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Terry Storch Dispatch w.08.2020
You can't get out of debt while keeping the same lifestyle that got you there. - Dave Ramsey
The Morning Brew highlighted some facts last week, and they really blew my mind. I’m a big proponent of living a debt free life, but I understand many reasons why some don’t. I think there are examples where taking on debt and leveraging amazingly low costs of money makes sense. But at the same time, many people just don’t have the discipline to manage debt well. Check out these staggering facts:
U.S. household debt hit a new record last quarter—$14.2 trillion. That’s an increase of $193 billion from the previous quarter and marks the 22nd straight quarter Americans have increased their borrowing.
Quick hits from the Federal Reserve Bank of New York’s report:
Mortgage balances: up $120 billion to $9.6 trillion
Student loan balances: up $10 billion to $1.5 trillion
Credit card debt: up more than usual ($46 billion) in the busy holiday shopping period
Bottom line: The economy may be strong, but student loans, in particular, are leading to higher delinquency rates among younger Americans.
Allow me to share a few things on the topics of mortgages, student loans, and credit card debt.
Take a deep look at your mortgage situation. With rates at crazy lows right now, it might be worthy of a refinance. I’m a huge fan of 15-year or mortgages or even less. We’re in the middle of one. Decide if it makes sense for you. Ours did.
Parents or future parents, plan now for your situation, and what your situation looks like. Time is essential, so don’t wait until you’re a few years out from sending your kids off to college to create a plan. Grandparents, consider gifting your grandchildren with a 529 college savings account when they’re born. Seeding the account with $1,000 can make a massive difference over time with compounding interest!
Credit Card Debt
Avoid it like the plague. I’m a huge fan of leveraging credit cards to gain points, miles, and benefits, but this ONLY makes sense if you have the discipline to pay off your cards each month. If you’re carrying a credit card balance, use the debt snowball approach to get them paid off TODAY.
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It’s our annual review time at Life.Church, so the title of this article jumped out at me — WHY CONSTANT FEEDBACK BEATS ANNUAL PERFORMANCE REVIEWS. I was pulled in because of it. It led me to believe the author was recommending that constant feedback could replace the annual review process. That was not the point or the recommendation. Good thing because I was ready to argue and disagree! The article has great points and guides us as leaders to consistently build a culture that brings constant feedback. This is mission-critical, and the closing thought is money! Read now.
But more than the feedback, they absolutely love having a clear sense of what it takes to move to the next level. It’s clear. It’s written down. It’s not ever-changing. It’s not subject to whether our personalities match. And most importantly, they can create their own vision of where they’ll be in the future. Because they’re in charge of it.
Who is the best leader you have ever seen up close and in action? Not a leader you’ve read about, or the leader a few levels disconnected from you that you assume leads really well. Get that name in your mind and visualize their face. What do you admire about them? What specifically does that person embody that made them rise to the top of your list? My guess is that something on your list connects with what is written about in this article. Read now.
Information wants to be free or it wants to be expensive. Seth Godin does a remarkable job of correcting a NYTimes article that just got it all wrong. There are very few that understand the flow of information better than Godin, and he unpacks how free and expensive can coexist. Take the time to read and process this article. Read now.
Predictions around Electric Vehicles (EV) are all over the map, but there is no argument that they are coming fast and will eventually take over. It’s really about when not if. Some analyses show that 2018 was the peak of internal combustion vehicles (ICE), and now we’re in a decline. The reality is that only 5.1 million electric cars were sold worldwide in 2018, but that figure is expected to surge throughout the decade. According to this Forbes article, it is projected that 21 million units will be sold in 2020, 98 million sold in 2025, and 253 million sold in 2030. If you’re an investor, this is a sector to pay attention to.
Here are some articles that you might find interesting if you are wanting to learn about the EV market.