June 4, 2025 • 33 mins
Financial jargon isn’t just annoying—it’s expensive. Banks bank on the fact that most people don’t really know what terms like APR, APY, and amortization actually mean. That confusion? It could be costing you thousands.
This episode breaks down the alphabet soup of money terms that keep smart, successful people stuck.
No jargon. No fluff. Just the knowledge banks hope you never Google.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
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(00:45):
If financial jargon like APR,apy or amortization make you
think WTF and make your eyesglaze over, then you are not
alone.
This episode is for you.
We are here to end theconfusion that is costing you
money.
In this episode, we are goingto break down the fancy finance
lingo that banks are using tokeep you in the dark.
(01:07):
We'll teach you what theseterms really mean, how to spot
red flags in credit card andloan offers, and how to finally
understand your savings accountand what it's actually doing.
No fluff, no judgment, justreal talk that will help you
make smarter money moves.
Speaker 2 (01:29):
If this is of interest, stay tuned.
Hey babe, what are we talkingabout today?
Speaker 1 (01:36):
We're talking about the world of finance and all of
the crazy acronyms, the jargon,the lingo, that oh why HSA, ppo,
hysa, apr, ayp I don't know, Imean just like WTF.
Speaker 2 (02:09):
So, more specifically for today's episode, though, we
are going to focus on APRversus APY, apy all right,
please, please, tell us.
Where are we starting?
So, first and foremost, likewhat do these acronyms actually
stand for?
Please tell me so apr is annualpercentage rate and apy is
annual percentage yieldR is whatyou see on your credit cards.
Yes, so the main differencebetween the two is that an APR
(02:29):
is what you are going to becharged to borrow.
So you think about on yourcredit cards.
On loans, this is what you'regoing to see the APR.
This is the amount that you'rebeing charged to borrow that
money, as compared to with APY,annual percentage yield.
This is what you're going tosee on savings accounts, cds.
So this is going to be what youearn the money I'm making.
Speaker 1 (02:50):
Yes, not the money they're taking, correct?
Speaker 2 (02:53):
that is the main difference between the two okay,
so apy is the better one.
Speaker 1 (02:59):
Apr we want to stay away from and they.
Speaker 2 (03:02):
I mean, you know, the sad part is is that
unfortunately, too many peoplemake financial decisions where
you need to be taking this,these two, into account and they
don't really understand whatthey are and they're kind of
just you know, you know, oh, I'mgoing to go off.
What is the easiest one to do,I'm going to go.
Which one's going to provide mewith rewards?
You know what is a brand namethat I'm familiar with?
(03:32):
And they really don't read thefine print and there might be
hidden fees, poor returns,higher rates than you
necessarily need if you were togo with a alternative option and
unfortunately you're missingout and you know, potentially
costing you money when you'renot understanding these
different terms.
Yeah, it's the little terms andthe little acronyms that could
be costing you big bucks in theend and, to be honest, as
someone who works in thefinancial services industry,
they don't make it easy for you.
No, they don't make it easybecause, in all honesty, the
(03:55):
word yield throws a lot ofpeople off like what does that
really mean?
Right right because, like youhear, interest rate and you know
that's bad you know thatinterest rate could be good.
Oh well, if you're earning it.
Yeah, okay, yeah true becausethey throw you off on purpose,
because most people think about,for example, like with a
savings account you know theinterest rate on the savings on
a high yield savings account,but they don't also associate
(04:17):
that that.
Speaker 1 (04:18):
That's what the apy is the annual annual percentage
yield correct.
Speaker 2 (04:23):
Okay, ok, so like I said they unfortunately they
overcomplicate it when I thinkit could be explained in much
simpler terms.
So if you're out there thinkinglike hey, like I just listening
to the few first few minutes ofthis podcast, you're like, oh,
I didn't understand that You'renot alone.
Speaker 1 (04:37):
Right.
Speaker 2 (04:37):
Like they're not making it easy for you.
Speaker 1 (04:41):
Well, and I mean the APRs on credit cards right now
are sky high.
I mean some of them are pushing30%.
That's crazy.
Speaker 2 (04:53):
And that's the biggest thing, when we say that
you have to understand this andbreak it down and really make
your decisions on which optionyou're going to select in
certain scenarios, based off ofthese numbers.
Speaker 1 (05:05):
You have to run the numbers.
Speaker 2 (05:07):
You have to run the numbers, especially when it
comes to the APR.
This is what you're going to becharged to borrow.
You have to understand what theinterest rate is on that.
In addition to, are there anytype of additional fees?
So let's just use credit cardsas an example.
You might, like I said, withinterest rates the way they are
now, you might have somewherealmost close to an APR interest
(05:28):
rate of 30% on a credit card.
Speaker 1 (05:31):
I mean above 20% is pretty common.
Oh, definitely above 20% yeah.
Speaker 2 (05:35):
But then also, once again, it depends on your credit
score as well.
But then you also take intoaccount any additional fees.
So is there an annual fee toeven just have that credit card?
Speaker 1 (05:43):
Yep account any additional fees.
Speaker 2 (05:44):
So, is there an annual fee to even just have
that credit card?
Yep, because that's anadditional fee that you have to
factor in.
And then also, if you'repotentially late on any of your
payments, is there an additionallate fee?
So, understanding one what theAPR is in regards to how much
you're being charged to borrow,what is an annual fee that's
associated with that, if thereis one, and then any other
potentially hidden fees, such aslate fees.
Speaker 1 (06:04):
Yeah.
Speaker 2 (06:05):
All those need to be taken into account.
Speaker 1 (06:07):
Well, so two things, obviously.
With the credit card.
Let's say you're not payingyour credit card balance in full
and you have a, let's say, 22%interest rate and your balance
was $120.
You paid $80.
Now you have a $40 balance.
That $40 balance is still goingto incur that same 22% interest
(06:29):
rate, right?
Speaker 2 (06:29):
Well, not at that one time.
So the APR is the interest rateover the course of the entire
year.
All right, real quick.
I want to speak to the personlistening who feels like they
can't work with a financialplanner yet because they're
carrying a lot of debt.
First of all, I see you and Ineed you to know you're not
broken, you're not behind.
(06:51):
You're just in a tough season.
I created something just for youbecause I've had people reach
out who are serious aboutchanging their money story.
But the full financial planningpackage just wasn't the right
fit yet.
So I built a new servicethrough Oak City Financial
that's focused completely ondebt reduction.
No fluff, no shame.
You'll get a one-time planningsession, a personalized payoff
(07:12):
strategy, your own financialdashboard and monthly coaching.
If you want extra support whileyou climb out, it's $300 to get
started and $100 a month.
If you want that ongoingguidance, that's it.
This is about helping you getunstuck, not making you feel
like you failed.
If this sounds like what you'vebeen needing, go ahead and
schedule a call with me.
The link is in the show notes.
(07:32):
Let's take the first steptogether.
Let's take the first steptogether.
Speaker 1 (07:43):
I think the one thing to note that's really important
is that it doesn't matter whatyour APR is if you're paying
your credit card off in fullevery month.
Correct you only I mean, I knowthat's pretty basic, but like
it only matters if you're notpaying it off, if you're
carrying a balance, that's whenit matters If you are paying it
off in full every month then itdoesn't matter if you're paying
(08:04):
a 60% APR?
Hopefully not, but you know,because you're literally not
paying it at that point.
So the goal is especially withthe credit cards, especially the
credit cards that have feesattached.
Like we've said this before,but we usually most years we pay
close to $1,200 in credit cardfees, the annual rate that we
(08:27):
pay to hold the credit cardbecause of various perks.
That has nothing to do with theAPR, but the APR only matters
when you're carrying a balance,because then that's when you
have that penalty of quoteunquote borrowing the money.
Speaker 2 (08:40):
Correct, correct.
Speaker 1 (08:41):
Yeah.
Ok, let's go to APY, because Ithink most people have at least
seen APR, have some inkling ofwhat it means.
But annual percentage yield.
So that's a good one, becausewe're getting money back.
Speaker 2 (08:55):
Yeah, this is like I said before.
These are the ones you're goingto see associated with a
savings account, a CD, and thisis going to be the interest that
you earn on your money.
So this is the positive one.
Speaker 1 (09:07):
Yes, that's the one where our money is making money.
We'd love to see it.
If you don't have a high yieldsavings account yet, what are
you doing?
We talk about it on everyepisode.
Use the link in our show notes.
We have one for Ally and wehave a high yield account that
we really like.
With Wealthfront as well.
Your money that is sitting inyour emergency savings, put it
(09:27):
in a high yield savings.
Speaker 2 (09:28):
And the funny thing is is that this is the one that
is a reoccurring thing that Isee for individuals when I start
to work with them, or just even, you know, talking to people,
is that they're still usingthese traditional brick and
mortar banks where they'regetting 0.02, 0.03% interest
rate on their savings accountand I'm like why?
Speaker 1 (09:51):
Like you could literally be making thousands of
dollars a year just by parkingyour money into a high yield
savings.
Speaker 2 (09:57):
And the funny thing is that sometimes these are the
same people who are like oh youknow, can you help me beat the
market?
I'm like I can't help you beatthe market, but I can definitely
give you two seconds of advicethat is going to give you over a
thousand cent return on yoursavings.
Speaker 1 (10:14):
They're like should I be investing in crypto?
And you're like shut up andopen an HYSA.
Speaker 2 (10:22):
The amount of, like I said, the amount of people that
still have savings accounts,traditional savings accounts,
where they're getting 0.02%, isastonishing to me, because you
can easily go online and ittakes not even five minutes to
do.
Speaker 1 (10:37):
Yeah, and just as a call out, if your money is
parked at the Bank of America's,the Wells Fargo's, any of those
traditional brick and mortars,or even at your local credit
union, and it is not named as ahigh yield savings account, you
are making no money.
So don't assume that your moneyis sitting in a high yield
savings account if you didn'tactually put it in a high yield
(10:58):
savings account.
Speaker 2 (11:00):
So here's a task for people listening.
If you don't know what yourcurrent APY annual percentage
yield is on your savings accountthat you have right now whether
it's a high yield savingsaccount or just a regular
savings account go look it up.
Speaker 1 (11:14):
Go find out what it is.
Speaker 2 (11:16):
We know what ours is, but you need to go look it up.
Go find out what it is.
We know what ours is, but youneed to go look it up.
Speaker 1 (11:20):
Yeah, I mean we're making 4.5% on the money sitting
in our savings that we hope tonot touch and it just kind of
keeps growing and we're makingmoney for it sitting there Most
basic thing that you can do foryourself this month.
Speaker 2 (11:35):
And I also do want to point out.
So, for example, with like asavings account, a high yield
savings account or regularsavings account, more
specifically, your APY canchange.
Speaker 1 (11:43):
Yes.
Speaker 2 (11:44):
All right.
Now, with the CD you're lockedinto a certain APY for a certain
period of time.
So for example, say maybe a oneyear, 12 month CD, you're going
to have that same APY for theentire 12 months, but then, once
that 12 months ends, then yourAPY can change.
So I do want to also, like Isaid, keep that in mind that you
have to constantly notconstantly but periodically keep
(12:06):
up with this information andsee if there's any changes to
the APY on these differentaccounts.
Speaker 1 (12:10):
Be aware.
Yeah Well, and two, even if,going back to APR, maybe you had
a promotional offer for sixmonths, eight months, nine
months a year, whatever with acredit card, put that in your
calendar Because as soon as thatpromotional rate is over, it's
probably going to jump back upto that crazy high percentage.
So you need to be aware of that, especially if you're signing
(12:31):
up for promotional offers ofsome sort.
Speaker 2 (12:34):
Yes, everything is in the details.
Yes, the fine teeny, fine,teeny, tiny, teeny, tiny print
you will have differentinstitutions that show like a
low apr and a high apy and onceyou read the fine print it
really reveals what the truth isbehind it.
So, like you know, like yousaid, like you might see a high
apy, but then you read the fineprint it's like, oh, that's just
(12:55):
for like the first two or threemonths yeah and then it just
drops down to the regular, whichis fine.
You get a little bit more, butyou do want to make sure that,
over the course of an extendedperiod of time, that, when it
comes to your I keep using thehigh yield savings account with
APY that it's on par for the,you know, with the broader
market.
So, for example, like if amajority of high yield savings
(13:17):
accounts are doing 4.5% but youlook at your savings account and
it's only getting 2%, you'renot on par.
You need to change.
Speaker 1 (13:25):
You are not on par, okay, so I think we've got APR,
we've got APY.
What about the other terms?
Speaker 2 (13:32):
There are a few more little financial terms that I
think you will encounter on aregular basis and you should
have a basic understanding ofwhat they are.
I'm going to start out withsimple the word principle.
Speaker 1 (13:43):
Not like principle from Saved by the Bell.
Speaker 2 (13:46):
No, even though it's spelled the same.
Speaker 1 (13:48):
Yeah, weird, right, yeah yeah.
And then there's well theprinciple of the matter, so that
one's different, okay, so whatis the principle that?
Speaker 2 (13:55):
So that one's different.
Okay, so what is the principal?
That is, the base amount thatyou either borrow or invest.
Speaker 1 (14:01):
So, for example, your original amount of money?
Speaker 2 (14:02):
Yes, so let's just use from a state, from a
borrowing standpoint.
If you took out a loan for$10,000, your principal is the
$10,000 that you borrowed.
Speaker 1 (14:12):
That's pretty straightforward.
Speaker 2 (14:14):
Or if you're investing in the market and you
invest $10,000, the initialamount that you put in is that
$10,000 and that's the principal, okay.
So from a borrowing standpoint,when you pay more back to the
institution that you borrowedthe money from.
So you borrowed $10,000 and say, over the course of your loan,
you pay back 13.
You pay back the principal ofyour 10, but that additional
(14:36):
$3,000 came from interest andthat's your APR for borrowing
the money.
Speaker 1 (14:41):
The penalty for borrowing.
Speaker 2 (14:42):
I wouldn't call it a penalty, because it's the price
of borrowing.
Speaker 1 (14:47):
It's not a penalty.
Speaker 2 (14:47):
It's the price of borrowing.
And then, on the oppositespectrum, if you have invested
$10,000 and now you have $13,000, 10,000 was your principal and
3,000 is the growth that you'vehad on the account.
Speaker 1 (14:58):
Right, okay, we've kind of already touched on this,
but what is the interest rate?
Speaker 2 (15:04):
This is the flat percentage that you're charged
or earn, depending on whetheryou're borrowing or investing.
That doesn't include any typesof fees or any type of
compounding of that.
Speaker 1 (15:15):
Okay, I mean, that's pretty basic.
Speaker 2 (15:17):
Yeah, and that's the one that we're most, most people
are familiar with, which isalways, you know, like I said
before, finance industry kind oftries to make it difficult by
adding these additional terms ontop of it, that kind of
intertwine with just the wordinterest rate.
Speaker 1 (15:31):
Yeah, but I mean, I mean we have interest rates on
credit cards, on our mortgages,on our car loans, on our student
loans.
Like, if you are borrowingmoney, there is an interest rate
.
I mean, even if it's zeropercent for a certain amount of
time, there is some sort ofinterest rate attached, because
these institutions let's call itwhat it is they make money when
(15:52):
you pay interest.
The credit card companies donot exist because of the people
who are paying their bills ontime and in full every month.
The credit card companies existbecause of the people who are
borrowing money, who are notpaying their bill in full every
month.
Speaker 2 (16:06):
That's the business model.
Speaker 1 (16:07):
That's the business.
They are relying on people tonot pay their bill in full and
to be in debt.
Speaker 2 (16:13):
Yeah, if everyone paid their credit card off on
time, there wouldn't be anycredit cards.
Speaker 1 (16:17):
Yeah, so honestly, like, if you want to stick it to
the man, then you need to payyour credit card off on time, so
that way you're not paying themthe interest and you're getting
all the perks and the miles andwhatever else bonuses that you
originally signed up for.
That's the ultimate goal.
Yeah, yeah, okay, let's getinto a tricky one.
Okay, let's get into a trickyone.
Amateurization.
Speaker 2 (16:38):
All right.
So that is how loan paymentsare split between the principal
and the interest that you haveto pay over time.
Speaker 1 (16:46):
Okay, all right.
Speaker 2 (16:46):
So remember, we take a step back where we talked
about with the word principal wetalked about, that's the
initial amount in a loanscenario that you borrowed, but
then you also have interest ontop of that that you have to pay
back as well, and this is justhow it's broken up over a split
up over the time period that youhad to pay off that loan.
Okay, now, one thing that Ithink a lot of people don't
(17:07):
realize when it comes to a lotof loans is that often in the
beginning, a lot of you thinkthat your payment is going
towards principal and interest.
Oh, where a lot of times in thebeginning you're actually
paying off a lot of interestfirst, which-.
Speaker 1 (17:20):
Look at your mortgage statement.
If you have a mortgage, pull upthat statement.
Get your feelings hurt becausethat payment is not going
towards the principal.
Speaker 2 (17:30):
And let me break this down for you so that you can
maybe understand a little bitmore from a mathematical
standpoint.
All right, if you are havingmore of your monthly payments
going towards principal, that'sgoing to reduce the overall
interest that you pay on theloan, because the interest is
assessed upon.
What is the remaining balance?
Speaker 1 (17:49):
All right, so you want that first initial
principal balance to go down asquickly as possible?
Speaker 2 (17:54):
Yeah, Because then that allows you to pay less in
interest over time.
However, the way that theyoften set it up is that they've
already predetermined a certainamount of interest that you're
going to have, and most of yourpayment is going towards the
interest as compared to goingtowards paying down the
principal.
Speaker 1 (18:09):
Yeah.
Speaker 2 (18:09):
So less money going towards the principal, so it's
not going down as much.
So therefore you're having topay more interest.
Speaker 1 (18:15):
Yep.
So therefore you're having topay more interest Yep and we've
(18:37):
talked about this on a previousepisode, but might be and you're
trying to put extra moneytowards the principal.
Call that institution first andfind out hey, I want to apply
$200 extra to next month's billto the principal.
How do I do that?
And some of them they make itcomplicated.
They're like oh, you need tomail a check to this address and
(18:58):
you can't do it online becausethen it'll automatically.
You need to find out Again.
Speaker 2 (19:03):
Yeah, do not simply hop online and add an additional
$200 to your monthly payment.
Speaker 1 (19:08):
It might not, because that might not go towards
principal.
Right.
So that's a really importantcall out.
You need to call thoseinstitutions and say I want this
amount of money applied to theprincipal.
How do I do that?
And some of them might say, oh,you can do it online and it'll
actually have like a principalpayment button.
But others will make it extracomplicated and you need to
(19:30):
follow those exact steps inorder to get the principal
balance down and for it not togo towards the interest Correct.
Yeah, Okay, what about fixedversus variable rates?
You see that kind of on creditcard offers, loan offers as well
.
Speaker 2 (19:46):
So the main difference between them is that
fixed stays the same If you arein a fixed rate.
There's no variation in it.
It stays the same over the termof whatever that loan or CD or
whatever it may be.
The rate stays the same ascompared to a variable.
That rate can increase.
Technically it can increase ordecrease, but most of the time
(20:09):
when it comes into talking aboutborrowing money, that rate can
increase.
Speaker 1 (20:14):
Yeah, do they ever just decrease it because they're
trying to be nice?
Yeah, they normally have like aminimum that it has to be.
Speaker 2 (20:19):
Yeah, and normally the minimum is set at what they
currently are, kind of at.
Speaker 1 (20:23):
Right, right, that makes sense.
So even if rates drop, yoursdoesn't drop.
Yeah, okay.
Speaker 2 (20:35):
And the make money doesn't drop.
Yeah, okay, and the biggestthing with that is that I think
fix is very straightforward.
Yeah, the biggest thing is thevariable, and I would say this
often can come, sometimes comeinto play when people are, you
know, doing personal loans orstuff of that nature, where
they're like, oh you know, Ihave a variable rate for this
period of time, and often theenticing aspect of that is that
the variable rate tends to beinitially lower than a fixed
rate and that's kind of how theyentice you into doing that.
Speaker 1 (20:54):
They lure you in, yeah.
Speaker 2 (20:56):
Now that can be extremely advantageous if you
have a very good plan in placeto pay it off in the timeframe
of that lower variable rate.
So, for example, they might giveyou, like might say, let's just
say, a five-year loan and thefirst year or two could be
variable at a lower rate, butthen after that second year it
(21:16):
jumps up yeah so if you have agood plan in place where you
could pay that debt off at thatlower interest rate and you are
disciplined in doing that, thenyeah, it could be a good idea to
take the variable rates,because you know you're going to
pay it off at that lowerinterest rate.
But if you are not disciplinedand you don't have a specific
payment plan in place to pay offthat loan before that variable
rate changes, then that'sprobably not the best option for
(21:37):
you.
Speaker 1 (21:37):
Yeah, they're doing that a lot too with mortgages
right now.
Right when the developer, rightif it's a new build, the
developer will buy you a pointreduction, or whatever that
might be, for the first year orfor 18 months, things like that
and then you have to really Imean one or two percentage
(21:59):
points in your interest rate.
Speaker 2 (22:00):
It's huge.
Speaker 1 (22:00):
That's huge.
So you have to run the numbersand you have to understand okay,
after this 12 months mymortgage is going to go up to X,
y, z.
I mean, again, you have to runthe numbers.
Speaker 2 (22:12):
Yeah, and there's a lot of good debt calculators out
there that can allow you to runthese different scenarios and
see how much you would end uppaying over the course of a
certain period of time with thedifferent options that are
available.
So, I definitely encouragepeople to look at those and I
definitely use those with myclients.
As far as even just puttingtogether a strategy to pay off
debt sooner and showing them howmuch they can save and how much
(22:33):
quicker they could pay off adebt by just simply adding an
additional $50 a month can makea huge difference.
Speaker 1 (22:40):
One quick call out, because I've had personal loans
in the past for debtconsolidation and various
purposes.
One thing that you want to ask,especially in the personal loan
space, is is there a penaltyfor early payoff?
Speaker 2 (22:54):
Yes.
Speaker 1 (22:55):
Because if you are the person that's like hey, I
get bonuses, I get commissions,maybe my paychecks are varied.
I plan on picking up a sidehustle.
My side business is doing well,I'm going to get this paid off
faster, that's great and I'mglad you have a plan in place,
but you need to make sure thatthe loan you have allows for
early payoff without penaltyMeaning.
(23:18):
Going back to that earlierconversation of hey, I want this
extra $2,000 to go towards theprincipal so that I can be done
with this loan.
Are you actually going to beallowed to do that on the loan
that you took out?
So, just a call out frompersonal experience.
I do not open any personalloans that do not have an option
(23:39):
for early payoff withoutpenalty.
Speaker 2 (23:42):
Yeah, once again, it's just it's going to take
that extra step, but you do, inthese scenarios, have to read
the fine print and if there'sanything that you don't
understand, then you need toseek out professional advice to
help you out with that.
Because I'm just going to putthis out there as someone who
started their career in a callcenter at Fidelity.
(24:03):
Not everyone there should beworking there, so you might call
into these call centers to getinformation and details about
policies and stuff and theycould potentially be giving you
the wrong information.
Speaker 1 (24:17):
Yeah.
Speaker 2 (24:18):
So if you have any doubt from an understanding
standpoint, and you don'tnecessarily trust the
information that's beingprovided to you, I would
definitely-.
Speaker 1 (24:25):
Hang up and call back .
Get somebody else.
Speaker 2 (24:28):
I always say sometimes, if you have the time,
maybe call two or three timesand get the same information,
the same information.
Speaker 1 (24:34):
Brandon loves that trick.
We've even done that.
I remember when we were callingabout my 401k through Fidelity
and we were trying to figure outa few things, and I remember we
were on the phone together andhe's like I don't trust this
person, let's say goodbye andlet's call again.
And then we called like twomore times and the second two
(24:58):
times we got different but thesame information.
So two out of the three timesit was okay.
Speaker 2 (25:02):
now we can trust it because we've heard it twice
from two different people and Imean because I've had scenarios
where I call into which youshouldn't have to do, but but,
like I said, I'm saying thisfrom experience, one like
calling in with clients to dothings that I know for a fact
that can be done and theperson's like, no, you can't do
that.
I'm like I'm not going to arguewith you, Just put me back in
the queue.
Speaker 1 (25:21):
Yeah, Like I'm not.
I hear you say that often.
You're like I'll start backover, Thanks.
Speaker 2 (25:26):
Like I know we can do this, I like I'm not arguing
with you about it, let's just goback.
Speaker 1 (25:32):
And then also, like I said from before, from
experience, as far as this iswhere I started my you know
finance career yeah sitting nextto people in the call center
that I'm listening to give wronginformation oh gosh, and I love
how they're like this call isgoing to be recorded for quality
and assurance purposes and you,you're like, your quality sucks
.
Speaker 2 (25:55):
I also tell people, like when you're calling in
about this information, I wouldalso make note of day time and
the person's name that you'retalking to, because a lot of
times in these financialsituations, if you call in and
they give you incorrectinformation and it causes you
some type of financial loss,there is repercussion for that.
Yeah, so you can recoup moneyin these scenarios because like
I said that's why these callsare recorded document, document,
(26:16):
document.
Speaker 1 (26:17):
Yeah, and even I don't, did you just say this,
but I always write down the timeyeah too, like what time
somebody actually picked up thephone.
Um, absolutely okay, so wewalked through APR, APY
amortization fixed versusvariable.
What do we want to leave ourlisteners with today, babe?
Speaker 2 (26:37):
Honestly, the first thing I want to leave you with
is any account that you havethat has an APR, APY associated
with it.
If you don't know what thosenumbers are, go ahead and go
into those accounts, pull themup and make sure you understand
what they are and all thedetails associated with it.
That's the first thing.
And in certain scenarios, ifthe information doesn't quite
(26:57):
align with how you would like itto be, so let's just say you
are one of those people that isin a regular old fashioned
savings account, which Iwouldn't understand if you
listen to our podcast whileyou'd be there, but we're not
here to judge.
So if you pull up your savingsaccount and you realize that
you're only getting 0.02% um APR, I mean, sorry, APY, I'm not
(27:18):
messing about now APY, that'swhy I don't like to use these
terms.
But if you pull up your savingsaccount and you are getting a
0.02% APY, you can see theinformation now and know that
you need to make a change.
And also, on the opposite end,if you are looking at some of
the APRs on a loan you may have,if it seems high and you might
(27:40):
be able to possibly refinancethat loan and get a lower APR,
you might want to look at doingthat as well, because then that
saves you money.
Speaker 1 (27:48):
You can do that on your credit cards too.
Yes, at least once a year youshould be calling, even if
you're not using that card.
You should be calling to askfor a credit increase.
If you are responsible andbecause that is going to help
your credit utilization score,and then also, especially if you
are a longstanding customer,you're in good standing, you
have a good credit score, etc.
(28:09):
You should be calling andasking if they can lower your
APR.
Sometimes it'll be yeah, we canlower it to this for six months
.
Sometimes it's okay, you know,we can lower it to this and then
that's kind of your new APR.
The worst thing they can say iswe don't have any offers right
now or no, we can't do that.
At least you asked.
Most of the time when I calland I say, hey, can you lower my
(28:29):
APR?
They are like, yes, ms Norwood,that's not a problem, we'll
lower it to whatever it might be.
Speaker 2 (28:36):
Get over the fear of asking.
Ask One other big thing.
Like she said, get over thefear of asking.
Speaker 1 (28:41):
Yeah, nothing bad is going to happen.
Speaker 2 (28:43):
These final institutions do not know you on
a personal level.
They don't know you before youcall no-transcript, have a fear
of asking for things, for fearof being told no.
It's like who cares?
Speaker 1 (29:03):
I'm going to roll that into if you can't call your
credit card company whereyou're literally speaking to a
stranger and ask them to loweryour APR, then are you also not
asking for the raise?
Are you not asking for thepromotion?
Are you not asking for thebonus?
Are you not asking for theseverance?
Are you not, as like I couldkeep going?
Learn to ask questions.
No is an answer.
(29:24):
It's usually not the one wewant, but it's an answer.
And what's the worst that canhappen?
Speaker 2 (29:28):
Exactly.
Speaker 1 (29:29):
Yeah.
Speaker 2 (29:30):
And then also like one other thing I would
definitely think I woulddefinitely encourage you to
start incorporating, is theseonline calculators.
Especially when it comes to theAPR and paying off debt, these
calculators can be so helpfuland I've seen it.
Speaker 1 (29:45):
You have to visualize it.
Speaker 2 (29:46):
Yes, I've seen it time after time working with
people where you know worse.
It may take them, like rightnow.
It could take them two years topay off a current debt based
upon paying the minimum paymenteach month.
And then I show them like, hey,if you can come up with an
extra $50, that two years getscut down, and sometimes in half.
Speaker 1 (30:06):
That's significant and that's seeing something like
that in black and white is verymotivating.
Speaker 2 (30:12):
There's a difference between me saying, hey, add an
additional $50 to your monthlypayment, and it will just simply
reduce how you pay off the debt.
It will reduce it as comparedto you're going to take you two
years.
Adding $50 is now going toreduce it to one year.
Speaker 1 (30:26):
That's crazy.
Speaker 2 (30:27):
That is a very different conversation and
presentation to someone to getthem motivated to do the
additional $50 and pay off thedebt quicker.
Speaker 1 (30:37):
Yeah, absolutely yeah , use the debt calculators.
We'll link one that we usepersonally and that Brian it's
like who is Brian?
I don't know.
He's my other husband.
Could you imagine having twospouses or a secret family?
Oh my gosh.
Speaker 2 (30:55):
Unless he's rich and giving me money too.
Speaker 1 (30:57):
Yeah, no, I mean, if I ever wanted a second husband,
he would have to be rich andhave a lake house and a beach
house and a boat.
Let's be serious.
Speaker 2 (31:04):
And be okay for me coming.
Speaker 1 (31:05):
Right that.
Speaker 2 (31:08):
Brandon uses with his clients.
We digress.
Speaker 1 (31:13):
Just a little sleep deprived over here and then yeah
.
So look at your high yieldsavings account.
If you don't have one, it'stime to open one.
Look at the APR on your creditcards.
You need to know them.
You really just need to knowall of these numbers when it
comes to where your money is,how much you're paying, how much
you're earning, and I meanhonestly, is your money working
(31:35):
harder than you are?
Because that's the ultimategoal.
Speaker 2 (31:38):
Yeah.
Speaker 1 (31:39):
Right.
Speaker 2 (31:40):
I mean at the end of the day.
That's how you become workoptional.
Speaker 1 (31:43):
Yes, by making your money work for you.
So hopefully we have helped youunderstand some of these common
and confusing acronyms that thefinance industry uses to try to
keep us broke.
But we do not want to staybroke, so hopefully this was
helpful.
Share it with a friend.
As always, please subscribe,rate and review, and we will
(32:04):
talk to you soon, don't forget.
Benjamin Franklin said aninvestment in knowledge pays the
best interest.
You just got paid Until nexttime.
Thanks for listening to today'sepisode.
(32:24):
We are so glad to have you aspart of our Sugar Daddy
community.
If you learned something today,please remember to subscribe,
rate, review and share thisepisode with your friends,
family and extended network.
Don't forget to connect with uson social media at the sugar
daddy podcast.
You can also email us yourquestions you want us to answer
for our past the sugar segmentsat the sugar daddy podcast at
(32:47):
gmailcom, or leave us avoicemail through our Instagram.
Speaker 2 (32:52):
Our content is intended to be used, and must be
used, for informationalpurposes only.
It is very important to do yourown analysis before making any
investment, based upon your ownpersonal circumstances.
You should take independentfinancial advice from a licensed
professional in connection with, or independently research and
verify any information you findin our podcast and which you
rely upon, whether for thepurpose of making an investment
decision or otherwise.
This episode is sponsored by Prenupscom.
The truth is, every marriedcouple has a prenup a set of
rules that defines your legaland financial relationship with
your spouse.
You either choose your ownrules or use what your state
gives you.
At Prenupscom they writeprenups that actually help
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Their specialty is fair prenupsthat help couples plan for a
(00:22):
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That's what Brandon and I didafter eight years of marriage.
(00:45):
If financial jargon like APR,apy or amortization make you
think WTF and make your eyesglaze over, then you are not
alone.
This episode is for you.
We are here to end theconfusion that is costing you
money.
In this episode, we are goingto break down the fancy finance
lingo that banks are using tokeep you in the dark.
(01:07):
We'll teach you what theseterms really mean, how to spot
red flags in credit card andloan offers, and how to finally
understand your savings accountand what it's actually doing.
No fluff, no judgment, justreal talk that will help you
make smarter money moves.
Speaker 2 (01:29):
If this is of interest, stay tuned.
Hey babe, what are we talkingabout today?
Speaker 1 (01:36):
We're talking about the world of finance and all of
the crazy acronyms, the jargon,the lingo, that oh why HSA, ppo,
hysa, apr, ayp I don't know, Imean just like WTF.
Speaker 2 (02:09):
So, more specifically for today's episode, though, we
are going to focus on APRversus APY, apy all right,
please, please, tell us.
Where are we starting?
So, first and foremost, likewhat do these acronyms actually
stand for?
Please tell me so apr is annualpercentage rate and apy is
annual percentage yieldR is whatyou see on your credit cards.
Yes, so the main differencebetween the two is that an APR
(02:29):
is what you are going to becharged to borrow.
So you think about on yourcredit cards.
On loans, this is what you'regoing to see the APR.
This is the amount that you'rebeing charged to borrow that
money, as compared to with APY,annual percentage yield.
This is what you're going tosee on savings accounts, cds.
So this is going to be what youearn the money I'm making.
Speaker 1 (02:50):
Yes, not the money they're taking, correct?
Speaker 2 (02:53):
that is the main difference between the two okay,
so apy is the better one.
Speaker 1 (02:59):
Apr we want to stay away from and they.
Speaker 2 (03:02):
I mean, you know, the sad part is is that
unfortunately, too many peoplemake financial decisions where
you need to be taking this,these two, into account and they
don't really understand whatthey are and they're kind of
just you know, you know, oh, I'mgoing to go off.
What is the easiest one to do,I'm going to go.
Which one's going to provide mewith rewards?
You know what is a brand namethat I'm familiar with?
(03:32):
And they really don't read thefine print and there might be
hidden fees, poor returns,higher rates than you
necessarily need if you were togo with a alternative option and
unfortunately you're missingout and you know, potentially
costing you money when you'renot understanding these
different terms.
Yeah, it's the little terms andthe little acronyms that could
be costing you big bucks in theend and, to be honest, as
someone who works in thefinancial services industry,
they don't make it easy for you.
No, they don't make it easybecause, in all honesty, the
(03:55):
word yield throws a lot ofpeople off like what does that
really mean?
Right right because, like youhear, interest rate and you know
that's bad you know thatinterest rate could be good.
Oh well, if you're earning it.
Yeah, okay, yeah true becausethey throw you off on purpose,
because most people think about,for example, like with a
savings account you know theinterest rate on the savings on
a high yield savings account,but they don't also associate
(04:17):
that that.
Speaker 1 (04:18):
That's what the apy is the annual annual percentage
yield correct.
Speaker 2 (04:23):
Okay, ok, so like I said they unfortunately they
overcomplicate it when I thinkit could be explained in much
simpler terms.
So if you're out there thinkinglike hey, like I just listening
to the few first few minutes ofthis podcast, you're like, oh,
I didn't understand that You'renot alone.
Speaker 1 (04:37):
Right.
Speaker 2 (04:37):
Like they're not making it easy for you.
Speaker 1 (04:41):
Well, and I mean the APRs on credit cards right now
are sky high.
I mean some of them are pushing30%.
That's crazy.
Speaker 2 (04:53):
And that's the biggest thing, when we say that
you have to understand this andbreak it down and really make
your decisions on which optionyou're going to select in
certain scenarios, based off ofthese numbers.
Speaker 1 (05:05):
You have to run the numbers.
Speaker 2 (05:07):
You have to run the numbers, especially when it
comes to the APR.
This is what you're going to becharged to borrow.
You have to understand what theinterest rate is on that.
In addition to, are there anytype of additional fees?
So let's just use credit cardsas an example.
You might, like I said, withinterest rates the way they are
now, you might have somewherealmost close to an APR interest
(05:28):
rate of 30% on a credit card.
Speaker 1 (05:31):
I mean above 20% is pretty common.
Oh, definitely above 20% yeah.
Speaker 2 (05:35):
But then also, once again, it depends on your credit
score as well.
But then you also take intoaccount any additional fees.
So is there an annual fee toeven just have that credit card?
Speaker 1 (05:43):
Yep account any additional fees.
Speaker 2 (05:44):
So, is there an annual fee to even just have
that credit card?
Yep, because that's anadditional fee that you have to
factor in.
And then also, if you'repotentially late on any of your
payments, is there an additionallate fee?
So, understanding one what theAPR is in regards to how much
you're being charged to borrow,what is an annual fee that's
associated with that, if thereis one, and then any other
potentially hidden fees, such aslate fees.
Speaker 1 (06:04):
Yeah.
Speaker 2 (06:05):
All those need to be taken into account.
Speaker 1 (06:07):
Well, so two things, obviously.
With the credit card.
Let's say you're not payingyour credit card balance in full
and you have a, let's say, 22%interest rate and your balance
was $120.
You paid $80.
Now you have a $40 balance.
That $40 balance is still goingto incur that same 22% interest
(06:29):
rate, right?
Speaker 2 (06:29):
Well, not at that one time.
So the APR is the interest rateover the course of the entire
year.
All right, real quick.
I want to speak to the personlistening who feels like they
can't work with a financialplanner yet because they're
carrying a lot of debt.
First of all, I see you and Ineed you to know you're not
broken, you're not behind.
(06:51):
You're just in a tough season.
I created something just for youbecause I've had people reach
out who are serious aboutchanging their money story.
But the full financial planningpackage just wasn't the right
fit yet.
So I built a new servicethrough Oak City Financial
that's focused completely ondebt reduction.
No fluff, no shame.
You'll get a one-time planningsession, a personalized payoff
(07:12):
strategy, your own financialdashboard and monthly coaching.
If you want extra support whileyou climb out, it's $300 to get
started and $100 a month.
If you want that ongoingguidance, that's it.
This is about helping you getunstuck, not making you feel
like you failed.
If this sounds like what you'vebeen needing, go ahead and
schedule a call with me.
The link is in the show notes.
(07:32):
Let's take the first steptogether.
Let's take the first steptogether.
Speaker 1 (07:43):
I think the one thing to note that's really important
is that it doesn't matter whatyour APR is if you're paying
your credit card off in fullevery month.
Correct you only I mean, I knowthat's pretty basic, but like
it only matters if you're notpaying it off, if you're
carrying a balance, that's whenit matters If you are paying it
off in full every month then itdoesn't matter if you're paying
(08:04):
a 60% APR?
Hopefully not, but you know,because you're literally not
paying it at that point.
So the goal is especially withthe credit cards, especially the
credit cards that have feesattached.
Like we've said this before,but we usually most years we pay
close to $1,200 in credit cardfees, the annual rate that we
(08:27):
pay to hold the credit cardbecause of various perks.
That has nothing to do with theAPR, but the APR only matters
when you're carrying a balance,because then that's when you
have that penalty of quoteunquote borrowing the money.
Speaker 2 (08:40):
Correct, correct.
Speaker 1 (08:41):
Yeah.
Ok, let's go to APY, because Ithink most people have at least
seen APR, have some inkling ofwhat it means.
But annual percentage yield.
So that's a good one, becausewe're getting money back.
Speaker 2 (08:55):
Yeah, this is like I said before.
These are the ones you're goingto see associated with a
savings account, a CD, and thisis going to be the interest that
you earn on your money.
So this is the positive one.
Speaker 1 (09:07):
Yes, that's the one where our money is making money.
We'd love to see it.
If you don't have a high yieldsavings account yet, what are
you doing?
We talk about it on everyepisode.
Use the link in our show notes.
We have one for Ally and wehave a high yield account that
we really like.
With Wealthfront as well.
Your money that is sitting inyour emergency savings, put it
(09:27):
in a high yield savings.
Speaker 2 (09:28):
And the funny thing is is that this is the one that
is a reoccurring thing that Isee for individuals when I start
to work with them, or just even, you know, talking to people,
is that they're still usingthese traditional brick and
mortar banks where they'regetting 0.02, 0.03% interest
rate on their savings accountand I'm like why?
Speaker 1 (09:51):
Like you could literally be making thousands of
dollars a year just by parkingyour money into a high yield
savings.
Speaker 2 (09:57):
And the funny thing is that sometimes these are the
same people who are like oh youknow, can you help me beat the
market?
I'm like I can't help you beatthe market, but I can definitely
give you two seconds of advicethat is going to give you over a
thousand cent return on yoursavings.
Speaker 1 (10:14):
They're like should I be investing in crypto?
And you're like shut up andopen an HYSA.
Speaker 2 (10:22):
The amount of, like I said, the amount of people that
still have savings accounts,traditional savings accounts,
where they're getting 0.02%, isastonishing to me, because you
can easily go online and ittakes not even five minutes to
do.
Speaker 1 (10:37):
Yeah, and just as a call out, if your money is
parked at the Bank of America's,the Wells Fargo's, any of those
traditional brick and mortars,or even at your local credit
union, and it is not named as ahigh yield savings account, you
are making no money.
So don't assume that your moneyis sitting in a high yield
savings account if you didn'tactually put it in a high yield
(10:58):
savings account.
Speaker 2 (11:00):
So here's a task for people listening.
If you don't know what yourcurrent APY annual percentage
yield is on your savings accountthat you have right now whether
it's a high yield savingsaccount or just a regular
savings account go look it up.
Speaker 1 (11:14):
Go find out what it is.
Speaker 2 (11:16):
We know what ours is, but you need to go look it up.
Go find out what it is.
We know what ours is, but youneed to go look it up.
Speaker 1 (11:20):
Yeah, I mean we're making 4.5% on the money sitting
in our savings that we hope tonot touch and it just kind of
keeps growing and we're makingmoney for it sitting there Most
basic thing that you can do foryourself this month.
Speaker 2 (11:35):
And I also do want to point out.
So, for example, with like asavings account, a high yield
savings account or regularsavings account, more
specifically, your APY canchange.
Speaker 1 (11:43):
Yes.
Speaker 2 (11:44):
All right.
Now, with the CD you're lockedinto a certain APY for a certain
period of time.
So for example, say maybe a oneyear, 12 month CD, you're going
to have that same APY for theentire 12 months, but then, once
that 12 months ends, then yourAPY can change.
So I do want to also, like Isaid, keep that in mind that you
have to constantly notconstantly but periodically keep
(12:06):
up with this information andsee if there's any changes to
the APY on these differentaccounts.
Speaker 1 (12:10):
Be aware.
Yeah Well, and two, even if,going back to APR, maybe you had
a promotional offer for sixmonths, eight months, nine
months a year, whatever with acredit card, put that in your
calendar Because as soon as thatpromotional rate is over, it's
probably going to jump back upto that crazy high percentage.
So you need to be aware of that, especially if you're signing
(12:31):
up for promotional offers ofsome sort.
Speaker 2 (12:34):
Yes, everything is in the details.
Yes, the fine teeny, fine,teeny, tiny, teeny, tiny print
you will have differentinstitutions that show like a
low apr and a high apy and onceyou read the fine print it
really reveals what the truth isbehind it.
So, like you know, like yousaid, like you might see a high
apy, but then you read the fineprint it's like, oh, that's just
(12:55):
for like the first two or threemonths yeah and then it just
drops down to the regular, whichis fine.
You get a little bit more, butyou do want to make sure that,
over the course of an extendedperiod of time, that, when it
comes to your I keep using thehigh yield savings account with
APY that it's on par for the,you know, with the broader
market.
So, for example, like if amajority of high yield savings
(13:17):
accounts are doing 4.5% but youlook at your savings account and
it's only getting 2%, you'renot on par.
You need to change.
Speaker 1 (13:25):
You are not on par, okay, so I think we've got APR,
we've got APY.
What about the other terms?
Speaker 2 (13:32):
There are a few more little financial terms that I
think you will encounter on aregular basis and you should
have a basic understanding ofwhat they are.
I'm going to start out withsimple the word principle.
Speaker 1 (13:43):
Not like principle from Saved by the Bell.
Speaker 2 (13:46):
No, even though it's spelled the same.
Speaker 1 (13:48):
Yeah, weird, right, yeah yeah.
And then there's well theprinciple of the matter, so that
one's different, okay, so whatis the principle that?
Speaker 2 (13:55):
So that one's different.
Okay, so what is the principal?
That is, the base amount thatyou either borrow or invest.
Speaker 1 (14:01):
So, for example, your original amount of money?
Speaker 2 (14:02):
Yes, so let's just use from a state, from a
borrowing standpoint.
If you took out a loan for$10,000, your principal is the
$10,000 that you borrowed.
Speaker 1 (14:12):
That's pretty straightforward.
Speaker 2 (14:14):
Or if you're investing in the market and you
invest $10,000, the initialamount that you put in is that
$10,000 and that's the principal, okay.
So from a borrowing standpoint,when you pay more back to the
institution that you borrowedthe money from.
So you borrowed $10,000 and say, over the course of your loan,
you pay back 13.
You pay back the principal ofyour 10, but that additional
(14:36):
$3,000 came from interest andthat's your APR for borrowing
the money.
Speaker 1 (14:41):
The penalty for borrowing.
Speaker 2 (14:42):
I wouldn't call it a penalty, because it's the price
of borrowing.
Speaker 1 (14:47):
It's not a penalty.
Speaker 2 (14:47):
It's the price of borrowing.
And then, on the oppositespectrum, if you have invested
$10,000 and now you have $13,000, 10,000 was your principal and
3,000 is the growth that you'vehad on the account.
Speaker 1 (14:58):
Right, okay, we've kind of already touched on this,
but what is the interest rate?
Speaker 2 (15:04):
This is the flat percentage that you're charged
or earn, depending on whetheryou're borrowing or investing.
That doesn't include any typesof fees or any type of
compounding of that.
Speaker 1 (15:15):
Okay, I mean, that's pretty basic.
Speaker 2 (15:17):
Yeah, and that's the one that we're most, most people
are familiar with, which isalways, you know, like I said
before, finance industry kind oftries to make it difficult by
adding these additional terms ontop of it, that kind of
intertwine with just the wordinterest rate.
Speaker 1 (15:31):
Yeah, but I mean, I mean we have interest rates on
credit cards, on our mortgages,on our car loans, on our student
loans.
Like, if you are borrowingmoney, there is an interest rate
.
I mean, even if it's zeropercent for a certain amount of
time, there is some sort ofinterest rate attached, because
these institutions let's call itwhat it is they make money when
(15:52):
you pay interest.
The credit card companies donot exist because of the people
who are paying their bills ontime and in full every month.
The credit card companies existbecause of the people who are
borrowing money, who are notpaying their bill in full every
month.
Speaker 2 (16:06):
That's the business model.
Speaker 1 (16:07):
That's the business.
They are relying on people tonot pay their bill in full and
to be in debt.
Speaker 2 (16:13):
Yeah, if everyone paid their credit card off on
time, there wouldn't be anycredit cards.
Speaker 1 (16:17):
Yeah, so honestly, like, if you want to stick it to
the man, then you need to payyour credit card off on time, so
that way you're not paying themthe interest and you're getting
all the perks and the miles andwhatever else bonuses that you
originally signed up for.
That's the ultimate goal.
Yeah, yeah, okay, let's getinto a tricky one.
Okay, let's get into a trickyone.
Amateurization.
Speaker 2 (16:38):
All right.
So that is how loan paymentsare split between the principal
and the interest that you haveto pay over time.
Speaker 1 (16:46):
Okay, all right.
Speaker 2 (16:46):
So remember, we take a step back where we talked
about with the word principal wetalked about, that's the
initial amount in a loanscenario that you borrowed, but
then you also have interest ontop of that that you have to pay
back as well, and this is justhow it's broken up over a split
up over the time period that youhad to pay off that loan.
Okay, now, one thing that Ithink a lot of people don't
(17:07):
realize when it comes to a lotof loans is that often in the
beginning, a lot of you thinkthat your payment is going
towards principal and interest.
Oh, where a lot of times in thebeginning you're actually
paying off a lot of interestfirst, which-.
Speaker 1 (17:20):
Look at your mortgage statement.
If you have a mortgage, pull upthat statement.
Get your feelings hurt becausethat payment is not going
towards the principal.
Speaker 2 (17:30):
And let me break this down for you so that you can
maybe understand a little bitmore from a mathematical
standpoint.
All right, if you are havingmore of your monthly payments
going towards principal, that'sgoing to reduce the overall
interest that you pay on theloan, because the interest is
assessed upon.
What is the remaining balance?
Speaker 1 (17:49):
All right, so you want that first initial
principal balance to go down asquickly as possible?
Speaker 2 (17:54):
Yeah, Because then that allows you to pay less in
interest over time.
However, the way that theyoften set it up is that they've
already predetermined a certainamount of interest that you're
going to have, and most of yourpayment is going towards the
interest as compared to goingtowards paying down the
principal.
Speaker 1 (18:09):
Yeah.
Speaker 2 (18:09):
So less money going towards the principal, so it's
not going down as much.
So therefore you're having topay more interest.
Speaker 1 (18:15):
Yep.
So therefore you're having topay more interest Yep and we've
(18:37):
talked about this on a previousepisode, but might be and you're
trying to put extra moneytowards the principal.
Call that institution first andfind out hey, I want to apply
$200 extra to next month's billto the principal.
How do I do that?
And some of them they make itcomplicated.
They're like oh, you need tomail a check to this address and
(18:58):
you can't do it online becausethen it'll automatically.
You need to find out Again.
Speaker 2 (19:03):
Yeah, do not simply hop online and add an additional
$200 to your monthly payment.
Speaker 1 (19:08):
It might not, because that might not go towards
principal.
Right.
So that's a really importantcall out.
You need to call thoseinstitutions and say I want this
amount of money applied to theprincipal.
How do I do that?
And some of them might say, oh,you can do it online and it'll
actually have like a principalpayment button.
But others will make it extracomplicated and you need to
(19:30):
follow those exact steps inorder to get the principal
balance down and for it not togo towards the interest Correct.
Yeah, Okay, what about fixedversus variable rates?
You see that kind of on creditcard offers, loan offers as well
.
Speaker 2 (19:46):
So the main difference between them is that
fixed stays the same If you arein a fixed rate.
There's no variation in it.
It stays the same over the termof whatever that loan or CD or
whatever it may be.
The rate stays the same ascompared to a variable.
That rate can increase.
Technically it can increase ordecrease, but most of the time
(20:09):
when it comes into talking aboutborrowing money, that rate can
increase.
Speaker 1 (20:14):
Yeah, do they ever just decrease it because they're
trying to be nice?
Yeah, they normally have like aminimum that it has to be.
Speaker 2 (20:19):
Yeah, and normally the minimum is set at what they
currently are, kind of at.
Speaker 1 (20:23):
Right, right, that makes sense.
So even if rates drop, yoursdoesn't drop.
Yeah, okay.
Speaker 2 (20:35):
And the make money doesn't drop.
Yeah, okay, and the biggestthing with that is that I think
fix is very straightforward.
Yeah, the biggest thing is thevariable, and I would say this
often can come, sometimes comeinto play when people are, you
know, doing personal loans orstuff of that nature, where
they're like, oh you know, Ihave a variable rate for this
period of time, and often theenticing aspect of that is that
the variable rate tends to beinitially lower than a fixed
rate and that's kind of how theyentice you into doing that.
Speaker 1 (20:54):
They lure you in, yeah.
Speaker 2 (20:56):
Now that can be extremely advantageous if you
have a very good plan in placeto pay it off in the timeframe
of that lower variable rate.
So, for example, they might giveyou, like might say, let's just
say, a five-year loan and thefirst year or two could be
variable at a lower rate, butthen after that second year it
(21:16):
jumps up yeah so if you have agood plan in place where you
could pay that debt off at thatlower interest rate and you are
disciplined in doing that, thenyeah, it could be a good idea to
take the variable rates,because you know you're going to
pay it off at that lowerinterest rate.
But if you are not disciplinedand you don't have a specific
payment plan in place to pay offthat loan before that variable
rate changes, then that'sprobably not the best option for
(21:37):
you.
Speaker 1 (21:37):
Yeah, they're doing that a lot too with mortgages
right now.
Right when the developer, rightif it's a new build, the
developer will buy you a pointreduction, or whatever that
might be, for the first year orfor 18 months, things like that
and then you have to really Imean one or two percentage
(21:59):
points in your interest rate.
Speaker 2 (22:00):
It's huge.
Speaker 1 (22:00):
That's huge.
So you have to run the numbersand you have to understand okay,
after this 12 months mymortgage is going to go up to X,
y, z.
I mean, again, you have to runthe numbers.
Speaker 2 (22:12):
Yeah, and there's a lot of good debt calculators out
there that can allow you to runthese different scenarios and
see how much you would end uppaying over the course of a
certain period of time with thedifferent options that are
available.
So, I definitely encouragepeople to look at those and I
definitely use those with myclients.
As far as even just puttingtogether a strategy to pay off
debt sooner and showing them howmuch they can save and how much
(22:33):
quicker they could pay off adebt by just simply adding an
additional $50 a month can makea huge difference.
Speaker 1 (22:40):
One quick call out, because I've had personal loans
in the past for debtconsolidation and various
purposes.
One thing that you want to ask,especially in the personal loan
space, is is there a penaltyfor early payoff?
Speaker 2 (22:54):
Yes.
Speaker 1 (22:55):
Because if you are the person that's like hey, I
get bonuses, I get commissions,maybe my paychecks are varied.
I plan on picking up a sidehustle.
My side business is doing well,I'm going to get this paid off
faster, that's great and I'mglad you have a plan in place,
but you need to make sure thatthe loan you have allows for
early payoff without penaltyMeaning.
(23:18):
Going back to that earlierconversation of hey, I want this
extra $2,000 to go towards theprincipal so that I can be done
with this loan.
Are you actually going to beallowed to do that on the loan
that you took out?
So, just a call out frompersonal experience.
I do not open any personalloans that do not have an option
(23:39):
for early payoff withoutpenalty.
Speaker 2 (23:42):
Yeah, once again, it's just it's going to take
that extra step, but you do, inthese scenarios, have to read
the fine print and if there'sanything that you don't
understand, then you need toseek out professional advice to
help you out with that.
Because I'm just going to putthis out there as someone who
started their career in a callcenter at Fidelity.
(24:03):
Not everyone there should beworking there, so you might call
into these call centers to getinformation and details about
policies and stuff and theycould potentially be giving you
the wrong information.
Speaker 1 (24:17):
Yeah.
Speaker 2 (24:18):
So if you have any doubt from an understanding
standpoint, and you don'tnecessarily trust the
information that's beingprovided to you, I would
definitely-.
Speaker 1 (24:25):
Hang up and call back .
Get somebody else.
Speaker 2 (24:28):
I always say sometimes, if you have the time,
maybe call two or three timesand get the same information,
the same information.
Speaker 1 (24:34):
Brandon loves that trick.
We've even done that.
I remember when we were callingabout my 401k through Fidelity
and we were trying to figure outa few things, and I remember we
were on the phone together andhe's like I don't trust this
person, let's say goodbye andlet's call again.
And then we called like twomore times and the second two
(24:58):
times we got different but thesame information.
So two out of the three timesit was okay.
Speaker 2 (25:02):
now we can trust it because we've heard it twice
from two different people and Imean because I've had scenarios
where I call into which youshouldn't have to do, but but,
like I said, I'm saying thisfrom experience, one like
calling in with clients to dothings that I know for a fact
that can be done and theperson's like, no, you can't do
that.
I'm like I'm not going to arguewith you, Just put me back in
the queue.
Speaker 1 (25:21):
Yeah, Like I'm not.
I hear you say that often.
You're like I'll start backover, Thanks.
Speaker 2 (25:26):
Like I know we can do this, I like I'm not arguing
with you about it, let's just goback.
Speaker 1 (25:32):
And then also, like I said from before, from
experience, as far as this iswhere I started my you know
finance career yeah sitting nextto people in the call center
that I'm listening to give wronginformation oh gosh, and I love
how they're like this call isgoing to be recorded for quality
and assurance purposes and you,you're like, your quality sucks
.
Speaker 2 (25:55):
I also tell people, like when you're calling in
about this information, I wouldalso make note of day time and
the person's name that you'retalking to, because a lot of
times in these financialsituations, if you call in and
they give you incorrectinformation and it causes you
some type of financial loss,there is repercussion for that.
Yeah, so you can recoup moneyin these scenarios because like
I said that's why these callsare recorded document, document,
(26:16):
document.
Speaker 1 (26:17):
Yeah, and even I don't, did you just say this,
but I always write down the timeyeah too, like what time
somebody actually picked up thephone.
Um, absolutely okay, so wewalked through APR, APY
amortization fixed versusvariable.
What do we want to leave ourlisteners with today, babe?
Speaker 2 (26:37):
Honestly, the first thing I want to leave you with
is any account that you havethat has an APR, APY associated
with it.
If you don't know what thosenumbers are, go ahead and go
into those accounts, pull themup and make sure you understand
what they are and all thedetails associated with it.
That's the first thing.
And in certain scenarios, ifthe information doesn't quite
(26:57):
align with how you would like itto be, so let's just say you
are one of those people that isin a regular old fashioned
savings account, which Iwouldn't understand if you
listen to our podcast whileyou'd be there, but we're not
here to judge.
So if you pull up your savingsaccount and you realize that
you're only getting 0.02% um APR, I mean, sorry, APY, I'm not
(27:18):
messing about now APY, that'swhy I don't like to use these
terms.
But if you pull up your savingsaccount and you are getting a
0.02% APY, you can see theinformation now and know that
you need to make a change.
And also, on the opposite end,if you are looking at some of
the APRs on a loan you may have,if it seems high and you might
(27:40):
be able to possibly refinancethat loan and get a lower APR,
you might want to look at doingthat as well, because then that
saves you money.
Speaker 1 (27:48):
You can do that on your credit cards too.
Yes, at least once a year youshould be calling, even if
you're not using that card.
You should be calling to askfor a credit increase.
If you are responsible andbecause that is going to help
your credit utilization score,and then also, especially if you
are a longstanding customer,you're in good standing, you
have a good credit score, etc.
(28:09):
You should be calling andasking if they can lower your
APR.
Sometimes it'll be yeah, we canlower it to this for six months
.
Sometimes it's okay, you know,we can lower it to this and then
that's kind of your new APR.
The worst thing they can say iswe don't have any offers right
now or no, we can't do that.
At least you asked.
Most of the time when I calland I say, hey, can you lower my
(28:29):
APR?
They are like, yes, ms Norwood,that's not a problem, we'll
lower it to whatever it might be.
Speaker 2 (28:36):
Get over the fear of asking.
Ask One other big thing.
Like she said, get over thefear of asking.
Speaker 1 (28:41):
Yeah, nothing bad is going to happen.
Speaker 2 (28:43):
These final institutions do not know you on
a personal level.
They don't know you before youcall no-transcript, have a fear
of asking for things, for fearof being told no.
It's like who cares?
Speaker 1 (29:03):
I'm going to roll that into if you can't call your
credit card company whereyou're literally speaking to a
stranger and ask them to loweryour APR, then are you also not
asking for the raise?
Are you not asking for thepromotion?
Are you not asking for thebonus?
Are you not asking for theseverance?
Are you not, as like I couldkeep going?
Learn to ask questions.
No is an answer.
(29:24):
It's usually not the one wewant, but it's an answer.
And what's the worst that canhappen?
Speaker 2 (29:28):
Exactly.
Speaker 1 (29:29):
Yeah.
Speaker 2 (29:30):
And then also like one other thing I would
definitely think I woulddefinitely encourage you to
start incorporating, is theseonline calculators.
Especially when it comes to theAPR and paying off debt, these
calculators can be so helpfuland I've seen it.
Speaker 1 (29:45):
You have to visualize it.
Speaker 2 (29:46):
Yes, I've seen it time after time working with
people where you know worse.
It may take them, like rightnow.
It could take them two years topay off a current debt based
upon paying the minimum paymenteach month.
And then I show them like, hey,if you can come up with an
extra $50, that two years getscut down, and sometimes in half.
Speaker 1 (30:06):
That's significant and that's seeing something like
that in black and white is verymotivating.
Speaker 2 (30:12):
There's a difference between me saying, hey, add an
additional $50 to your monthlypayment, and it will just simply
reduce how you pay off the debt.
It will reduce it as comparedto you're going to take you two
years.
Adding $50 is now going toreduce it to one year.
Speaker 1 (30:26):
That's crazy.
Speaker 2 (30:27):
That is a very different conversation and
presentation to someone to getthem motivated to do the
additional $50 and pay off thedebt quicker.
Speaker 1 (30:37):
Yeah, absolutely yeah , use the debt calculators.
We'll link one that we usepersonally and that Brian it's
like who is Brian?
I don't know.
He's my other husband.
Could you imagine having twospouses or a secret family?
Oh my gosh.
Speaker 2 (30:55):
Unless he's rich and giving me money too.
Speaker 1 (30:57):
Yeah, no, I mean, if I ever wanted a second husband,
he would have to be rich andhave a lake house and a beach
house and a boat.
Let's be serious.
Speaker 2 (31:04):
And be okay for me coming.
Speaker 1 (31:05):
Right that.
Speaker 2 (31:08):
Brandon uses with his clients.
We digress.
Speaker 1 (31:13):
Just a little sleep deprived over here and then yeah
.
So look at your high yieldsavings account.
If you don't have one, it'stime to open one.
Look at the APR on your creditcards.
You need to know them.
You really just need to knowall of these numbers when it
comes to where your money is,how much you're paying, how much
you're earning, and I meanhonestly, is your money working
(31:35):
harder than you are?
Because that's the ultimategoal.
Speaker 2 (31:38):
Yeah.
Speaker 1 (31:39):
Right.
Speaker 2 (31:40):
I mean at the end of the day.
That's how you become workoptional.
Speaker 1 (31:43):
Yes, by making your money work for you.
So hopefully we have helped youunderstand some of these common
and confusing acronyms that thefinance industry uses to try to
keep us broke.
But we do not want to staybroke, so hopefully this was
helpful.
Share it with a friend.
As always, please subscribe,rate and review, and we will
(32:04):
talk to you soon, don't forget.
Benjamin Franklin said aninvestment in knowledge pays the
best interest.
You just got paid Until nexttime.
Thanks for listening to today'sepisode.
(32:24):
We are so glad to have you aspart of our Sugar Daddy
community.
If you learned something today,please remember to subscribe,
rate, review and share thisepisode with your friends,
family and extended network.
Don't forget to connect with uson social media at the sugar
daddy podcast.
You can also email us yourquestions you want us to answer
for our past the sugar segmentsat the sugar daddy podcast at
(32:47):
gmailcom, or leave us avoicemail through our Instagram.
Speaker 2 (32:52):
Our content is intended to be used, and must be
used, for informationalpurposes only.
It is very important to do yourown analysis before making any
investment, based upon your ownpersonal circumstances.
You should take independentfinancial advice from a licensed
professional in connection with, or independently research and
verify any information you findin our podcast and which you
rely upon, whether for thepurpose of making an investment
decision or otherwise.
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