A Blogger’s Potpourri

Most of the time, when writing this blog, a single subject jumps out at me.  Not so for this one.  In the last couple of weeks, I found at least four subjects that would make good blogs in and of themselves.  I thought about holding off on them for future blogs, but since the subject matter was timely I thought why not share them in a bit of a condensed form?  A sort of ‘Bloggers Potpourri’ as it were.

So here we go.

  • Did you recently see an improvement in your credit score?

You may have, which is good news.   Financial health can be monitored and enhanced by working to maintain and improve one’s credit score. Jessica Dickler writes in a blog for CNBC (read it here) that due to improved standards for using public records, all three major credit reporting agencies now are eliminating tax liens from credit reports. As a result, some scores could jump as much as 30 points.  This took effect last month.  This does not affect everyone.  Only about 11% of us will see a difference.  If you don’t track your credit score you should!

  • Understanding more about credit reports and credit scores.

We write a lot about credit reporting, credit scoring and credit scores.  Equifax, one of the three major credit reporting agencies, recently posted three common questions regarding credit reports and scoring in a newsletter. There is also a link to a credit monitoring primer (find them here) to help further educate consumers.  Among the common questions are:

  1. Are credit reports and credit scores the same thing? Answer: “A credit report is a detailed report of your credit history.  A credit score is a numeric calculation of your repayment risk.”

 

  1. What information is in your credit report? Answer: “Your credit report includes a summary of your credit history, including credit accounts, lenders and repayments.”

 

  1. How are credit scores calculated? Answer: “The main factors involved in calculating a credit score are:

 

  1. The number of accounts you have
  2. The types of accounts you have
  3. Your used credit vs. your available credit
  4. The length of your credit history
  5. Your payment history”

 

All of us are entitled to one free copy of our credit report each year. You can get a copy through the reporting agencies.  Many banks, credit card companies and even credit monitoring apps may provide this information free to its customers or subscribers.

  • American’s greatest financial regrets.

According to data from Bankrate (read the blog here), here is a list of the top financial regrets we have as Americans:

  1. Not saving enough for retirement—18%
  2. Not saving enough for emergencies—14%
  3. Taking on too much credit card debt—10%
  4. Taking on too much student loan debt—8%
  5. Not saving enough for children’s education—7%
  6. Buying more house than you can afford—2%
  • Consumer debt set to top $4 Trillion by the end of 2018.

Data recently released by the Federal Reserve Bank of New York shows consumer debt could top a whopping $4 Trillion dollars by the end of this year. A summary and analysis of the data by LendingTree (read the article here), points out that total consumer credit as a percentage of personal income is 26%!  Consumer spend about 10% of their income paying these debts each month.  The good news is that delinquency rates are 2.4% overall and reflective of the strong economy and employment.

  • How much money is enough?

No, it is not all about money, but the question still is asked:  How much money to you need to feel “wealthy” or “financially comfortable?”  In a CNBC blog by Kathleen Elkins (read it here) she summarizes findings by the investment firm Charles Schwab that says that Americans polled think it takes a net worth of $2.4 million to be considered “wealthy” and $1.4 million to be “financially comfortable.”  As she points out, though, “Since less than 10 percent of Americans have $1.4 million, by that standard, only the top tier of American households qualify as ‘comfortable.’  Well, that certainly leaves a lot of us…well…uncomfortable.

A. Alliance Collection Agency, Inc. is a full service, licensed accounts receivable management and debt collection agency providing highly effective, customized one on one management and recovery solutions for our business partners.  Founded in northern Illinois in 2005, we have been proudly improving the bottom-line on behalf of our business partners in and around Chicagoland for over 13 years.

Your Unalienable Right to Pursue Happiness. Have You Forgotten You Have One?

“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.” –The Declaration of Independence.

I ran into this quote from the Declaration of Independence the other day.  I don’t know how many times I have read this amazing document, but this time “…pursuit of Happiness” just sort of jumped out at me.  Pursuing Life and Liberty I get.  But a right to pursue Happiness?

So, I wondered, how effective have I been at taking advantage of my own unalienable right to the pursuit of happiness?  How would I even measure my level of happiness or at least the progress I am making in my pursuit?

The reams of material on pursuing, finding and maintaining happiness is staggering.  Wikipedia notes that the bulk of the attempts to measure happiness are subjective, or at least based on qualitative not quantitative measures.  Depending on where you live, age, race, economic status, weather, politics, religion, well just about every factor in our lives, can increase or decrease our self-reported level of happiness at just about any given moment.

Then they throw this in under “Happiness economics”:

“Micro-econometric happiness equations have the standard form: Wit= a+Bxit+? it. In this equation W is the reported well-being of individual i at time t , and x is a vector of known variables, which include socio-demographic and socioeconomic characteristics.”

I must say that did not make me any happier.

I can just see someone building a similar equation into a health app as a way to measure our ‘happiness’ quotient.  Inevitably I know I would wind up in a situation where not hitting my goal of 10,000 steps per day would make my happiness quotient go down and therefore I would eat more ice cream to become happier and have to do more steps to get rid of the extra calories which I would not attain anyway so…well you see where this is going.

In our business of collections, we see the sometimes very unfortunate results of our pursuit of happiness.  Consumer debt is now back to pre-recession highs. More of us are trying to ‘buy’ our way to happiness.  Unfortunately, once the glow wears off of the ‘best new thing’ the bill is still there and the consequences of not paying it, well, certainly don’t increase happiness.

From Wikipedia again: “Scholars at the University of Virginia, University of British Columbia and Harvard University released a study in 2011 after examining numerous academic papers in response to an apparent contradiction: “When asked to take stock of their lives, people with more money report being a good deal more satisfied. But when asked how happy they are at the moment, people with more money are barely different than those with less.” Published in the Journal of Consumer Psychology, the study is entitled “If Money Doesn’t Make You Happy, Then You Probably Aren’t Spending It Right” and included the following eight general recommendations:

  • Spend money on “experiences” rather than goods.
  • Donate money to others, including charities, rather than spending it solely on oneself.
  • Spend small amounts of money on many small, temporary pleasures rather than less often on larger ones.
  • Don’t spend money on “extended warranties and other forms of overpriced insurance.”
  • Adjust one’s mindset to “pay now, consume later,” instead of “consume now, pay later.”
  • Exercise circumspection about the day-to-day consequences of a purchase beforehand.
  • Rather than buying products that provide the “best deal,” make purchases based on what will facilitate well-being.
  • Seek out the opinions of other people who have prior experience of a product before purchasing it.”

 

Good suggestions all.  I am reminded, though, of how many of the suggestions for pursing happiness involve money, or lack thereof.  While money certainly was a part of what Jefferson et.al. thought would be involved in the “pursuit of Happiness,” I have to believe they were also thinking of the many more opportunities for happiness in our lives that are made possible by our simple unalienable right to purse them.  How is your pursuit?

A. Alliance Collection Agency, Inc. is a full service, licensed accounts receivable management and debt collection agency providing highly effective, customized one on one management and recovery solutions for our business partners.  Founded in northern Illinois in 2005, we have been proudly improving the bottom-line on behalf of our business partners in and around Chicagoland for over 12 years.

Retiring Soon? Don’t Forget to Plan for Health Care Costs

Now that I’m a certain age (cough, cough) articles regarding retirement are showing up more frequently on my news feed. At least that’s how it seems. Maybe they’ve always been there, but now I’m paying closer attention to them.  Anyway, I recently read an article in Wealth Management that reported that half of retirees said they didn’t calculate their medical expenses before retiring. And more than 40 percent of these retirees said their healthcare expenses were higher than they expected. Ouch!

So, how do you calculate your health care costs when planning for your retirement?  I read a great article by Dana Anspach in The Balance that answers this question.

First, let’s start with a quick tutorial on Medicare.

Medicare has four parts:

Part A – Hospital stays

Part B – Physician Fees

Part C – Medicare-approved private health insurance plans (Medicare Supplemental Insurance) for people enrolled in Medicare Part A and Part B.

Part D – Prescription Medications

Medicare Part A which covers hospitalization is typically free (99% of Medicare beneficiaries do not pay a premium for Part A) but the other parts are not. You’ll be paying premiums for Medicare Part B, supplemental insurance, (often referred to as Medicare Part C) and for drug coverage (Part D).

This year, 2018, Medicare Part B costs $134.00/month (If your income is $85,000 or less per year).  If you make more, you’ll pay more.

My understanding is that Medicare Part A and Part B will cover about 50 percent of your medical expenses. If you want insurance to help with the other 50 percent that’s where a Medigap policy or Medicare Advantage Plan (Part C) as well as a prescription drug plan (Part D) comes in.

This is where it can get tricky.  Not all supplemental insurance plans are created equal.  If you get a Medicare Advantage policy that includes dental and vision coverage, it might not provide as much hospitalization coverage. This could leave you holding the bag if you get a severe or chronic illness.  Make sure you understand the pros and cons of each policy before selecting one.

Medicare also does not cover the majority of long-term care costs. To make sure you have the ability to cover these costs, you might want to consider a long-term care insurance policy too.

The cost is sure adding up, isn’t it? What’s the bottom-line?

There are many healthcare cost calculators online that can help you estimate your premium and out-of-pocket costs.  Anspach used the healthcare cost calculator at HVS Financial to calculate the example she used in her article. It estimated total healthcare expenditures to be about $4,500 a year ($375/mo).  Keep in mind this is for one person. For a married couple you’ll need to budget double that.

It’s a lot to swallow, I know. But forewarned is forearmed.

A. Alliance Collection Agency, Inc. is a full service, licensed accounts receivable management and debt collection agency providing highly effective, customized one on one management and recovery solutions for our business partners.  Founded in northern Illinois in 2005, we have been proudly improving the bottom-line on behalf of our business partners in and around Chicagoland for over 13 years.

image provided by taxcredits.net