It's time for the b a q a A. The b a q A What you say, The b a q A with Manda, The b a q A with Tippanda, the b a q Welcome back to Brown a Vision, Question and Answer. You have questions, We have some answers. Although we're not your attorney, your financial advisor, your therapist, your mama, but we are two very very smart Brown girls about money, career, business, entrepreneurship, so we'd love your questions.
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You can also if you want.
To be in in the stew as the young people say and sit in the hot seat, you can leave us a voice note via Instagram. Brown and Vision pod cast on Instagram. And yeah, we will potentially have you in the studio with us. We're gonna do money questions today, Mandra right.
Yeah, we got some juicy ones and we're gonna go old school here and read them. These are some questions that were submitted through ig Let's kick off. There are a couple of debt questions today, which is one of our lovely one of our favorite topics, especially considering what's happening in the economy right now. So let's start with ig question number one from listener MSW. MSW says, Hi, ladies, can you both explain how it's hard to get rid of credit card debt during a recession? Is it because
they increase the interest rates? Should we not use credit cards at all? Due to this? I'm getting emails about how I can double my points if I use my credit card and other deals like that. I love the podcast benefit since day one. Thank you, MSW.
Oh MSW, are you a social worker because that's the social worker you know, MSW, exactly I can ask.
Okay, I thought it.
Sounded like kind of vaguely.
You girl with the people said.
They are trying anyone scentivise you to use your credit card because they make so much money off of these days billions.
Yes, so for one, I'll take on the tod you not use your credit card, No, girl, If you pay your credit card off in full every single month, they ain't got to worry about a lot, you know, like that's not you know, that's not the issue paying off. So I, for example, finally joined the Big Girl money club. I don't know if I told you this manager that you know I have my my I think it's mostly my American Express card. I put like almost all my bills on it, and I paid off every month in full,
and I have so many points as a result. But I was scared to join the big girl money club because even though I've been paying off my credit card in full, well, you know, like the club where people like put all their bills on their credit card so they can just use points, and they put them on
their credit card because they paid off in full. You know, even though I've been paying off my credit card in full for like over ten years, I was scared to put my bills on my credit card, you know, because it's just like what if it's like girl, First of all, I live off ten percent of what I make.
You're gonna be fine.
So instead now as a result, you know, I use those points to upgrade when I fly to you know, to really for travel for me.
I really love that.
So using a credit card is not inherently bad. If you paid off in full every month, you don't have to worry about the rais and interest rates. But our friend Jerome not too long Gero Rome Powell not too long ago, right, he raised interest rates, right, mandra he did.
I mean, they've been raising interest rate interest rates quarter after quarter, and they're doing this for a couple of reasons. Like y'all know, during the pandemic, y'all were getting stimmy's okay, we were getting stimulus checks. Not only that, but like the labor market was hot, hot, hot, We're getting big fat raises, a great resignation. Y'all were quitting your way rich, and I love it and I'm here for it. But because Americans suddenly had sitting on all these piles of cash,
basically extra money in the bank, we were shopping. We were shopping a lot. We were shopping so much that supply chain is you started to be a problem and there literally wasn't enough stuff for as much appetite as we had. And that is what has been leading to inflation, which is like increased prices. But what's crazy is like, yes, inflation is to blame, because you know, there was more increased demand, but also you just see companies raising prices
almost using inflation as an excuse to raise them. You know, because like even though inflation averages what like seven percent right now, you're seeing prices for you know, some products
way more than just like seven percent more expensive. But anyway, So one way that the Federal Reserve is trying to control inflation, which is like a good thing they have, they have our best interests at hearts at heart, I think, is they start to raise the base federal funds rate, which does impact the cost of borrowing not just for you and me, but also big corporations as well. So one of the first ways that we feel it as consumers is in our credit card. So your interest rate
on your credit card very likely goes up. Everyone's probably got a variable rate interest credit card. That's pretty much the only kind you can get these days, so it will go up when the rates go up. So if you haven't, go check your most recent credit card statement or your email and see what your rate is these days. Because you're right, it is getting increasingly more expensive as
they raise rates to carry credit card debt. So yes, if you have credit card debt, I would absolutely encourage you to stop accruing additional debt and focus on paying it down because it's just getting more and more expensive yeah, to carry it. So that's your little mini inflation slash fed lesson for the day. I was looking like, what was the average APR right now, and it's a about it's over. Wait, let me check. It's twenty two point nine percent. Yes, because I remember.
Getting credit card, it's like between twenty and thirty percent. Credit cards usually like range between. I mean, if you have excellent credit. I remember my Chase Good Time card when I got that, it was sixteen percent. That was back in the eight days when.
Rates were really low, back in my twenty seventeen sixteen something.
My last fourteen ninety nine. I remembered to think.
I was look at me.
It's still a lot, but you know, trying not to carry a balance. But I am someone who like I have I have been. I joined the Big Girl Club and like getting getting different cards for different like I have a Target Red card and I have my AMEX for shopping, and I have my Chase Good Time Card for travel and food, and I have a business credit card. So no, we have like four credit cards to track Tiffany, I have a confession to make. I was actually laughing.
I was cracking up with Jamila's Sufranz. She's been on the show before. She's the co host of or the host of Journey to Launch. She and I were confessing to each other that we paid interest fees on our credit cards recently because we just forgot to pay them all. Yes, same, And I was like, I never did this when I was broke, but yeah, anyway, it's a dirty little secret. But yeah, it's getting expensive out here, so you have to be really careful.
Yeah, So inherently should you not use credit cards at all?
Not? I don't believe so.
But you got to know yourself, right, It's like, if you know that, like you're not paying it off in full, and you're and you're you know, having like a little bit of a struggle, then you want to suspend.
Or at least reduce the use of credit cards, you know.
But if you're someone who was already paying them off in full every month, then I wouldn't concern myself, you know, you know so much like I don't. I couldn't even tell you that in my interest rates on my credit cards because why I pay them off in full, you know, every single month. And so yeah, so but I love this question. It was a really great one, Like, you know, so thank you Emma's w for what you do for the people. But also this is just a really great,
really great questions. I think it's important for people to understand that. I think when people think that when the Feds rate raise the rates, Mandy, that people think that it's it's like the rate that they're raising is like the credit rating rate that we get as consumers.
But it's like no, no, no, no.
No, like it trickles down, you know, no, but meaning like you know, like Jerome Powell says, Oh, the new rate is you know, up you know, point five percent, and then your credit card interest rate is gonna be up point five percent. It's not that's not the rate that they're raising, but it trickles down, yes.
And to us, you know, because there's really like the rate.
For like like the big bank borrowers, Like that's what's happening there exactly.
And it also leads into like auto loan rates obviously housing like mortgage rates are so incredibly And the funny thing is that and you know what. Shout out to the chief mortgage economist at my former company, lending Tree, ten Die cup Feeds say, bless his heart. He explained this to me. I would say no less than a dozen times, and I still don't remember why. But I do know enough to know that the federal rate increases. They don't directly impact mortgage rates, but indirectly they do.
So they do, but it's not like a direct you know impact or whatever. Ten you have to explain to me again. But anyway, that's why housing is getting more expensive, your auto loans, your personal loans are getting more expensive, any kind of like consumer debt.
Usually the only art like it's just got to be more pricey. Yeah.
The only upside is like your savings rates will be going out rural. Yeah, so I think a couple percent. We're getting back to the heydays of your highyield savings accounts.
Girl, it's like it's giving three point three three point seven. I'm leaving the ally I sawry. Yeah, like, girl, because you ain't paying as much as others.
So I'm leaving. Ain't know, I don't know. We're switching over from Allah. You know, if you caught it, you caught it.
But because I'm just like, yeah, because I'm not loyal pose what I got to be loyal for.
I'm loyal to the coin who's paying better than access rates. And so I'm switching.
And so that is the good thing that here's the thing about interest rates. Okay that what's important to understand is that depending on where you are in your financial journey, the raising of interest rates is a good or bad thing. If you're on this side of your financial journey where a debt is still prevalent and it's like, you know that, like you're just having a hard time with debt, then the raising of interest rates by the Fed is going to be a bad thing for you because you're going
to have to contend with higher monthly payments overall. If you are on the side of your financial journey where you've minimized or totally eliminated debt and now you're saving and investing, then that's the side. Then the Fed's raising the interest rates is a good thing because you're like, ooo, who the money that I have saved actually is earning more money, and I have the potential to keep and
make more. So depending and there's no judgment on where you are on what side, because we have both both, Manny and I have been on both sides, you know, and so like now I'm on the woohoo, you know, I'm finally on the side where like I don't have any debt, and so the raising of the interest rates, it doesn't concern me. If anything else, I'm like, hey, let me see how much I can squeeze out of
my high yield savings account. So just keep that in mind that, like very often personal finance, something is not good or bad. Like credit cards. I don't believe that they're good or bad. It just depends on where you currently are with your finances and how you navigate them. And so you know, our desire, Mandy, as I desire, is to help you work towards the other side.
When these things happen.
It's good for you, you know, and as good as it can be.
Yeah, yeah, it just sucks that with these rates, and like the market's always uncertain for some reason or another. But we're still seeing, like my portfolio is not giving what I would like to see. It's still down like ten percent my investments for the year. And the truth is, like a lot of companies, especially this is why we're seeing somebody layoffs in tech. Not to turn it into the career episode, but you know, tech relies on a
lot of borrowing venture capital funding for their businesses. And when the cost of borrowing the money that these businesses are lending them and the money that businesses themselves are being lent, so they can give it to tech firms. When that gets more expensive, like it does when the rates go up, they like to give money to tech less. And so that's why tech is. You see them doing layoffs and being more heavily impacted by what's happening in
the market. And yeah, in general doesn't love expensive borrowing. So yeah, it's it's a very complex picture in general. But do what you can pay down your debt. Look into like balance transfer credit cards. If you have a balance and you want to save some money, maybe you can find a zero percent interest like an intro offer that you can transfer your credit card to a different card. I did that last year, and it can buy you
some time. And like, my dad just had to pay for a bunch of dental work and he got a personal loan at nine percent fixed rate, so that rate is not going to change and he can use that nine percent loan, which is much better than if he had had to put it on you know, credit cards, car or what he wanted to do, which was take money out of his baby four one K. I helped him just set up a couple of years ago. I was like down't touch it. Yeah, fun, fun times, but
all right, ms W thank you for the question. Should we take a quick little break and be right back with another money question for the BAQ.
And We're black and back.
Second question comes from mss D d or it is a double D girl. That sounds like a lot anyway, Hi, ladies, love your show. Thanks girl. I spent the past few years focusing on paying off debt.
Another debt question. Also, I was.
Able to get my student loan discharged due to my disability. Actually would like to learn more about that double D. You know, like you don't have to give me, like you know all your business, but you know, how were you able to because lots of people are not able to do that? And I'm curious, she says. I work full time and I'm wondering what I should do next. I have credit cards that I pay off each month. I have an emergency fund, but of course I can
always say more. I should probably focus on stashing away from my retirement. I don't want to work in corporate America forever. I just wanted your opinion on what's the most important. Thanks for you, Thank you for all, Thank you for all you both do. Girl, it's just a lot of words to thank you for all you both did. I problemse double D.
I can read.
So this is a really great question because it's funny, you know, because.
Money can be dried and we go do with money.
So this is a really great question, you know, because this is kind of like on the other side, this is you know, this is your super fortunate you know, all of a sudden, you know, student loan debt, which I'm sure with a heavy load, is gone, and now you have this excess monthly payment that you don't have to pay out. So it's like emergency fun stashing away for retirement, you know, like like what should she be doing?
You know, she has got credit card debt still, so what say you manager to kick it off?
I mean, it's Harvard out knowing exactly how much credit card debt she has. But I'm in the I'm kind of like, kind of greedy. I'm like, can you do a little bit of everything? Can you increase your retirement contribution? Because really you have more money, less money coming out of your paycheck each month, so put the money to work. And it sounds like maybe you haven't been saving for retirement,
investing for retirement while you're paying down your debt. So I would prioritize that and then take some money and add to what you've been paying on your credit cards. You can pay those down faster. Those would be the priorities that I would have. And you do have an emergency fund, which is you know, which is great. You could be adding to it since you already have it. I would prioritize the retirement and credit card debt.
I agree, because you have to think to yourself this right that, like Mandy just read earlier in the question, right, that credit card debt, I can almost guarantee that, unless you have a balance transfer card or whatever, that your interest rate lies somewhere between twenty and thirty percent. So
the market is not yielding twenty or thirty percent. So even you know if you were to invest it, you'd still be losing because you're losing so much with the credit card debt that whatever gains will be a race by that loss. So I'd be focusing on credit debt. And normally I like for people to start with a
snowball method. But for you, sus, since you got rid of this big lump sum with this student loan, I probably would look at the credit card debt with the highest interest rate first and really work on the avalanche method, especially as we go into this potential recession and interest rates are likely to continue to rise, so i'd pay off that credit well, I'd be putting some of it toward paying off that credit card debt, especially with the
highest interest rate. And to Mandy's point, you know it is your younger self job to look after your older self, so you know i'd be looking if I can. Will this allow you to start to max out your retirement every year? Consider doing that or getting close to maxing it out, because you're right, you don't want to work anywhere forever, ideally unless you like to really love it.
And then if there's anything left over.
You know, I'm curious how much in the emergency fund that you have if you have your three to six months and I don't you know there is because you said like you could always save more, and I was going to, like, you know, be like girl, this actually you can actually oversave.
Like I'm not gonna lie.
I'm kind of in that oversaved category. Soce manager Loky Hockey, we.
Have like a year. It's like, girl, why do you say I have over eight years with the saving saved.
Which anything above that, I mean, I'm already being ridiculous because I'm like, girl.
You do not need this money to save this much, but.
It's for my own comfort. So I have a year's worth of expenses saved that let's just say I had five years. That's too much because four of those years at a minimum should be going and investing for wealth. Because if I'm maxing out retirement, I don't have debt, my emergency fund is fully funded. That excess money should really be invested in for wealth. That is what the
excess money is for. And so if you are in a place where there's still money left over because I don't know how much your your student loan payment was, that you should consider starting to invest for wealth because you have your reach. You're on the other side of like maintenance of money, and you're on the side of really growth of money. Because retirement investing is not the same thing as wealth investing. Retirement investing is investing for
to maintain your current lifestyle. You know, Like I know they show you the commercials was like retire, you'll be on the island. No, I need you to look around your life. Now, hey, life, If I set aside this, how I'm going to continue to live?
Yeah, which is fine, you know what I mean. You know, it's better than cat food, you know.
So that's what retirement investing for retirement is to maintain your current lifestyle and if you can. That's why it's the bear bones basic. So if you've done these bear bones basics, then you have money left over, then consider like setting aside to invest for wealth, because then you can elevate your current lifestyle and then also elevate your your your lifestyle in the future.
So so no believe, I was just thinking about the fact that she says she has a disability. Obviously don't have more specifics on what that disability is. But it may even be more important for you to be setting aside money for your future self because you may need additional health care, you know, support, And to that, I would say look into if you have an HSA, a health savings account that you can put as part of
your retirement plan. You know, that can help you set aside dollars pre texts that you can use for health expenses in retirement later down the line, and you can actually invest that money too. So there's another advantage there. But yeah, I'm I'm I'm definitely pro long term savings and investing for you, and good luck with them with your credit card debt too, and kudos, I'm getting your student loans discharge you. I'm with Tiff, like, I want more details. How'd you do with that double date?
Yeah?
Share the deeds because you know we might be able to It might be helpful to be like, hey, yeah, like I said, you don't have to share what your disability is, but it'd be just great to know that maybe it's like, hey, I was able to do it because this law or this whatever, and we could share that information with our audience.
So wow, that's the idea to day. I got ready say double D chat and I tell you I'm just I'm just mad. I'm just jealous. That's all. At the end of the day, I know we need the.
Remember someone told me that I looked at my journal from sixth grade and I literally wrote, Timothy Cook is not my friend.
He said, I'm a member of the any Batic.
Oh my god, boy, who doesn't do that ship to little girls?
I mean it was I was trapping past because literally in the journal, why was the page tear stained.
I know maybe bites you're like I love it and you're not supposed.
To have I mean for real, but whatever, Tim Cook, you were a jerk. But no Cook, oh you do no, no, but no.
If you guys want to be you know, if you want to participate in b a Q, you can always send us like just written, you know, messages on any of our social platforms or Brandon Bitsch podcast dot com
and click ask us anything or contact me form. If you want to be actually in studio and record with us, which we love that too, you know, you have to leave us a voice note on Instagram so we can hear your voice, you know, make sure you know you got it all together, and then we'll invite you into the stew with me and Mandra Awesome.
See you guys next time. Bye, Hey ba fan, We could not do this show without your support or the support of our team behind the scenes. The Brown Emission Podcast is produced by Cumulus Podcast Network. It's edited by the wonderful Emani Crosby and produced by Tanya Bustos. Dennis Stimplinsky is our in house tech guru, and I am Bandy Woodrid Santos your co host, and I will see y'all next week.