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