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Debt-Free Retirement: Boosting Cash Flow for a Blissful Tomorrow · Money In Motion with Klaas Financial

0:01
Speaker 1: You know the music. You know what that means. Time
0:04
Speaker 1: to take some questions and get your calls for our
0:06
Speaker 1: retirement playing professionals from Class Financial telephon numbers to get
0:10
Speaker 1: on the air this morning with CJ. Coloss and Malia
0:11
Speaker 1: Quavis of Coss Financial. All I get to do is
0:13
Speaker 1: dial the station six oh eight three two one thirteen ten.
0:16
Speaker 1: That's six soh eight three two one thirteen ten. Again
0:19
Speaker 1: we'll get you on the air with Malia and cjf
0:21
Speaker 1: Coss Financial. You can learn more about Class Financial on
0:24
Speaker 1: their website Coss financial dot com. That's k l aa
0:28
Speaker 1: S financial dot com. Great resource to learn more about
0:31
Speaker 1: the team at Coss Financial. They're separate services whether you're
0:33
Speaker 1: an individual or a business owner, different departments at Coss Financial.
0:38
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0:58
Speaker 1: They're telephon number for the office right here in Addison
1:00
Speaker 1: six oh eight four four to two five six three seven.
1:03
Speaker 1: No charge for that initial get to know your appointment
1:05
Speaker 1: at Coss Financial. It will be complimentary to you again
1:08
Speaker 1: their number six oh eight four four to two five
1:10
Speaker 1: six three seven. And welcome maing in CJ Closs and
1:13
Speaker 1: Malia Quavis. CJ, how you doing this morning.
1:16
Speaker 2: I'm doing great. It's a beautiful day, Sean.
1:18
Speaker 1: It is a fantastic day. It looks like some nice
1:20
Speaker 1: days ahead. Malia, how have you been?
1:22
Speaker 3: Very good? Happy to be here.
1:24
Speaker 1: It's great to have you both along. And again we've
1:26
Speaker 1: got a full show this week. We're going to be
1:27
Speaker 1: talking about debt, which is never a good never a
1:32
Speaker 1: good thing, especially as you're planning for retirement and entering
1:35
Speaker 1: into retirement. We're gonna get some details from CJ and
1:37
Speaker 1: Malia on that and things you need to be aware of.
1:39
Speaker 1: Mention some of the cool features of the program. I
1:41
Speaker 1: mentioned the website and all the great stuff there on
1:43
Speaker 1: the show. Each and every week get a Closs Quiz
1:45
Speaker 1: quesch a week. This week is no exception. Your chance
1:47
Speaker 1: to win a fantastic prize from our friends at Coss
1:50
Speaker 1: Financial at twenty five dollars gift card to best Buy.
1:52
Speaker 1: I tell you, but a little bit later on in
1:54
Speaker 1: the program how you can win that little tip though,
1:57
Speaker 1: if you listen closely to the show. Oftentimes just about
1:59
Speaker 1: every time, both the question and answer to the class
2:02
Speaker 1: quiz questionly come up during the program, and before we
2:05
Speaker 1: get rolling on this week's conversation, let's actually take a
2:07
Speaker 1: look back at last week's program and get the question
2:10
Speaker 1: and answer as well to the class quiz question.
2:12
Speaker 3: Of the week. Yeah, we had a great conversation about
2:15
Speaker 3: estate planning, something everybody should take seriously and make sure
2:18
Speaker 3: they get that done. And as financial planners, we try
2:21
Speaker 3: to make sure our clients have their boxes checked in
2:24
Speaker 3: that category. Accordingly, our question was on average, what percentage
2:30
Speaker 3: of Americans have completed their estate plans? Is it twenty
2:34
Speaker 3: six percent or seventy five percent? So Xavier from Monona
2:39
Speaker 3: correctly answered that with the answer of twenty six percent.
2:43
Speaker 3: So this is one of those questions where you don't
2:46
Speaker 3: want to be part of the bigger number. You want
2:48
Speaker 3: to be part of the smaller number and help that
2:50
Speaker 3: smaller number grow, if that makes sense. We want more
2:52
Speaker 3: people to really have reviewed or complete their estate plans.
2:56
Speaker 3: So thanks for listening last week. Go back and listen
2:59
Speaker 3: to the show if you missed it as a.
3:01
Speaker 1: Really informative program. And as Malia mentions, you can listen
3:03
Speaker 1: back to the show. Just head on over to Clossfinancial
3:06
Speaker 1: dot com. That's k l Aasfinancial dot com. Our full
3:09
Speaker 1: minds are open as well if you'd like to join us.
3:11
Speaker 1: Love to have you six oh eight three two one
3:13
Speaker 1: thirteen ten. That's six oh eight three two one thirteen ten.
3:16
Speaker 1: We'll get you on there with Malia and CJ of
3:18
Speaker 1: Coss Financial. And I know that you guys help folks
3:21
Speaker 1: of course planning for retirement, and I know one of
3:23
Speaker 1: the issues that comes up is the amount of debt
3:25
Speaker 1: that folks carry the balance sheets in that true k CJ.
3:30
Speaker 2: Yeah, for many For many people, debt continues to be
3:33
Speaker 2: something that follows them into retirement and it can obviously
3:37
Speaker 2: put an undue burden on retirees that while they're trying
3:41
Speaker 2: to keep up with you know, regular living and medical expenses,
3:44
Speaker 2: and now suddenly they have all these debt service payments.
3:46
Speaker 2: So this is why choosing to be debt free in
3:48
Speaker 2: retirement is truly the best choice, and we'll provide more
3:52
Speaker 2: options as you begin the next season of your life.
3:55
Speaker 2: So there are a few steps that we want you
3:58
Speaker 2: to kind of focus on as it relates to attempting
4:02
Speaker 2: to be debt free. Now, I will say, as we
4:03
Speaker 2: move towards this, Molly and I try to do a
4:06
Speaker 2: good job of every once in a while telling you
4:08
Speaker 2: what is ideal and then what is realistic. Right, So,
4:12
Speaker 2: like some people go, well, that's great, you guys that
4:14
Speaker 2: it would be wonderful to be debt free. But life
4:16
Speaker 2: threw me some curveballs and I've got debt. Now what
4:18
Speaker 2: do I do? So just understand that often because we're
4:22
Speaker 2: not speaking to individuals on the air, right I'm not
4:25
Speaker 2: speaking to some Janis sitting in her living room right now,
4:29
Speaker 2: I'm speaking to a group of people. And therefore, because
4:32
Speaker 2: we're speaking to a group of people, we talk in
4:34
Speaker 2: more utopian terms. Right, Ideally you should do this or
4:38
Speaker 2: that and here's why. But if this doesn't fit you,
4:41
Speaker 2: that's okay. Just make sure you're working with somebody to
4:45
Speaker 2: move towards it. So a few steps to consider, you know,
4:48
Speaker 2: set up a plan would be would be you know,
4:51
Speaker 2: item number one here to reduce and then eventually eliminate
4:55
Speaker 2: your debt. And if you don't listen to us, then
4:57
Speaker 2: there is this guy called Dave Ramsey out there with
5:00
Speaker 2: Ramsey Solutions that is kind of the no debt guru,
5:05
Speaker 2: and he has a bunch of different resources as it
5:07
Speaker 2: relates to helping people get out of debt. But some
5:10
Speaker 2: things you might need to do would be first change
5:13
Speaker 2: your lifestyle and spending habits, which requires that you start
5:17
Speaker 2: by setting realistic goals. Today, likely you'll want to be
5:20
Speaker 2: aggressive and paying down your debt so that you can
5:24
Speaker 2: be skin saving on a regular basis when in doubt.
5:28
Speaker 2: Many behavioral finance experts, including US, suggest putting the two
5:33
Speaker 2: habits on autopilot. The two habits I'm referencing are paying
5:37
Speaker 2: down your debt aggressively and saving for the future. There
5:41
Speaker 2: is a reason why the people who are most successful
5:44
Speaker 2: financially create robotic behaviors to make that happen, or what
5:52
Speaker 2: many people would call disciplined patterns. Right, if you've actually
5:56
Speaker 2: watched what the most successful athletes in the world do
5:59
Speaker 2: is they never miss practice. Right, they practice practice practice,
6:04
Speaker 2: and so in a similar way, if the greatest athletes
6:05
Speaker 2: in the world are just constantly practicing and working on
6:08
Speaker 2: their craft. The most wealthy people in the world are
6:10
Speaker 2: constantly saving and paying down debt. Another thing you might
6:14
Speaker 2: want to do is pay down debt first. So obviously
6:19
Speaker 2: it depends on a bunch of different situations that you're in.
6:22
Speaker 2: We do like people trying to get their four one
6:24
Speaker 2: K matches, But generally speaking, you're going to want to
6:27
Speaker 2: get rid of all of your non mortgage debt as
6:30
Speaker 2: quickly as possible. Main reason for this is because often
6:33
Speaker 2: that non mortgage debt think student loans, credit cards, lines
6:38
Speaker 2: of credit, auto loans, those interest rates on those debts
6:42
Speaker 2: are typically as high or higher than the earnings you
6:46
Speaker 2: could receive on your savings. Let me repeat that, the
6:49
Speaker 2: interest on the debt of those non mortgage debts is
6:52
Speaker 2: typically as high or higher than what you could receive
6:55
Speaker 2: on your savings. And therefore, while we want you to
6:58
Speaker 2: save for the future, it becomes a bailistic if you
7:01
Speaker 2: are saving into an account paying you, say, three four
7:04
Speaker 2: percent all the meanwhile, you have a credit card at
7:06
Speaker 2: twenty five percent. So consider paying down debt first.
7:10
Speaker 1: Talking this morning with CJ. Closs and Malia Quavis, they
7:13
Speaker 1: are our retirement planning professionals from Class Financial Prime Opportunity
7:17
Speaker 1: right now, get you on the air if you've got
7:18
Speaker 1: a question, all I got to do is dial six
7:20
Speaker 1: oh eight three two one thirteen ten. That's six so
7:23
Speaker 1: eight three two one thirteen ten. Get you right on
7:25
Speaker 1: the air with CJN Malia. Don't forget about the website
7:27
Speaker 1: Class Financial dot com. That's Class k l aa S
7:31
Speaker 1: Financial dot com. And the telephone number six oh eight
7:34
Speaker 1: four four two five six three seven. No charge for
7:37
Speaker 1: that initial get to know. The appointment at Class Financial
7:38
Speaker 1: eight will be complementary to you. So what about I
7:43
Speaker 1: know there's a sometimes that big pile of cash just
7:46
Speaker 1: sitting there, a retirement thing. What about kind of dipping
7:49
Speaker 1: into that payoff some debts?
7:50
Speaker 2: CJ. Yeah, No, it's a good question. So often what happens.
7:54
Speaker 2: And by the way, again we speak in utopian terms,
7:57
Speaker 2: and often that's not very helpful, so I will speak
7:59
Speaker 2: in very practical terms here. I think Malia did this
8:02
Speaker 2: about a week ago, very practically speaking, when you are young,
8:06
Speaker 2: well it may not just be young, but let's just say,
8:09
Speaker 2: when you have less wealth built up, When you have
8:11
Speaker 2: less wealth, the primary places that you hold wealth, when
8:16
Speaker 2: you're younger or less developed, would be in your home
8:20
Speaker 2: and in a retirement account when your employer puts money
8:23
Speaker 2: in there for you. Again, in your home or in
8:27
Speaker 2: a retirement account, especially when an employer puts money in
8:29
Speaker 2: there for you so often when things go wrong or
8:33
Speaker 2: said maybe a better way, you are irresponsible and I'm
8:35
Speaker 2: raising my hand. That was me early on. When that happens,
8:40
Speaker 2: the two places people look to go. It's like, oh,
8:42
Speaker 2: I'll tap a line of credit on my home, or
8:44
Speaker 2: I will take a loan from my retirement account. So
8:47
Speaker 2: here's what we'd say, lines of credit right now, and
8:50
Speaker 2: even floating interest rate lines of credit are somewhere between
8:52
Speaker 2: seven and ten percent, depending upon your credit rating, and
8:55
Speaker 2: again that's probably higher than the interest rate we expect
8:58
Speaker 2: you to get on any sort of a saving account.
9:00
Speaker 2: So lines of credit can work fine for very short
9:03
Speaker 2: term emergency needs if you have a plan to pay
9:06
Speaker 2: it off quickly, but remember helocks as they're called home equity.
9:09
Speaker 2: Lines of credit are not great for longer term emergencies.
9:13
Speaker 2: Like I had a person say to me, oh, my
9:15
Speaker 2: roof went bad, and so I took out a line
9:16
Speaker 2: of credits, and you know it's thirty five thousand dollars
9:18
Speaker 2: and I go, how quickly you're going to be able
9:20
Speaker 2: to pay that back? And he goes over the next
9:22
Speaker 2: ten years. Not a great use of a line of credit.
9:25
Speaker 2: The second one that I really want to focus on
9:27
Speaker 2: is borrow from my retirement account. That sounds like a
9:30
Speaker 2: good idea. My employer's been putting money in there, and
9:32
Speaker 2: I've got one hundred grand in there now and I
9:34
Speaker 2: heard I can get a fifty thousand dollars loan. While
9:37
Speaker 2: this is true, we would just I mean, there should
9:39
Speaker 2: be like a huge caution button when you go to
9:42
Speaker 2: do this, and the huge caution would be listen, if
9:46
Speaker 2: you leave that employer and that loan is not paid off,
9:50
Speaker 2: it is deemed as a distribution, and if you are
9:52
Speaker 2: under fifty nine and a half, the distribution is not
9:55
Speaker 2: only taxable, but penalized under most circumstances. Or furthermore, if
9:59
Speaker 2: you get laid off from that employer, the same circumstances apply.
10:03
Speaker 2: So what we're trying to get at here is these
10:06
Speaker 2: four to one k loans, while while they can be
10:09
Speaker 2: a system of last resorts, they are not a great solution.
10:13
Speaker 2: And so what we would say is before you start
10:15
Speaker 2: doing these things where you're just grabbing at cash to
10:18
Speaker 2: pay for items you want or need, or emergencies that
10:21
Speaker 2: pop up. Talk to an advisor, talk to an accountant.
10:24
Speaker 2: They'll look at all of your options and then tell
10:26
Speaker 2: you what is the best path. And then, finally, kind
10:29
Speaker 2: of outside of you know, should you tap your four
10:32
Speaker 2: one K plan for an emergency. One other thing you
10:35
Speaker 2: could do, as it relates to getting out of debt
10:38
Speaker 2: before you retire, is planned to work longer. Now most
10:42
Speaker 2: people when they hear this, they go, no, no, you know,
10:46
Speaker 2: I want to be done, and we certainly appreciate that,
10:48
Speaker 2: but I will just tell you your retirement will only
10:51
Speaker 2: be as joyful as the cash flow allows it to be.
10:56
Speaker 2: That may not be purely true, because, of course, we
10:59
Speaker 2: all know how happiness does not come from money. But
11:02
Speaker 2: there is an immense amount of stress that comes from
11:05
Speaker 2: being retired, having a fixed income, and still living paycheck
11:10
Speaker 2: to paycheck in retirement, and that is often caused by
11:14
Speaker 2: debt service payments. So one thing you might want to
11:17
Speaker 2: consider doing if you are still, you know, entering retirement
11:20
Speaker 2: with debt is consider working a little bit longer to
11:23
Speaker 2: eliminate for sure all of your non mortgage debt and
11:27
Speaker 2: if possible, even your mortgage.
11:29
Speaker 1: Great advice and great great guidance this morning as we
11:32
Speaker 1: talk with CJ. Coss and Maleia Quavis. They are our
11:35
Speaker 1: retirement planning professionals from Coss Financial. Don't for you can
11:38
Speaker 1: learn more about Malia, CJ and the whole team at
11:41
Speaker 1: Coss Financial on their website. Great website, Cossfinancial dot com.
11:44
Speaker 1: That's Closs k l a A S Financial dot com.
11:47
Speaker 1: Telephone number for the office right here in Madison six
11:50
Speaker 1: oh eight four four two five six three seven. No
11:53
Speaker 1: charge for the initial get to know you appoinment dech
11:54
Speaker 1: Coss Financial. It will be complementary to you again. The
11:57
Speaker 1: number six oh eight four four two five six three
12:00
Speaker 1: seven number to get on the air this morning, six
12:02
Speaker 1: oh eight three two one thirteen ten. That's six oh
12:05
Speaker 1: eight three two one thirteen ten. Trey will get to
12:08
Speaker 1: your call in just a moment. We'll also talk about
12:10
Speaker 1: some of the general numbers when it comes to amount
12:13
Speaker 1: of debt that Americans are carrying. We will do all
12:16
Speaker 1: of that next as Money in Motion with Class Financial
12:19
Speaker 1: continues right here on thirteen ten, WIBA talking with our
12:27
Speaker 1: retirement planning professional CJ. Closs in Malia Equavis their website
12:30
Speaker 1: Class financial dot com delpha number six oh eight four
12:33
Speaker 1: four two five six three seven And to get on
12:35
Speaker 1: the air, all I gotta do is give us call
12:36
Speaker 1: six oh eight three two one thirteen ten. That's six
12:39
Speaker 1: soh eight three two one thirteen ten, and Trey from
12:42
Speaker 1: Madison joins us. Trey, welcome to the program. You're on
12:44
Speaker 1: the air with CJ. Closs and Malia Equavis of Class Financial.
12:48
Speaker 2: Hey, I was going, I was just wondering, what's the
12:52
Speaker 2: biggest financial mistake you've ever seen.
12:54
Speaker 1: Them with may Oh great question.
12:58
Speaker 2: Well thanks for the question, Trey. I'll answer and then
13:01
Speaker 2: Maleia can answer as well. You're kind of putting me
13:04
Speaker 2: on the spot because I've seen a bunch of big
13:07
Speaker 2: financial mistakes. But I would say, kind of broadly, the
13:11
Speaker 2: biggest financial mistakes we see people make is focusing on
13:15
Speaker 2: the next shiny object. And what I mean by that is,
13:18
Speaker 2: you know, kind of like what is the hot thing
13:20
Speaker 2: happening right now? So this could be you know, back
13:23
Speaker 2: in two thousand and eight, this was gold, Like, oh
13:26
Speaker 2: my gosh, everything's going down but gold. I'm going to
13:28
Speaker 2: put all my money in gold. This could be now
13:31
Speaker 2: in current day cryptocurrency. And this is not us saying
13:34
Speaker 2: that gold or cryptocurrencies are bad. It's just they're just
13:37
Speaker 2: a thing, right, They're not going to save you. Or
13:40
Speaker 2: game Stop. When game Stop was going crazy, we had
13:43
Speaker 2: some people calling us and saying should I have a
13:44
Speaker 2: portion of my portfolio and game Stop? And so biggest
13:48
Speaker 2: mistake is mistaking that wealth creation or solid financial planning
13:55
Speaker 2: comes from gambling instead of good behaviors, if that makes
14:00
Speaker 2: sense right, because we all just want to believe that
14:03
Speaker 2: we can just strike gold or that we can, like
14:05
Speaker 2: you know, win the lottery and there's a quick way
14:07
Speaker 2: to become wealthy and change our lives. But the truth
14:10
Speaker 2: is that like ninety nine point nine nine nine percent
14:12
Speaker 2: of people who are wealthy of make good decisions. And
14:14
Speaker 2: so that would be my feedback of the biggest mistake.
14:18
Speaker 2: But Malia, what do you think?
14:20
Speaker 3: So I think it's a great question, and I think again,
14:24
Speaker 3: it goes back to behavior. And oftentimes if we are
14:28
Speaker 3: spenders in our in our you know, earning years, we
14:33
Speaker 3: have this disconnect that when we retire, we're suddenly not
14:37
Speaker 3: going to be spenders vice versa. If we've been savers,
14:41
Speaker 3: some of the savers say, well, when I get into retirement,
14:44
Speaker 3: I'm going to start spending my money. And so the
14:47
Speaker 3: disconnect works fine for those savers, okay, because the savers
14:51
Speaker 3: remain savers. The spenders, however, cannot self correct. They think
14:55
Speaker 3: they can, but it's called a habit. And so really,
14:59
Speaker 3: when we're working with people in their fifties, you know,
15:02
Speaker 3: approaching their early sixties, if we haven't kind of you know,
15:06
Speaker 3: managed their spending and their mindset on spending, then we
15:10
Speaker 3: are going to end up in debt and we are
15:12
Speaker 3: going to end up with not the type of retirement
15:14
Speaker 3: income they're looking forward to. So it's all about the
15:17
Speaker 3: habits and making sure you've got good ones or you're
15:20
Speaker 3: getting better ones as you approach those magic years.
15:24
Speaker 1: It seems, Malia and correct me fight. It's easier to
15:26
Speaker 1: correct some of these things earlier than later.
15:29
Speaker 3: That's what we would prefer to do. Again, none of
15:32
Speaker 3: us have perfect lives, and life happens. But I think
15:36
Speaker 3: you know, a habit takes you know, a couple months
15:38
Speaker 3: to get into place, and as long as you keep
15:41
Speaker 3: on doing it. And I know, I mean, our clients
15:43
Speaker 3: say this all the time to us. They walk in
15:45
Speaker 3: the door and they go, yeah, we were out shopping
15:48
Speaker 3: this week and the wife says, Malia said, or CJ
15:51
Speaker 3: said we could buy this, or we shouldn't buy this
15:54
Speaker 3: or whatever. So, you know, it is good to have
15:56
Speaker 3: always that third party out there that can be kind
15:59
Speaker 3: of the sounding board, whether it be your accountant, your parents,
16:03
Speaker 3: you know, someone besides just your neighbor or your colleague,
16:06
Speaker 3: because you all have, you know, your own situation going on,
16:11
Speaker 3: and it's nice to have that objective third party.
16:13
Speaker 1: It's good. It's good to hear as we get some
16:16
Speaker 1: of you know, some of these great questions. Trey, thank
16:18
Speaker 1: you for the call. And I think some people are
16:20
Speaker 1: probably nodding their head to to to what both you
16:22
Speaker 1: and CJ had said. And as we kind of talk
16:24
Speaker 1: about some people, let's talk about all people. When it
16:27
Speaker 1: comes to debt in general. How much debt to Americans
16:30
Speaker 1: Malia have in retirement in general carry these days.
16:35
Speaker 3: Yeah, we're going to talk about the big number and
16:36
Speaker 3: then we'll drill it down to individuals, but we like
16:40
Speaker 3: to just start off with what comprises total household debts.
16:44
Speaker 3: So when we're talking about this, that would include your mortgages,
16:48
Speaker 3: student loans, car loans and of course credit cards. So
16:52
Speaker 3: according to the Federal Reserve Bank of New York, household
16:56
Speaker 3: debt balances in the US set a record high seventeen
17:01
Speaker 3: point six y nine trillion that's trillion with a T
17:05
Speaker 3: during the first quarter of twenty twenty four. So that
17:08
Speaker 3: was up by one hundred and eighty four billion. I mean,
17:12
Speaker 3: who can keep tracks of billions and trillions here, but
17:14
Speaker 3: billion up from the previous quarter, and mortgage balance is
17:17
Speaker 3: increased by another one hundred and ninety billion, so you
17:22
Speaker 3: know what. We look at various studies. One study we
17:26
Speaker 3: saw that's fairly accurate I believe is Credit Karma because
17:29
Speaker 3: they have a lot of members. They looked at their
17:32
Speaker 3: data of seventy eight point two million members as recently
17:36
Speaker 3: as April of twenty four, and we isolated what they
17:39
Speaker 3: said about the baby boomers because that's primarily the audience
17:42
Speaker 3: we work with quite a bit. So those would be
17:45
Speaker 3: people born between nineteen forty six and nineteen sixty four.
17:49
Speaker 3: These people who are typically retired or on their way
17:52
Speaker 3: to retirement in the next five to seven years. Those
17:55
Speaker 3: people carry an average auto loan debt of about twenty
17:58
Speaker 3: two thousand. Credit card debt of around seven thousand, mortgage
18:03
Speaker 3: debt of around one hundred and eighty eight thousand, and
18:05
Speaker 3: then surprisingly, and again I don't think most people would
18:10
Speaker 3: think of this. They do carry the most in student
18:12
Speaker 3: loan debt of forty three thousand plus. So you know,
18:16
Speaker 3: are they all in school paying back their own student loans.
18:19
Speaker 3: Probably not. We do have clients that feel an obligation
18:24
Speaker 3: to take over student loans for their kids or grandkids,
18:29
Speaker 3: and we would never you know, if a client wants
18:33
Speaker 3: to do that for their children or grandchildren, we understand,
18:37
Speaker 3: but we always want to make sure our clients are
18:39
Speaker 3: whole before they assume obligations like that. So some quick
18:43
Speaker 3: suggestions to help you stay or stray away from debt.
18:47
Speaker 3: First word is stop just stop stop adding to your
18:51
Speaker 3: debt balances. You need to remove those credit cards and
18:54
Speaker 3: Dave Ramsey would tell you the same thing from your wallet.
18:57
Speaker 3: Reduce that temptation. It's just like you know, if you
19:00
Speaker 3: put a cake in front of me all day long,
19:02
Speaker 3: I pass it in the office. Eventually I'm going to stop.
19:05
Speaker 3: I'm going to stop and have a piece right. Same
19:07
Speaker 3: thing with that credit card.
19:08
Speaker 2: If it's in that I know the problem.
19:12
Speaker 3: So you know, that's kind of what taunts us, So
19:16
Speaker 3: take it out. You don't need to have a whole
19:19
Speaker 3: bunch and just resist that temptation. Understand current interest rates
19:24
Speaker 3: and we're going to have CJ go over this, but
19:26
Speaker 3: current interest rates really can devastate you if you are
19:30
Speaker 3: accumulating debt. Prioritize pay enough high interest credit card debt first.
19:36
Speaker 3: But there's various methods. Use a debt reduction calculator, payoff
19:41
Speaker 3: calculator again, you can find that at credit Karma dot com,
19:44
Speaker 3: calculator dot net. Figure out how to use that snowball
19:48
Speaker 3: approach we've spoken about many times. And finally, pay your
19:52
Speaker 3: bills on time. So late payments will result in fees
19:56
Speaker 3: and that's going to increase your debt balances and ultimately
19:59
Speaker 3: it's going to hurt your credit score if you're trying
20:02
Speaker 3: to buy a house in the future or or whatever.
20:05
Speaker 3: So you know, again behavior just pay your bills regularly
20:10
Speaker 3: and don't accumulate more debt than you can pay off
20:13
Speaker 3: in a single month.
20:14
Speaker 1: Talking this morning with our retirement planning professionals from Class Financial, CJ.
20:17
Speaker 1: Coss to Malia Quavis the website Cossfinancial dot com. That's
20:20
Speaker 1: css K, l AA S Financial dot com and they're
20:23
Speaker 1: telephone number six, so eight four four two five six
20:26
Speaker 1: three seven. So about those current interest rates CJ. Of course,
20:30
Speaker 1: looking at different types of debt, we have what are
20:32
Speaker 1: we seeing then as far as those those interest rates
20:35
Speaker 1: for those those different debts.
20:38
Speaker 2: And so it varies by category, but we'll go through
20:41
Speaker 2: some of them here today. So you know, credit cards
20:44
Speaker 2: being one. According to lending Tree, the average credit card
20:47
Speaker 2: interest rate in America today is twenty four point eight
20:51
Speaker 2: four percent. This is the highest since lending Tree began
20:54
Speaker 2: tracking rates monthly in twenty nineteen. Now not the highest
20:58
Speaker 2: in history for those who know, back in the late
21:00
Speaker 2: seventies early eighties kind of Reagan administration era, we had
21:03
Speaker 2: higher inflation and higher interest rates than we have now
21:06
Speaker 2: by a wide margin, by the way. But since twenty nineteen,
21:09
Speaker 2: it's the highest number we've seen. And if you have
21:12
Speaker 2: less than an ideal credit score, than the average APR
21:15
Speaker 2: offered is twenty six point eight five percent or higher.
21:18
Speaker 2: And that's not a delinquency rate, that's just a standard
21:22
Speaker 2: credit card rate. If you have a lower credit score,
21:26
Speaker 2: so that's that's a big deal, you guys. We suggest
21:30
Speaker 2: paying off or at least paying down this type of
21:33
Speaker 2: debt first, for the obvious reason that you can't compete
21:37
Speaker 2: with that, meaning like if you have money in a
21:39
Speaker 2: bank account and say it's a really high yield money
21:43
Speaker 2: market account at six percent, and by the way, I
21:45
Speaker 2: don't even think that exists, but let's just say for
21:47
Speaker 2: conversation's sake, it does. Well, my goodness, your credit card
21:51
Speaker 2: is what five times that rate? So just remember credit
21:56
Speaker 2: card balances that carry from cycle are a poison pill
22:02
Speaker 2: to your financial circumstances. And actually Trey called in and said,
22:05
Speaker 2: you know what is one of the worst financial mistakes
22:08
Speaker 2: you've seen. Another financial mistake within this credit card category
22:12
Speaker 2: would be thinking that carrying balances on your credit cards
22:16
Speaker 2: helps your credit score. It doesn't. Carrying balances cycle to cycle,
22:22
Speaker 2: and paying interest on your credit card does not help
22:26
Speaker 2: your credit score. Now, utilizing a credit card could help
22:30
Speaker 2: your credit score, but for what it's worth, I mean,
22:32
Speaker 2: listen to Dave Ramsey on this topic. I don't think
22:35
Speaker 2: your goal in life should be to have a high
22:36
Speaker 2: credit score. Let me repeat that, I don't think your
22:39
Speaker 2: goal in life should be to have a high credit score,
22:41
Speaker 2: because I remember credit scores are defined by if you
22:44
Speaker 2: are using credit. The goal in life should be to
22:47
Speaker 2: have no credit score. Okay, sorry, now I'm starting to
22:50
Speaker 2: sound like Dave Ramsey. Okay. The next category would be
22:53
Speaker 2: home loans. So ideally, as we approach retirement, we would
22:56
Speaker 2: prefer that you have either no or very little of
23:00
Speaker 2: a mortgage left. And as of July of July twenty
23:04
Speaker 2: third of twenty twenty four, the national average thirty year
23:07
Speaker 2: fixed rate mortgage APR is six point nine to two percent,
23:11
Speaker 2: with the average fifteen year fixed rate mortgage at six
23:14
Speaker 2: point three three percent. This is according to bank Rate's
23:17
Speaker 2: the latest survey of the national or the nation's largest
23:20
Speaker 2: mortgage lenders. So there's no guarantee as to what mortgage
23:24
Speaker 2: rates will do in the future, so just do your
23:26
Speaker 2: research first. Even if your current mortgage has a decent rate,
23:30
Speaker 2: a debt is still a debt, and often it's a
23:33
Speaker 2: fixed amount that you've agreed to pay. And like we
23:36
Speaker 2: just mentioned to you, at an almost seven percent interest
23:40
Speaker 2: rate on a mortgage, there's no guarantee that what you
23:43
Speaker 2: do in the markets over time, or in bonds or
23:46
Speaker 2: in cash is going to beat that. So bottom line
23:50
Speaker 2: is we want you to carefully look at at all
23:53
Speaker 2: of your debts and just make sure that you are
23:56
Speaker 2: trying to get rid of those as quickly as possible.
23:59
Speaker 1: Great guy, it's from CJ. Clossom Aliaquavis. They are retirement
24:02
Speaker 1: planning professionals from Class Financial. We're to talk about auto
24:05
Speaker 1: loans and student loans, things to be watching out for.
24:07
Speaker 1: We will do that next of course. In the meantime,
24:09
Speaker 1: men haven't been to the website yet, checkout classfinancial dot com.
24:13
Speaker 1: That's class k l aas Financial dot com telph a
24:16
Speaker 1: number for the officer right here in Madison six oh
24:18
Speaker 1: eight four four two five six three seven. More of
24:21
Speaker 1: money in Motion with Class Financial is next right here
24:23
Speaker 1: on thirteen ten wib A, just moments away from the
24:31
Speaker 1: Class quiz question the week. Talking this week with our
24:33
Speaker 1: retirement planning professional CJ. Colossomlia Quaves from Klass Financial about
24:38
Speaker 1: debt of course, their website Class financial dot Com. Tell
24:41
Speaker 1: for a number six oh eight four four to two
24:43
Speaker 1: five six three seven. So, Malia, what should we watch
24:46
Speaker 1: out then? As we watch out for as we're kind
24:48
Speaker 1: of working our way through these different types of debts
24:50
Speaker 1: and loans and other things, specifically when it comes to
24:53
Speaker 1: auto loans and student loans. What do we need to
24:55
Speaker 1: be aware of.
24:56
Speaker 3: Yeah, we want everyone to be really careful with this,
24:59
Speaker 3: starting off with auto loans. And we hear this all
25:02
Speaker 3: the time. Our clients are getting ready to retire. They're like,
25:05
Speaker 3: I'm buying this car. It's going to be the last
25:07
Speaker 3: car I ever have, and quite honestly, they might have
25:09
Speaker 3: three more because we are living into our nineties oftentimes.
25:13
Speaker 3: So I love the thought, but the fact is you
25:16
Speaker 3: may need to replace. So we do have to look
25:20
Speaker 3: at auto loans, and you know, we like people to
25:22
Speaker 3: compare their credit unions to the banks if they're buying
25:26
Speaker 3: new buying news or whatever. But be familiar with the
25:29
Speaker 3: changing rates. As of mid July of twenty twenty four,
25:32
Speaker 3: aprs arranging anywhere from about five point six percent to
25:36
Speaker 3: over twenty one percent, and that's based on your credit
25:40
Speaker 3: score and again what kind of auto loan you're looking
25:42
Speaker 3: for now For individual consumers, though, you have to again
25:46
Speaker 3: understand that those rates, look at your credit score, the term,
25:50
Speaker 3: length of your loan, age of the car being financed,
25:53
Speaker 3: and understand that the length of the loan can range
25:56
Speaker 3: anywhere from you know, your normal sixty months up to
25:59
Speaker 3: eighty four months. And you know, when you enter onto
26:03
Speaker 3: a car lot, there's only one plan of action for
26:07
Speaker 3: that salesperson. It doesn't matter what amount you end up paying.
26:12
Speaker 3: They're going to tell you how you can afford the
26:14
Speaker 3: monthly payment, right, and the monthly payment can look maybe
26:18
Speaker 3: more attractive if they stretch out the loan. So that
26:22
Speaker 3: is the goal, just to sell you the car. And
26:24
Speaker 3: I know some of our clients go and they pay cash.
26:27
Speaker 3: That is not what the auto place wants to hear.
26:31
Speaker 3: They like to finance your loan. But you know, many
26:34
Speaker 3: of our clients pay cash. We think that's great, but
26:37
Speaker 3: just so you know, many times there's some bulking going
26:40
Speaker 3: on when you show up and say I don't want
26:42
Speaker 3: to finance. So there's some reality speaking there, so be careful.
26:48
Speaker 3: That's what we'd say. We would still advocate if you
26:50
Speaker 3: have to take a car loan out, try to keep
26:52
Speaker 3: it to the five years or less. We're we're fans
26:56
Speaker 3: of zero percent two point nine percent. If you're going
26:58
Speaker 3: to take out a loan, just make sure you shop
27:01
Speaker 3: that really well. And then student loans. You know, again
27:04
Speaker 3: we just spoke about how you know, many of our
27:07
Speaker 3: baby boomers do carry student loan debt, and that's a
27:11
Speaker 3: really important item, especially if you have grandkids perhaps that
27:14
Speaker 3: are taking out federal loans, to really understand how high
27:18
Speaker 3: those have risen. So, federal student loans for undergraduates currently
27:23
Speaker 3: have an interest rate for the twenty twenty four to
27:25
Speaker 3: twenty twenty five school year of six point five to
27:28
Speaker 3: three percent. But interestingly enough, graduate students they have interest
27:33
Speaker 3: rates of eight point oh five percent for those unsubsidized loans,
27:38
Speaker 3: and if they're not unsubsidized, they're up to nine point
27:42
Speaker 3: oh five percent. So these these student loan rates are
27:46
Speaker 3: are pretty high from the federal level. But then what
27:49
Speaker 3: people go and do is they go about go about
27:52
Speaker 3: finding out about refinancing them with companies you may have
27:55
Speaker 3: heard of called l FI or so FI, and those
27:59
Speaker 3: rates average anywhere from five and a quarter today up
28:01
Speaker 3: to ten percent. But you have to understand the difference
28:04
Speaker 3: between having a federal loan which will allow you to
28:07
Speaker 3: pay it over a very long period of time. If
28:11
Speaker 3: you have some type of crisis, you can generally defer
28:15
Speaker 3: them many times with federal, but as soon as you
28:18
Speaker 3: switch over to a better rate, which we're all about
28:21
Speaker 3: better rates, you have to understand now you are taking
28:24
Speaker 3: a loan that there really is no forgiveness. It's just
28:27
Speaker 3: alone and so you have to keep that in mind
28:32
Speaker 3: as you're thinking about refinancing for a lower cost. So
28:35
Speaker 3: just understand that. And finally, I just want to say
28:39
Speaker 3: the takeaway from all of this today is that you
28:43
Speaker 3: should make retiring as close to debt free as possible.
28:47
Speaker 3: And we understand the fight here is how can we
28:50
Speaker 3: do this while we're still saving enough for retirement. It
28:53
Speaker 3: is a little tricky, but we know we see people
28:56
Speaker 3: successfully do it every day. So just get a plan
28:59
Speaker 3: and stay to the plan.
29:00
Speaker 1: Talking this morning with CJ. Colss and Malia Quavis, they
29:02
Speaker 1: are our retirement plan professionals from Class Financial, the website
29:05
Speaker 1: COSS financial dot com that's coss k l Aasfinancial dot com.
29:10
Speaker 1: And the telephone number six oh eight four four two five,
29:13
Speaker 1: six three seven. Want to hold on to the telephone number.
29:15
Speaker 1: Now it's time for the COSS Quiz question the week.
29:17
Speaker 1: It works like this, just a moment, I'll ask you
29:19
Speaker 1: the Class Quiz question leak. You will then have thirty
29:21
Speaker 1: minutes from the end today's program to call the Class
29:23
Speaker 1: Financial office right here in Madison at six oh eight
29:26
Speaker 1: four four two, five, six three seven. If you are
29:29
Speaker 1: the first cost correct answer one this week's prize, which
29:31
Speaker 1: is a twenty five dollars gift card to best Buy.
29:34
Speaker 1: This week's COLSS quiz question the week is this true
29:37
Speaker 1: or false? According to the Federal Reserve Bank of New York,
29:41
Speaker 1: household debt balances in the United States set a record
29:45
Speaker 1: high of seventeen point six y nine trillion during the
29:50
Speaker 1: first quarter of twenty twenty four. First caller with the
29:53
Speaker 1: correct answer one that twenty five dollars gift card to
29:55
Speaker 1: best Buy the number six oh eight four four two, five,
29:58
Speaker 1: six three seven. CJ. Leah. It's always great chatting with
30:01
Speaker 1: you guys. You enjoy this beautiful day. Thanks Doctor Marty
30:04
Speaker 1: Greer comes your way next here on thirteen ten w
30:06
Speaker 1: U I B E