Amy: Tonight, is it time? Is the Fed going to step off the gas in its fight against inflation speculation? It is spreading. You're listening to "Simply Money," presented by Allworth Financial. I'm Amy Wagner along with Steve Sprovach. Man, it is like trying to read the tea leaves, right? One person speaks, markets respond. This is it. The change has come. It's amazing. We've said this many times this year, Steve, but how much power the Federal Reserve is wielding right now? One member speaks, and the entire globe is listening.

Steve: Oh, I remember the old EF Hutton commercials, "When EF Hutton speaks, everybody listens. You get one, and the whole room would go quiet when that EF Hutton person would say, "Well, I think..." and, boom, you know, the crickets, and, "Let's hear what they have to say." That's what it is with the Fed. And that's because everything economically, market valuations, it all boils down to when is the Fed...? Here's the fancy term that we're hearing a lot more of, when is the Fed going to pivot? When are they gonna stop raising rates and start talking about dropping rates? And when that happens, watch out.

Amy: The reason why the markets have been...right? Like, end of last week, like, what's going on? What's the good news? Well, on Friday, Federal Reserve Bank of San Francisco's Mary Daly said to policymakers, "Listen, you should probably start planning for a reduction in the size if interest rate increases." She stated that, "A slowdown to incremental increases of 50 or 25 basis points will be appropriate as we approach the terminal rate." What did she mean? Well, the markets had already priced in what? Seventy-five basis points in November next week? And then another 75 basis points in December? Just trying to, again, read the tea leaves. And she's like, "Well, maybe not."

Steve: Well, a lot of people are going to the church of wishful thinking these days.

Amy: I think you might be right. Yes.

Steve: I mean, we are so desperate for some good news, Amy, that all you have to hear is, "Hey, maybe not three-quarters of a point." And, you know, next one, I think is a given three-quarters of a point. Maybe we'll drop it from three-quarters to half a point, and, "Woohoo, let's go. Oh, let's reduce."

Amy: And she honestly didn't even say that. She didn't say what we could expect in December. But I think it's...

Steve: What she said and what we hear may be two completely different things.

Amy: Well, you laugh about it, but I honestly think that is what's been happening this year. Every time there is a glimmer of, shall we say bad economic data, which means good news, as far as the Fed slowing things, markets are on a tear. Well, this must mean, and then all of a sudden, the Federal Reserve then takes another aggressive measure, and, oh, wait a second, right? The Federal Reserve has said many, many times this year, "Our only focus is on pulling inflation down." Their goal is 2%. We are far north of there right now, and you've got one person in the Federal Reserve saying, "I don't know, maybe not."

Steve: Well, I mean, here's what's going on from, you know, macro level, 30,000 feet, use whatever catchphrase you want, but, you know, there's an old adage that, "When there's no more buyers, you're at the bottom." And I have been hearing for weeks about, "Oh, what do you think, Steve?" Oh, okay, that's cute, you know, yeah. We'll recover. Yeah. "Not for years, Steve." You know, there's so much pessimism out there.

Amy: I saw a headline today that said, "A decades-long bear markets." Yes.

Steve: Yeah, which, by the way, just cut out the extremes on both sides.

Amy: Please.

Steve: The truth is somewhere in the middle, you know. They're the ones that get the headlines, but not a lot of credibility as far as I'm concerned. But, you know, we're reaching. We want a quick recovery. And my experience, and again, let's just go back to when everybody says, "Hey, this is the best place to put money, invest it as soon as possible," you're usually near the top. And when you hear things like, "Oh, man, this is gonna last for years, I wouldn't put a dime in the market now. It's just the beginning. We're gonna have to see changes in Washington," blah, blah, blah, it's usually somewhere near the bottom. The question is, all right, is this bounce the real bounce off bottom, or is it another bounce like we saw back in June?

In June, Amy, we had a 17% increase in stock prices back in June. It felt like the real deal. If you waited till it was up 16% and said, "Okay, I'm putting my money in, the dust has settled, I'm back in," you got burned because it dropped down 17% and then a little bit more so that, you know, now the question is, is October 12th the new bottom? I don't know. You know, you just don't know. But it may be another dead cat bounce. I'm sorry, Peter. It's just a phrase. But, you know, we don't know. But I'll tell you what, we know at some point we're gonna recover. The question is, it is the bottom, has it already happened, or will we revisit it sometime in the near future?

Amy: Well, and trying to pinpoint the timing in real-time is nothing but speculation. I mean, even when you have a member of the Fed coming out and saying, "Listen, here's what I think we can expect," this is not a ticket to the bank statement because economic data will come out between the time she said that statement and the time that the Federal Reserve is making their moves. And as each piece of data comes in, that changes the outlook for them, right? So, they don't already know what's gonna happen even next week or next month.

And so, you know, you look at the data coming in, and yes, these are weekly numbers, but jobless claims down again, right? But the labor market remains strong. Why do we care about that? Well, if this was working, if the Federal Reserve's aggressive actions to bring down inflation were working, there would be a domino impact that would likely impact the labor market. There would be a tightening. You would be worried about losing your job. I mean, we would probably be looking at the reality of a recession. And so I think you can have kind of one-off one member of the Fed saying something, you know, "Listen, it's my 401(k), too. I'm happy when the markets are up," but I don't know if we've really seen the last of this aggressive action by the Federal Reserve.

You're listening to "Simply Money" tonight here on 55KRC as we make sense of the markets, right? What's happening on Wall Street, what's happening on Main Street, and all of the reaction. It's just too soon to say.

Steve: Yeah. You know, Andy Stout, Chief Investment Officer of Allworth has always said, "When the data changes, my opinion changes." So, it's not like the Fed is flip-flopping. I mean, they're open about, "Hey, we got to see if what we're...

Amy: They're based on the facts.

Steve: Yeah, "if what we're doing is impacting the economy." But the problem is there's a six, seven, eight, nine-month lag time. So, the things that they started doing back in January and February, we're just beginning to see if it has an impact on the economy and is slowing it down because we're in that period, Amy, where bad news is good news. We wanna see the economy slowing down, so the Fed does reduce their increases in interest rates and goes through that pivot that we're focused on.

And when you start to see more and more people talk about, hey, the Fed pivot looks like it's gonna be whatever, second quarter, third quarter of next year, that's when you know some of the money that's been sitting on the sidelines... By the way, there's $5 trillion sitting on the sidelines right now, most of which is gonna reenter the market at some point. So, there's a lot of pent-up demand for buying stocks, so don't be surprised if the market starts to move before the good news happens because that's generally what happens. I mean, 2009, what was the bottom? March 9th? Something like that.

Amy: Yeah, March 10th, something like that.

Steve: And tell me, you know, things were clear and, oh, it's time to get back in. No. On March 10th, march 11th, April, May, things were as ugly as they were for the previous year, but eventually, we got out of it.

Amy: I've gone back and looked at the headlines on the day that the market hit bottom.

Steve: You do the research.

Amy: Yeah, I did that.

Steve: I should start doing that.

Amy: We've done it, you know, several times over the years, and there was nothing anywhere in any major paper or any major website that made you think that, "Okay, maybe the clouds are parting and the sun is coming out and we're seeing better days and the economy is strengthening, and all of this is behind us." Nothing.

Steve: So, your research proved me right?

Amy: It did.

Steve: Scary.

Amy: I am backing you up, my friend. Here's some more good news in this good news is bad news kind of world, places where markets that are tied very closely to interest rates. Think about you are going to buy a home, and now, all of a sudden, interest rates have doubled maybe since the beginning of this year or buying a new car or a used car, though in those kinds of places we are seeing a tightening. I mean, in fact, in the real estate market, it is like a seized-up overnight kind of situation.

Steve: It's like a light switch. Yeah. I just talked to somebody last week that I've known for years, and years, and years. Was in the mortgage department of a large local bank here, lost her job. I mean, that's the impact. And, you know, I guess that's what we're looking for. The Fed wants to see, you know, not necessarily a recession, but they know that when they said there was gonna be some more pain before we can get inflation under control. That's pain. I mean, when you lose your job or, you know, somebody you know loses their job and wasn't expecting it, that's pain. That's what you can expect because of the Fed increasing interest rates. And it's not just real estate, any large ticket item where you generally borrow money, like a car, you know. Who pays cash for a car? Yeah, there's a percentage, but most people take out a loan. You know what those rates are? Those rates are sky-high compared to where they were a year ago.

Amy: And they make a difference, right? I mean, we've talked on this on the show about, you know, what your mortgage payment would have been a year ago with the interest rate at 3.25%, something like that, 3% versus now at 7%. For a lot of people, it's hundreds of dollars difference, maybe $1,000.

Steve: Oh, it might be a grand. Yeah.

Amy: Yeah. And when you look at that, well, first, that's cost-prohibitive for some people, right? For a lot of people.

Steve: It is, and believe it or not. And I was talking to my son who's an engineer for a large automotive manufacturer. There are still supply chain issues out there. So, you know, what is inflation? It's too many dollars chasing too few items. Well, you know, maybe the items would be there if there weren't supply chain issues. China is still a very large manufacturer of a lot of stuff that's distributed all over the world, especially in the automotive industry. There's still supply chain issues because China is still locking down entire towns if there is a COVID spread going on. So, while you have that going on, you've got, you know, in that case, kind of an artificial limitation on supply, but it's still a limitation on supply. So, we've got to get past all of these issues to get inflation down. We're gaining ground. It's better than it was a year ago, but we're not out of the woods.

Amy: And when you say we're gaining ground, what that means is the economy is losing momentum, right?

Steve: Yeah.

Amy: I mean, that's how we're gaining ground right now. There are a number of kind of economic data pieces that are coming in to show you, okay, this is slowing down, and that's what we want, but there's a lot of other areas that are not slowing down at the pace I think that the Federal Reserve, that the markets would want, and that's what we're dealing with here.

Steve: It is. And I'll tell you what, Amy, we're getting a lot of numbers this week. This turns out, at least for the short term, to be an important week. We're getting a lot of earnings coming in, Apple, you know, big companies like that. We wanna see reduced earnings, believe it or not, but again, bad news is good news. It shows that the Fed...

Amy: Consumer sentiments out this week, too, right?

Steve: That's a big one.

Amy: How do we all feel about the economy?

Steve: Well, I mean, I know how I feel. I think a lot of others feel the same way. New home sales, I don't think there's gonna be any surprises there. Third quarter GDP, gross domestic product, believe it or not, it's expected to be over 2%. Remember, the first two quarters of this year were minuses.

Amy: Negative.

Steve: And technically, that's a recession. Didn't really feel like it. I don't think that the first two quarters were a real recession, but, you know, that's one of the numbers. Personal spending, you know. Are we still spending money? Yes. Is it down? I don't know. We'll see. These are numbers economists and analysts are gonna be taking a hard and close look at this week.

Amy: Here's the Allworth's advice. "Making financial news based on buzz, based on speculation, what you read daily, man, it is a dangerous game to play. Let history be your guide here." You know, we often rip the IRS, but not this time. They just announced something that could really help you retire earlier. It is a big deal. We're gonna explain next. You're listening to "Simply Money" here on 55KRC, The Talk Station.

You're listening to "Simply Money," presented by Allworth Financial. I'm Amy Wagner, along with Steve Sprovach. If you can't listen to our show every night, well, subscribe to get our daily podcast. You can listen the following morning, maybe while you're riding to work or at the gym. And if you think maybe your friends, well, maybe they could use a little bit of financial advice, well, spread the word to them as well. Search "Simply Money." It's on the iHeart app or wherever you find your podcast.

Straight ahead, it's 6:43. Gonna talk about common mistakes that you could make about college that could have a huge negative impact on your retirement. Speaking of retirement, some good news here. If you use a 401(k), the IRS, every year, determines how much the maximum amount that you can put in, and this year, we're seeing that amount go up more than we have, man, in a long time.

Steve: In a long time. Yeah. Let's put the two words, inflation and IRS, and make a positive out of it. Is that possible?

Amy: Who would have thought that way? Yes, I know.

Steve: This is one of the few good things you can say about inflation. And, you know, if you draw social security, you know, okay, you're gonna be getting a raise because inflation is high, it's gonna be a fairly large increase. Well, the IRS is working through all of the numbers that they do, and a lot of these items that they set limits on are being indexed for inflation. Now, this doesn't help us this year, Amy, but in 2023, we're looking at the max you can put in of your own money into your 401(k) is increasing from $20,500 to $22,500. That's almost 10%. That's a $2,000 increase. And on top of that, if you're an old guy like me, you're not there yet, but, you know, if you're an old guy like me, the catch-up provision goes from $6,500 to $7,500, in addition to that baseline increase.

So, you know, some people out there are just great savers. We wanna make sure you have an emergency fund. We wanna make sure you have, you know, 401(k) contributions to allow you to retire when you want, and if you can continue to put even more money away, a taxable investment account. Those are the three major buckets. But if you can max out your 401(k) contributions, oh, my goodness, especially with the market down, you can put away a lot of money and it's gonna do a lot of good for you and allow you to live a lot better in retirement than if you just stick with the old numbers.

Amy: And I think it's easy to say, "Yeah, that sounds great, but, like, maxing out my 401(k), who can do that?" I will tell you I am not a do-as-I-say. You know, I walk the walk, too, right? And I have made many sacrifices through the years in order to be able to put as much as I possibly can into that 401(k)...

Steve: Good for you.

Amy: ...because I really truly believe. And there are years when certain things can't happen, but I'm maxing out that401(k) as much as I possibly can. If you are not anywhere close to it, just increase 1%, right? Every year. Maybe try to put one... I don't miss it, you know. I've been making this sacrifice. I'm used to it. My family is used to it, and I think it can make a huge difference.

Here's the talker. If you are a McDonald's fan, and for anyone who has had little children, I don't know what it is, but at about the age of four or five, all of a sudden, all they ever want is to eat at McDonald's and get the Happy Meal.

Steve: Is that marketing? Happy Meal. I mean kids love it.

Amy: It is brilliant.

Steve: Yeah.

Amy: Well, of course, because it's going to make you happy just by getting one. So, why wouldn't adults want them, too, right? McDonald's came out earlier this year with the adult Happy Meals. And they have these weird little figurines in them and I'm thinking, like, "What are they thinking?" I don't know. Once again, marketing at McDonald's. Leave it to McDonald's. These have now become these weird little grimaces and a Hamburglar and whatever, have become these collector things, and people are paying, like, real money for them.

Steve: I don't get it. To me, it's just another sign we're rapidly approaching end times. I mean, adult Happy Meals.

Amy: We have collectively lost our minds.

Steve: And I'm reading some of these quotes of people saying, "I'm so happy my day is fulfilled. I've got my adult Happy Meal." Wow, that's a little bit scary, but yeah, I mean, this one is the outlier. Somebody listed one of these little figurines that come in an adult Happy Meal for, like, 300 grand on eBay. Yeah, that ain't happening, but there's a whole bunch of them listed for, like, 20, 30 bucks.

Amy: Steve, it's in its original packaging.

Steve: I know.

Amy: I mean, $300,000. It's almost a steal at this point.

Steve: Can you imagine your kid you pay 300 grand for what you think is a collectible and your little kid just gets their hands on it and tears open the plastic, and now it's worth a buck?

Amy: Stupid human financial tricks. This is exactly what that is.

Steve: The new Beanie Babies.

Amy: Yes. Don't even go there. Please, do me a favor. One of the most meaningful things you can do with your money is maybe not to buy a figurine from McDonald's and their Happy Meals, but passing along your financial legacy to your heirs. And baby boomers, interestingly, according to some new research, say they're worried that these are high-net-worth investors, they've got $1 million dollars or more. Two-thirds of them say they're concerned about their heirs using their inheritance wisely.

Steve: Well, it's a pretty common problem and a normal discussion I have with people day in and day out about, "Okay, you know, I'm getting a little bit older and, you know, my kids are good but, you know, I'm a little concerned about the marriage, their kids, I'm worried about their education, one kid is doing great, the other kid is struggling," common stuff. And the biggest concern of two-thirds of high-net-worth individuals is a smooth transfer of my assets to the next generation. And how do you accomplish that? Well, I mean, that's where beneficiary designations become real important. But I'll tell you what, sometimes you don't necessarily have to have $12 million to need a trust, but in a trust, you can go ahead and put limitations. You can put strings on your money. And that's a fairly common tool of, "Okay, I don't want this kid to have this money until they're 25, or this grandkid. It can only be used for educational purposes." That's one of the things you can use to address your concerns.

Amy: Over the next 20 years, we are about to see the greatest transfer of wealth this country has ever seen. Seventy-three trillion dollars is expected to pass to younger generation, another $11.9 trillion will be given to charities, right? The baby boomers, you know, have amassed money, they've worked hard, many of them have pensions, and social security, and save for themselves. And as a result, there's all this wealth that has built up that's being passed on. But it's so interesting to see because there are such generational differences and how people look at money. You know, I can see the difference between my dad and I, and between my children and I, you know, what we value, what we think working hard looks like. So many differences. And I'm, as you know, a huge advocate of just speaking openly.

Steve: Yeah, communication is huge.

Amy: Talking openly. Yes. You know, if you're looking at your children and saying, "I don't understand this," ask, why did you choose to do this? Or, what is this about money? Just make sure that everyone is on the same page, and make sure that everything is spelled out really closely in what you're doing.

Here's the Allworth's advice. "Too many families fight over money after a loved one is gone. Have those important conversations now so that your financial legacy can be passed on in the most meaningful way possible." Coming up, Halloween almost here. Thieves have unleashed scary new scams. What you need to know to protect yourself, next. You're listening to "Simply Money" here on 55KRC, The Talk Station.

You're listening to "Simply Money," presented by Allworth Financial. I'm Amy Wagner along with Steve Sprovach. You look at your phone, you got a text from mom. Well, usually, you pick it up immediately and respond. But is that text really from your mom? Joining us tonight with a warning everyone needs to hear, Jocile Ehrlich, President and CEO of the Cincinnati Better Business Bureau. All right. Mom is texting. You need to answer, right?

Jocile: Yeah, well, maybe not. Scammers are using mom and dad. They're getting closer and closer to home to try and trick you into becoming their next victim. And they're using these text messages with a spoofed caller ID as their bait. They're counting on you to have the words dad and mom saved as a contact on your cell phone and, to your point, hoping you won't think twice before sending them money. And here is how it works.

Amy: Hold on. So, somehow a scammer gets ahold of your parent's cell phone number, or they're spoofing?

Jocile: No. They're spoofing it, but it comes across as dad or mom.

Amy: Oh, I see. Okay.

Jocile: And most people see dad or mom, and right away say, "Okay, pick it up." They don't look maybe at the number that might be underneath it.

Amy: Sure. Okay.

Jocile: Yeah. So, you get a text from mom saying she left her wallet at home, or she lost it, or some such thing, and she's out shopping and she needs you to send money to some unknown bank account or a digital wallet so she can pay for what she bought. First, stop and think. If your parents typically don't text, don't respond to this at all. And if your parents generally don't involve you in their finances, or, like, my mom would have no idea what a digital wallet is, there's a pretty good chance the text is not from them. So, instead, if you do not have their number memorized by heart, look it up in your contact list and call your parents and say, "Did you send this text? And are you okay?" Etc., etc. Don't call the number displayed on the screen because, as you said, it may be spoofed, then go back and delete the phone number of the imposter who supposedly forgot their wallet so they could get into yours.

Amy: So many times, Jocile, what we've seen through the years is scammers just push on the sense of urgency, you know, your parents need you, they need to help. And this is one where, you know, mom and dad, you know, I think for many people, you don't even stop and think, but nowadays you have to.

Jocile: Right. You have to. And think of the message here. I can't even envision a situation where mom says, "I forgot my wallet," not, "Come down here, Johnny, and bring me some money," but instead, "Dump some money in a bank account or send me some money through a digital account." That's just not normal transactions. So, you really stop and think, and don't just respond emotionally to the fact that mom or dad allegedly texted you.

Amy: Great warning as always from Jocile Ehrlich, President and CEO of the Cincinnati Better Business Bureau. What other scams do we need to know about, Jocile?

Jocile: Well, speaking of banks, there's a phony bank text message scam going around. Looks like it's a fraud alert from your bank. And I've personally gotten a couple of these. It might say something like, "There's some unusual activity in your account. Did you approve a transaction for $1,000? Reply Yes or No." Stop there, folks. If you reply to that text, the scammer knows now that they have an active cell phone number, and you're gonna be their next target for this scam, and who knows what other cell phone scam-based scams there might be?

Phase two of this is the scammer is gonna call you to follow up, and the number will appear in this caller ID as if it is coming from the bank. The caller will claim to be the bank representative who can stop the fraudulent charges, but you'll have to set up a digital wallet, then send money to yourself using that app. It all gets a little convoluted here. The scammer is gonna tell you how to connect the app to your bank account, then they're gonna ask you to verify the connection is active by sharing the code that your bank sent back to you. Do not do it, you know. If you give that scammer your verification code, they're going to set up another account with your phone number and email, but their bank account information. And if that happens...

Amy: Well, they have complete access, right? They've got access to your account now.

Jocile: Yeah, when you send money to yourself, as they told you to do, you're actually sending money to the scammer. And you're kind of stuck here because disputing the charges is going to be extremely hard because as far as the bank is aware, you've already approved this transaction, even though you were tricked into it. And remember, sending money through a digital wallet app is like using cash, making it very hard to get your money back.

Amy: Let's talk about something that I have been hearing about a little bit more lately. Check washing fraud. Actually, I think this happened to not a client of ours, but one of our clients actually called, and happened to a friend of theirs, too, for a pretty big amount as well.

Jocile: Right. You know, this is a very old scam, but it is coming back around. Years ago, crooks washed stolen checks by removing all the handwritten payee information and amount information with chemicals, and then change those fields to whatever it is they wanted it to say. Well, the U.S. postal inspector is saying this is really being resuscitated. They report that billions, with a B, dollars of counterfeit checks are generated annually. And occasionally, these counterfeit checks are stolen from mailboxes. Well, I think everybody can remember, just even this week, we heard reports of thieves getting hold of those keys that open up those blue mailboxes that are on street corners. That's how this is happening.

A lot of people pay their bills electronically, that's great, but there's also a lot of people who use checks regularly. And even those who prefer to use electronic checks, there are some times where you have to write a check. If you do have to write a check, make sure that you use a black gel ink pen instead of a ballpoint pen. Black gel ink is your best protection against check washing since gel ink really resists chemical stripping, and contains pigments which really soak into the fibers of the check and make it harder to wash. And if you need to mail that check...

Amy: I was gonna say the incidents that I heard about, the person actually had written a check to a charity. Intended it to go to the charity. It was taken somehow out of the mailbox, the intended person that the check was written to was changed, and then several zeros added to the end of that check. And I saw a picture of it and couldn't believe it. And then, of course, I went on YouTube. There are, of course, dozens and dozens, hundreds of videos telling people exactly how to pull this off.

Jocile: Yeah. And, you know, you write a check, best interest at heart, you put it in your mailbox, you flip up the little flag, or you drop it in a blue box, and just expect that it's going to be picked up by who is intended to pick it up, the post office, and it's going to be delivered. That is not the case anymore. If you write a check, you need to either hand deliver it, and that's obviously not always easy to do, or take it directly to the post office and mail it with them, or put it in a blue box, for lack of a better word, you know, close to the time that you know that they're going to be picking it up.

Amy: Really quickly, I wanna get to something else that you talk about, Jocile, an inheritance scheme. What do we need to know about that?

Jocile: This is similar to the Nigerian letter scam where you get a letter saying that, "You're entitled to all of this money," and they're gonna help you get it, blah, blah, blah. In this case, it's moved stateside, it's not from Nigeria. At least that's how it's being portrayed. You get a letter from a law firm, they're looking for the heir of a multimillion-dollar inheritance, and they think it might be you. Well, spoiler alert, it's not you. The letter continues with details that the inheritance will be split. This is an inheritance now. It's gonna be split between you, their law firm, and some charities. Now, isn't that so nice of them? And one other thing you need to know, you need to keep this a secret and don't tell anybody, and you need to contact them by email immediately.

Now, you probably figured this out. This isn't a letter from a lawyer, it's a scam. And if you email them, they're going to try to get as much of your personal information as possible, your social security number, your bank account numbers, your money, anything, everything they can get because you think that you're entitled to this inheritance. And that inheritance, rather than them sending you any money, they may end up taking yours.

Amy: Scammers, man, they're coming at you as they are your parents, as they are your bank, as they are a law firm. They're coming at you from every direction, which is why we appreciate so much when Jocile Ehrlich joins us every month, President and CEO of the Better Business Bureau right here in Cincinnati with just this warning, right? Of what you need to be watching out for. Make sure your friends and family members are watching out for these as well. You're listening to "Simply Money" here on 55KRC, The Talk Station.

You're listening to "Simply Money," presented by Allworth Financial. I'm Amy Wagner along with Steve Sprovach. Do you have a financial question you want us to talk about here on the show? There's a red button you can click on while you're listening to the show on the iHeart app. Just record your question. It's coming straight to us. We would love to talk about it right here on the show.

Straight ahead, all of those credit card perks out there, making sense of them, which ones might best suit you? We're gonna break that down for you. Paying for college, right? College expectations, college loans, student loans, all of that, usually come, Steve, as you know about the time when you're starting to think, "I need to ramp it up saving for retirement." And for a lot of people, that whole helping your kids pay for college can really derail retirement plans.

Steve: Oh, it can. And, you know, the numbers are getting bigger and bigger every year. I'm just shocked at I thought college was expensive when my kids were in college, and that's 15 years ago, yeah, almost 15 years ago. They are a lot more expensive now. You know, would a graduating senior take out a 10-year $100,000 mortgage before they got a job? No. But if you call it a student loan, they jump at it, you know. And this is one of the problems that we've got with student loan debt in this country. And, you know, there are some basic mistakes that kids and their parents are making.

Amy: So, new research out from Voya says that 81% of those who have student loans say it very much affects their ability to save for retirement, right? So, like, it's a generational thing. You've got parents making sacrifices that affect their retirement, you've got children taking on more in student loans than they can. You know, many of them we talk about kind of failure to launch. Well, many of them can't buy houses, can't save for retirement because every penny that they're not, you know, eating, or paying for rent, or gas is going to student loans.

And so I think conversations, and I'm a huge advocate of this, starting in middle school, right? What can we afford? What makes sense? You know, and kids can have big dreams. And I'm not about, like, squashing people's dreams of going to these big colleges, but, you know, my daughter, literally because of palm trees and pictures she's seen on Instagram several years ago said, "I'm going to South Carolina." I'm sure the campus is beautiful. I'm sure it would be a lovely, very fun college experience. She doesn't even know what she wants her major to be yet, right? And I've had to say, "Hey, babe, you can visit South... We're not going there, you know. In-state tuition is what makes sense for us. Look at all these lovely schools here in Kentucky."

Steve: Well, you got 18 kids you got to put through college, so yeah, you've gotta call it, yeah.

Amy: Yes, four teenagers right now. But I think that parents, it feels difficult to, like, have this...you know. You want your kids to think, "I can do anything I want," you know, but when it comes to college, okay, maybe they can, but to go to this majorly expensive school with this great bumper sticker that you can put on your car, and then, all of a sudden, they are a philosophy major and they're gonna make $40,000, how are they gonna pay off those loans? And I've used this example before, but a friend of mine, a journalism major, writes, "I was a broadcast journalism major. You know you're not gonna make a ton when you get out of school."

Steve: The big bucks. Exactly.

Amy: This guy that I worked with at a station here in Cincinnati had gone to a private school, right? Had a great time, a great college experience. He was $80,000 in debt, making about $40,000 a year. Like, it's just the numbers don't work out.

Steve: Yeah, I'm still getting over you saying you talk to your kids when they're in middle school about how they're going to pay for college. Oh, my goodness.

Amy: My four children.

Steve: And I think we all want our kids to, you know, have it easier than we did, you know. I had it pretty rough. I mean, my parents didn't have any money, and I paid my way through college, and so did my wife. And, you know, you do what you've got to do, but, you know, if you wanna make it easier on your kids, going to Yale or Harvard or someplace where they're not gonna get a scholarship might not be the first thing that you want jumping in your head. It might be, "Hey, okay, that sounds great. You wanna go there? Let's start researching together what kind of scholarships and grants we can get before jumping at the student loan." Everybody out there says, "Okay, you know, what do I need to do to get into this school? Okay, what paper do I need to sign?" And, you know, no. How about first get the grants, get the scholarships that you don't have to pay back? I think that solves a lot of problems right off the bat.

Amy: We had Al Riddick on our show last week. He's the CEO of Game Time Budgeting, and he was talking to me about, you know, what your kids can be expected, and he said, "Listen, when your kids get to high school, their job, if they want to go to college, is to make sure that they position themselves to get as much money as they possibly can. And that means maybe taking AP classes, taking dual credit classes where some of those credits transfer, and you've already got them in high school and maybe you don't have to go to college as long. You know, learning how to study for the ACT, taking those test preparation classes because, that way, they're doing their part to set themselves up to be successful." And I thought, "That's a really interesting way to think about that." Your child's job in high school is to do everything they can to prepare themselves for college.

Steve: I agree totally. And I'll tell you another thing. I mean, you know, the big problem is too much debt. It's okay for your kid to work while they're in college. I did, my wife did. I averaged 20 hours a week working to, you know, pay for all the incidentals and help out with tuition and that sort of stuff while I'm at school. And, you know, a lot of parents are like, "Well, I want them to focus on their studies." Let me tell you something, maybe things have changed, but when I was in college, the kids that were told by their parents, "We don't want you to work, we want you to focus," they were the biggest partiers. So, don't kid yourself.

Amy: Yes, the classes only take so much time.

Steve: Exactly.

Amy: And then what's left over, you're either working or you're partying. I mean, you make a great point there, too. And I would also say, okay, so maybe you've gone and you've researched all these scholarships that you can get, and you've gotten the scholarships and the grants, and now you're looking at the federal loans. If you still can't afford that school after you've maxed out what the federal loans would be and you're looking at private loans, maybe they just can't afford that school, you know.

Steve: Yeah, and federal loans have a big advantage. There's a lot more flexibility on repayment. Some actually have forgiveness, separate from what the recent proposals out of Washington are. And the repayment schedule is usually tied to your income in the job that you get after college. So, yeah, don't jump at private loans. Yeah, people wanna give you... They wanna give you money if you've got good credit. Stick with federal and max that out before you go elsewhere.

Amy: And read the fine print, right? Make sure that you and your child very much understand what they're gonna be facing when they get out of school. Here's the Allworth's advice. "Borrowing money first then maybe worrying about how you're gonna pay it off later is not the way to go here. Do the research, educate yourself and your children, figure out what can be afforded first." Paying off your credit card balance every month, okay, then that's a big check on the list. We're going to explore which cards might offer you the most benefits and perks next. You're listening to "Simply Money" here on 55KRC, The Talk Station.

You're listening to "Simply Money," presented by Allworth Financial. I'm Amy Wagner along with Steve Sprovach. Right now, when things cost so much more for everything, right? You're often looking at, "Okay, how can I make dollar stretch? How can I make the most out of everything that I've got coming in?" This is I think a good time to look at credit cards. And are you using the right credit card for you? And the big caveat here is if you're paying it off every month, right? If you're paying off that balance in full...if you're not, then don't even worry about the perks because you're gonna lose them in the interest that you're paying, but if you're paying that full balance, then look at, "Okay, at this stage in my life, right? What kind of credit card perks actually work the best for me?"

Steve: Well, and I pay attention to perks, but I also pay attention to, "Okay, which one comes out of my wife's account that she pays for, and which one comes out of mine?" I'll never buy gas with Amex. I don't care what the rewards are because I pay that one. So, this is what the Sprovach household does. Not necessarily good "Simply Money" advice but, you know, that's the way it works. But no, you wanna pay attention to your rewards. No question,

Amy: I think it's actually kind of the stage of your life that you're in, and here's what I mean. When you have little kids, there are credit cards out there that actually will do a match for their 529. Brian James, who works with us started this when his kids were little and it is amazing how much money when they got to the college-age, right? That could make a lot of sense as a perk, or maybe it's cashback. But, you know, maybe when your kids get older and you're looking to travel, and I can tell you we've got four teenagers now, if we want to travel and fly somewhere, that's insanely expensive. So, we get Delta rewards. We get Marriott rewards. We've got both of those credit cards because we like those travel rewards. And I think thinking through those things kind of make a lot of sense.

Steve: No question. And I like Delta, you know, for one reason. It's got a high annual fee but you get a free flight once a year that offsets, in my view, the cost of the annual fee.

Amy: And you make a great point, pay attention to that fee. Thanks for listening. Tune in tomorrow. We're gonna talk about the major impact inflation is having on your retirement saving and what you can do about it. You've been listening to "Simply Money," presented by Allworth Financial on 55KRC, The Talk Station.