Connect with us

Personal Finance

What RFK, Jr.’s financial disclosures may teach us about managing debt

Published

on

Robert F. Kennedy Jr., U.S. President Trump’s nominee to be secretary of Health and Human Services, testifies before a Senate Finance Committee confirmation hearing on Capitol Hill in Washington, U.S., Jan. 29, 2025. 

Evelyn Hockstein | Reuters

Credit cards have become a ‘de facto emergency fund’

To reduce those costs, experts say it would be wise for Kennedy to accelerate the paydown of those balances.

“He has a lot of income, so I don’t even know why you’d have all that debt if you have that much income,” said Carolyn McClanahan, a certified financial planner and founder of Life Planning Partners, who reviewed Kennedy’s filing.

That same advice may apply to the average household, for whom credit card debt can also be costly.

The average debt per credit card borrower was $6,380 as of the third quarter of 2024, according to TransUnion. Currently, the average credit card interest rate is 20.13%, according to Bankrate.

Those borrowers may also be paying for other debts. Average unsecured debt — excluding balances tied to real property like cars or homes — climbed 8% to $29,364 in 2024, according to Money Management International.

Paying off debts provides ‘guaranteed risk-free’ return

With interest rates that high, it usually makes the most sense to prioritize debt paydown over other priorities like investing or saving, according to experts.

“If you’re paying down credit card debt at 20%, that’s a guaranteed risk-free, tax-free return,” Rossman said. “You’re unlikely to get that much from your investments.”

Bankrate’s research has found higher-income individuals are more likely to carry long-term credit card debt, with 59% of borrowers who earn $100,000 or more having been in debt for at least a year. That includes 24% who have been in credit card debt for at least five years, Rossman said.

“Higher-income people often get higher credit limits, and sometimes that gets people into trouble,” Rossman said.

RFK Jr. nomination advances to full senate vote

While wealthy borrowers may face substantial interest charges, they may be tempted to use credit cards for certain perks. For example, the American Express Centurion Card, also known as the Black Card, comes with a $10,000 one-time fee, as well as an annual $5,000 fee. In return, borrowers, get access to airport lounges, elite status at hotels and help finding tables at restaurants, among other rewards.

Nevertheless, credit cards usually are not the most effective way for the wealthy to borrow money, according to Charlie Douglas, a certified financial planner who works with ultra-high net worth families.

For wealthy investors to avoid having to sell investments and incur capital gains taxes when they want to make a big purchase like real estate, it makes sense to have a line of credit already established, Douglas said. Importantly, that comes with no costs on an ongoing basis.

It may also make sense to have up to one years’ worth of expenses in cash as a buffer, he said.

Continue Reading

Personal Finance

Amid trade turmoil, ‘you do not want to time the market’

Published

on

Pres. Trump unveils sweeping tariffs: Here's what to know

As President Donald Trump rolls out sweeping new tariffs on goods imported into the United States, Americans are growing increasingly pessimistic about their financial fate.

Consumers worry that the duties will cause inflation to flare up again, while investors fear that higher prices will mean lower profits and more pain for the battered stock market

As of Thursday morning, futures tied to the Dow Jones Industrial Average were down 1,200 points, or 2.8%. S&P 500 futures sank 3.4%, and Nasdaq-100 futures lost 4%.

But sharp drops — or sudden spikes — in the market are to be expected, according to Jean Chatzky, CEO of HerMoney.com and host of the podcast HerMoney with Jean Chatzky.

“With these volatile markets, you do not want to time the market,” she said of the old adage. “Timing the market doesn’t work — it’s time in the market.”

More from Personal Finance:
Tariffs are ‘lose-lose’ for U.S. jobs and industry
Why uncertainty makes the stock market go haywire
Americans are suffering from ‘sticker shock’ — how to adjust

Trade tensions, inflation and concerns about a possible recession have undermined consumer confidence across the board, several studies show.

Still, it’s normal for most Americans to feel unnerved during heightened volatility, Chatzky said.

“There’s very little doubt that consumers are feeling nervous, maybe more nervous than we’ve felt in quite some time,” she said.

Committing to setting money aside in a high-yield savings account, whether by scaling back on dining out or rideshare expenses, will help regain some financial control, Chatzky said.

Top-yielding online savings accounts currently pay 4.4%, on average, well beyond the savings account rates at some of the largest retail banks, which average just 0.41%.

“Taking action is the best way to feel more resilient,” she said.

It’s understandable why some may be hesitant to continue investing, however, when you are investing for the long term, a down market is an opportunity for dollar-cost averaging, which helps smooth out price fluctuations in the market, Chatzky said.

This is also a good time to check your investments to make sure you are still allocated properly and rebalance as needed, so you are not taking on more risk that you are comfortable with, she added.

Timing the market is a losing bet

Talk yourself down from making any sudden financial moves, Chatzky advised.

Trying to time the market is almost always a bad idea, other financial experts also say. That’s because it’s impossible to know when good and bad days will happen.

For example, the 10 best trading days by percentage gain for the S&P 500 over the past three decades all occurred during recessions, often in close proximity to the worst days, according to a Wells Fargo analysis published last year.

And, although stocks go up and down, the S&P 500 index has an average annualized return of around 10% over the past few decades.

Subscribe to CNBC on YouTube.

Continue Reading

Personal Finance

How to file for a free tax extension if you can’t make April 15 deadline

Published

on

Galina Zhigalova | Moment | Getty Images

If you can’t file your taxes by the April 15 deadline, there’s a free, easy way to submit a federal tax extension online, experts say.  

Nearly 1 in 3 American admit that they procrastinate when it comes filing their taxes, according to a January survey of more than 1,000 U.S. filers from IPX1031, an investment property exchange service. In addition, about 25% do not feel prepared to file their taxes, the survey found.

As of March 21, the IRS received roughly 80 million individual returns of the 140 million expected this filing season, the agency’s latest reporting shows.

More from Personal Finance:
How to spring-clean your finances. It can ‘make you feel more secure,’ advisor says
Tariffs will likely raise much less money than White House projects: economists
The federal government is phasing out paper checks. Here’s who will be affected

Many natural disaster victims have an automatic tax extension, which varies by jurisdiction. Military members serving in a combat zone also have more time to file. 

However, the federal tax deadline for the majority of taxpayers is April 15. It’s possible to push that due date to Oct. 15 by filing for an extension.

But “it’s an extension to file, not an extension to pay,” said Jo Anna Fellon, managing director at financial services firm CBIZ.

“It’s an extension to file, not an extension to pay.”

After the tax deadline, you will start incurring the failure-to-pay penalty of 0.5% of your unpaid taxes for each month or partial month that your taxes remain unpaid. The failure-to-pay penalty has a maximum charge of 25% of your unpaid taxes.

That’s cheaper than the failure-to-file penalty, which applies when you don’t submit your return by the deadline. The failure-to-file penalty is 5% of unpaid taxes monthly, also limited to 25%.

But you’ll also owe interest on your unpaid balance, which is currently 7% and accrues daily after April 15.

You can estimate your taxes owed by creating a “pro forma return” — or mock version of your filing — using as many tax forms as possible, Fellon said.

The ‘easiest way’ to file an extension

There are a few free options to file a tax extension.

For federal taxes, you can complete Form 4868 and mail it to the IRS. But it’s better to file digitally to avoid processing delays amid the agency’s shrinking workforce, experts say. Paper filing can also increase fraud risk, they say.

The “easiest way” is by choosing “extension” when making a payment for 2024, which automatically submits Form 4868, according to Tommy Lucas, a certified financial planner and enrolled agent at Moisand Fitzgerald Tamayo in Orlando, Florida.

“It takes all of five minutes,” and you can double-check the transaction via your IRS online account, he said.

IRS Direct Pay

Internal Revenue Service

Alternatively, you can file your extension for free online via IRS Free File, a public-private partnership between the IRS and several tax software companies.   

For the 2025 season, you can use IRS Free File for returns if your adjusted gross income, or AGI, was $84,000 or less in 2024. But there’s no income limit to file an extension, Lucas said.

Don’t miss these insights from CNBC PRO

Tax season is a prime time for scams: Here’s how to protect yourself

Continue Reading

Personal Finance

Trump administration loses appeal of DOGE Social Security restraining order

Published

on

A person holds a sign during a protest against cuts made by U.S. President Donald Trump’s administration to the Social Security Administration, in White Plains, New York, U.S., March 22, 2025. 

Nathan Layne | Reuters

The Trump administration’s appeal of a temporary restraining order blocking the so-called Department of Government Efficiency from accessing sensitive personal Social Security Administration data has been dismissed.

The U.S. Court of Appeals for the 4th Circuit on Tuesday dismissed the government’s appeal for lack of jurisdiction. The case will proceed in the district court. A motion for a preliminary injunction will be filed later this week, according to national legal organization Democracy Forward.

The temporary restraining order was issued on March 20 by federal Judge Ellen Lipton Hollander and blocks DOGE and related agents and employees from accessing agency systems that contain personally identifiable information.

More from Personal Finance:
Judge slams Social Security chief for agency shutdown ‘threats’
Social Security changes may impact service, benefit payments
Trump pick to lead Social Security faces questions on DOGE

That includes information such as Social Security numbers, medical provider information and treatment records, employer and employee payment records, employee earnings, addresses, bank records, and tax information.

DOGE team members were also ordered to delete all nonanonymized personally identifiable information in their possession.

The plaintiffs include unions and retiree advocacy groups, namely the American Federation of State, County and Municipal Employees, the Alliance for Retired Americans and the American Federation of Teachers. 

“We are pleased the 4th Circuit agreed to let this important case continue in district court,” Richard Fiesta, executive director of the Alliance for Retired Americans, said in a written statement. “Every American retiree must be able to trust that the Social Security Administration will protect their most sensitive and personal data from unwarranted disclosure.”

The Trump administration’s appeal ignored standard legal procedure, according to Democracy Forward. The administration’s efforts to halt the enforcement of the temporary restraining order have also been denied.

“The president will continue to seek all legal remedies available to ensure the will of the American people is executed,” Liz Huston, a White House spokesperson, said via email.

Fiserv CEO on the nomination to Social Security Commisioner role

The Social Security Administration did not respond to a request from CNBC for comment.

Immediately after the March 20 temporary restraining order was put in place, Social Security Administration Acting Commissioner Lee Dudek said in press interviews that he may have to shut down the agency since it “applies to almost all SSA employees.”

Dudek was admonished by Hollander, who called that assertion “inaccurate” and said the court order “expressly applies only to SSA employees working on the DOGE agenda.”

Dudek then said that the “clarifying guidance” issued by the court meant he would not shut down the agency. “SSA employees and their work will continue under the [temporary restraining order],” Dudek said in a March 21 statement.

Don’t miss these insights from CNBC PRO

Continue Reading

Trending