Don’t Need That $1,200 Stimulus Check? Here Are Places to Donate It.

Most Americans will be receiving $1200 checks and $500/child in next few weeks. To some families, this will be far from enough to pay the rent or mortgage and buy food. But to many others, the checks will be an unearned bonus. As a retiree who will not be losing any income and who will be spending less on gas, eating out, and other non-essentials, I plan to donate my share to the local homeless shelter that also runs a food bank.
 For ideas on more national/global charities in need of money to fight the coronavirus and its repercussions, Amelia Nirenberg, writing for The New York Times, has compiled a list at: https://www.nytimes.com/2020/03/27/smarter-living/coronavirus-charity-donations.html?campaign_id=12&emc=edit_my_20200330&instance_id=17188&nl=your-money&regi_id=83720664&segment_id=23315&te=1&user_id=bde4c6c63beab087f13b761e1ee9fe1e

So you think you're going to jump back in the market after it bottoms out

"The problem with “going to cash” in a crash is that you lock in your losses. Maybe your plan is to jump right back in after the market bottoms? Good luck with that. When markets do turn back up, they do so quickly.  As financial planner Kristin McKenna explains here, six of the 10 best daily gains in the S&P 500 between January 2000 and December 2019 occurred within two weeks of the worst 10 days. Had you missed all of those 10 best days, your average annualized total return on the S&P 500 for those two decades would have been 2.44% compared to 6.06% had you stayed fully invested and ridden the roller coaster down and back up."

https://www.forbes.com/sites/janetnovack/2020/03/16/8-ways-coronavirus-will-drastically-alter-boomer-retirements/amp/

Resources to survive coronavirus from Consumer Financial Protection Bureau

The CFPB is committed to providing you with up-to-date information and resources to protect and manage your finances during this difficult time.

We have updated our site with new resources on:

• Credit reporting – Your credit reports and scores play an important role in your future financial opportunities. Learn how to manage and protect your credit during the coronavirus pandemic.
• Debt collection – Dealing with debt can be a stressful experience, coupling that with the coronavirus pandemic may make it even harder to address.
• Financial caregiving – We have resources for financial caregivers helping people who cannot manage their money or property themselves during the coronavirus pandemic.

More resources will be posted as the situation continues to change and evolve. We encourage you to share these resources with your friends, families, and others in your networks.

Check out: https://www.consumerfinance.gov/

Take the Investor Literacy Quiz

Female investors are less likely than their male counterparts to be confident about long-term opportunities in U.S. financial markets, about their own investment knowledge and about making investment decisions.
That’s according to “Mind The Gap: Women, Men and Investment Knowledge,” new research conducted by the Financial Industry Regulatory Authority’s Investor Education Foundation and George Washington University’s Global Financial Literacy Excellence Center.

The recent market volatility related to the global spread of the coronavirus (COVID-19) “sheds a spotlight on the importance of understanding investments and markets and why raising the investment knowledge of both men and women is essential,”
Take the 10 question quiz:
https://www.usfinancialcapability.org/quiz-literacy.php?utm_source=MM&utm_medium=email&utm_campaign=O_FoundationNewsRelease_031920_FINAL

Why do people hoard toilet paper?

Why Do People Hoard Toilet Paper? A Look At Irrational Behaviors In Uncertain Times

Dan Ariely, a professor of psychology and behavioral economics, explains how we can focus on making good decisions during the coronavirus crisis and in the future.

https://www.wbur.org/hereandnow/2020/03/25/why-do-people-hoard-toilet-paper-a-look-at-irrational-behaviors-in-uncertain-times

Don’t Panic: Make These 3 Money Moves to cope with Coronavirus

The Wirecutter recommends:

1. Get your debt in order

If you don't pay in full each month: Lower interest payments on your credit cards. Call your card companies and negotiate a lower rate.
Refinance your mortgage
Use federal student loan protection

2. Shore up your cash

 Save the money you would’ve otherwise spent. You're not eating out commuting to work, getting your hair cut, etc.

Budget for a month. Use your prolonged indoor time to create a budget.

3. Ignore your losers

stocks go down, often dramatically, and the value of your 401(k) may drop along with them. That’s part of the risk you take when you put your money into the stock market: You get higher returns than with bonds and you need those higher returns to grow your nest egg.

Get the details:
https://thewirecutter.com/money/prepare-for-coronavirus-recession/?utm_source=rss&utm_medium=feed&utm_campaign=RSS%20Feed&te=1&nl=your-money&emc=edit_my_20200323&campaign_id=12&instance_id=16999&segment_id=22635&user_id=bde4c6c63beab087f13b761e1ee9fe1e&regi_id=83720664emc=edit_my_20200323

How to build an emergency fund in the midst of an emergency

Now is not the time to stick your head in the sand and bemoan your situation! You are not alone.
National surveys by the Federal Reserve have found that many households would struggle to handle an unexpected $400 expense.

Writing for The New York Times, Ann Carrns provides this helpful advice from finance experts:
Even small cash cushions can help people stave off disaster. As little as $250 can significantly reduce the risk that a family will miss paying a utility bill or be evicted. “Each extra dollar saved” reduces the likelihood of having to skip bill payments.

First, try to estimate your expected future income. Talk with your employer but recognize the situation is changing rapidly.

Next, take stock of possible sources of cash and credit. Don't open new credit card accounts, but knowing the credit limit on each card you already use to get an idea of what you can draw on if needed.
Even though the federal tax filing deadline has been delayed, if you expect a tax refund, file now and use this money to start your emergency fund. (The average refund is about $3,000).

Scrutinize your spending, and cut where you can, even if you are still fully employed. Can you cancel subscriptions, switch to a less expensive cellphone plan for a few months or negotiate a lower rate on your internet? (My husband reduced our internet monthly charge from $69 to $40 this morning.)
Direct these savings to your emergency fund in an online savings account.

If your situation is dire, consider temporarily reducing contributions to your retirement account and redirecting the money to an emergency fund. A cut is better than stopping contributions entirely.

If you own a home, you could consider opening a home equity line of credit as a financial backstop.

Check with your employer to see if they offer emergency loans.

"Many companies allow hardship withdrawals or loans from 401(k) retirement plans, but doing so puts your long-term retirement savings at risk. Hardship withdrawals don’t have to be paid back but are taxable as income and may result in penalties. Loans aren’t taxable but must be repaid, and they can be risky because if you leave your employer you generally have to repay the loan quickly, said J. Michael Collins, director of the Center for Financial Security at the University of Wisconsin-Madison."

Check out the New York Times Money Hub blog post and other related posts. Search for other savings options on this searchable blog. 

Your Money: A Hub for Help During the Coronavirus Crisis (The New York Times)

"If your income has fallen or been cut off completely, we’re here to help. This guide will connect you to the basic information you’ll need to get through this, including on government benefits, free services and financial strategies."

By Ron Lieber and Tara Siegel Bernard

https://www.nytimes.com/article/coronavirus-money-unemployment.html?te=1&nl=your-money&emc=edit_my_20200323&campaign_id=12&instance_id=16999&segment_id=22635&user_id=bde4c6c63beab087f13b761e1ee9fe1e&regi_id=8372066420200323

What you need to know:

• How unemployment insurance works
• Who and what the new paid leave law covers
• How to pause your federal student loans
• You have three more months to file your federal taxes
• Help for renters and homeowners
• Ways to keep the lights on and the phones working
• More advice that will help

 Thanks to the new York Times for this excellent, timely, helpful advice!

You make most of your money in a bear market...

So in March 2020, the Dow and S&P 500 had their worst week since 2008...

As famed value investor Shelby Davis observed: “You make most of your money in a bear market; you just don’t realize it at the time.”

Advice below is quoted directly from Jason Zweig writing for the WSJ: 

What Benjamin Graham Would Tell You to Do Now: Look in the Mirror

The great investment analyst and Buffett mentor often counseled that investors must first know their own risk tolerance

 by Jason Zweig writing for The Wall Street Journal, March 10, 2020
"Benjamin Graham, the great investment analyst and Warren Buffett’s mentor, can help you navigate the market’s latest storm. Should you jettison some stock or stay the course? How should you act now to reduce the odds that you will kick yourself later for taking too much risk or too little?"
First, determine whether you are an investor or a speculator. “The investor’s primary interest lies in acquiring and holding suitable securities at suitable prices,” Graham wrote. The speculator, on the other hand, cares mainly about “anticipating and profiting from market fluctuations.”

The primary reason many individuals fail as long-term investors, Graham said in 1972, is that “they pay too much attention to what the stock market is doing currently.”
Intelligent investors, he insisted, don’t need superior intellect, training or expertise. Instead, intelligence consists of patience, independence and self-control.

Graham wrote, you should reconcile yourself “to the probability rather than the mere possibility” that stocks will fall by 33% or more at least once every five years.

Graham advised keeping a minimum of 25% and a maximum of 75% in stocks, with the rest in bonds. As stocks become cheaper, inch your exposure to them upward; as they get more expensive, you should edge your position downward.
Respect the difference between what he called “timing” and “pricing.” Timing is the attempt to guess what the market is going to do next, a form of forecasting that Graham believed inevitably ends in speculation. Pricing is simply the observation that when the market goes down, stocks get cheaper.

The recent dramatic declines in stock prices, as Graham taught, should make you incrementally more enthusiastic about buying stocks—not less. If you are “the right kind of investor,” he wrote, you should “take added satisfaction” from knowing that your actions are “exactly opposite from those of the crowd.” 

Thanks to one of my favorite financial writers Jason Zweig for this reminder and insight.  

First step in budgets is to take a step back

"New Year, new budget" or "New Year, no budget" Which are you?
Yes, it's well past the new year (Happy Spring Equinox), but with so many people losing jobs, getting work hours cut, or having their financial life in a turmoil, maybe now is the time to revisit the "B" word. Actually, I much prefer the term "spending plan."
Are you the "hands on" must know where every dollar goes type or the automated no-budget type? 
You need to recognize which behaviors will pull/push you to take needed action. Preston Cherry, a CFP and Ph.D candidate at Texas Tech University studies personality types in relation to budgeting styles according to Wall Street Journal writer, Julia Carpenter.
Consider your own attitudes and habits (and that of your spouse/partner, which can be very different). Sometimes spouses hold very different views on money management and may benefit from consulting a financial therapist.
Focus on your financial goals. What do you want to achieve in the short and long run? If saving for a house down payment or paying off student loans (or both) is a priority. Focus on what strategies will get you there.
Don't be rigid (especially if someone else shares your financial life). Sometimes the best approach is to set up an automatic savings transfer from your checking account each month toward your goals and simply live on the rest without using credit cards.
There are lots of resources and tools available. Now might be the time to put a spending plan to work to reach your goals, whether planning for the future or how to survive a pay cut.

Traditonal Medicare or Medicare Advantage? Resources to help decide

When signing up for Medicare you need to decide between traditional Medicare (and a supplemental plan) and Medicare Advantage Plan (offered by private insurers) that often come with prescription drug benefits (90%).
Medicare Supplement Insurance (Medigap) can pay most of the 20% costs Original Medicare doesn't cover, plus some other costs. Many people with Original Medicare choose Medigap.
While Medicare Advantage plans often offer additional benefits like vision and hearing exams, free fitness memberships, they restrict the network of doctors and hospitals.
Whether you choose traditional Medicare of a Medicare advantage plan, you'll pay two monthly premiums: one for basic medicare and the second one for a Supplement plan or an Advantage plan.

Two excellent resources recommended by Wall Street Journal writer Glenn Ruffenach (Dec. 17, 2018):
Kaiser Family Foundation https://www.kff.org/medicare/
34% of all Medicare beneficiaries (22 million) are enrolled in Medicare Advantage Plans
Read:
An Overview of Medicare  https://www.kff.org/medicare/issue-brief/an-overview-of-medicare/
Medicare Advantage: https://www.kff.org/medicare/fact-sheet/medicare-advantage/

Medicare Rights Center  https://www.medicarerights.org/
"Medicare Interactive (MI) is a free and independent online reference tool thoughtfully designed to help older adults and people with disabilities navigate the complex world of health insurance."
Trusted Resources link: https://www.medicarerights.org/resources/additional-resources

Medicare Plan Finder: https://www.medicare.gov/plan-compare/#/?lang=en

Retiring in a Bear Market?

No one knows when the coronavirus will subside... when financial markets will level off... when gut-wrenching volatility will settle down.
What can you do as you prepare to retire?
Focus on things you can control!
Thanks to Wall Street Journal writer Glenn Ruffenach for this advice written in December 2018:
Firm up your spending plan (aka budget).
Reduce your debt. Interest rates are super low in 2020. Pay off your mortgage or refinance (see recent post on refinancing).
Determine best time to claim Social Security retirement benefits. (Lots of info in this searchable blog).
Create your own pension. Use dividend-paying stocks, bond funds, and plain vanilla life annuities.
Manage your taxes (lots of info in this blog)
Plan for long term care (Check out this blog)
To quote Ruffenach: "Don't let the markets along govern your decision; they could seesaw for years. people have more control over their financial future than they realize. And that should help take some of the anxiety out of retirement planning."
And... you have been reading my blog and following it's advice for years... right?

Watch the TikTok hamster wash its hands: https://www.youtube.com/watch?v=lOJ8Lc-TfNg
Stay healthy! Get outside and get some fresh air exercise... while its still allowed. 

Stock Market Volatility

The wild swings in the financial markets are enough to scare any investor. With huge drops followed by big gains and then further drops... what is an investor to do?
First let's review what's happening. It is NOT individual investors making buy/sell decisions that drive financial markets. It's the computerized models of the major investment houses that are driving the crazy swings in prices. It is not an individual fund manager making buy/sell decisions. The computer models make trades automatically without human intervention. So even though commentators and media reports refer to what "investors" are doing, it's really the computers.
So, knowing that's what's driving volatility, it's time to review your financial goals, time lines and consider your risk tolerance. As I've tried to emphasize, no money that you expect to need in the next 5 years should be in the stock market! Shorter term goals should be accomplished with less volatile investments and savings products. Online savings accounts are a good home for your short term goals.

Even if you are on the verge of retirement, DON'T FREAK OUT! While you may plan to retire shortly, your investment horizon for retirement is about 30 years. Yes, you need some money in secure savings/conservative investments, but not all of it... even if you hope to retire shortly. You need to be invested in stocks for the long run to keep ahead of inflation.

Think about target date retirement funds (learn about them by searching this blog). They start out for young investors with most of the investments in stocks. Target date funds gradually and automatically get more conservative as the proposed retirement year approaches. Same concept applies to 529 Education Savings Plans like Utah's 529: https://my529.org/. The 529 age-based savings plans start with high percentages in stock and move to almost all fixed income savings options as college age nears.

If you cash out your stock investments now during the wild market swings you will only lose money by locking in losses that were only numbers on paper.

DON'T focus on year to date (YTD) returns. It's early in the year and we started the year hear the end of an 11 year long bull market in stocks. Think about where you started.

Want to develop some good habits? Break bad habits?

"Welcome to My Habit Lab. Designed by scientists at the University of Southern California. We draw on the latest psychological research to help you break bad habits and start good ones."

Psychologist Wendy Wood, Ph.D. wrote the book: Good habits, bad habits: the science of making positive changes that stick

Check out this website: http://goodhabitsbadhabits.org/

An interview with the author: https://behavioralscientist.org/good-habits-bad-habits-a-conversation-with-wendy-wood/  

About the book: 

"We spend a shocking 43 percent of our day doing things without thinking about them. That means that almost half of our actions aren’t conscious choices but the result of our non-conscious mind nudging our body to act along learned behaviors. How we respond to the people around us; the way we conduct ourselves in a meeting; what we buy; when and how we exercise, eat, and drink—a truly remarkable number of things we do every day, regardless of their complexity, operate outside of our awareness. We do them automatically. We do them by habit. And yet, whenever we want to change something about ourselves, we rely on willpower. We keep turning to our conscious selves, hoping that our determination and intention will be enough to effect positive change. And that is why almost all of us fail. But what if you could harness the extraordinary power of your unconscious mind, which already determines so much of what you do, to truly reach your goals?"

How does your financial adviser get paid? And why does it matter?

"With markets in turmoil, investors need financial advice more than ever. Unfortunately, figuring out where to get it and how to pay for it just got a little harder" according to Jason Zweig writing for The Wall Street Journal. Until recently you could find this information about Certified Financial Planners from Letsmakeaplan.org. But the CFP Board of Standards will no longer disclose this info on the website.
Why does how your adviser get paid matter? Search for "fiduciary" on this blog fro a reminder.
Financial advisers on commission earn a slaes fee when you trade stocks or other securities, buy insurance, or other financial products. So they may not charge you for advice, you are paying indirectly when they recommend a product and you buy it. Hmmm... think about the implications.
A fee-only adviser charges either a one-time or recurring fee for advice and/or managing your portfolio.
The letsmakeaplan website had served as a fast way to find a Certified Financial Planner. Now... not so much.
A 2019 investigation by The Wall Street Journal revealed that about 6,300 CFPs listed on the website had faced criminal or regulatory problems not disclosed on the website.
While the CFP Board requires members to adhere to a code of ethics, there is little enforcement.

Once again, it is essential to ask your adviser directly if they serve as a fiduciary. Check out links on this blog.

Planning to refinance your mortgage?

A rush to refinance mortgages in light of the super low mortgage rates is facing a logjam of applications. According to Katy Mclaughlin writing for The Wall Street Journal, you need to take these steps:

1. Unfreeze your credit. Many people froze their credit to protect against fraud. Now is the time to thaw your credit history. Freezes and un-freezing are now free. You should be able to unfreeze your account online but plan ahead in the event that you need to send documentation to a credit bureau to prove your identity.

2. Get Appraisal Ready. If planning any home improvements complete them before the appraisal or hold off until afterwards. "Purge clutter and spiff up the home as much as possible."

3. Call your Accountant. if self-employed... you may need a year to date profit and loss statement from a CPA. This can be time consuming during tax season when CPAs are very busy (despite the recent roll back of filing to July 15). Request digital files of of your last two years of business and personal federal tax returns.

4. Examine Trust Documents. IF the title of the  home is held in a trust, some lenders need a full copy of the trust while others need only specific pages. It helps to have a digital copy. Review the document to be sure there are no typos, especially in name spellings. If there are you need to have the pages redrafted by the trust attorney and notarized.

5. Go on a Credit Diet. DO NOT open any new credit accounts during the mortgage process. Doing so will slow down the process.

Remember to freeze your credit after the process is complete.
Expect delays as the volume of applications swells and coronoa virus slows the process.

Lost income due to Coronavirus shut down?

If your income has fallen or been cut off completely, we’re here to help. This guide will connect you to the basic information you’ll need to get through this, including on government benefits, free services and financial strategies. https://www.nytimes.com/article/coronavirus-money-unemployment.html

Your Money: A Hub for Help During the Coronavirus Crisis

By Ron Lieber and Tara Siegel Bernard

What you need to know:

• How unemployment insurance works
• Who and what the new paid leave law covers
• Help for renters and homeowners
• How the tax payment deadline extension works
• What to do if you need Social Security help
• Ways to keep the lights on and the phones working
• More advice that will help you

Don't touch that investment portfolio!

Investment expert tells savers not to look at portfolio

Investment strategist Joachim Klement is advising retirement savers not to check their 401(k) balances to help prevent them from making poor decisions based on short-term market moves. "Nothing that happens today, tomorrow or over the rest of this year will matter 10 years from now," he says.

At or near retirement? Consider these moves to protect your nest egg

https://www.cnbc.com/2020/03/13/at-or-near-retirement-consider-these-moves-to-protect-your-nest-egg.html

Now is NOT the time to sell stocks! Turn off and tune out the investing news.

Money that you will need in the next 5 years should not be invested in the stock market. 

Please review other posts on this blog about the basics of investing, rebalancing, retirement planning, etc. There is lots of sound, sensible information to help you navigate these trying times. 

Stock market perspective

IS THE STOCK MARKET swoon messing with your head? You don’t want to make this market decline any worse than it has to be. To that end, here are 10 steps that’ll help preserve your sanity and your portfolio:
(Quoted directly from Jonathan Clements.  Follow Jonathan on Twitter @ClementsMoney and on Facebook. His most recent articles include Bad News, Don’t Lose It and Stand Your Ground.)
https://humbledollar.com/2020/03/grin-and-bear-it/
I highly recommend his website and weekly emails.

1. Avoid touching both your face and leveraged exchange-traded index funds.
2. Change the password on your investment accounts to “ItsTooLateToSell.”
3. Downgrade your opinion of investors based on their degree of hysteria.
4. Don’t watch Contagion, Margin Call or the New York Knicks.
5. Quarantine your emotions every time the Dow drops 1,000 points.
6. After your brother-in-law finishes pontificating, ask whether he inherited his clairvoyance from his mother or his father.
7. Avoid contact with insurance agents pitching equity-indexed annuities. Don’t shake hands with brokers on any deal that promises downside protection.
8. Unless you live in a ranch-style house, stay away from open windows.
9. Wash your hands for 20 seconds after watching CNBC.
10. Use the vacation fund to buy stocks. Mention it to your spouse after he’s had a few drinks.

Easy way to build an emergency fund

According to the IRS, around 72% of Americans received a refund on their taxes in 2019. This extra cash may be the largest check some people receive all year and can be a perfect opportunity to start—or grow—your emergency savings funds.
Learn how your tax return can kickstart your savings. The Consumer Financial Protection Bureau's guide walks you through some fast and easy ways to use your tax refund to increase your savings.
Watch the short video and read the CFPB Tax Guide

This guide will cover the following topics:

• Why save your tax return
• How to save money fast
• Affordable ways to file your taxes
• Protect yourself from tax fraud

Sign up for the CFPB Savings Boot Camp, a six-step email course to help you on your savings journey.

Building an Emergency Fund: 
Setting up a dedicated savings or emergency fund is one essential way to protect yourself, and it’s one of the first steps you can take to start saving. By putting money aside—even a small amount—for these unplanned expenses, you’re able to recover quicker and get back on track towards reaching your larger savings goals.

This guide will help you answer the following questions:

• What is an emergency fund?
• Why do I need it?
• How much do I need in it?
• How do I build it?
• Where should I keep it?
• When should I use it?

https://www.consumerfinance.gov/start-small-save-up/an-essential-guide-to-building-an-emergency-fund/

https://www.consumerfinance.gov/start-small-save-up/how-to-use-your-tax-refund-to-build-your-emergency-funds/?utm_source=newsletter&utm_medium=email&utm_campaign=TaxTime_P&utm_content=March20

Behind on Federal Student-Loan Payments?

Lots of options exist, including suspending payments, but some will increase what you owe

Cheryl Winokur MunkThe Wall Street Journal, 3/9/20. 

"Getting behind on student loan payments—or worse, defaulting—can lead to serious financial consequences." 

Call your loan servicer to learn options to lower or suspend payments. (call the Federal Student Aid Information Center at 800-433-3243 to obtain this information.) 

These options are applicable only for federal student loans. You have far fewer options with private loans. 

Option 1: Change repayment plans

The Federal Student Aid "office’s Loan Simulator, found at studentaid.gov, can help borrowers find the best repayment strategy based on their individual circumstances, including a plan that offers the lowest monthly payment, fastest payoff term or lowest amount paid overall." 

 
Options:

Graduated repayment plan.  Open to all federal loan borrowers.
Payments are lower at first and then increase, usually every two years.

Extended repayment plan. Only certain loans qualify; payments can be extended for u to 25 years. You'll pay more interest tha in the traditional 10 year repayment plan. 

Income-driven repayment.  
"There are four income-driven plans for which borrowers may qualify. Each of these plans limits borrowers’ payments to a percentage of their income." Payments are limited to a percentage of income.

Income-sensitive repayment. "This is only for borrowers who have Federal Family Education Loans, a loan offering that was discontinued in 2010."

Option 2: Deferment

Some borrowers can qualify to defer payments on the principal (and on the interest, if the loan is subsidized).  Must show economic hardship to qualify.

Option 3: Forbearance

"Borrowers who don’t qualify for a deferment can apply for a forbearance, in which they temporarily halt payments or make smaller payments."

"During forbearance, borrowers are still responsible for paying interest that accrues."

 

Other considerations

"In general, if you are facing a hardship that is likely to be short-term, you could be better off with a deferment or forbearance, say for a month or two."
"However, struggling borrowers will be better off changing their repayment plan than seeking deferment or forbearance."
Also check out:
Student Loan Sherpa: https://studentloansherpa.com/ a website for student-loan education, strategy and borrower advocacy. 
Edvisors helps students and parents make informed decisions about ways to pay for college costs and financial aid, including scholarships and student loans.  https://www.edvisors.com/