Episode Transcript
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Speaker 1 (00:00):
Yeah, Today's Q and A how much is good credit
and financial literacy worth? This is brought to you by
me Listen Ashes check Mark collections.
Speaker 2 (00:08):
Each day I feature a listener question.
Speaker 1 (00:10):
Since by one of these methods you mey, email me
Brian Mudd at iHeartMedia dot com, hand me up on
social at Brian Mud Radio. You may also use the
iHeartRadio talk back feature. We would love it if you
would love us. Just going to the app make us
your number one preset Priam much Show podcast number two preset.
Speaker 2 (00:26):
While you're in there, look for a little microphone button.
See it, tap it.
Speaker 1 (00:29):
You may lay down a message right there, maybe a
topic or question for a future Q and A. Today's
said this Brian some time ago, I recall you having
discussed what the value of maintaining good credit was over
the course of a lifetime, or something to that effect.
I'm asking because I'm currently working on financial education with
my soon to be eighteen year old son, who listens
(00:51):
to you as well.
Speaker 2 (00:51):
By the way, thanks well, thank you. I love hearing it.
Love hearing it.
Speaker 1 (00:57):
So, financial literacy, or the lack thereof, one of the
costliest issues in society today, and it's a problem for
most of our society. According to the annual t IAA
Institute Personal Finance Study, what percentage of adults are currently
(01:24):
financially literate? Only forty eight percent, Only forty eight percent.
This includes only thirty eight percent of adults understanding the
basics of investing, only thirty nine percent understanding insurance, and
(01:45):
only forty four percent understanding the basics of earning, income
and taxation. And that one in particular, All these have
enormous implications for your life. That last one in particular
is really something that is used often politically. For example,
it is really easy for politicians to manipulate voters who
(02:10):
don't understand the basics of even earnings and taxation. Now,
before diving into the implications specifically for credit, because that
was ultimately what this was about, I thought this financial
literacy piece was an important aspect. Here's an idea of
what the impact of overall financial literacy means to the
(02:33):
average person in this country. Financially Literate people earn more,
invest more, produce better investment returns, and maintain a net
worth that is how much higher do you think of it?
Just being financially literate. We aren't talking about being Warren
buffet here, just being able to pass a basic financial
(02:53):
literacy test, which most Americans are not currently doing. Being
able to do that, how much more net worth? I mean,
just having the basic knowledge as you said, I would
say like sixty percent. Yeah, multiply that by uh by
(03:15):
quite a bed, and you'll get there. Those who are
financially literate maintain a net worth that is two point
five times higher. And those are just the averages. So,
in other words, financial literacy will result in the average
adult being worth two hundred and fifty percent more than
(03:37):
they otherwise would be.
Speaker 2 (03:41):
With all other factors being equal, living the.
Speaker 3 (03:45):
Same life, doing the same relative stuff, simply having command
and then presumably making better decisions as a result of it,
two and fifty percent.
Speaker 2 (03:58):
More net worth.
Speaker 1 (04:00):
And that is the best way that I can think
of to illustrate the importance of financial literacy at any age,
but especially earlier. As you're talking about your son getting
ready to turn eighteen. I mean, this is perfect. As
for the credit specific question, I want to boil this
analysis down as much as possible because it is real
easy to get carried away with a bunch of numbers.
Speaker 2 (04:19):
Quickly.
Speaker 1 (04:20):
I was thinking about how to present this, and I'm like,
oh boys, it's gonna be so. Generally speaking, credit impacts
just about every aspect of one's financial life, from having
access to certain products and services to what you have
to pay for those products and services. So what I
decided to do to try to make this easy from
a sheer numbers standpoint, I broke out the average costs
(04:42):
for these aspects of life, housing, transportation, credit, insurance, and utilities.
And by the way, in utilities I included wireless service.
Here's what those breakouts look like. The total lifetime costs
in today's dollars for the the interest expense for the
average mortgage, auto loan, credit card, auto insurance, homeowners insurance,
(05:08):
and utilities. If you have a six hundred credit score,
better run, you an average of seven hundred and eighty
seven thousand dollars. If you have a seven hundred credit score,
that bumps down to seven hundred and five thousand. If
(05:30):
you have an eight hundred credit score, that comes down
to six hundred and thirty nine thousand. So, aside from
perhaps not always having access to all the products and
services one may want, the difference between a poor credit
score of six hundred and a good credit score of
seven hundred is eighty two thousand dollars. On average, the
(05:51):
difference between a good credit score of seven hundred and
an excellent credit score of eight hundred is an additional
sixty five thousand dollars. This also means that the difference
between a poor credit score and an excellent credit score
is one hundred and forty seven thousand dollars. Now, to
put this in additional perspective, the average full time income
(06:15):
in Florida is sixty eight hundred and fifty dollars. Right now,
this means that the average Floridian with poor credit must
work an additional two and a half years simply to
pay for the extra interest expense associated with having poor
(06:36):
credit compared to excellent credit.
Speaker 2 (06:39):
Two and a half years just.
Speaker 1 (06:42):
To accommodate poor credit, And that is not factoring into
the conversation the opportunity costs associated with that money, like
what would happen if you took it, saved and invested
over the course of your life so on that those
numbers would be massive, but anyway for your purpose is
hopefully helpful and motivational
Yeah, Today's Q and A how much is good credit
and financial literacy worth? This is brought to you by
me Listen Ashes check Mark collections.
Speaker 2 (00:08):
Each day I feature a listener question.
Speaker 1 (00:10):
Since by one of these methods you mey, email me
Brian Mudd at iHeartMedia dot com, hand me up on
social at Brian Mud Radio. You may also use the
iHeartRadio talk back feature. We would love it if you
would love us. Just going to the app make us
your number one preset Priam much Show podcast number two preset.
Speaker 2 (00:26):
While you're in there, look for a little microphone button.
See it, tap it.
Speaker 1 (00:29):
You may lay down a message right there, maybe a
topic or question for a future Q and A. Today's
said this Brian some time ago, I recall you having
discussed what the value of maintaining good credit was over
the course of a lifetime, or something to that effect.
I'm asking because I'm currently working on financial education with
my soon to be eighteen year old son, who listens
(00:51):
to you as well.
Speaker 2 (00:51):
By the way, thanks well, thank you. I love hearing it.
Love hearing it.
Speaker 1 (00:57):
So, financial literacy, or the lack thereof, one of the
costliest issues in society today, and it's a problem for
most of our society. According to the annual t IAA
Institute Personal Finance Study, what percentage of adults are currently
(01:24):
financially literate? Only forty eight percent, Only forty eight percent.
This includes only thirty eight percent of adults understanding the
basics of investing, only thirty nine percent understanding insurance, and
(01:45):
only forty four percent understanding the basics of earning, income
and taxation. And that one in particular, All these have
enormous implications for your life. That last one in particular
is really something that is used often politically. For example,
it is really easy for politicians to manipulate voters who
(02:10):
don't understand the basics of even earnings and taxation. Now,
before diving into the implications specifically for credit, because that
was ultimately what this was about, I thought this financial
literacy piece was an important aspect. Here's an idea of
what the impact of overall financial literacy means to the
(02:33):
average person in this country. Financially Literate people earn more,
invest more, produce better investment returns, and maintain a net
worth that is how much higher do you think of it?
Just being financially literate. We aren't talking about being Warren
buffet here, just being able to pass a basic financial
(02:53):
literacy test, which most Americans are not currently doing. Being
able to do that, how much more net worth? I mean,
just having the basic knowledge as you said, I would
say like sixty percent. Yeah, multiply that by uh by
(03:15):
quite a bed, and you'll get there. Those who are
financially literate maintain a net worth that is two point
five times higher. And those are just the averages. So,
in other words, financial literacy will result in the average
adult being worth two hundred and fifty percent more than
(03:37):
they otherwise would be.
Speaker 2 (03:41):
With all other factors being equal, living the.
Speaker 3 (03:45):
Same life, doing the same relative stuff, simply having command
and then presumably making better decisions as a result of it,
two and fifty percent.
Speaker 2 (03:58):
More net worth.
Speaker 1 (04:00):
And that is the best way that I can think
of to illustrate the importance of financial literacy at any age,
but especially earlier. As you're talking about your son getting
ready to turn eighteen. I mean, this is perfect. As
for the credit specific question, I want to boil this
analysis down as much as possible because it is real
easy to get carried away with a bunch of numbers.
Speaker 2 (04:19):
Quickly.
Speaker 1 (04:20):
I was thinking about how to present this, and I'm like,
oh boys, it's gonna be so. Generally speaking, credit impacts
just about every aspect of one's financial life, from having
access to certain products and services to what you have
to pay for those products and services. So what I
decided to do to try to make this easy from
a sheer numbers standpoint, I broke out the average costs
(04:42):
for these aspects of life, housing, transportation, credit, insurance, and utilities.
And by the way, in utilities I included wireless service.
Here's what those breakouts look like. The total lifetime costs
in today's dollars for the the interest expense for the
average mortgage, auto loan, credit card, auto insurance, homeowners insurance,
(05:08):
and utilities. If you have a six hundred credit score,
better run, you an average of seven hundred and eighty
seven thousand dollars. If you have a seven hundred credit score,
that bumps down to seven hundred and five thousand. If
(05:30):
you have an eight hundred credit score, that comes down
to six hundred and thirty nine thousand. So, aside from
perhaps not always having access to all the products and
services one may want, the difference between a poor credit
score of six hundred and a good credit score of
seven hundred is eighty two thousand dollars. On average, the
(05:51):
difference between a good credit score of seven hundred and
an excellent credit score of eight hundred is an additional
sixty five thousand dollars. This also means that the difference
between a poor credit score and an excellent credit score
is one hundred and forty seven thousand dollars. Now, to
put this in additional perspective, the average full time income
(06:15):
in Florida is sixty eight hundred and fifty dollars. Right now,
this means that the average Floridian with poor credit must
work an additional two and a half years simply to
pay for the extra interest expense associated with having poor
(06:36):
credit compared to excellent credit.
Speaker 2 (06:39):
Two and a half years just.
Speaker 1 (06:42):
To accommodate poor credit, And that is not factoring into
the conversation the opportunity costs associated with that money, like
what would happen if you took it, saved and invested
over the course of your life so on that those
numbers would be massive, but anyway for your purpose is
hopefully helpful and motivational
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