December 31, 2020

Managing your Student Loans Podcast

 Podcasts from the U.S. Consumer Financial Protection Bureau

The goal of the podcast is to educate, inform, and engage students, parents, and practitioners with tools and resources created to help them make more informed financial decisions. This podcast will help listeners with tips and strategies to find their inner financial intuition, one money topic at a time.

“Managing your Student Loans Series focuses on Managing Student Loans & Money while in College, Discussing the Veterans Benefits Administration’s (VBA) GI Bill® Comparison Tool and CFPB’s Your Financial Path to Graduation Tool and Postgraduate Degree Repayment Options.

Future episodes will cover managing and repaying student loans, interviews from practitioners, real student loan borrowers and their family members, and more.

https://www.consumerfinance.gov/consumer-tools/educator-tools/students/financial-intuition/?utm_source=newsletter&utm_medium=email&utm_campaign=OS_IFSATF

Check out all the resources from the CFPB: https://www.consumerfinance.gov 

December 30, 2020

Making New Year's resolutions? Keep them small and achievable

 

Here are strategies to consider:

Don’t rely on motivation

"New Year’s is when many people feel motivated to make changes, including making saving for retirement a priority. But motivation can dissipate quickly, as anyone who has joined a gym in January and stopped going in February knows."

Instead find ways to "shrink your goals to make them easier to accomplish."

Keep the bar low

Setting ambitious goals sets you up for failure. Set specific actions, not that you will save more but that you will save $X per month and set up an automatic transfer to that account. 

Stress the positive

Focus on how small steps will add up to something substantial over time. See blog posts on compound interest. 

The easier the task, the better the odds of sticking to it when motivation flags.

Calculate small changes

"Seemingly small reductions in investment fees can also produce big savings over time. According to Vanguard Group, $100,000 invested at 6% a year would grow to $429,000 after 25 years with no fees. With a 1% annual fee, the balance would grow to $339,000."

Experimental approach

Don't cut back on things you enjoy. Instead get rid of subscriptions you don’t use, negotiating discounts with cellphone and cable companies, and save a portion of a tax refund or raise.

Try negotiating a rent reduction, especially if you live in a city where people who can work from home are fleeing the city, leaving empty apartments. 

Don’t get upset by setbacks. “Think of your behavior change (goal, resolution) as an experiment. Figure out why your strategy didn’t work, change your approach, and try again. 

Just take one step

"In contrast to eating healthier or exercising more, retirement savings can be put on autopilot, via payroll deductions to a 401(k) or automated transfers from a savings account to an individual retirement account."  Set up the account today and then set a date in the future to start funding the account.

 Source: Advice from an interview of Dr. BJ Fogg, a behavior scientist at Stanford University, author of “Tiny Habits: The Small Changes that Change Everything,Ramit Sethi, author of “I Will Teach You to Be Richand other behavior experts by Anne Tergesen, writing for The Wall Street Journal, Dec. 29. 2020.

December 28, 2020

Robinhood investing anyone?

Robinhood is an investing platform geared to millennials to make investing look so easy, fun, and sexy... The New York Times reports: "the company has also faced intense scrutiny for its practices." 

"The app has become a favorite of young and inexperienced investors, enticed by no-fee trading, offers of free stocks and an engaging user interface that uses what a New York Times report in July described as the 'Silicon Valley playbook of behavioral nudges and push notifications.'" i.e., you are being manipulated.

 "Last week, the Securities and Exchange Commission charged the company with “misleading customers about revenue sources,” citing “repeated misstatements that failed to disclose the firm’s receipt of payments from trading firms for routing customer orders to them.” Robinhood agreed to pay a $65 million fine. And on Wednesday, Bloomberg News reported that a complaint filed in San Francisco against Robinhood Financial could become a class-action lawsuit."

Source: Robinhood Recaps From a Volatile Year... And you thought your Spotify Wrapped was a bummer.

by Ezra Marcus

December 25, 2020

Why I'm not a fan of gift cards

 OK. It's too late to reverse the flood of gift cards given in lieu of more sensible gifts for this Christmas.  On Wednesday, December 23 Suzanne Kapner, writing for The Wall Street Journal, reported on the huge increase in gift card purchases this season. 

"Gift-card purchases in the first week of December were twice the rate in the same period last year, according to InMarket, a data-analytics company. Gift card sales jumped 48% last weekend, compared with earlier in the week, as deadlines for free shipping with guaranteed Christmas delivery expired, according to Rise.ai, which manages electronic gift card programs for more than 5,000 brands, including Allbirds and Milk Bar."

Shoppers wanted to avoid crowded stores during the pandemic and the massive overload shouldered by the USPS, Fed-Ex and UPS that delayed deliveries.Ok, I get it but... somethings to think about the next time you are tempted to buy a gift card (clearly marked with a dollar amount): 

"The gift-card boom might not help holiday sales. Retailers can’t record the revenue until the cards are redeemed, according to Nathan Ehrlich, chairman of the Retail Gift Card Association."

Kapner explains: "There are two types of gift cards. So-called closed-loop cards are issued by banks and branded merchants including Macy’s or Amazon. They typically have no fees and don’t expire but can only be used at the retailer with its brand on the card..."

So "closed-loop" cards limit where the recipient can redeem the gift. 

"Open-loop cards operate on card networks such as those run by Mastercard Inc. and Visa Inc. These cards can be used anywhere those brands are accepted but typically hit recipients with fees." “If you don’t use the money, the fees will eat away at the balance.”

"A sizable portion of gift cards go unused, allowing merchants and card issuers to later book some of those funds as revenue under accounting rules. Mercator estimates merchants keep roughly $3.5 billion of unredeemed balances annually." That's BILLION with a B! So your money spent on gifts cards may just line the pocket of the retailer. 

Here's a better idea: Give old fashioned, never-go-out-of-style CASH! I doubt any of that gift will go unused. Consider that during this pandemic many people have lost income, jobs, and may be at risk of becoming homeless. Well... that's not MY relatives and friends. Don't be too sure! 

Especially for children, giving cash can help teach them to save some, donate to charity, and spend the rest on what they really want/need for themselves. 

Recently when I thought the $600 payments to all Americans (and their children) were assured (before Trump's threatened veto), I asked a teenage friend what she planned to do with her $600. She didn't miss a beat: "Give half to Planned Parenthood and put the other half in my college fund," was the prompt response!


December 14, 2020

Have you ever heard of "debt parking"?

It’s ‘Debt Parking’: When Fake Debts End Up on Your Credit Report

"The F.T.C. recently took its first legal action to stop the fraud. Consumers may not know the debts are on their reports until they apply for a loan."

Thanks to The New York Times writer Ann Carrns for exposing this despicable practice by the debt collection industry. 

"Consider this unnerving situation: You apply for a loan only to learn that your credit report is marred by a delinquent debt — one that you have already paid or maybe don’t recognize."

'You could be a victim of unscrupulous debt collectors who have placed invalid or fake debts on your consumer credit reports to coerce you to pay them. The tactic is called illegal “debt parking,” or sometimes “passive debt collection.”'

So, what can a person do? Get on the internet and check your credit report for free at: https://www.annualcreditreport.com/index.action

Follow the NYT's Your Money column for more important financial information. 

Get your free credit reports today

Due to the unemployment and financial stresses resulting from COVID-19 Equifax, Experian, and TransUnion  provide free weekly online reports through April 2021.

Go to https://www.annualcreditreport.com

You will be asked for your name, address, birth date, and social security number. 

If you've lived at your current address for less than 2 years you will be asked additional questions to verify your identity. 

Once you get to each of the 3 credit bureau sites you will be asked additional verification questions about employment, vehicle loans/leases, mortgages, and other financial transactions and maybe even your Zodiac sign!! (really!)

The Annual Credit Report website provides an abundance of credit related information and education.

 

 

December 11, 2020

Lawmakers with stock holdings vote in ways that juice their portfolios

"Amid calls for stricter regulation of congressional stock ownership, researchers find that financial self-interest outweighs party, ideology and other factors in policy decisions" according to Washington Post reporter Christopher Ingraham
December 20, 2020. 

"A series of well-timed stock trades early in the pandemic brought Justice Department scrutiny on at least five U.S. senators this year over potential insider trading, including Georgia Republicans Kelly Loeffler and David Perdue. Though the inquiries were dropped, both lawmakers have taken heat on the issue as their respective campaigns head into a January runoff election that will determine partisan control of the Senate."

"New research from political scientists Jordan Carr Peterson and Christian Grose underscores why tighter regulations might be necessary. They found that members of Congress who own stock tend to vote in ways that benefit their portfolios and that these decisions can’t be explained away by other factors, such as ideology or constituent interests."

"This behavior, it’s worth noting, is perfectly legal. While the 2012 Stock Act prohibits members of Congress from insider trading, there is nothing to prevent them from casting votes that increase the value of their assets based on public information."

So if you think your representative is voting to represent your interests as a constituent, time to reassess.

November 30, 2020

Income inequality is bad enough, but wealth inequality is way worse

"The richest 1 percent now owns more of the country’s wealth than at any time in the past 50 years." Writing for The Washington Post, Christopher Ingraham explains:  "Today, the top 1 percent of households own more wealth than the bottom 90 percent combined. That gap, between the ultrawealthy and everyone else, has only become wider in the past several decades." Using the analogy of equally distributing slices of pie, Ingraham explains the results of research by economist Edward N. Wolff, published in his new book: "A Century of Wealth in America." 

Extreme wealth and income inequality is bad for the economy. What can we as a nation due to reduce wealth inequality and its perverse negative effects?

"If you were designing a tax plan to reduce the extreme inequality in the United States, you'd probably try to find ways to redistribute some of the wealth from the richest households to the poorest ones. But the Senate GOP tax plan does precisely the opposite of that, according to the CBO: In the short term the richest households get the biggest tax cuts, while longer term the taxes of the poorest households actually increase."

Check it out: https://www.washingtonpost.com/news/wonk/wp/2017/12/06/the-richest-1-percent-now-owns-more-of-the-countrys-wealth-than-at-any-time-in-the-past-50-years/

Getting to Retirement: Common Sense from The Humble Dollar

"HOW DO WE GET from here to retirement? Amid the financial markets’ daily turmoil, it might seem like one big crapshoot."

"But in truth, navigating this journey is pretty straightforward, because there are just five key variables—our time horizon, current nest egg, savings rate, target nest egg and investment return."

Jonathan Clements (https://humbledollar.com/)provides solid, easy to implement strategies for retirement investing for people at various ages. Sign up for his weekly emails and read his Humble Dollar blog.

Starting with this example he illustrates how one can achieve a secure retirement based on current age: "We begin investing for retirement at age 25 with a mix of 60% stocks and 40% bonds. We sock away a little over $15,000 a year, with that sum rising each year with inflation. If all goes well, our nest egg should—in today’s dollars—be worth some $169,000 at age 35, $384,000 at age 45, $655,000 at 55 and our coveted $1 million at 65."

OK. So you're not longer age 25. Check out his variations based on your current age. 

https://humbledollar.com/2020/11/dialed-in/

How to avoid dementia and How dementia affects finances

Dementia may cause major financial problems long before diagnosis, making early detection critical

"Deteriorating financial capabilities have long been considered one of the earliest signs of cognitive decline."

New research published Monday "suggests that adverse financial events associated with Alzheimer’s disease and related dementias, or ADRD, can start happening years before people are clinically diagnosed." The study connected "the health data of more than 80,000 Medicare beneficiaries with federal consumer credit reports."

“Some of these financial symptoms are popping up as early as six years before formal clinical diagnosis,” said the study’s lead author.

"The effect cognitive impairments can have on a person’s financial health is 'a significant problem,' said Oscar Lopez, director of the Alzheimer’s Disease Research Center at the University of Pittsburgh. If people are racking up debt or falling victim to financial scams or fraud, it could prevent them from having the necessary funds to care for themselves as their condition worsens."

"Changes in judgment, financial ability or decision-making are usually the first signs individuals and family members may notice, but 'too often these are denied or dismissed, when they may actually be a reason to get a thorough medical evaluation,' Heather Snyder, vice president of medical and scientific operations at the Alzheimer’s Association."

"There has traditionally been some reluctance to diagnose mild cognitive impairment or Alzheimer’s early, amid concerns that without effective therapies to cure or slow the progression of the condition, a diagnosis may only cause worry or other adverse mental health effects."  This study provides strong evidence for making a diagnosis earlier than later to prevent financial disaster. Money problems  continued even when "people were aware their cognitive abilities were declining."

It is especially import for older adults living alone to have a trusted family member or other adult be notified when bills are overdue as this is a clear sign of potential trouble. More financial entities need to  allow for a second party to be notified when problems occur with bills and other financial accounts.

Doing these five things could decrease your risk of Alzheimer’s by 60 percent, new study says

"A study presented Sunday at the Alzheimer’s Association International Conference in Los Angeles found that combining five lifestyle habits — including eating healthier, exercising regularly and refraining from smoking — can reduce the risk of Alzheimer’s by 60 percent. A separate study showed that lifestyle choices can lower risk even for those who are genetically prelifestyle disposed to the disease."

Rate yourself on five important metrics:  diet, exercise, smoking, alcohol consumption and “engagement in cognitive stimulation activities.”

"Individuals who ate a 'high-quality diet' of mostly vegetables, nuts, berries, beans, whole grains, seafood, poultry and olive oil — while avoiding red meats, butter, cheese, pastries, sweets and fried food — earned 1s. This was also true for anyone who exercised at least 150 minutes a week, whether by biking, walking, swimming, gardening or doing yard work."

"People who did not smoke, limited themselves to one glass of wine a day, and regularly — two or three times a week — engaged in mentally stimulating activities such as reading the newspaper, visiting the library or playing games such as chess and checkers also earned 1s."

"Individuals with a score of 4 or 5 — meaning they pursued four or five healthy behaviors over the period studied — were 60 percent less likely to develop Alzheimer’s compared with participants who scored 0 or 1. The results did not vary by race or gender.

Source: Hannah Natanson writing for The Washington Post, July 14, 2019 

 

 

November 27, 2020

How long are you likely to live? An important figure for retirement planning

"How often do you eat red meat? Do you exercise regularly? Cancer in your family? Did you go to college?"

"These questions – among the varied and complex predictors of longevity – are packed into a calculator that will estimate how long you could live. The calculator was created by Dr. Thomas Perls, an expert on longevity and the genetics of aging at Boston University."

Living to 100: https://livingto100.com/

"The Living to 100 Life Expectancy Calculator uses the most current and carefully researched medical and scientific data in order to estimate how old you will live to be. Most people score in their late eighties... how about you?"

"The calculator asks you 40 quick questions related to your health and family history, and takes about 10 minutes to complete. At the end, you will be asked to create an account to store your answers."

Thanks to the Squared Away Blog: https://squaredawayblog.bc.edu/squared-away/how-long-will-you-live-try-this/

Homeowner's Insurance Rates Going Up due to Climate Change-related disasters

 Surprised by increases in your HO insurance?

Even for property owners who have never filed a homeowner’s insurance claim, the premium will be likely go up for 2021 due to an increase in the frequency and severity of natural catastrophes and their resulting insurance claims across the US for the years 2017-2020. In short, losses have increased faster than the capital base of the insurance industry and the industry is taking steps to make sure that it is solvent and able to pay all of the claims which have and which will arise.

2020 was a record-breaking year for hurricanes and wildfires, both aggravated by climate change. Expect more of the same next year and in the coming decades as world leaders, and the U.S. in particular, have failed to reduce carbon emissions.

November 20, 2020

2021 Medicare Premiums

 In 2021, Higher Medicare premiums will apply for individuals with modified adjusted gross income above $88,000; for married couples who file a joint tax return, that amount is $176,000. These higher premiums affect only about 8% of beneficiaries. 

Most Medicare participants will pay $148.50 per month per person.


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