Tenth Verse: Same as The First
On May 3, the Federal Reserve raised the federal funds rate by a quarter-point to a range of 5 percent to 5.25 percent. This is the 10th rate hike since March of 2022, and the Fed again cited its commitment to “return inflation to its 2 percent objective.” The effect this latest increase will have on consumers with credit card debt will likely be direct and significant.
If, for example, the annual percentage rate (APR) on one of your credit cards is 20.4 percent, you could see an increase to 20.65 percent. If you are (according to Experian), “the average consumer,” you have a credit card balance of $5,525, and if you are paying a fixed amount on that card per month, it’s now going to take longer to pay down that balance.
For some hints on how to manage debt before it manages you, check out the How We Can Help article in this newsletter.
Shareholder Meetings and Corporate Earnings Reports
Four times each year, investors get a peek into the performance of public corporations when they file their Forms 10-K and 10-Q with the Securities and Exchange Commission. Contained in these reports are both quantitative data (e.g., income statement, balance sheet, statement of cash flows) and qualitative data (management’s interpretation of the company’s performance, potential risks, and its expectations of future performance). These reports play a role in an investor’s decision to purchase or sell a stock.
Spring Shareholder Meetings
Another source of information for investors are shareholder meetings. Many S&P 500 companies hold their annual meetings in April and May when, in addition to reporting earnings, corporate management will often announce new initiatives, comment on current business conditions, and sometimes provide interim financial data.
While these two sources—corporate earnings reports and shareholder meetings—are important, they are not all-inclusive. When we help you assess investment options, we use your goals, tolerance for risk and your Financial Plan as a framework. With these three in mind, we then consider how individual securities might play a role in your investment plan. (Real estate and, for business owners, business are the other elements of a diversified portfolio.)
Everyone’s situation is different, so we tailor your asset allocation and individual investments to be in alignment with your financial plan. If you have any questions about adjusting the stock portion of your portfolio, let’s talk. To us, analyzing investments is fun. Finding investments that help you achieve your goals is the reason we come to work every day.
Or, should we say, “Pickleball, everyone?”
For two years running, pickleball has been the fastest growing sport in the United States. According to a report from the Sports & Fitness Industry, “Participation nearly doubled in 2022, increasing by 85.7% year-over-year and by an astonishing 158.6% over three years.” There are 4.8 million pickleball players (also known as “pickleheads”) in the United States and, according to Pickleheads.com, thousands of courts across the U.S. (To locate a court in your area, visit https://www.pickleheads.com/courts/us.)
To participate, two to four players use paddles that resemble oversize ping-pong paddles and a pickleball. (Think a whiffle ball with more holes.) A pickleball court is smaller than a tennis court and about the same size as a badminton court. When pickleball courts are not available, players will use tape or chalk to mark the boundaries on tennis courts.
Despite its reputation as a game for older folks, the average age for pickleheads is 34.8 years. If you’d like to see why people of all ages are picking pickleball as their go-to activity, check out https://usapickleball.org/what-is-pickleball/how-to-play/ for rules, tips, and strategies.
How We Help
Managing Debt Before It Manages You
A couple weeks ago, we wrote about credit scores and reports in Make Credit Your Servant. Today, let’s talk about related topic: consumer debt.
According to the Consumer Financial Protection Bureau, 175 million Americans hold credit cards, average interest rates are over 20%, and total debt could reach $1 trillion.
If you, or more likely, one of your children is struggling to manage debt, we offer one-on-one counseling, of course, but here are a few common strategies:
- The Avalanche Method: List debts in order from highest interest rate to lowest and pay the high interest balances first.
- The Snowball Method: Create a monthly budget—both income and expenses— then commit to spending no more than you bring in. (Include in expenses the funds used to pay down debts.) Pick one debt that can be eliminated quickly such as a credit card or loan with a low balance. The theory is that small successes will build momentum, i.e., a snowball effect. Once the first debt is paid off, apply that payment towards the next debt on top off what you are already paying on the second debt. Repeat this process and you will find that the discipline will go a long way towards becoming debt free.
- Debt Management Plan (DMP): This is a contractual agreement among debtor, creditor, and credit counseling firm. Credit card companies may provide incentives to debtors who enter DMPs, such as lower interest rates, fee waivers or modified repayment terms. Two important notes: 1) Participating in a DMP tells future potential creditors that you weren’t able to pay off a debt under the original terms; and 2) Credit card counseling organizations are generally non-profit, whereas debt settlement companies charge fees.
We don’t take a cookie-cutter approach to debt elimination. Instead, we design debt management strategies to fit an individual’s circumstances. If you’d like to know how we can help you (or someone you love) eliminate debt. give us a call, and let’s get started!
Advisory Services offered through Obsidian Personal Planning Solutions, LLC. Securities are offered through Triad Advisors, member FINRA/SIPC. Obsidian Personal Planning Solutions, LLC, and Obsidian Personal Planning Solutions, Inc, are not affiliated with Triad Advisors.