WEBVTT 1 00:00:05.040 --> 00:00:07.120 And our phone lines. They are open to you right 2 00:00:07.160 --> 00:00:09.839 now if you've got a question for our retirement planning 3 00:00:09.880 --> 00:00:13.199 professionals from Class Financial telephone number six oh eight three 4 00:00:13.240 --> 00:00:16.000 two one thirteen ten. That's three two one thirteen ten. 5 00:00:16.079 --> 00:00:17.519 Love to get you on the other this morning. Join 6 00:00:17.559 --> 00:00:20.359 this week by CJ. Closs and Eric Schwartz. As mentioned, 7 00:00:20.359 --> 00:00:23.839 they come to us from Class Financial the website classfinancial 8 00:00:23.839 --> 00:00:26.839 dot com. That's Closs k l a A S Financial 9 00:00:26.879 --> 00:00:29.280 dot com. Our telephon number six O eight four four 10 00:00:29.320 --> 00:00:32.640 two five six three seven. No charge that initial get 11 00:00:32.640 --> 00:00:34.640 to know the appointment at Class Financial. It will be 12 00:00:34.719 --> 00:00:37.560 complimentary to you again their number six oh eight four 13 00:00:37.600 --> 00:00:40.520 four two five six three seven. As mentioned, CJ and 14 00:00:40.719 --> 00:00:43.159 Eric joining us this morning. CJ, how you doing this week? 15 00:00:43.560 --> 00:00:44.159 I'm doing great. 16 00:00:44.159 --> 00:00:44.719 How are you, Sean? 17 00:00:44.719 --> 00:00:47.079 I'm doing really good. Great to talk with you and Eric? 18 00:00:47.119 --> 00:00:50.399 How have you been I have been I've been great. 19 00:00:50.439 --> 00:00:52.200 I'm excited for our conversation this morning. 20 00:00:52.280 --> 00:00:53.200 It's gonna be a good one. 21 00:00:53.240 --> 00:00:53.399 Yeah. 22 00:00:53.439 --> 00:00:57.479 We're gonna be talking about preparation of course for retirement 23 00:00:57.640 --> 00:01:00.960 and kind of the game plan in debt and talk 24 00:01:01.000 --> 00:01:03.320 about debt. So I'll get to that in just a moment. 25 00:01:03.359 --> 00:01:04.840 A couple of things keep in mind as we do 26 00:01:04.879 --> 00:01:06.879 the show. Don't forget. The phone lines are open. Love 27 00:01:06.879 --> 00:01:08.560 to have you join us at six oh eight three 28 00:01:08.599 --> 00:01:11.239 two one thirteen ten. I been to the website recently. 29 00:01:11.319 --> 00:01:14.040 Head on over their Class Financial dot com. That's Coss 30 00:01:14.159 --> 00:01:17.599 k l aas Financial dot com. Great resource to learn 31 00:01:17.640 --> 00:01:19.439 more about the team at Coss Financially. You can learn 32 00:01:19.480 --> 00:01:21.879 about the separate divisions. You can also sign up for 33 00:01:21.920 --> 00:01:24.840 the weekly market paulse newsletter that available to you at 34 00:01:24.920 --> 00:01:28.159 Clossfinancial dot com. Tell phone number six oh eight four 35 00:01:28.239 --> 00:01:30.640 four two five six three seven no charge for that 36 00:01:30.640 --> 00:01:33.159 ininitcial gets no you appointment at Class Financial. It will 37 00:01:33.200 --> 00:01:35.040 be complementary to you. Don't forget. Also, you're going to 38 00:01:35.120 --> 00:01:36.920 use that numb a little bit later on the program 39 00:01:37.040 --> 00:01:39.079 with the class Quiz question the week your chance to 40 00:01:39.079 --> 00:01:41.959 win a fantastic prize this week no exception, our friends 41 00:01:42.000 --> 00:01:44.439 from Class Financially have provided a twenty five dollars gift 42 00:01:44.439 --> 00:01:46.359 card to IHOP and we'll tell you a little bit 43 00:01:46.439 --> 00:01:48.519 later on how you can win with the class quiz question. 44 00:01:48.599 --> 00:01:50.599 Leak just a little tip though, Pay close attention to 45 00:01:50.599 --> 00:01:53.120 the program because just about every show the question and 46 00:01:53.239 --> 00:01:56.200 answer both come up during the program, and before we 47 00:01:56.200 --> 00:01:58.599 get rolling on this week's topic, let's actually roll back, 48 00:01:58.640 --> 00:02:01.040 take a look back at last week show and get 49 00:02:01.040 --> 00:02:03.040 the question and answer there as well. 50 00:02:04.280 --> 00:02:07.200 Yeah, so our question last week was true or false. 51 00:02:07.439 --> 00:02:10.919 You may be eligible for a Social Security survivor benefit 52 00:02:11.080 --> 00:02:13.879 as a spouse if you were married for at least 53 00:02:13.960 --> 00:02:17.800 nine months before their death, and Patty from Oregon knew 54 00:02:17.800 --> 00:02:19.639 that the correct answer was true. 55 00:02:20.120 --> 00:02:23.680 Fantastic congratulations to Patty, and again you two can be 56 00:02:23.759 --> 00:02:26.599 like Patty play close attention and pay close attention and 57 00:02:26.639 --> 00:02:29.719 also pays to pay close attention to the program just 58 00:02:29.719 --> 00:02:31.520 to win again later on the show a twenty five 59 00:02:31.560 --> 00:02:35.400 dollars gift card to IHOP. So see Jay, let's talk. 60 00:02:35.439 --> 00:02:38.199 So when you're helping folks prepare for retirement, I got 61 00:02:38.240 --> 00:02:40.280 to guess debt is one of those big topics that 62 00:02:40.360 --> 00:02:43.319 come up quite a bit. And you know, I think 63 00:02:43.319 --> 00:02:45.479 people say, well, how do I get there? What's the 64 00:02:45.479 --> 00:02:48.919 game plan? These are really important conversations, aren't they? 65 00:02:49.159 --> 00:02:49.520 It is? 66 00:02:49.639 --> 00:02:52.280 Yeah, I mean, when you when you do what we 67 00:02:52.360 --> 00:02:55.479 do for a living, you come to realize that cash 68 00:02:55.520 --> 00:02:58.919 flow management and kind of we'll call it financial behavior 69 00:02:59.000 --> 00:03:03.479 patterns are really critical now. Unfortunately, a lot of these 70 00:03:03.599 --> 00:03:07.120 financial behavior patterns get set at actually a very very 71 00:03:07.159 --> 00:03:09.439 young age. So this could be the way that your 72 00:03:09.479 --> 00:03:12.800 parents handled money. It could be an extreme experience of 73 00:03:12.879 --> 00:03:15.240 poverty that you grew up with that has caused you 74 00:03:15.319 --> 00:03:18.439 to be a huge saver. And truth be told, there's 75 00:03:18.439 --> 00:03:21.280 strengths and weaknesses to all of these different shades of 76 00:03:21.319 --> 00:03:24.280 the way that you handle cash flow management and saving 77 00:03:24.319 --> 00:03:26.919 for the future. We've seen people who you know, maybe 78 00:03:26.919 --> 00:03:29.680 we're children of the Great Depression, who have millions and 79 00:03:29.680 --> 00:03:32.960 millions of dollars but won't spend a penny because they're 80 00:03:33.000 --> 00:03:35.840 so fearful, and that's an extreme. But then we will 81 00:03:35.840 --> 00:03:38.319 have other people who you know, grew up with parents 82 00:03:38.360 --> 00:03:40.400 that never saved anything, and they just go, I don't know, 83 00:03:40.439 --> 00:03:41.960 I heard you can love our social security, so I 84 00:03:42.000 --> 00:03:44.840 just spend everything. So you get the idea, these are 85 00:03:44.840 --> 00:03:48.039 these extremes that get set at an early age, and 86 00:03:48.080 --> 00:03:51.039 so we just want to tell you, hey, while while 87 00:03:51.080 --> 00:03:55.439 each approach can have strengths and weaknesses, we given what 88 00:03:55.479 --> 00:03:57.360 we do for a living, we get to see some 89 00:03:57.479 --> 00:04:01.520 behavior patterns that really work out out well and have 90 00:04:01.599 --> 00:04:05.080 high probabilities of success over long periods of time. So 91 00:04:05.360 --> 00:04:08.000 we're going to talk about that relative to debt today. 92 00:04:08.080 --> 00:04:10.919 So that's one of these weird things that has a 93 00:04:10.960 --> 00:04:13.240 way of sticking around and for many people can even 94 00:04:13.319 --> 00:04:16.839 follow them into retirement. So you should know, in our view, 95 00:04:16.920 --> 00:04:20.000 the best case scenario from what we see across thousands 96 00:04:20.040 --> 00:04:23.920 of households that we've worked with, is that heading into 97 00:04:23.959 --> 00:04:29.240 retirement debt free really is ideal. Now, some people go, 98 00:04:29.279 --> 00:04:31.319 but what about the mortgage interest deduction, And I've heard 99 00:04:31.360 --> 00:04:34.399 blah blah blah blah blah. Stop stop. We do this 100 00:04:34.439 --> 00:04:37.279 for a living, right. If you don't, then just take 101 00:04:37.319 --> 00:04:40.680 a pause. I'm not talking about, you know, tax management 102 00:04:40.839 --> 00:04:44.319 or anything like that. I'm just saying from the overall approach, 103 00:04:44.800 --> 00:04:49.839 heading into retirement, if possible, being debt free really does 104 00:04:50.360 --> 00:04:52.680 give you the best leg up and give you freedom 105 00:04:52.800 --> 00:04:56.439 and choice and opportunity and all of that. Now that's 106 00:04:56.439 --> 00:04:59.240 not to say that you can't retire with debt. It's 107 00:04:59.319 --> 00:05:01.319 just to say, if you're looking for the best option, 108 00:05:01.600 --> 00:05:04.560 do your best to not have debt heading into retirement. 109 00:05:04.920 --> 00:05:07.079 So of course people say, well, if if I'm not 110 00:05:07.160 --> 00:05:09.879 there or if my plan isn't on par What do 111 00:05:09.920 --> 00:05:11.800 I need to do to make some adjustments? So I'm 112 00:05:11.800 --> 00:05:13.319 going to go through kind of four things here that 113 00:05:13.360 --> 00:05:17.199 you can consider. Number One, set up a plan to 114 00:05:17.279 --> 00:05:21.079 reduce and eliminate your debt. It starts with a plan. 115 00:05:21.519 --> 00:05:23.959 If you don't want to take our word for it, 116 00:05:24.360 --> 00:05:26.720 you can listen to Dave Ramsey. I think he actually 117 00:05:27.120 --> 00:05:30.319 he might be syndicated on this station as well, if 118 00:05:30.360 --> 00:05:33.439 not other stations. But Dave Ramsey's a big proponent of 119 00:05:33.759 --> 00:05:36.680 eliminating debt to create financial freedom, and then it can 120 00:05:36.720 --> 00:05:39.920 also create generosity in you. So set up a plan. 121 00:05:41.240 --> 00:05:44.600 Number two, consider making some lifestyle changes. You might need 122 00:05:44.600 --> 00:05:47.360 to tweak your spending habits and set some realistic goals. 123 00:05:47.879 --> 00:05:50.199 A lot of folks find success by being aggressive with 124 00:05:50.279 --> 00:05:53.360 debt payments first and then shifting to focus on saving 125 00:05:53.399 --> 00:05:56.639 for the future. So we would and then finally we 126 00:05:56.680 --> 00:06:00.399 would actually say set it on automatic. We have that 127 00:06:00.439 --> 00:06:03.879 often people's desires don't match their cash flow, Like I 128 00:06:03.920 --> 00:06:06.439 really do want to be generous, but I just can't 129 00:06:06.480 --> 00:06:08.959 give right, Or I really do want to pay down 130 00:06:09.000 --> 00:06:11.279 my debt, but I just don't have money to do 131 00:06:11.319 --> 00:06:14.480 it with. And we would say, well, then your desires 132 00:06:14.519 --> 00:06:16.759 aren't matching your behaviors, and so you need to you 133 00:06:16.800 --> 00:06:19.480 need to make it automatic. So first of every month 134 00:06:19.720 --> 00:06:23.399 you make your large mortgage payment. Number three would be 135 00:06:23.519 --> 00:06:30.319 to pay down debt, potentially in lieu of additional retirement savings. Now, 136 00:06:30.399 --> 00:06:33.839 one way where we might slightly differ from Dave Ramsey 137 00:06:33.920 --> 00:06:36.160 is we really do like people getting their company match. 138 00:06:36.319 --> 00:06:38.720 But I'll be frank with you, I don't want to 139 00:06:38.839 --> 00:06:42.279 argue Dave on Thus, I see his point, which is like, 140 00:06:42.800 --> 00:06:46.399 you've got to have a ruthless attitude about debt at times, 141 00:06:46.519 --> 00:06:49.600 I mean ruthless, like I just gotta get rid of it. 142 00:06:50.240 --> 00:06:52.959 And if that means you don't save into the four 143 00:06:52.959 --> 00:06:54.519 oh one K for a little bit just to get 144 00:06:54.560 --> 00:06:57.920 the debt paid off before you retire, we would say again, 145 00:06:58.160 --> 00:07:02.199 heading into retirement without debt is the best option. Now again, 146 00:07:02.519 --> 00:07:06.519 talk to a professional advisor, talk to your accountant, make 147 00:07:06.560 --> 00:07:09.360 sure that it makes sense across your overall financial picture. 148 00:07:09.399 --> 00:07:12.720 But generally speaking, given that we are retirement planners, I 149 00:07:12.720 --> 00:07:14.480 can tell you those of our clients that don't have 150 00:07:14.560 --> 00:07:16.839 debt and retirement tend to have a lot less stress 151 00:07:16.839 --> 00:07:18.680 and live a lot more free and are a lot 152 00:07:18.720 --> 00:07:21.399 more generous with their kids and grandkids than those that 153 00:07:21.519 --> 00:07:24.199 have a mortgage. And then finally there's an option just 154 00:07:24.199 --> 00:07:26.079 to work a little bit longer. So we have plenty 155 00:07:26.079 --> 00:07:28.399 of clients who do this where they maybe got remarried 156 00:07:28.439 --> 00:07:31.639 later on in life, got a home with that new spouse, 157 00:07:32.079 --> 00:07:34.160 ended up with a mortgage, and worked, you know, instead 158 00:07:34.199 --> 00:07:36.480 of sixty five to sixty seven or sixty eight, just 159 00:07:36.480 --> 00:07:38.199 to make sure that they haven't had enough time to 160 00:07:38.240 --> 00:07:42.480 get that mortgage eliminated. So there's kind of four practical 161 00:07:42.560 --> 00:07:45.199 things you can do to try to eliminate debt before 162 00:07:45.240 --> 00:07:45.759 you retire. 163 00:07:46.000 --> 00:07:49.319 Talking this morning with our retirement planning professionals from Class Financial, CJ. 164 00:07:49.480 --> 00:07:53.839 Closs and Eric Schwartz. You can learn more Onlineclossfinancial dot com. 165 00:07:53.839 --> 00:07:58.079 That's Coss Klaas Financial dot com. Great website and resource 166 00:07:58.120 --> 00:07:59.759 to learn more about Class. Also sign up for the 167 00:07:59.759 --> 00:08:02.399 Week the Market Paul's newsletter. Of course, I know in 168 00:08:02.399 --> 00:08:04.240 the mornings, we all know this. Sometimes step out of 169 00:08:04.240 --> 00:08:06.800 the car, maybe you're grabbing grabbing coffee, dropping the kiddo's 170 00:08:06.839 --> 00:08:08.720 off or the grand kids off at school. You miss 171 00:08:08.800 --> 00:08:10.800 part of the program. You can always listen back at 172 00:08:10.839 --> 00:08:15.319 Clossfinancial dot com. That's class klaas financial dot com. They're 173 00:08:15.319 --> 00:08:18.240 telephone number six, so eight four four two five six 174 00:08:18.439 --> 00:08:21.639 three seven, So Eric, that's obviously a lot to consider 175 00:08:21.680 --> 00:08:24.560 that CJ laid out there. How much debt are right 176 00:08:24.759 --> 00:08:27.240 retirees actually carrying these days? 177 00:08:28.800 --> 00:08:31.959 That's a great question, and the short answer is probably 178 00:08:31.959 --> 00:08:34.399 a lot more than you might think, especially when we 179 00:08:34.480 --> 00:08:38.759 start thinking about not only mortgages, but student loans, car loans, 180 00:08:38.840 --> 00:08:42.240 credit cards. Seems like you can kind of borrow for 181 00:08:42.320 --> 00:08:45.480 any purchase these days, even even one hundred dollars purchase online. 182 00:08:45.480 --> 00:08:48.480 You can say I'll pay that over four months. But 183 00:08:48.960 --> 00:08:51.600 the Federal Reserve Bank Front of New York reported that 184 00:08:51.759 --> 00:08:55.639 US household debt hit a record seventeen point ninety four 185 00:08:55.799 --> 00:08:59.120 trillion dollars in the third quarter of last year. That's 186 00:08:59.159 --> 00:09:01.919 a point eight percent sent from the previous quarter, and 187 00:09:02.000 --> 00:09:06.039 mortgage debt alone was twelve point five to nine trillion dollars. 188 00:09:06.919 --> 00:09:10.799 Data from credit Karma, which this is from April to 189 00:09:10.879 --> 00:09:14.360 June of last year, shows that baby boomers specifically, who 190 00:09:14.360 --> 00:09:17.559 are either retired at this point or close to it, 191 00:09:17.639 --> 00:09:20.720 they carry an average auto loan debt of twenty three 192 00:09:20.759 --> 00:09:24.519 thousand dollars, a credit card debt of over eight thousand, 193 00:09:25.159 --> 00:09:28.960 and mortgage debt of about one hundred and ninety seven thousand, 194 00:09:29.039 --> 00:09:33.879 seven hundred and ninety five dollars. They also this surprising me, actually, 195 00:09:34.200 --> 00:09:36.840 they also have an average of forty five one hundred 196 00:09:36.840 --> 00:09:39.480 and one dollars in student loan debt. Again as they 197 00:09:39.480 --> 00:09:41.799 approach retirement here in the near future. 198 00:09:43.279 --> 00:09:46.240 Doug this morning with c J. Klass and Eric Schwartz 199 00:09:46.240 --> 00:09:49.519 out retirement planning professionals from Klass Financial and as we 200 00:09:49.600 --> 00:09:51.720 kind of break through this, it's pretty eye opening there, 201 00:09:52.200 --> 00:09:54.240 and we Eric, when we kind of look at this stuff, 202 00:09:54.720 --> 00:09:57.960 what are some strategies to avoid then to to not 203 00:09:58.120 --> 00:09:59.080 be adding more debt? 204 00:10:00.799 --> 00:10:03.440 Yeah, like CJ was saying that debt tends to be 205 00:10:03.519 --> 00:10:06.639 something that I'll stick around for a while. And the problem, 206 00:10:06.799 --> 00:10:10.960 especially in a higher interest rate environment like we've seen 207 00:10:10.960 --> 00:10:13.159 over the last couple of years compared to you know, 208 00:10:13.200 --> 00:10:17.080 the previous ten or fifteen years, it tends to accumulate 209 00:10:17.200 --> 00:10:20.759 over time even if you're not adding to it. But 210 00:10:20.840 --> 00:10:23.519 in terms of practical tips to kind of address some 211 00:10:23.600 --> 00:10:26.679 of this, the first and I think simplest is stop 212 00:10:26.720 --> 00:10:29.639 adding to your debt. So leave those credit cards at home. 213 00:10:29.799 --> 00:10:34.759 Avoid this impulse spending. Don't don't create more of an 214 00:10:34.799 --> 00:10:38.639 issue than you already have. The second one would be 215 00:10:38.919 --> 00:10:42.840 know your interest rates, so focus on paying off those 216 00:10:42.919 --> 00:10:46.000 high interest debts first. These are often your credit cards, 217 00:10:46.720 --> 00:10:49.399 and I mentioned just a moment ago that we've seen, 218 00:10:50.039 --> 00:10:52.159 you know, starting in twenty twenty two, we saw interest 219 00:10:52.240 --> 00:10:55.039 rates spike and then you know, they've come down a 220 00:10:55.039 --> 00:10:58.039 little bit, but they're still higher than they were, like 221 00:10:58.080 --> 00:11:01.159 I said, the previous ten fifteen years before that, so 222 00:11:01.799 --> 00:11:05.000 you may not notice. But your interest rates, a lot 223 00:11:05.000 --> 00:11:08.120 of them are not fixed. They're variable, especially your credit cards. 224 00:11:08.159 --> 00:11:11.600 So as interest rates change, your interest rate also changes. 225 00:11:11.679 --> 00:11:14.080 So more than likely you're paying more interest on your 226 00:11:14.080 --> 00:11:17.120 credit card now than you were three years ago. So 227 00:11:17.200 --> 00:11:20.120 take a look at those interest rates and prioritize those 228 00:11:20.200 --> 00:11:24.679 high interest debts first. Now you don't have to do 229 00:11:24.720 --> 00:11:27.879 this by yourself, so there are some pretty cool debt 230 00:11:27.919 --> 00:11:31.720 payoff tools out there. I mentioned credit Karma earlier. Credit 231 00:11:31.799 --> 00:11:36.120 karma dot com has some great calculators. Calculator dot net 232 00:11:36.200 --> 00:11:38.720 is another place you can go to find out. You know, hey, 233 00:11:38.720 --> 00:11:42.600 if I make this payment every month with this interest rate, 234 00:11:43.200 --> 00:11:46.279 when will I actually have this paid off? Goes back 235 00:11:46.279 --> 00:11:48.799 to what CJ was saying earlier. To make a plan 236 00:11:48.919 --> 00:11:51.879 to pay off debt. The last one is pay your 237 00:11:51.879 --> 00:11:55.279 bills on time. Late fees add up fast. They can 238 00:11:55.360 --> 00:11:58.240 hurt your credit score, and they're really just you know, 239 00:11:58.440 --> 00:12:01.600 adding to adding to your issue. And it's it's a 240 00:12:01.600 --> 00:12:04.360 pretty simple way to avoid some additional fees. 241 00:12:04.600 --> 00:12:06.960 Really good tips, Sara, as we talked this morning with CJ. 242 00:12:07.039 --> 00:12:10.480 Class and Eric Schwartz. They are our retirement planning professionals 243 00:12:10.480 --> 00:12:12.480 from Class Financial. If you got a question, love to 244 00:12:12.480 --> 00:12:14.559 have you join us this morning phone number six oh 245 00:12:14.600 --> 00:12:17.240 eight three two one thirteen ten. That's six oh eight 246 00:12:17.320 --> 00:12:19.519 three two one thirteen ten. Love to get you on 247 00:12:19.559 --> 00:12:21.759 the air again. Join this week by CJ. Closs and 248 00:12:21.879 --> 00:12:24.559 Eric Swartz. You can learn more about Class Financial online 249 00:12:24.679 --> 00:12:28.240 Class financial dot com. That's Coss k l aa S 250 00:12:28.559 --> 00:12:31.080 Financial dot com And they're telephone number six oh eight 251 00:12:31.360 --> 00:12:34.399 four four two five six three seven. No charge for 252 00:12:34.440 --> 00:12:36.480 the initial get to know your appointment at Class Financial. 253 00:12:36.600 --> 00:12:39.360 It will be complimentary to you again the telephone number 254 00:12:39.399 --> 00:12:41.960 six oh eight four four two five six three seven. 255 00:12:42.159 --> 00:12:44.919 Be talking about different types of debt with Cjen Eric, 256 00:12:44.960 --> 00:12:46.879 we will do that and take your call. Next as 257 00:12:46.919 --> 00:12:49.600 Money in Motion with Class Financial continues right here on 258 00:12:49.639 --> 00:12:58.200 thirteen ten wib A talking with our retirement planning professionals 259 00:12:58.200 --> 00:13:01.320 from Class Financial, Eric Schwartz and CJ. Closs. Of course, 260 00:13:01.320 --> 00:13:03.919 you can learn more about Class Financial on their website 261 00:13:03.919 --> 00:13:07.360 colss financial dot com. That's Class k l a A 262 00:13:07.679 --> 00:13:10.080 S Financial dot com. You can learn about the team 263 00:13:10.120 --> 00:13:12.440 at Coss Financially. You can learn about the separate divisions. 264 00:13:12.440 --> 00:13:15.399 You can also sign up online for the weekly Market 265 00:13:15.440 --> 00:13:19.240 Pulse newsletter. That all available to you at Clossfinancial dot com. 266 00:13:19.279 --> 00:13:22.000 Telephone number six oh eight four four two five six 267 00:13:22.159 --> 00:13:24.320 three seven. No charge for that initial gets to doing 268 00:13:24.320 --> 00:13:27.360 appointment at Coss Financial. It will be complementary to you. 269 00:13:27.639 --> 00:13:29.840 And again they're telephone number six O eight four four 270 00:13:29.879 --> 00:13:32.720 two five six three seven. Talking this week about debt 271 00:13:32.759 --> 00:13:35.960 and heading into retirement and left off we were just 272 00:13:36.039 --> 00:13:38.679 kind of scratching the service a bit on interest rates 273 00:13:38.720 --> 00:13:40.200 and what are some of the things we should be 274 00:13:40.200 --> 00:13:43.320 looking for when it comes to different types of debt. CJ. 275 00:13:44.679 --> 00:13:46.279 Yeah, good question. So we're going to kind of go 276 00:13:46.320 --> 00:13:50.120 through some some different types of debt, secured debt, unsecured 277 00:13:50.159 --> 00:13:54.440 debt and different categories that our clients commonly see. But 278 00:13:54.519 --> 00:13:56.639 before we do, I just found it ironic. Eric was 279 00:13:56.679 --> 00:13:58.919 just talking about it seems like you can finance just 280 00:13:58.919 --> 00:14:01.039 about anything today, and then one of the ads you 281 00:14:01.120 --> 00:14:03.320 probably caught this, Shan. One of the ads was like, oh, 282 00:14:03.360 --> 00:14:05.480 you can finance, and I won't be particular because I 283 00:14:05.519 --> 00:14:08.039 want to, you know, but one of the ads right 284 00:14:08.080 --> 00:14:11.320 before we came on was referencing being able to finance something, 285 00:14:11.720 --> 00:14:16.840 and I just found it ironic. Okay, moving on from that. Yes, 286 00:14:16.960 --> 00:14:21.559 so different categories, uh, credit cards. So according to lending Tree, 287 00:14:21.600 --> 00:14:24.840 the average interest rate is twenty four point two six 288 00:14:24.919 --> 00:14:27.840 percent right now on credit cards, and if your credit 289 00:14:27.879 --> 00:14:29.840 isn't great, that rate can jump up to twenty seven 290 00:14:29.919 --> 00:14:34.039 and a half percent or even higher. So obviously credit 291 00:14:34.080 --> 00:14:36.919 cards are what are a category kind of broadly that 292 00:14:36.960 --> 00:14:40.919 we call unsecured debt. Whenever you hear that, everybody just you. 293 00:14:41.159 --> 00:14:44.519 Sometimes it sounds overcomplicated, but think of it in terms of, hey, 294 00:14:44.600 --> 00:14:47.519 if you default on making your credit card payment, can I, 295 00:14:47.720 --> 00:14:49.960 as the bank or the credit card company, come and 296 00:14:50.039 --> 00:14:54.200 repossess something that you own to then reduce my risk 297 00:14:54.519 --> 00:14:57.240 to sell that repossessed item to then pay off some 298 00:14:57.279 --> 00:14:59.320 of the debt. And the answer is no, not with 299 00:14:59.360 --> 00:15:02.559 credit cards, because typically you're buying like groceries and other 300 00:15:02.600 --> 00:15:06.120 items that you can't repossess, you can't give get title to. 301 00:15:06.360 --> 00:15:09.919 That's the key to So we call it unsecured because 302 00:15:10.000 --> 00:15:13.519 if you default, there's no recourse. I hope that helps everybody, 303 00:15:14.039 --> 00:15:15.679 and of course that's why the interest rate has to 304 00:15:15.720 --> 00:15:18.919 be so high to mitigate that risk. The next category 305 00:15:18.960 --> 00:15:22.159 would be home loans. Ideally we want to see little 306 00:15:22.200 --> 00:15:24.679 to no mortgage debt as you approach retirement. We already 307 00:15:24.679 --> 00:15:26.840 talked about that. But as of the first of the 308 00:15:26.840 --> 00:15:30.399 week in February of twenty twenty five, the national average 309 00:15:30.440 --> 00:15:33.120 for a thirty year fixed rate mortgage is six point 310 00:15:33.279 --> 00:15:36.320 nine percent and for a fifteen year fixed rate mortgage 311 00:15:36.360 --> 00:15:39.799 it is six point h one percent. Listen, everybody, in 312 00:15:40.000 --> 00:15:45.039 historical norms, this is actually not bad rates. It's just 313 00:15:45.039 --> 00:15:47.240 just a few years ago it was like, I think 314 00:15:47.240 --> 00:15:49.720 the thirty year was at three and the fifteen year 315 00:15:49.799 --> 00:15:52.919 was at two, right, And so our brains are used 316 00:15:52.919 --> 00:15:56.519 to these insanely low interest rates, and so now when 317 00:15:56.559 --> 00:16:00.000 we gravitate back towards a normalized interest rate environment everybody, 318 00:16:00.000 --> 00:16:03.240 but he's panicking. Truth be told, these rates are pretty normal. 319 00:16:03.759 --> 00:16:05.960 What I would say to you is it doesn't really 320 00:16:06.000 --> 00:16:08.840 matter what the rate is. Being debt free is the key, 321 00:16:08.919 --> 00:16:11.440 because when you have debt, you have outgoing cash flow. 322 00:16:11.480 --> 00:16:13.440 When you don't have debt, you don't have that required 323 00:16:13.480 --> 00:16:17.879 outgoing cash flow. So those are the home loan rates, 324 00:16:18.559 --> 00:16:20.799 and then and then we're going to get into auto loans. 325 00:16:20.840 --> 00:16:24.759 So auto loans. In January of twenty twenty five, Edmunds 326 00:16:24.799 --> 00:16:28.879 dot com listed the average car loan interest rate for 327 00:16:28.960 --> 00:16:31.919 December of twenty twenty four as six point six percent 328 00:16:32.039 --> 00:16:35.159 for new car loans and ten point eight percent APR 329 00:16:35.279 --> 00:16:38.440 for used car loans. So again, somewhat of a historical 330 00:16:38.559 --> 00:16:40.399 average what we're seeing here on the car loans. But 331 00:16:40.440 --> 00:16:42.919 what I'd say to you is listen to that used 332 00:16:43.000 --> 00:16:47.080 car loan space. I mean, listen if well, if you've 333 00:16:47.080 --> 00:16:49.080 heard me talk about auto loans. I'm actually a big 334 00:16:49.120 --> 00:16:51.879 proponent of getting vehicles that are lightly used because there's 335 00:16:51.879 --> 00:16:55.080 about a thirty percent decline often off the new car 336 00:16:55.200 --> 00:16:57.799 purchase price. That's not always true, by the way, but 337 00:16:57.799 --> 00:17:00.600 that's typically true. So get a lightly use used vehicle. 338 00:17:00.679 --> 00:17:02.840 The problem with that is, now, if you get a 339 00:17:02.919 --> 00:17:05.440 lightly used vehicle that's had a thirty percent reduction off 340 00:17:05.440 --> 00:17:08.920 the MSRP and you don't have the cash to buy 341 00:17:08.960 --> 00:17:10.799 it with, the interest rate on that thing could be 342 00:17:10.839 --> 00:17:14.079 ten to eleven percent. So you get the point here. 343 00:17:14.119 --> 00:17:18.160 It's like, oh, man, if I'm gonna buy that used vehicle, 344 00:17:18.359 --> 00:17:21.200 I may want to either have cash to buy it 345 00:17:21.279 --> 00:17:24.160 with that would be our first choice, or if I 346 00:17:24.240 --> 00:17:25.880 don't have cash to buy it with and I need 347 00:17:25.920 --> 00:17:28.519 a vehicle to get around, then we get into what 348 00:17:28.519 --> 00:17:30.680 we call the length of the loan or what you 349 00:17:30.720 --> 00:17:32.839 know in finance or bank terms they would call the 350 00:17:32.880 --> 00:17:38.440 amortization timeline. So, unbelievably, you can get auto loans these 351 00:17:38.559 --> 00:17:42.200 days that last like up to eight years. For those 352 00:17:42.240 --> 00:17:45.480 who don't know, that is insanity. And the reason it's 353 00:17:45.519 --> 00:17:50.759 insanity is because the vehicle will be depreciating often faster 354 00:17:51.400 --> 00:17:54.640 than you are paying down the debt. Therefore, if you 355 00:17:54.759 --> 00:17:58.440 ever go to sell that vehicle, you might be upside down, 356 00:17:58.799 --> 00:18:01.519 meaning the vehicle's worth less than you owe. So what 357 00:18:01.559 --> 00:18:04.799 we would say is, listen, if you're forced into using 358 00:18:04.880 --> 00:18:07.240 an auto loan, although we would prefer that you don't 359 00:18:07.960 --> 00:18:10.279 then pay it off quickly, make it like a two 360 00:18:10.400 --> 00:18:12.319 or three year loan. And if you go but I 361 00:18:12.319 --> 00:18:14.000 don't have the cash flow for that, then I would 362 00:18:14.039 --> 00:18:17.200 say you might want to get a cheaper vehicle because 363 00:18:17.279 --> 00:18:21.759 pushing out that amortization timeline further. Yes, it brings down 364 00:18:21.799 --> 00:18:27.039 your payment, but it also reduces the amount of equity 365 00:18:27.079 --> 00:18:29.039 you will have in that vehicle over time. So if 366 00:18:29.039 --> 00:18:31.440 you're going to get an auto loan, just be be 367 00:18:31.440 --> 00:18:33.240 be very aware of the interest rate and try to 368 00:18:33.240 --> 00:18:34.920 get it paid off as quickly as possible. 369 00:18:35.039 --> 00:18:37.799 Talking this morning with CJ. Closs and Eric Schwartz. They 370 00:18:37.839 --> 00:18:40.839 are our retirement planning professionals from Class Financial website class 371 00:18:40.880 --> 00:18:44.839 financial dot com. That's colss k l aasfinancial dot com. 372 00:18:44.839 --> 00:18:46.880 And they're tell for number six o eight four four 373 00:18:47.000 --> 00:18:49.480 two five six three seven. No charge for that initial 374 00:18:49.559 --> 00:18:51.640 gets to know you appointment at Loss Financial. It will 375 00:18:51.680 --> 00:18:53.960 be complimentary to you. Again, they're number six oh eight 376 00:18:54.200 --> 00:18:57.359 four four two five six three seven. So CJ, what 377 00:18:57.440 --> 00:18:59.720 about it's all the new student loans when we need 378 00:18:59.759 --> 00:18:59.920 to know. 379 00:19:00.400 --> 00:19:02.799 Yeah, student loans are in the news right now. Hey, 380 00:19:02.839 --> 00:19:05.720 couple things real quick on those auto loans. Interestingly, enough. 381 00:19:05.759 --> 00:19:08.359 The average auto loan right now going back to auto 382 00:19:08.400 --> 00:19:15.400 loans is seventy months. Wowsers. Again. I just cannot emphasize 383 00:19:15.440 --> 00:19:18.960 to you all who are listening enough to say, if 384 00:19:19.000 --> 00:19:22.279 you are doing anything on a vehicle loan over five years, 385 00:19:23.039 --> 00:19:28.160 I personally just think that's ludicrous. I would much prefer 386 00:19:28.319 --> 00:19:31.119 that it's three years or less. And my first choice 387 00:19:31.279 --> 00:19:34.279 for you for your financial future would be that you 388 00:19:34.400 --> 00:19:37.880 pay for that vehicle with cash. And what that means 389 00:19:37.880 --> 00:19:40.160 because you go, how could I do that? Well, it 390 00:19:40.240 --> 00:19:43.400 means you need to pay yourself three or four hundred 391 00:19:43.440 --> 00:19:45.839 dollars a month for the next three four five years 392 00:19:46.279 --> 00:19:49.160 to build up the resources so that when you need 393 00:19:49.200 --> 00:19:51.720 to go buy a vehicle you write a check for 394 00:19:51.759 --> 00:19:54.440 that vehicle. What you will find is that when you 395 00:19:54.480 --> 00:19:56.799 are writing a check that took you three or four 396 00:19:56.920 --> 00:20:00.519 years to save to buy that vehicle, will buy a 397 00:20:00.799 --> 00:20:04.519 cheaper vehicle than you would have if you use debt 398 00:20:04.720 --> 00:20:08.519 to finance it. Yes, let that sink in. When you 399 00:20:08.640 --> 00:20:10.920 actually pre save and use your own money and you 400 00:20:10.960 --> 00:20:13.400 write a check for a vehicle, you will on average 401 00:20:13.440 --> 00:20:16.480