- The Money Minute
- Pride Stress Test, Must-Have Insurance and Student Debt Essentials
Pride Stress Test, Must-Have Insurance and Student Debt Essentials
Here are the headlines you need to know this week.
Hot Rich Summer?
This week’s guide to the biggest news on Wall Street is presented by:
A message from Masterworks:
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What’s Going On?
It’s officially summer now but what's the vibe? I want to drink spicy margs by the pool and talk about literally anything other than the debt ceiling. So at least it’s not a Hot Government Default Summer? But what can we expect from this next quarter? In this weekly headline round-up we’re going to talk about three stories that may end up defining the summer.
1. Student Loan Repayments
AKA — I Know What You Owed Last Summer.
And okay, mea culpa, we do need to talk about the debt ceiling really quickly to give some context on this one. As I mentioned last week, the new debt ceiling deal officially ended the pause on student loan repayment; payments will need to resume 60 days after June 30th, which is, the week of August 28th.
If you had automatic payments set up before the pause (this is an 🚨 Important Announcement Alert 🚨), you need to opt back in. I repeat: if you had auto-pay set up for your student loans before the pause, don’t assume it is still active. Before August, you need to get auto-pay back up-and-running again, and please don’t miss a payment because of this.
You can also negotiate a new payment plan if your financial circumstances have changed. There are two types of repayment plans available. One is income-driven payment plans. These plans calculate your payments based on your income and family size. But be aware these plans are a little in flux right now. There is pending legislation that would make these plans more generous to low-income families; that legislation sent for review on May 23, which means that the new guidelines should be out riiiight before the payment pause ends. I hate these buzzer-beaters, but here we are. The second option is fixed payment plans which just have you paying a set amount every month.
Remember, you can start making payments before the interest starts again. You can start right now! This gives you a chance to pay down just the principal on your loan, which means paying less over the life of the loan.
2. Get Serious About Flood Insurance
The climate crisis is fast becoming a financial crisis. It’s hard to deny the mounting cost of storms, floods and fires (helloooo, did you see New York this week?). These rising costs have led two major insurance companies in California, All State and State Farm, to stop selling new policies.
In understanding this story, the first thing we need to understand is that costs have gone up. This has been caused by a couple of things. First, property values have gone up. Way up. Meaning, the total value of new policies is higher. But it’s not just the cost of existing buildings that has increased. The cost of building new structures has gone up as well. This is mostly because in a lot of places, notably, California, there are pretty strict building codes designed to make new buildings more durable in the face of natural disasters. But building a better building takes more money. And that ties into the third and final reason that insurance companies are having to make bigger payouts: construction costs for labor and materials are higher than ever.
So what can you do to protect your home? When it comes to flood insurance, if you already own your home, not much. The only move you have is to check and see if your rate is going to go up, and budget for that. If you’re buying a home, check the FEMA flood maps for the area and ask the seller if the home has ever flooded. If you live in a state where it is difficult to get private coverage, look for a state plan. These can be a little more difficult to enroll in but they can provide protection that you may not be able to buy on the private market.
If you rent, be aware that your renter’s insurance policy almost never protects you from water damage from external flooding. If a pipe bursts, renter’s insurance has got you covered. If the creek rises… not so much.
To be protected from a flood as a renter you need to buy “contents coverage” from the National Flood Insurance Program. And fun fact! The NFIP is super picky about what it will cover in your basement. Anything that is part of your house, like the hot water heater, is covered; as are most things that are plugged-in like washing machines and freezers. Anything else in the basement that isn’t explicitly listed in the policy is not covered. So if you’re storing, oh I don’t know, a Chanel bag down there: either move it to the attic or get it listed on your policy. Because summer isn’t just for hot girls. It’s also for wildfires and hurricanes. Bummer.
June 1st kicked off the official start of Pride Month. But this may be the summer of backlash … which is, not so not hot it’s insane. In prior years, the corporate tendency to slap a rainbow on anything and call it "Pride" has always been a sort of uncomfortable balance. Is it true support? Or is it rainbow washing? Well, brands across the spectrum have been tested this spring to show their true colors.
It started with the Bud Light backlash over their decision to work with a trans influencer. The latest brand to face customer criticism for celebrating Pride is Target. Target has long sold pride products during June and most of the historical criticism has been of the rainbow-washing variety. And now for the first time, Target is facing serious backlash against the sale of Pride-branded merch in the form of customers not just complaining on social media but also trashing displays and threatening employees. This comes at a time when retail workers are experiencing more threats to their personal safety than ever. Target has a difficult line to walk to protect their employees but also to show that their support of Pride is more than just a marketing campaign - it’s a meaningful commitment to equal rights. So maybe this is the summer of standing up for what you believe in. I hope it is.
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“Net Return" refers to the annualized internal rate of return net of all fees and costs, calculated from the offering closing date to the date the sale is consummated. IRR may not be indicative of Masterworks paintings not yet sold and past performance is not indicative of future results. See important Regulation A disclosures at masterworks.com/cd.