Happy Monday!
I hope you enjoy this edition of The Change-up, my weekly newsletter sharing the latest market news and personal finance tips. If you're interested in learning more about working with me, send me an email (austin@mccallandassociates.com) or click my Calendly link at the bottom.
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This is a great opportunity for those just getting started on their financial journey, if you have a question or two, or just want to make sure you are doing all of the right things.
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Quote of the Week
““Most people do not listen with the intent to understand; they listen with the intent to reply” ”
*As of 7/7/2023. For the week of 7/3/2023.
The Story
If your work felt slow last week, you weren't alone. Market participation was very eh, with stocks starting the second half of 2023 in the red. The market was boosted during Monday's half-day by Tesla announcing record deliveries in Q2 before going lower the rest of the week. The big news this week was the jobs report on Friday, which was mixed (more on that below).
My View
I feel like I'm in a perpetual cycle of analyzing employment reports, price increases in goods and services, consumer sentiment, and personal savings rates. And then trying to digest all of that data to predict what the Federal Reserve will do going forward. All while maintaining a 30,000-foot view of the economy.
So the cycle continues....
June's job report came in with mixed results, a characteristic usually reserved for my golf game. We added 31,000 fewer jobs than expected, but hourly wages continued to tick upward. The unemployment rate also came down by 0.1%. The Fed won't like that. CME Group currently has the likelihood of a 0.25% rate increase in a few weeks at 94.9%.
So how does it affect you?
For one, the job market is still strong. People can find well-paying jobs, which is a good thing. On the other hand, data like this will most likely cause the Fed to continue tightening the economy. Down the road, this might cause the job market to worsen and the economy to slow down, which is a bad thing.
As always, my advice is to focus on the things you can control, not the things you can't. Make sure you're doing the right things to protect you and your family, but don't stay up at night worrying about the unknown. Believe me, it's unproductive. I've tried.
Coming Up This Week
Consumer Price Index (Wednesday)
Producer Price Index (Thursday)
The last week of June, the SCOTUS ruled against President Biden’s student loan forgiveness program, which would have provided up to $20k in relief to borrowers with Federal debt. Not only will federal borrowers have to pay back their loans in full, but the interest on the loans will begin accruing again on September 1st.
While the White House is exploring a Plan B through the Higher Education Act (HEA) of 1965, it has many hoops to jump through to become legitimate. And even if it does, it’s unclear how many Americans it will cover and what the forgiveness will be.
So, those with Federal student loans need to plan on satisfying their debt without the help of the government. And to do that, you need a repayment plan that fits your lifestyle and objectives. Some repayment plans even include forgiveness options.
Here are 4 strategies to consider for your federal student loans:
1. Refinance your loans with a private lender
Let me start by saying that going this route will disqualify you from all federal loan programs. With that said, refinancing with a private lender can lower your overall interest rate, especially if you have a good credit score. This option was more attractive when interest rates were lower, so it should be considered on a case-by-case basis.
2. Income-Driven Repayment Forgiveness
If you can’t afford your payments, you can choose the IDR plan, which bases your monthly payment on your family size and income. If you still have a balance at the end of your repayment term (20-25 years), the remaining amount is forgiven. But be careful, the forgiven amount could be taxable as income.
3. Public Service Loan Forgiveness
Some borrowers can have their loans forgiven after 120 payments if they work at an eligible non-profit or government agency full-time. To use the PSLF, you need to repay your loan under an income-driven repayment plan. The loan balance forgiven through PSLF is not taxable.
4. Teacher Loan Forgiveness
If you have a federal direct unsubsidized or subsidized loan and teach full-time for five full and consecutive academic years in a low-income school, you could be eligible for $17,500 in forgiveness.
Student loans can get confusing very quickly. Before deciding on your loan, talk with a financial planner who has your best interest at heart and can lead you to the best choice for you and your family.
Let’s have a week!
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Investing 101 If you can't explain the investment to a fifth-grader, don't do it
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Most people get this wrong Investing isn't about generating the highest return at all costs It's about growing yo… https://t.co/IzfLi3Dy1o
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