Category Archives: Debt – Debt Management

Why Student Loan Debt Has Grown So Fast – Change In US Household Types of Debt – Interesting Chart From HowMuch.net – Paired with Another Interesting Chart that Explains from Visual Capitalist

We ran across this neat chart below from “HowMuch.net, a financial literacy website”… which stunned us.

The comparison growth of student loan growth versus other types of debt is amazing.

For the record we are huge fans of higher education, but not the debt that may come with it.

So we set off to see if there were a cause and effect for the above chart…

Thanks to our friends at Visual Capitalist the following chart answers a lot.

The small blue shaded area is inflation, compared to how fast Tuitions have increased… No wonder the gigantic growth in Student Debt…

Have a Great “Cause and Effect” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

All Eyes on Interest Rates … Rate Run

We have been watching interest rates closely as well as a local born inflation gauge called the Trimmed Mean put out by our Own Dallas Federal Reserve….

Interest rate movement can be a predictor of better times ahead… Think reopening and also of future inflationary waves…

Here is a shorter termed graph of the 10 Year Treasury Yield….

Purposely a shorter term graph to exaggerate the recent movement…

Next up, we fly much higher to the ten thousand foot level to show you while rates are moving, they are far from sky high….

Higher rates can be a headwind to markets… fast moving higher rates would have a high probability of disruption…

Watching Rates and Inflation

Slower, gradual, less jittery rates may be just what the Dr. ordered… not too hot, not too cold…

We will be watching!

Have a Great “Watching Rates” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

Where’s My Stimulus Check Link – BREAK IN- Possible Third Stimulus Information …. Friday, Reminder Monday Financial Institutions Closed, Early Day for Us Today!

The Appropriations Act of 2021, signed into law very late in December, as mentioned here, provided for a $600 per qualified person in your household, stimulus deposit.

With multiple data points of folks receiving their stimulus, most on January 4th or 5th of this month via ACH Deposit from the IRS, if you have not and were thinking you should…. read on!

BREAK IN – THIRD STIMULUS OUTLINE ANNOUNCED

Yesterday afternoon, the first crumbs of an outline of a third stimulus began hitting our screens. As mentioned in the original post (link above) there were some debate on a $600 or $2000 amount, with the afore mentioned $600 already being processed. The new stimulus plan, so far (not in law yet) calls for a $1400 amount, basically getting the total to the argued $2000 amount. Nothing iron clad yet, but since we were on he topic, thought we would give you a heads up….


Now back to our regularly scheduled Post!

Who and Where on the Stimulus Check

This stimulus deposit is being provided through the Internal Revenue Service office and as such they are using 2019 Tax Return information to send the stimulus. If you have had a change of bank account or other information since filing your 2019 US Tax Return there may be confusion on getting the funds to you.

Who is eligible for the second Economic Impact Payment?

Generally, U.S. citizens and resident aliens who are not eligible to be claimed as a dependent on someone else’s income tax return are eligible for this second payment.  Eligible individuals will automatically receive an Economic Impact Payment of up to $600 for individuals or $1,200 for married couples and up to $600 for each qualifying child.  Generally, if you have adjusted gross income for 2019 up to $75,000 for individuals and up to $150,000 for married couples filing joint returns and surviving spouses, you will receive the full amount of the second payment. For filers with income above those amounts, the payment amount is reduced.  (This from the IRS site)

Here is the link to the US Government tracking site:

https://www.irs.gov/coronavirus/get-my-payment

Once open need to Click on “Get My Payment” Tab

Be very careful when opening this site to NOT allow your browser to jump to any other site than that associated with the IRS as you will be asked for confidential information!

Holiday Reminder

Monday, in honor of Martin Luther King (MLK), banks, Capital Markets and our offices will be closed. With kiddos hitting the ground via early release today, we will also be out of the office early in order to keep the streets safe (haha), but tethered electronically for emergency needs.

Have a Great Friday and Weekend!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

PPP – Paycheck Protection Program Part II, What You Need to Know!

As mentioned last week here in this announcement post, in brevity form, due to the Holidays near the end of the year, an additional stimulus act, was actually signed into law on a weekend (Sunday December 27th, 2020 to be exact)

This new stimulus bill called “The Appropriations Act of 2021” is a massive over 5000 page document, that touches many parts of the economy but most importantly for us … made a second round of PPP II, Paycheck Protection Program funds available.

25% Any Quarter Y/Y Sales Decrease, PPP I before PPP II

The two most important points to know about the second round of the paycheck protection program are as follows:

  1. In order to receive a second round of PPP payments you must have had a 25% decrease in sales in any one quarter in year 2020 versus the same quarter in 2019.
  2. The second most important item to know, is in order to have qualified to take the second round of the PPP II, program you must have taken the first round and used it. If you have not taken the first round you will be forced into taking the first round PPP I before you can get to the second round.

Tax Deduction Clarity

The massive page bill also clarified the ability to write off the loan for tax purposes. Said another way even though the loan is forgiven, as long as the loan was used appropriately, entities will be able to write those expenses off of their taxes effectively making what some call a double dip possible, which was congress’s original intention, but became confused by several IRS statements.

Employee Headcount, Max Loan, Looser Usage

A few other miscellaneous items include lowering of the threshold from 500 to 300 employees, limiting the maximum amount of the forgivable loan to a maximum of $2 million versus the higher amount in the original program, and more flexible spending options versus the mandatory 75% payroll usage in PPP I.

$150k Easy File Forgiveness Threshold

One last item included in the bill was a threshold of a basically $150K for non-invasive forgiveness. What that means if someone had taken the PPP loan of $150K or less, in either part one or part two you were basically have a simple one page document where are you certified you use the funds appropriately and the entity which you receive the loan is not to request any further documents. This does not mean that the small business Association cannot audit in the future but is meant to make the forgiveness program fluid and easy. Think twice of initiating any loan just over the $150k hurdle as the hassle may not be worth the extra funds.

Have a Great “PPP II Updated” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

PPP (Paycheck Protection Plan) Part II, One Especially Time Sensitive Item – Stimulus Checks Repeat … Overview…

Being off, and promising a lighter than normal posting during the holidays was interrupted by the signing of Part II of the Cares Act Sunday, December 27, 2020 …. AKA Appropriations Act of 2021 (all 5593 pages here!)

Given the time of year we will keep this high-level and will expand in great detail shortly, but wanted to give you a couple important bullet points that may be very refreshing, and one call to action should you have not used PPP Part I but want either PPP Part I or II (Your window for both may be closing fast!)

Part II of the Cares Act – AKA Appropriations Act of 2021

PPP Part II has basically the same guidelines for the vast majority of folks in total amount, BUT with a qualifying hurdle to get PPP Part II threshold of having any one quarter of revenues/sales in 2020 being down 25% from 2019.

To clarify, if you as a business owner had only 75% sales revenue in any (just one) quarter versus that same quarter in 2019 you will qualify for PPP Part II.

What follows is most time sensitive, while we do not know anyone in this situation, you guys may and please share if you do.

If you or someone you know did not get PPP Part I  but want PPP I OR II, they need to apply for Part I first … and there is a very limited pool of money. It is not possible to get PPP Part II without first getting PPP Part I. With a very limited pool of money for PPP Part I, it is possible that it may run out in short order, discrediting someone from getting PPP Part I and II …again please share at your leisure.

PPP is Forgivable and Tax Deductible for Appropriate Expenses

Some really good news on the tax front. This latest act clarified that businesses will be able to expense their loan proceeds along with forgiveness. Said another way, the loan will be forgiven if used appropriately, and the use of that loan will be allowed to flow through the Income Statement effectively allowing what Congress had originally intended, a double dip use of the money, forgiveness and tax deductions for appropriately used funds.

Stimulus checks – Break In – $600 Seems to be the Number but No Promises!

The most important thing to know from a high-level is if your income didn’t change much and you received a stimulus check earlier this year, it’s likely you will receive another.

The amount of the stimulus check is $600 (or $2000 – becoming more unlikely) and includes all parties including qualified children. As an example a husband and wife with two qualifying children would start out with four checks of $600 or $2400.

The phase outs are very similar, if not almost the exact same as the prior. Which goes to our original statement, if not much has changed and you received an original stimulus check you will probably receive another one but only around the most likely base amount of $600 per person amount.

BREAK IN – Literally as I was Working on this Post – The following hit my Inbox:

Treasury and IRS Begin Delivering the Second Round of Economic Impact Payments to Millions of Americans

WASHINGTON – Today, the Treasury Department and the Internal Revenue Service will begin delivering a second round of Economic Impact Payments to millions of Americans as part of the implementation of the Coronavirus Response and Relief Supplemental Appropriations Act of 2021.  The initial direct deposit payments may begin arriving as early as tonight for some and will continue into next week.  Paper checks will begin to be mailed tomorrow, Wednesday, December 30. This second round of payments will provide critical economic support to those who, through no fault of their own, have been adversely impacted by the COVID-19 pandemic.

“Treasury and the IRS are working with unprecedented speed to issue a second round of Economic Impact Payments to eligible Americans and their families,” said Secretary Steven T. Mnuchin. “These payments are an integral part of our commitment to providing vital additional economic relief to the American people during this unprecedented time.”

Eligible individuals will receive an Economic Impact Payment of up to $600 for individuals or $1200 for married couples and up to $600 for each qualifying child. Generally, if you have adjusted gross income for 2019 up to $75,000 for individuals and up to $150,000 for married couples filing joint returns and surviving spouses, you will receive the full amount of the second payment.  For filers with income above those amounts, the payment amount is reduced. 

This second round of payments will be distributed automatically, with no action required for eligible individuals.  If additional legislation is enacted to provide for an increased amount, Economic Impact Payments that have been issued will be topped up as quickly as possible.

The swift issuance of this second round of payments follows the successful delivery of more than $270 billion in CARES Act Economic Impact Payments earlier this year, providing crucial economic support to nearly 160 million Americans.

Later this week, you may check the status of your payment at IRS.gov/GetMyPayment.  For more information about Economic Impact Payments, please visit IRS.gov/EIP.

This email was from about 5PM Tuesday evening December 29th …. reading todays news just before this post in the AM today, it is still not 100% what amount is going to be sent. Just FYI

Now back to our regularly scheduled Post!

Again we will expand on this in the coming weeks, but primarily wanted to deliver the message about the PPP Part I and PPP Part II scenario.

We apologize for interrupting your holiday season, but felt this was important enough to quickly alert and maybe share some good news to many on the Tax Write Off Front and call to action those that passed on PPP I and may want it or PPP II now!

Have a Great New Year’s … Thanks for your time!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

Interesting Interest Rates Chart a Historical View and a Super Short Term View with Noted Movement

We spotted this neat chart last week from our friends once again at Visual Capitalist … here

Worth noting … we were close to these levels in 1945 as can be seen on the chart…

While the above is a more descriptive 200 year chart, we just could not help ourselves in showing a much shorter but encouraging one month chart of the same ten year treasury noted above …. again, VERY short time frame, but we like the upward movement….

We crow a lot about interest rates, but they really are VERY important…

Have a Great “Interest Rate Movement” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

Meet the Trimmed Mean Inflation Gauge … A Measure to Keep Watch

With the FOMC (Federal Open Market Committee) led by Jerome Powell and company at their most recent meeting, made the following comments:

On price stability, the FOMC adjusted its strategy for achieving its longer-run inflation goal of 2 percent by noting that it “seeks to achieve inflation that averages 2 percent over time.” To this end, the revised statement states that “following periods when inflation has been running persistently below 2 percent, appropriate monetary policy will likely aim to achieve inflation moderately above 2 percent for some time.”

The updates to the strategy statement explicitly acknowledge the challenges for monetary policy posed by a persistently low interest rate environment. Here in the United States and around the world, monetary policy interest rates are more likely to be constrained by their effective lower-bound than in the past.

Let’s Decipher these Comments and Bring On the Tracking

The comments above, were understood by many/most on Wall Street to mean rates will be allowed to stay lower for longer and the 2% inflation rate is not a hard line number….

The following is the Trimmed Mean Inflation Rate completed by our very own Dallas Federal Reserve, just down the street from us!

It is basically taking the far outliers in any report out and calculating the number. This rate is one of the most watched inflation numbers by the FOMC!

Here are the actual numbers- watch that 2% number!

When rates go up, it is a headwind for Capital Markets …

Let’s keep a watchful eye on this… we are tracking you Mr. Trimmed Mean.

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

NY Federal Reserve Tweet : Total Consumer Debt DOWN in Q 2 2020 …What? … Deep Dive into the Consumer Balance Sheet

Mid-Week last week, a NY Federal Reserve Research tweet lead to the following report….

img_7342

Q 2 2020 Consumer Debt DECREASE?

Not believing the headline…. How could there have been a DECREASE ?

A deeper dive into the report was due!

In prior writings/research this report has been a staple of a resource so familiarity in the set up made the review easier…

In fact, Q 2 2020 shows a decrease in total consumer debt!

Notice the rise up to the great slowdown of 2007-2009 and then a pull in the wings for about five years, until early 2014?

Did it take five years to regain confidence?

Certainly, this could be just a blip, as one quarter does not a trend make.

If it does continue down, as it did during the post 09 peak, we should be able to infer there is a great belt tightening ability across the board for the consumer….

Q2 2020 total Debt

The following chart, also from the same report shows a drop in delinquency status, predominantly in the 120 day range … this may be a result of some of the forbearance ability due to the stimulus packages, but logically that should hit the shorter term, in our opinion.

Q2 2020 Total Delenquency Status

Lastly, digging even deeper, the drop by loan type is showing the most movement in the shorter term and most evil credit card balance, followed by the less evil Auto Loan….

Q 2 2020 Total Account By Loan account

Could we really be turning Lemons into Lemonade ?

Hope So!

Have a Great “Puzzling but Hopeful Consumer Debt” day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
jkfinancialinc
street-cents

July 2020 Podcast Video, Financial Planning and Capital Market Update – By John Kvale …

Hello and Welcome to our June 2020 Financial Planning and Capital Market Update!

If you are too busy to read, feel free to listen as we describe our post and thoughts in friendly podcast audio format as well as Video!

Newbies –

We like to articulate our thoughts and review on a Monthly basis our Financial Planning Tips, Capital Markets and current events!

Hope you enjoy!

July – 2020 Video (YouTube)

 

Financial Planning Tip  –

Careful Use of Credit Cards to Maximize Perkscredit card

We carefully spoke on the use of Credit Cards and maximizing their points and incentives due to repeated inquiries about the topic, in this post.

Credit Cards can be very dangerous and the card companies want us to carry balances … so PLEASE BE CARFUL!

Vaccine Update – It’s Looking GoodVaccine

In this post we pointed to an excellent Bloomberg Tracker that is showing multiple Phase III drugs about to hit the testing.

Phase III is the last one before mass production… making for a very fast track of multiple possible cures for Covid.

This is also market friendly as well.

Capital Market Comments

The Look Through Continues – Expect Bumps

Not trying to sound like a broken record, but in April we proclaimed that smart market participants may likely look through the valley and over the hill to eventual earnings.

As a reminder, we were really on an island as very few were positive at that time.

They did, and continue to do so … with a bit too much rose colored glasses in our opinion…

We continue to expect bumps as there are tons of unknowns and a negative narrative can take over quickly…

Not letting our guards down!

7-31-20 YTD Large International and Small

Have a Great July Update!

Talk to you at the end of August!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
jkfinancialinc
street-cents

Ways to Maximize Offers through VERY CAREFUL Use of Credit Cards … Be Careful!

Recently, we have been asked multiple times about which credit card is best to use? 

Before we begin. we want to remind everyone that credit card debt is a no-no, it is one of the most expensive … it is not tax-deductible, and if you’re not careful can really create problems. So, if you have ever been behind or had high credit card debt please continue doing what you are doing right now and certainly do not open a credit card to try and use some of the techniques that follow.  

Now if you have made it through our scathing lecture above and are trying to maximize the benefits of credit card use here are a few helpful hints. 

Ways to Maximize Company offers through  VERY CAREFUL use of Credit Cards credit card

Determine what type of credit card would give you the most benefit. You may be in a situation where you frequently use a certain airline, hotel, or other type of service – usually travel or leisure related. Determine what bank or credit card company has the best benefits for you with regards to your frequented usage and only use that card in order maximize your status within that organization. i.e. American Airlines, Marriott Rewards. 

Again please do not open a credit card if you’ve had trouble in the past or currently have credit card debt-do not change anything you are doing we do not like credit card debt. 

 If you are in a situation where none of these apply and still want to try and maximize your benefit, look to a company that may give you a rebate … usually in the neighborhood of .5% to 1.5% on all of your purchases, as this may be a better option especially if you have a high volume of transactions.  

In closing this is not a green light to use your credit card recklessly, but if you were wondering what may be the way to maximize your benefits … stack it up all in one with one carrier and you would likely get the best status and benefits.  

As a side note we do not like having tons of credit cards and a debit card is fine to use as well (but may be harder to get refunded $ if stolen).  We find maximizing status by using a focused strategy the best! 

Have a Great “Careful Maximizing those Benefits” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
jkfinancialinc
street-cents