Tracking Your Finances and Minimizing Debt

Episode Transcript

Speaker 1 (00:00):
Our retirement planning professionals from Class Financial love to have
you join us this week. Don't forget. You can learn
more about Class Financial on their website. It's a good one.
Class Financial dot com. That's coss klaas financial dot com.
Great place to learn about Class Financial. There's separate divisions.
Also an opportunity there to sign up for the weekly
Market Pulse newsletter. I mean that available at clssfinancial dot com.

(00:21):
They're telephone number six O eight four four two five
six three seven no charge for that initial gets to
know you appoyment at Class Financial. It will be complementary
to you. Join this week by Eric Schwartz and Kyle
Kite of Class Financial. Eric, how you doing this morning?

Speaker 2 (00:36):
I'm doing great, Sean, how are you doing today?

Speaker 1 (00:37):
And fantastic see you gets go first this week.

Speaker 3 (00:40):
I know brand new.

Speaker 1 (00:42):
Yeah, great to have you. Kyle, how have you been.

Speaker 3 (00:45):
I've been doing good. Sean.

Speaker 1 (00:46):
It's good to talk with both of you. And we've
got such a great topic as always, UH kind of
a very real topic as well. We're gonna be talking
about financial behavior and UH and what what that does
when it comes to UH, when it comes to your
retirement outcome. We're going to get all the details from
Kyle and Eric this morning with money in Motion by
Class Financial again the website classfinancial dot com. That's Class

(01:08):
klaas financial dot com. So much great stuff. Also win
the program another great thing as an opportunity to win
a fantastic prize this week, have chance to win a
twenty five dollars gift card to Sephora with the class
Quiz question of the week. Little tip if you listen
closely to the program, it's about every show the question
and answer to the class quiz questionally comes up during
the show. I'll tell you a little bit later on

(01:29):
in the half hour about how you can win that
twenty five dollars gift card to Savora. And speaking up
the class quiz question a week before we start this
week's topic, let's actually roll back and take a look
at last week's show and get the question and answer
there as well. Eric.

Speaker 2 (01:43):
Yes, so thank you to everybody for listening, and especially
Kathy from Madison, who was our winner last week. The
question was true or false. Jim Anderson did the research
to support the four percent spending role that was first
published in the Journal of Financial Planning in Night octomer
Over of nineteen ninety four. The answer is actually false.
That research was completed by Bill Benjin.

Speaker 1 (02:05):
Yes, and that was that was I was. I was
reading that one last week. I often kind of giggle
a little bit as I'm reading some of them because
some are like, oh, these are these are great. I
loved the kind of the little little, uh, little trick
kind of there as well. Yeah, it was a hard one.
It was hard. It was great work uh this past
week as well. Don't forget we'll have a chance for
you to win another another another gift card. Again with

(02:29):
congratulations to Kathy from Madison with with last week's winterest.
You can be like Kathy as well. So you know
today's topic, it's it's a real one. We're talking about
something that a lot of people don't always think about,
which is kind of their financial behavior kind of how
you behave on a day in and day out basis.
It actually matters more when it comes to your retirement
outcome than markets. And I think a lot of people

(02:50):
are are pretty supply surprised by that. Kyle, let's dig
into this explain.

Speaker 3 (02:55):
Yeah, it's true, Sean, obviously none of us can control
the stock market and Marcus can fluctuate all the time,
and obviously long term growth is important. It's the decisions
that you make on a day to day, month to
month type of basis that really really impact this even more.
And what I mean by that is what's your savings
rate and how much debt do you carry and how
do you spend your money? Right, All those little decisions

(03:17):
add up to giving you more flexibility to be able
to put more away, or just flexibility in general, which
is what you want. So all those little decisions are
what truly shape your financial trajectory. Most people don't just
wake up at sixty five years old and have a
couple million bucks, right. It was strategic planning over years
and years of good decisions, because, for example, somebody who
consistently been percent of their income for over those thirty

(03:41):
years are likely to be far better off than somebody
who just chases hot stocks and doesn't have a saving strategy.

Speaker 2 (03:47):
Right.

Speaker 3 (03:47):
Some people say they're just trying to hit the lottery, right,
find the next Nvidia or Google or whatever it is.
But honestly, that's not the way that most people work
as far as being successful when it comes to this
kind of stuff. So you know, we like to say
that your habits built your retirement account more than any
bullmarket ever could. The average person isn't losing retirement security
because of market volatility. They're losing it because they didn't budget,

(04:09):
didn't play in, or spend too much.

Speaker 1 (04:11):
That is, as the kids say, that's keeping it real
right there for sure this morning, as we talked this
morning with Kyle Kite and Eric Schwartz of Class Financial,
great advice and guidance this morning, as always from our
retirement planning professionals from Class Financially. If you've got a question,
love to have to join us this morning. Six SO
eight three two one thirteen ten. That's six SO eight
three two one thirteen ten. The website costs financial dot com.

(04:33):
That's coss Klaasfinancial dot com and they're telephone number six
SO eight four four two five six three seven. No
charge for the initial get to know you aployment at
Colass Financial. It will be complimentary to you. Let's talk
about budgeting Eric, and a little bit about spending as well.
These are really important behaviors and really important kind of
to our foundation of who we are, aren't They absolutely?

Speaker 2 (04:56):
And I think we may need to just check in
real quick and see if the kids are still saying that.

Speaker 1 (05:00):
But you know that the kids in their thirties and forties,
But yeah.

Speaker 2 (05:05):
Exactly, exactly. Well, yeah, so your your budget. That's that's
kind of your blue your blueprint. And I've heard some
people call this instead of a budget, they'll call it
like a spending plan. It sounds a little bit more.
I don't know, we can fool ourselves. It sounds better
to call it a spending plan, and it doesn't feel
like we're depriving ourselves of things. But you know, if

(05:26):
you don't, if you really don't know where your money's going,
how are you going to be able to control it?

Speaker 3 (05:29):
Right?

Speaker 2 (05:30):
A really simple example, tracking your expenses for thirty days.
It often surprises people when they actually look and say, oh, man,
I'm spending a lot of money going out to eat
or or you know, going out shopping or whatever it
might be. And they'll discover, wow, there's hundreds of dollars
going towards towards that, or or they'll say wow, those
streaming services really really add up because you don't really

(05:52):
think about it in the moment, but over time they
really can can become an issue for you. And every
dollar that you're over spending today is a dollar that
you're taking from your future self. So good spending habits
are kind of like muscles. You strengthen them over time,
and when you learn to live below your means, you
can create the margin to save and invest. And the

(06:13):
other great thing is when you retired, you have less
money to replace if you are living on less. And remember,
budgeting isn't about deprivation. I mentioned that here just a
moment ago. It's just about being intentional. You're telling your
money where to go instead of wondering where it went.

Speaker 1 (06:29):
Like that perspective for sure. Talking this morning with Eric
Swartz and Kyle Kite, our retirement planning professionals from Class Financial,
don't forget if you miss any part of today's program,
you can always listen back at cossfinancial dot com. That's
Coss k l a A S Financial dot com. So
as we then kind of break down in getting into
some of the other areas like savings and investing, how
do we kind of build that? I think some of

(06:51):
this stuff, Eric is kind of easier said than done.
How do we actually start getting into that discipline?

Speaker 2 (06:58):
It is much easier said than done. And that's for
us why it always comes down to your behaviors, right,
We can't life's busy. Things happen, you know, life happens.
We can't expect ourselves to always be super disciplined and
make all of the right, right, hard decisions in the moment.
So what you have to do is is basically make

(07:18):
it hard for yourself to to not follow the budget.
So start by paying yourself first. We've always we've all
heard this adage. So before any bills are spending set
aside money for your retirement, make them automatic contributions to
your four oh one K or your I RA or
just even if it's moving money from your checking to
your savings every month, make it automatic, make it right away,

(07:41):
and don't don't count on yourself to actually do that
at the end of the month. Stay consistent regardless of
market conditions. Okay, so let's say you're investing during a downturn.
Those contributions you're putting in, they can feel like, gosh,
I'm just throwing this money away, but really what you're
doing is you're buying more shares at lower prices, which
is really good for your long term growth. And remember

(08:02):
it is about time in the market, not timing the market.
So it's not about choosing the perfect time to get
those dollars in there, it's about making sure they're in
there for longer. And also keep in mind that you
should match your investment choices to your risk tolerances in goals.
We've talked about this on a show before. For example,
a twenty five year old saving for retirement is going

(08:24):
to have a much different strategy than someone who's five
years out from retirement. So the key is having a plan,
sticking to it through ups and downs. And one thing
we rarely hear from clients is that they save too
much for their retirement. So if anything we hear they
we hear them say they wish they would have started earlier.

Speaker 1 (08:40):
That's it's great perspective and great insight this morning as
we talked with our retirement planning professionals from Coss Financial,
Eric Schwartz and Kyle Kites. Of course, you can learn
more about Eric, Kyle and the whole team at COSS
Financial online Cossfinancial dot com. That's cost Klaasfinancial dot com.
They're telephone number six so eight four four two five
six three seven charge for that initial gets to know

(09:01):
your appointment ach Colss Financial. It will be complimentary to
you again. Their number six oh eight four four two
five six three seven. Phone lines are open as well.
If you've got a question, love to have you join
us is more on six so eight three two one
thirteen ten. That's six soh eight three two one thirteen ten.
We'll continue our conversation with Eric and Kyle and take
your call next as Money in Motion with Class Financial
continues right here on thirteen ten WIBI talking with our

(09:24):
retirement planning professionals from Class Financial, Eric Schwartz and Kyle Kite.
Of course, you can get to know Eric and everyone
and client Kyle as well, and everyone else at Clause
Financial on their website clausfinancial dot com. That's Class k
l aas financial dot com. Great website is eventually gets
to know the team. Of course, you can also learn
a little bit more about the separate divisions at cous
Financial how they can help you or if you're an employer,

(09:45):
some great options and information up at lasfinancial dot com.
Sweet thing. Also, if you scroll down towards the bottom,
you'll see that little envelope says stay current right there
you can sign up like I did a number of
years ago for the weekly Market Pulse newsletter. It's a
great weekly snapshot of what's been going on in the markets,
also linked to the most recent and podcast comes with
that with that Market Pulse newsletter as well, So you
definitely want to subscribe. At cossfinancial dot com, they're tell

(10:07):
forh number six so eight four four two five six
three seven, no charge for that initial get to know
your appointment deck Laws Financial, it will be complimentary to
you again. They're number six oh eight four four two
five six three seven talking about the importance of savings
this week and putting money away and of course having
systems in place. And and Kyle, I know, one of

(10:27):
the areas we talk about on the show quite a
bit is reducing or avoiding debt. And let's talk about
some of these smart behaviors we should be using when
it comes to this area.

Speaker 3 (10:39):
Yeah, absolutely, Sean. You know, we kind of feel like
a broken record because we're always harping on debt and
this kind of stuff. But it's because debt is a
guaranteed headwind that you're working against. What I mean by
that is every month when you're paying those interest payments.
That interest is working against you instead of for you.
So if you can avoid the debt, then obviously you
could invest that money instead and earn interest instead of

(11:01):
paying interest. So it's very, very key to keep an
eye on your debt. Everybody's going to have debt at
some point, and we'll talk about kinds of debt that
aren't as bad as others and things like that. There's
some interesting stats out there. So currently in twenty twenty five,
the average American owes about one hundred and five thousand
dollars and one hundred and five and fifty one hundred

(11:22):
five thousand and fifty six dollars across mortgage loans, home
equity lines, your credit, auto loans, credit card debt, student
loan debt, and other debts like personal loans and that
kind of stuff. So again, over one hundred and five
thousand dollars is what the average American has in debt
right now, and what kind of debt matters big time, right, So,
high interest debt, especially credit cards, can it rode well

(11:43):
faster than any poor investment decision. And the reason that
is is because of obviously the interest rate. Right, So
a five thousand dollars balance on it that you carry
on a credit card. Charging you eighteen percent is going
to cost you thousands of dollars over time if all
you make is those minimum payments. And Eric and I'll
tell you it's very hard to find an investment that's
going to consistently make eighteen percent, Whereas when you're paying

(12:06):
eighteen percent interest, that's exactly what you're doing. You're just
costing yourself at eighteen percent every single year. So to
credit itself isn't bad, it's how you use it. So
if you use it properly, it builds your credit score,
which obviously helps you with premiums, refinancing a mortgage in
the future, or qualifying for better terms if you were
to need a loan for something. But it's crucial to

(12:26):
keep balances low and pay them in full every month,
and especially don't fall for those now pay later traps.
You know, this was a big thing, especially during COVID.
Everybody was zero percent buy now, pay later kind of stuff.
Those things can be a good tool if you use
them properly, but you got to be very, very careful
because a lot of those have it's zero percent for

(12:46):
a set number of months. And then if you don't
pay it off within that twelve or twenty four months,
whatever it ends up being, then they just throw all
that interest back on top of it. So you didn't
do yourselfs any favor. And it may seem convenient, but
they often lead to overspending because again, if it's only
fifty bucks a month or one hundred bucks a month
for twelve months, it doesn't feel as bad as writing
that check for the thousand or twelve hundred bucks whatever

(13:08):
it ends up being. And so that's why we are
so you know, again, a lot of debt is because
the freedom in retirement comes from avoiding debt payments. So
when you don't have to make that money go out
every single month to meet those debt payments, you just
have so much more flexibility.

Speaker 1 (13:23):
So Kyle is a is you know, we talk about
some habits. Let's talk about kind of the other side
of that, which is setting goals and part I guess
part of that not the other side, but part of
those habits is setting goals. That's pretty impactful. Let's talk
about why that is.

Speaker 3 (13:37):
Yeah, So the idea here is to take your goals
and then obviously turn them into an action right, because
they give you purpose for what you're doing. And you know,
especially when we're talking about budgeting and saving and that
kind of stuff, you have to know what you're saving
for and what you're working towards, so you know, you've
got to give your purpose to those to the money
that you're saving. So, whether that's retiring at sixty two,

(13:58):
or maybe you're saving up for a back at home,
or you want to take a big travel a trip
in retirement, whatever it needs to do, you need a
plan to get there. So just saying, oh, I want
to retire someday isn't very helpful at all, right, because
what does that look like? If you say I want
to retire with whatever the number is dollars by the
age of sixty five, that's something that you can put
a plan and start working towards. You got to know

(14:21):
what you're working towards for that finish line and then
review them regularly. Just is just as important because things change.
You know, your plan should change when your life changes.
You maybe have a kid, or you've changed careers, or
got an inheritance or something like that. Those are all
moving pieces that could change that plan that you were
working towards. And this is why it is so important

(14:41):
to have a financial advisor that you can regularly check
in and run these ideas by. And then behavior wise
writing down your goals and tracking progress increases follow through dramatically,
very intentional. Like we said earlier on not only you
know what you're doing with your money, but also writing
down those goals, it's a win for your mindset to
because then it just puts it into perspective of this

(15:02):
is what I'm working towards, and this is what I'm
trying to accomplish.

Speaker 1 (15:05):
Really great tips and guidance and advice. This warning from
our retirement fanning professionals from Class Financial talking this week
with Kyle Kite and Eric Schwartz, of course has mentioned
they come to us from Class Financially. We can learn
more online Class financial dot com. That's Class k l
a A S Financial dot com. They're telling for number six.
So eight four four two five six three seven. So Eric,
let's talk about then protecting your progress and we talk

(15:27):
about the term smart risk management. What exactly does that
does that look like?

Speaker 2 (15:33):
Yeah, it's a great question. H First of all, I
just got to say I can't believe CJ. Is missing
the show this night. We're talking all about eliminating debt.
This is his favorite subject.

Speaker 1 (15:42):
I have a feeling, I have a feeling. Eric. He
is listening on the radio, pacing back and forth, dwaning
so bad. Look I just sitting there.

Speaker 2 (15:51):
Yeah, that'd be good, CJ. If you're listening, give us
a call. But Lakey said, John, let's let's talk about
protecting that progress. So at a very basic level, we
want to start with an emergency fund, and that's three
to six months of essential expenses, and that's something we
would want you to keep in like a high yield
savings account. We want you to get some interest on

(16:13):
that if possible, because hopefully it's going to be sitting
there for a long time. But really what it's doing
is preventing you from going into debt when life does
throw you a curveball, right, So, whether that's a job loss,
a medical bill, a car repair, we want you to
up somewhere you can go so that you don't have
to go into debt in order to pay for that
short that will expense on short notice. And then beyond that,

(16:35):
this is kind of getting into another area, but we
want to be thinking about insurance as well, so health insurance,
life insurance, umbrella, long term care insurance. These are all
financial tools designed to protect your income, protect your family,
and protect your retirement. So being under insured can turn
a minor set back into a financial crisis, and that's
another great way to making sure you're properly insured is

(16:59):
another great way to make sure that you're protecting the
progress you're making.

Speaker 1 (17:02):
We talk this morning with our retirement planning professionals, Eric
Schwartz and Kyle Kite. Don't forget can learn more about
Class Financial their website class financial dot com. That's Class
k l a A s Financial dot com and their
telep number four four two five six three seven. No
charge for that initial get to know you appointment tech
Class Financial. It will be complementary to you again their
number four four two five six three seven. We'll kind

(17:24):
of get some final thoughts from Eric and Kyle will
head on over to the money Me and Motion listener
question corner and the Class quiz question weak. All of that,
we've got an action packed final segment next year on
thirteen ten wiv A. Talking this morning with our retirement
planning professionals, Eric Schwartz and Kyle kite. Of course they
come to us from Class Financial to website Class financial
dot com. That's Class k l A A S Financial

(17:46):
dot Com. Telph number six O eight four four two
five six three seven. No charge for that initial gets
to know your appointment Tech Laws Financial. It will be
complementary to you again their number six oh eight four
four two five six three seven. Talking this week of
out the importance of developing good savings and planning habits
and to kind of take things down the home stretch.
Eric some final thoughts, and let's talk about why folks

(18:10):
should be focusing in on their behavior and they should
start today, shouldn't they?

Speaker 2 (18:16):
They should. I know that the topics we're talking about
today aren't necessarily the most fun things to do, you know,
being really disciplined about your spending and your savings. It's
not the exciting stuff. But you make financial choices every day,
and those choices are going to shape your future. You
don't wait for the perfect job, the perfect stock market,

(18:36):
mostly because you don't know when that's going to come
or go. Just start practicing smart behaviors right away, budgeting, saving, investing,
managing your debt, planning. Just get started the sooner the better.
Your retirement is not just built on numbers. It's built
on these habits that you're actually developing right now. And
the sooner you take control of those habits, the more

(18:57):
freedom you're going to have down the road.

Speaker 1 (18:59):
Really great guy this morning from Eric Schwartz and Kyle Kite,
our retirement planning professionals from Class Financial. The website colssfinancial
dot com. That's Coss Klaas Financial dot com. Great opportunity
there to get to know the team at COSS Financial.
Also sign up for the weekly Market Pulse newsletter. You
can also email the show if you've got a question
with the Money in Motion Listener Question corner, and Jennifer

(19:19):
writes in this week she says, I just received an
inheritance and I'm about three years away from retirement. Should
I use that money to pay down debt or should
I invest it for the future? What are your thoughts?
And Kyle will send this one over to you.

Speaker 3 (19:33):
Yeah, first of all, Jennifer, sorry for your loss. Of course,
losing someone's never easy, but you're you're asking a great question,
And first it depends on what kind of debt we're carrying.
So I kind of talked about this just in this
last segment here. But if it's high interest debt like
credit cards or maybe a personal loan, that's usually the
first target that we would say to knock that out
again because paying off that seventeen or eighteen percent interest

(19:57):
is like percent guaranteed return, and like I said before,
you just don't find that in the market on a
regular basis, So that would be the number one thing.
But if it's something a little different, maybe you were
able to take advantage of those low mortgage rates we
had a few years back, and you locked in a
two or three percent interest rate, you might consider something
a little more blended. So being close to retirement, flexibility

(20:21):
and liquidity becomes a huge thing for you, and especially
maybe you haven't been able to say for your own retirement,
and this could kind of be the shot in the
arm that you need to give you that flexibility. So
keeping some of it invested, especially in a conservative, diversified portfolio,
could help you and your retirement later on. Or it
just could be that little emergency reserve that Eric was

(20:43):
just talking about too. And ideally, finally, you really want
to understand the tax implications because this gets in very,
very deep into the weeds as far as what type
of inheritance it is. Is it a CD or money
market or a checking account balance or is it a
a tradition IRA or four oh one K or a
non qualified annuity. All of these things have different implications

(21:05):
as far as taxes and your options and stuff like that,
so we really want to understand that. Or it could
just be property, you know, maybe it's rental properties or
a primary residence, stuff like that that obviously has some
different tax implications as well. Docor But again, when you
get something like this, this is a perfect time to
consult with the financial advisor or CPA before you make
any major moves to avoid any of those big surprises.

(21:27):
So like so much of this that we talk about
on a weekly basis is that there's just no one
size fits all answer. It's not a perfect little you
know abc D thing. We joke that financial planning is
as much art as it is science. But a good
starting point is what gives me the most stability and
peace of mind as I get closer to retirement. And
like I said, it could be reducing the debt, it

(21:47):
could be boosting your own savings, or it just could
be a combination. Of both of those.

Speaker 1 (21:51):
Great questions, great emails of course, Jennifer. Nice work. You
can two be like Jennifer submit a question for the
Money in Motion listener question corner. Just head on over
to Class Financial die dot com. That's coss k l
Aasfinancial dot com. Now only can you submit a question,
you can also learn more about Class Financial and UH
and subscribe to the weekly Market Pulse newsletter. They're telephone
number six soh eight four four two five six three seven.

(22:13):
No charge for the initial get to know your appointment
tech COSS Financial. It will be complimentary to you again
their number six oh eight four four two five six
three seven. You want to hold on to that telephone
number now because it's time for the Class Quiz Question
of the week. Works like this and just want to
ask you the Class Quiz question of the week. You
will then have thirty minutes from the in today's program
to call the Class Financial office right here in Madison
at six oh eight four four two five six three seven.

(22:34):
If you are the first caller with the correct answer,
you'll win this week's prize, which is a twenty five
dollars gift card to spour up this week's Class quiz
Question of the week is this In twenty twenty five,
the average accumulated debt Americans OH is over one hundred
and five thousand dollars. Is that true or is that false?
Telephone number six O eight four four two five six

(22:55):
three seven, first call with correct answer when this week's prize.
Don't forget as well. It's COSS Financial Office right here
in Addison. No charge for that initial gets to know
your appointment. It will be complimentary to you again the
number six oh eight four four two five six three seven.
Eric Kyle, It's always great chatting with both of you.
You guys, enjoy this day and we'll talk real soon.

Speaker 2 (23:12):
Thanks Sean.

Speaker 3 (23:13):
Thanks Sean, We

Speaker 1 (23:14):
Got news coming your way next here on thirteen ten
wu ib A