💰Pay rent or have kids?

This week's newsletter dives into the latest financial news and debunks some common money myths. Target is slashing prices on thousands of essential items. We break down the myth that you need to be an expert to invest in the stock market—spoiler alert, you don’t! We also explore the challenges facing parents as child care costs soar. Lastly, we look at rising interest rates, including the highest student loan rates since 2010, and what this means for borrowers. Let’s get into it!

- Milan

IN THE KNOW

It’s More Expensive To Have Another Child Than Pay Rent 

Child care costs are hitting parents hard, with prices now outpacing rent in every US state. According to a report by Child Care Aware of America, the cost for two kids in care is at least 25% higher than average rent nationwide. Vermont tops the list, where child care for two kids is $35,016, compared to an average rent of $13,788. This expense now eats up about 10% of a married couple’s income, way above the government's recommended 7%.

These skyrocketing costs are putting a major strain on families, pushing some parents to take second jobs or even leave the workforce. Lack of affordable child care makes it tough to be a working parent in the US. The situation got worse when $24 billion in federal funding for child care centers expired last September. Now, over 3 million kids might lose access to care due to what’s being called the child care cliff, with living expenses climbing and wages not keeping up.

Managing family budgets is becoming a real challenge for many but using the right tools will help you stay on top of your money. Don’t know where to start? We’ve made it simpler, just for you.

Easier Ways To Manage Your Loan 

Interest rates for loans are soaring, and federal student loans are no exception. Starting July, interest rates for student loans in the 2024-2025 academic year will hit their highest levels since 2010. For subsidized undergraduate loans, the rate will be 5.5%, while graduate and professional school loans will have a 7.05% rate. Parent PLUS loans will charge 8.05% interest. This hike is linked to higher yields on 10-year Treasurys, driven by inflation concerns and the Federal Reserve’s interest rate hikes.

Despite these rising rates, changes to federal student loan repayment plans under President Biden's administration have eased the burden for many borrowers. For instance, the new SAVE repayment plan adjusts monthly payments based on income, helping to keep payments manageable. However, student loans are just one type of debt feeling the squeeze. The Fed's interest rate hikes since March 2022, aimed at curbing inflation by reducing borrowing and spending, have also driven up rates for mortgages, auto loans, and credit cards, adding pressure to household budgets and increasing credit card delinquencies.

All this could really have an impact on your credit score whilst a good credit score can lower interest rates on all kinds of loans. Despite popular belief, increasing your credit score doesn’t have to be a long and tedious process. Here’s how you can do it easily.

In Better News 

Target announced a significant price drop on 5,000 frequently shopped items, including milk, bread, diapers, and pet food. So far, prices on 1,500 products have been reduced, with more cuts planned throughout the summer. These changes are aimed at helping consumers stretch their budgets amidst ongoing financial pressures. The price reductions will affect national brands across various departments as well as Target's private labels like Good & Gather and Everspring.

This move is part of a broader trend among major retailers responding to persistent inflation and shifting consumer behaviors. Recently, Michaels and Ikea have also implemented price-cutting initiatives. Besides slashing prices, Target is enhancing its competitive edge by rolling out its new loyalty program, Target Circle, offering additional discounts, and expanding its low-priced private-label brands. You can make the most of price reductions like these if you continue to budget your month. Making budgeting a habit will help you increase your savings and get rid of debt permanently. Get started here.

MONEY MYTH OF THE DAY

You Need To Be An Expert To Invest In The Stock Market

Many people think you need to be a stock market wizard to start investing, but that’s simply not true. The idea that only experts can successfully navigate the stock market is a myth that keeps too many people from growing their wealth. The reality is, with the right tools and resources, anyone can begin investing. Thanks to the rise of user-friendly platforms and robo-advisors, you can start investing with minimal knowledge and still see your money grow over time.

Instead of needing a degree in finance, you just need to start with the basics. Learn a bit about diversification, which is essentially not putting all your eggs in one basket, and understand the importance of investing for the long term. Many online brokers offer educational resources and tools to help you make informed decisions. Plus, there are plenty of apps that allow you to start with just a few dollars. The key is to get started and learn as you go—investing is much more accessible than many people think!

VIDEOS YOU MAY HAVE MISSED THIS WEEK

Here are the top videos you loved the most this week. Which one was your favorite?