💰Zero-percent down mortgages are here

Jun 05, 2024

This week we're exploring the myths and realities of financial success, firstly looking at the staggering $315 trillion global debt crisis and what it means for the economy, then examining how Gen X is faring as the first generation to rely primarily on 401(k) plans for retirement. From understanding the role of good debt to making informed decisions about your future, we've got the insights you need to navigate today's complex financial landscape.

- Milan


The World Is Trillions In Debt 

The world is currently swimming in a massive $315 trillion of debt, according to a new report from the Institute of International Finance. This surge in global debt is the biggest and fastest since World War II, largely driven by the economic impact of the Covid-19 pandemic. The bulk of this debt—about two-thirds—comes from mature economies like Japan and the United States. Interestingly, while their debt levels are sky-high, the debt-to-GDP ratio for these countries is generally falling, which suggests they can still manage their debts pretty well.

On the flip side, emerging markets are facing tougher times. They hold $105 trillion in debt, and their debt-to-GDP ratio just hit a new high of 257%, marking the first increase in three years. China, India, and Mexico are the biggest contributors to this rising debt. The report also warns about persistent inflation, rising trade tensions, and geopolitical issues that could make managing global debt even harder. To break it down: household debt, including mortgages and credit cards, amounts to $59.1 trillion; business debt stands at $164.5 trillion; and public debt is $91.4 trillion. This paints a picture of just how widespread and impactful the global debt issue really is. If you’re looking for a way to get rid of debt permanently, we break it down for you here.

Retirement Savings Doesn’t Have To Be Daunting 

Generation X has been the test subject for the 401(k) retirement system, and the results are looking pretty bleak. Nearly half of Gen Xers report that their retirement savings are falling behind schedule, according to a recent Goldman Sachs Retirement Survey. Many started contributing to 401(k) plans late and are now struggling to catch up. Shockingly, half of this generation hasn’t even calculated how much they need to retire, how to save and invest, or when they can afford to retire—a pressing issue as the oldest Gen Xers turn 60 next year.

Known as the "401(k) experiment" generation, Gen X has been the first to rely primarily on individual savings rather than traditional pensions. This shift has left many unprepared, with competing financial pressures like credit card debt, student loans, and supporting family members affecting their ability to save. Despite these challenges, there’s hope for future generations. Employers can help by offering financial planning services, emergency savings accounts, and guaranteed income options in retirement plans. Younger generations are already benefiting from innovations like automatic enrollment and target-date funds, but for Gen X, time is running out to secure a comfortable retirement. Learn all about managing your money and saving for retirement in our free cutomizable money plan. Just answer a few questions here.

Your Pathway To Home Ownership 

Many Americans dream of owning a home but struggle to save up for that hefty down payment. Good news! United Wholesale Mortgage (UWM) just launched a new zero-percent down mortgage program that removes this major hurdle. Now, homebuyers can cover 97% of the home's value with a first mortgage and the remaining 3% with a second mortgage, which doesn’t accrue interest but needs to be paid back when you sell, pay off the mortgage, or refinance.

While this sounds like a fantastic opportunity for first-time buyers and those with limited income, some experts are a bit nervous. With no upfront equity, homeowners could end up underwater if home prices drop, reminiscent of the 2008 mortgage crisis. This could lead to serious financial trouble if you need to sell quickly and can’t cover the second mortgage. Even though lending standards are much stricter now than they were back then, the risk is still there, especially for those who qualify for these zero-down loans.

If you’re looking to buy a home, make sure you have a good credit score first. A healthy score can save you thousands of dollars in interest, making homeownership a more achievable goal. Get all the resources you need here.


“All Debt Is Bad”

Many people believe that all debt is bad and should be avoided at all costs, but this is a myth that can actually hinder your financial growth. Not all debt is created equal. For example, taking on a mortgage to buy a home or a student loan to further your education can be considered "good debt" because these investments can increase your net worth and income potential over time. Good debt can be a powerful tool for building wealth, as long as it's managed responsibly and within your means.

On the other hand, high-interest debt like credit card balances and payday loans can indeed be detrimental if not handled carefully. This "bad debt" can quickly spiral out of control and lead to financial stress. The key is to understand the difference and use debt strategically to improve your financial situation. By leveraging good debt wisely and avoiding the pitfalls of bad debt, you can create a solid financial foundation and pave the way for future success.


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