance will end two years later,
23:27
Speaker 1: does it make sense to replace the policy or let
23:30
Speaker 1: it go at that time? Thanks for your guidance, and
23:33
Speaker 1: that is from Becky.
23:37
Speaker 2: Yeah, well, thank you. First of all, thank you for
23:39
Speaker 2: writing in Ala. Sean says, we love to hear from
23:42
Speaker 2: the listeners and get an idea of what it is
23:44
Speaker 2: that what your questions are other than just what we
23:48
Speaker 2: go over. And this is this is a really common
23:51
Speaker 2: thing that we deal with here day to day because
23:54
Speaker 2: especially with term life insurance policies, those are generally the
23:58
Speaker 2: length of those is generally timed based on your life
24:02
Speaker 2: insurance needs. So it would make sense that your your
24:05
Speaker 2: term policies are coming to right around the time you're retiring,
24:09
Speaker 2: because often your needs for life insurance change at that point.
24:13
Speaker 2: So whether or not you want to replace that term
24:15
Speaker 2: life insurance policy or let it lapse or whatever it
24:18
Speaker 2: might be, is going to be based on a few things.
24:22
Speaker 2: Number one, do you still have financial dependence? Do you
24:25
Speaker 2: still have anyone that relies on you for income even
24:28
Speaker 2: in retirement, so this could be children or other dependents.
24:33
Speaker 2: If not, you know that may be a reason to
24:36
Speaker 2: let the policy go. But if you do still have dependence.
24:39
Speaker 2: That is one thing that insurance would remain important for.
24:44
Speaker 2: You want to look at your debt and your expenses.
24:46
Speaker 2: So we've talked about debt for most of today's show,
24:49
Speaker 2: but often life insurance is put in place to pay
24:54
Speaker 2: off some of your biggest debts, like your mortgage or
24:58
Speaker 2: you know, future expenses. Let's say you want to provide
25:02
Speaker 2: educational funding for your kids or your grandkids. Things like
25:06
Speaker 2: these that could be a burden on your surviving spouse
25:09
Speaker 2: or family members. These are another thing that may that
25:12
Speaker 2: may cause you to say, well, maybe we want to
25:15
Speaker 2: we wanna look at a different policy beyond what we
25:19
Speaker 2: have here. From the From the term policy your savings
25:23
Speaker 2: and your assets. So if you've if you built sufficient
25:26
Speaker 2: retirement savings or other assets that would cover final expenses
25:30
Speaker 2: and provide for your spouse and family, life insurance becomes
25:34
Speaker 2: a lot less critical at that point. Your health and
25:38
Speaker 2: the cost of a new policy, So this is a
25:40
Speaker 2: really important thing when you're thinking about replacing a life
25:42
Speaker 2: insurance policy. Often we get these policies in our younger
25:47
Speaker 2: years when it's easier to qualify based on your health.
25:51
Speaker 2: So if you are getting a new policy, especially around retirement,
25:56
Speaker 2: you are likely to see higher premiums, and it's just
26:00
Speaker 2: in general is more difficult to actually get a new
26:03
Speaker 2: policy in the later years. And the last one here
26:07
Speaker 2: is the purpose of your insurance. So was the original
26:10
Speaker 2: policy intended to replace your income, to cover final expenses,
26:16
Speaker 2: cover state taxes, maybe leave an inheritance. Now is a
26:19
Speaker 2: really good time to reevaluate your financial goals and figure
26:23
Speaker 2: out if life insurance still fits into fits into your
26:28
Speaker 2: goals now. It's these are really high level responses and
26:32
Speaker 2: I think pretty lengthy as well, So it's probably helpful
26:36
Speaker 2: to consult with a financial advisor to review your specific situation,
26:40
Speaker 2: determine if you want to, you know, if you want
26:43
Speaker 2: to look at getting another policy, if you even need
26:45
Speaker 2: another policy. And this coincides really well with kind of
26:49
Speaker 2: the overall retirement planning process. So hopefully you're talking to
26:52
Speaker 2: someone as you as you move into that part of
26:54
Speaker 2: your life.
26:55
Speaker 1: Great question, Becky, and great answer as well from Eric Schwartz.
26:59
Speaker 1: Of course, Eric Schwartz and CJ. Clause our retirement planning
27:01
Speaker 1: professionals from Class Financial. Learn more on the website Coss
27:05
Speaker 1: financial dot com. That's Claus k l Aasfinancial dot com
27:09
Speaker 1: telephon number for the office right here in Madison, six
27:11
Speaker 1: oh eight four four two five six three seven. Don't
27:14
Speaker 1: forget no charge for the initial gets to know your
27:16
Speaker 1: appointment tech Coss Financial. It will beat complimentary to you
27:19
Speaker 1: again their number six oh eight four four two five
27:22
Speaker 1: six three seven. You can want to hold on to
27:24
Speaker 1: that telephone number now because it's time for the class
27:26
Speaker 1: quiz question of the week. It works like this. In
27:28
Speaker 1: just a moment, I'll ask you the class quiz question
27:30
Speaker 1: of the week. You will then have thirty minutes from
27:31
Speaker 1: the today's program to call the Class Financial office at
27:34
Speaker 1: six oh eight four four two five six three seven.
27:37
Speaker 1: If you are the first car correct answer to win
27:39
Speaker 1: this week's prize, which is a twenty five dollars gift
27:41
Speaker 1: card to i hop this week's class quiz question the
27:45
Speaker 1: week is this true or false? Entering retirement with the
27:49
Speaker 1: least amount of debt will give you the most freedom.
27:53
Speaker 1: Is that true or is that false? Telephlle number six
27:56
Speaker 1: oh eight four four two five six three seven. First
27:59
Speaker 1: call correct answer will win this week's prize that twenty
28:01
Speaker 1: five dollars gift card to i op dot forget as well.
28:03
Speaker 1: That's Class Financial's office. No charge for that initial get
28:05
Speaker 1: to know your appointment at Class Financial. It is complementary
28:08
Speaker 1: to you. Their telephone number six O eight four four
28:11
Speaker 1: two five six three seven C J. Eric. It's always
28:14
Speaker 1: great hanging out you guys. Enjoy this beautiful day and
28:16
Speaker 1: we'll do it all again real soon. Thanks Sean, Thanks Sean,
28:19
Speaker 1: and again that website COSS financial dot com. That's coss
28:22
Speaker 1: k l a A S financial dot com Doctor Mardy Greer.
28:26
Speaker 1: She joins us next with check out vet here on
28:29
Speaker 1: thirteen ten wu I B a