S4-9: US Consumer Credit Rising, Finance in Mainstream Media & Planners vs. Advisors

Meghan began by addressing a question about the use of a 529 Plan for a child who is not legally hers. She explained the basic operation of the plan and expressed hope that her explanation would provide an answer. She went on to detail the process of designating a beneficiary for a 529 plan, clarifying that the beneficiary can be any person chosen by the account holder, not just a child. The designated beneficiary's personal information, such as their birth date and social security number, must be provided.

Meghan emphasized that the account must be used by the designated beneficiary, and expenses must be demonstrated as qualified educational expenses for that beneficiary to maintain the tax efficiency of the plan. She also confirmed that a 529 plan can be used for a child that is not legally hers, as long as the account holder is the custodian of the account and can provide proof of qualified educational expenses.

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In response to a question on the cost of school photos, Meghan discussed her experiences with the school photo provider at her kids' elementary school. She expressed her dissatisfaction with the service, citing numerous errors and high prices. Meghan also shared that while the company is one of the biggest in the industry, she feels it has become a mess since merging with another major photo company a few years ago and suggested that there may be more economical ways to get school photos taken.

Meghan discussed the WeWork bankruptcy and its impact on commercial real estate, which is causing issues for many banks due to the commercial real estate debt on their balance sheets which may need to be devalued or written down. She also mentioned the ongoing civil lawsuit against former President Trump for allegedly overstating the value of his real estate assets on financial statements.

Meghan noted the increasing presence of financial topics in mainstream media, with recent examples including documentaries and movies about financial drama. She emphasized the importance of financial literacy in understanding these stories as more complex issues beyond just the tabloid fodder.

Meghan discussed the recent information from the Federal Reserve about consumer credit, noting the high rates of consumer credit balances and rising delinquency rates for credit cards and auto loans. She expressed concern about the trend and highlighted that while mortgage delinquencies have not significantly increased, student loans and auto loans are seeing rising delinquencies and have both grown fastest since the 2008 debt bubble.

Meghan also pointed out rising foreclosures and bankruptcies but emphasized that they are still at relatively low levels. She outlined the potential economic implications of consumer credit contracting, particularly in the context of rising interest rates and inflation. Student loans don't yet show rising delinquencies since payments resumed in October and so far data is only through September.

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