As Featured on KSN: Federal interest spike expected to deal blow to those with credit card debt

WICHITA, Kan. (KSNW) — In the wake of The Federal Reserve once increasing interest rates, this time by another three-quarters of a percent, nearly everyone will feel that interest rate increase.

But while experts say that increase is pretty substantial, it will deal a blow to some loans much sooner than others.

“Variable is going to get hit first, and that happens to be on credit cards,” Michael Proctor, President, Leading Edge Financial Planning, LLC, said. “So, not only are you paying a higher interest rate, you’re paying the higher cost of living at the store, at the gas pump, pretty much everywhere right now.”

Proctor says while many providers will alert consumers of an interest-rate increase in the coming weeks, others won’t, and it’s not required of them to do so.

“A lot of times, it’s built into the terms when you sign up for it — it will be prime plus a certain amount, so you may want to bump up what your payment is,” Proctor said.

Proctor says while it may seem tempting for those with credit card debt to sign up for a 0% interest rate credit, that can create its own set of problems.

Choose the Best College Post-Covid

Many students and parents start their college search by creating a long list of potential schools. Narrowing down that list isn't always as fun, but getting the most Return on Life from college requires families to balance dreams and practicalities. Start focusing your own college search by answering these three important questions with your high schooler.

1. What are my child's goals?

The student debt crisis and 2020 COVID-19 lockdowns forced many families to reevaluate what college is really for. Yes, parents want their children to gain independence, develop socially, and have some fun. But the price tag associated with those experiences is becoming harder for many families to justify without a clear educational goal.

That doesn't mean that your 18-year-old should have their entire life mapped out by the time they graduate high school. Multitalented students who are still exploring might look to schools with strong liberal arts programs that will help them focus their interests into a career. On the other hand, if your daughter has been giving her stuffed animals medical attention since preschool, have a conversation to make sure she is certain about investing time and money into what will be a very challenging -- and expensive -- academic track.

2. What are my child's Needs and Wants?

The educational goal you determined in step one should also be at the top of both your child's Needs and Wants for college. Next, discuss the other items that fall into those categories. Be strict about keeping these Needs and Wants separate, even for things that might blur the boundaries.

For example, is going to a large school with Greek life and a great football team really a Need? Or could your daughter see herself flourishing just as well at a smaller school where learning and social life might move at a slower pace?

Does your son Want to go to school in a big city? Or do you both feel like he Needs to expand his horizons and interact with a wider variety of people to mature personally and succeed professionally?

There are no judgments here, no right or wrong answers. The goal is to gain some clarity on what's really important to your child so that you can match those key characteristics with an ideal school.

3. How are we going to pay for college?

When you were preparing for college, your parents might have called this "The $64,000 Question," in reference to the old game show. Today, according to recent studies by the Education Data Initiative, figuring out how to pay for a bachelor's degree could be more like a "$400,000 Question."

Going to college doesn't just delay your child's income earning by four years or more, it can also deplete savings and create debt. And that's before weighing in factors external to tuitions, such as the cost of textbooks, transportation, and basic living expenses. Outlining these total costs might cause you and your child to look back on those Needs and Wants with a different perspective.

Like any other aspect of your financial plan, the sooner we can anticipate a major transition or expense, the sooner we can start planning for it. Many of our clients plot Sending a Child to College on their $Lifelines while their children are still in grade school. With that kind of foresight, we're able to explore options like 529 accounts that can supplement savings, scholarships, part-time work, and low-interest student loans.

But even if you and your high schooler just had your first-ever conversation about paying for college, your financial plan gives you options. Make an appointment to speak to one of our advisors and we'll help you get your child the best education possible with the money you have.

Wishing you the best Return on Life and education,

Mike

When's the Best Time to Retire?

Many of our clients come to us with questions about the best time to retire. In this post, we’ll take a look at different perspectives and things to consider.

When asked, “When do you plan to retire?” our clients often respond with, “65.” Isn’t that interesting? Because of a law passed sometime in the Great Depression, people today focus on a certain age instead of how much money they have or whether or not they like their job. It’s just 65.

This idea comes from the fact that you can start receiving Medicare at age 65. In fact, most people think they need to wait until 65 to retire so they can still have health insurance. But now, there are programs in place that make healthcare more affordable than people realize. Maybe it’s time to “retire” the one-size-fits-all idea of retiring at a certain age.

If you’ve been working for 30 or 40 years and earning an income to pay your bills, suddenly stopping that can be quite the change—especially when earning an income has been a source of security all those years. A sense of trust needs to be there to understand that investments are doing the work now instead.

And what about taking marriage into account? Often, one spouse may want to keep working longer than the other, resulting in entering a new stage of life at different times. This is especially common when there is a significant age gap between partners. Additionally, health concerns start to add up once you reach 55 or so, which causes some people to want to retire earlier to enjoy new activities while they can health-wise. Sometimes one spouse will reach these health concerns sooner than the other, which can affect the plan for both.

Luckily, there’s a lot of middle ground when it comes to retirement. Instead of retiring all at once, people can choose to go part-time or take off longer periods of time than a standard vacation. When you’ve gained a lot of experience after working for 40 years, employers may be willing to be flexible.

To help couples prepare for retirement, there’s a program we can take them through together. Some people find out after retiring that it’s not what they expected. Maybe they’re not as fulfilled as they thought they’d be, or maybe they realize they didn’t develop any hobbies over the years of being busy with work. One of the best things we have to offer as life-centered financial planners is help with getting the most out of your life at every stage.

If you’d like to talk about your plans for retirement, we’d love to help! Click below to schedule a free meeting with Mike or Lyndon.