(Names changed)
In a recent conversation with Deanna, we were discussing when it's a good time to settle a debt. It turns out Deanna & her husband had a sum of medical debt which had been acquired over the past year. In the course of our discussion, Deanna asked when it was appropriate to let a debt go to collections in order to negotiate a settlement. We discussed their specific financial situation to find out where they were positioned in order to address the debt.
Deanna & her husband had amassed approximately $10,000 in medical debt. Outside their mortgage, their financials looked pretty normal with amounts of credit card debt, auto loans, student loans & various other typical financial line items popping into place. As we looked down the page, the couple listed about $14 - 15,000 in savings.
With the couple considering defaulting on the medical bills (which are usually due in full within 30 days of service) we began to discuss how collections & settlements tend to play out. For the most part, creditors and collectors will only settle a debt which they feel they are not likely to be paid. Almost all collectors will need some proof that you're not going to be able to repay the loan. Occasionally, bankruptcy is considered as a way out of the pressure of debt. Unfortunately, bankruptcy is usually not a good solution and is frequently taken prematurely or unnecessarily.
In Deanna's case, she & her husband clearly had the ability to pay for this out of savings. However, she expressed great concern over liquidating such a large amount of savings. We asked a few more questions pressing further to see what other options may be available to either rebuild savings or absorb some of the blow of the financial hit. Here are some of questions we offered to consider in order to develop other options:
On your current budget, how quickly could you rebuild your savings?
Do you have anything you could sell that could bring in enough cash to cover all or most of the medical expenses?
Would you be able to move down in car in order to reduce other debt and thus increase cashflow to rebuild savings faster?
Does your husband have a company car that may allow you to sell the other car?
Are there areas in your budget that you could tighten for a brief time that would allow you to rebuild your savings quicker?
Then we presented a situational thought... As we are followers of Christ, I feel it's best to offer thoughts under the lens of the golden rule: "Do to others as you would want them to do to you."
"Deanna, If you had loaned $10,000 to a friend or worked a the equivalent of $10,000 worth of time at your job and the person decided to not pay you. How would you feel if you found out they didn't pay you but still had $15,000 in savings?"
It is understandable how difficult it is to part with nearly 2/3 of one's savings. In today's economy, financial security seems to be a commodity which easily evaporates. As we look at our finances, it is clear that we must bring our creative resources and combine them with our sweat equity to create financial options which allow us to keep our dignity as well as honor our word. I believe Deanna and her husband are now better equipped to address their financial situation with other tools that may keep their savings more in tact and still allow them to pay the full medical bill.
Saturday, August 28, 2010
The 2003 (AKA Bush) Tax Cuts
First off, there is a site (mytaxburden.org/) that will help you see how the expiration of the '03 tax cuts will affect you.
Let me be clear, the tax cuts were only a small tidbit of what americans really should fight for. I am a firm believer that income taxes (taxing and punishing productivity while rewarding consumerism) are immoral. That's right. I said IMMORAL. It's wrong to tax productivity as it serves as a deterrent to those who would be productive. It is equally wrong to reward indolence, laziness & consumerism at ANY income level. I'm not saying that people shouldn't consume... but when consumerism is encouraged, it will lead to gross consequences. Consider a parent which encourages their child to eat anything they want, all the time from a very young age. Obesity is likely to be a problem for the child in the coming years. However, if constraint & discipline are taught... then when the child does consume (food or otherwise), it will more likely be handled in a healthy, moderate fashion.
I am not a Bush fan. I really thought he was more than a lame duck in his last term. Like him or not, the Bush we had at the last 5 - 6 years of his presidency was seriously lacking. However, I'd also like to point out that the extreme left & dems are pushing the moniker "Bush" in front of the 2003 Tax Cut plan. Since the Bush name is out of vogue among most political pundits & spectators, those on the left side of the aisle are putting the "Bush" name on anything they want to sweep away.
So, if you comment... before you comment, ask yourself:
1. Have I, ME, MYSELF... researched the information?
2. Is it possible the presentation of the name "Bush" is what is fueling my dislike, distrust or disdain?
As this is planned to be a very brief post, I want to start a discussion... First of all, go to the site linked above (mytaxburden.org/) and fill out the form.
Here are my questions:
Have you done the form on the link above?
Would you mind sharing the results? (just curious)
What are your thoughts on how the expiration of the '03 "Bush" Tax Cuts will affect you?
Do you think these tax changes are right, justified or fair? Explain
Let me be clear, the tax cuts were only a small tidbit of what americans really should fight for. I am a firm believer that income taxes (taxing and punishing productivity while rewarding consumerism) are immoral. That's right. I said IMMORAL. It's wrong to tax productivity as it serves as a deterrent to those who would be productive. It is equally wrong to reward indolence, laziness & consumerism at ANY income level. I'm not saying that people shouldn't consume... but when consumerism is encouraged, it will lead to gross consequences. Consider a parent which encourages their child to eat anything they want, all the time from a very young age. Obesity is likely to be a problem for the child in the coming years. However, if constraint & discipline are taught... then when the child does consume (food or otherwise), it will more likely be handled in a healthy, moderate fashion.
I am not a Bush fan. I really thought he was more than a lame duck in his last term. Like him or not, the Bush we had at the last 5 - 6 years of his presidency was seriously lacking. However, I'd also like to point out that the extreme left & dems are pushing the moniker "Bush" in front of the 2003 Tax Cut plan. Since the Bush name is out of vogue among most political pundits & spectators, those on the left side of the aisle are putting the "Bush" name on anything they want to sweep away.
So, if you comment... before you comment, ask yourself:
1. Have I, ME, MYSELF... researched the information?
2. Is it possible the presentation of the name "Bush" is what is fueling my dislike, distrust or disdain?
As this is planned to be a very brief post, I want to start a discussion... First of all, go to the site linked above (mytaxburden.org/) and fill out the form.
Here are my questions:
Have you done the form on the link above?
Would you mind sharing the results? (just curious)
What are your thoughts on how the expiration of the '03 "Bush" Tax Cuts will affect you?
Do you think these tax changes are right, justified or fair? Explain
Friday, August 27, 2010
Term vs Whole Life policies
In a discussion with a person who promotes "good deals" on their FB page, we were discussing life insurance and which is a better thought. They had posted a link promoting Gerber Life insurance.
First of all, Gerber is a baby food manufacturer. Secondly, you shouldn't have insurance on a child (infant or non-income producing child) except for enough to bury the child should the unthinkable happen. It's not a way to replace income. The child doesn't PRODUCE an income. So, what is the insurance protecting against?
Even for those who are income producers or the odd child that may actually produce an income for their family, Gerber life insurance is a RIP OFF. I mean no offense. It's just a fact. Most healthy people should purchase 20 year level term for a FRACTION of the price of gerber's whole life policy. If a person HAS whole life, they should get their term in place before canceling the whole life / cash value insurance. The BEST deals to find insurance in this area is Zander Insurance...
If you're up for finding a deal... best price... you should consider looking into Zander Insurance... Again, I don't sell insurance. Nor do I make money off of insurance. If you'll notice from my FB profile (Goode Money) I do offer Dave Ramsey's Financial Peace Class for my church and community. But I don't sell insurance. In fact, I don't sell any financial product other than education.
You may want to consider looking into Dave Ramsey and see what he says about ways to save money. He actually has a video (about an hr long) somewhere on his site that are OUTSTANDING ways to save money... Ways that truly are Trifty Common Sense.
I suggest Zander simply because I know their reputation. I neither work for nor represent Zander in any fashion except that I like their company.
If this somehow offended you or other readers, consider something that really is a bargain other than whole life insurance... Just run a calculator and you can see that it's actually a rip off. The only people who believe in it are the people who sell it... I say again. I. DON'T. SELL. INSURANCE. So I profit nothing / lose nothing if you do or don't.
Example: Pulling a quote for me
35 year old male in NC
$500,000 policy for whole life is roughly $100-250/month
$500,000 policy of 20 year level term 24.06/month (actual quote from Zander Instant Quote)
The trick: invest the difference!
Do just the cursory calculation of $25 vs $100... investing $75/month into a good growth stock mutual fund which has averaged 12% (stock mkt avgs since the inception of the stock market) from age 35-70 (i.e. 35 years) is a total of $900 invested each year.
$75 invested monthly for 35 years yields $482,636.46
And this is not even "financially sophisticated" practices... This is park the money in a mutual fund. It's not even doing high end technical mumbo jumbo.
Now, let's look at the math from the high end!
Same 35 years... now investing $225/month into the same growth stock mutual fund totaling of $2,700 invested annually...
$225/mo invested monthly for $35 years yields: $1,447,909.39
If i'm half wrong, you're almost a millionaire... and no magic beans... and your HEIRS keep the money after you die...
What gerber doesn't tell you up front in bold letters: when you die... THEY keep the cash value savings of the policy. not your heirs.
I promise, I'm not trying to SPAM your posts. Just pointing out bad deals when I see them... especially when folks say they're actually GOOD deals. It's just not true.
Now, if you're uninsurable and all you HAVE is whole life... DON'T cancel it. Something's better than nothing. But If you can choose... the better deal by far is 20 year level term.
A great article: http://www.zanderins.com/term/term_vs_cash_value.pdf
First of all, Gerber is a baby food manufacturer. Secondly, you shouldn't have insurance on a child (infant or non-income producing child) except for enough to bury the child should the unthinkable happen. It's not a way to replace income. The child doesn't PRODUCE an income. So, what is the insurance protecting against?
Even for those who are income producers or the odd child that may actually produce an income for their family, Gerber life insurance is a RIP OFF. I mean no offense. It's just a fact. Most healthy people should purchase 20 year level term for a FRACTION of the price of gerber's whole life policy. If a person HAS whole life, they should get their term in place before canceling the whole life / cash value insurance. The BEST deals to find insurance in this area is Zander Insurance...
If you're up for finding a deal... best price... you should consider looking into Zander Insurance... Again, I don't sell insurance. Nor do I make money off of insurance. If you'll notice from my FB profile (Goode Money) I do offer Dave Ramsey's Financial Peace Class for my church and community. But I don't sell insurance. In fact, I don't sell any financial product other than education.
You may want to consider looking into Dave Ramsey and see what he says about ways to save money. He actually has a video (about an hr long) somewhere on his site that are OUTSTANDING ways to save money... Ways that truly are Trifty Common Sense.
I suggest Zander simply because I know their reputation. I neither work for nor represent Zander in any fashion except that I like their company.
If this somehow offended you or other readers, consider something that really is a bargain other than whole life insurance... Just run a calculator and you can see that it's actually a rip off. The only people who believe in it are the people who sell it... I say again. I. DON'T. SELL. INSURANCE. So I profit nothing / lose nothing if you do or don't.
Example: Pulling a quote for me
35 year old male in NC
$500,000 policy for whole life is roughly $100-250/month
$500,000 policy of 20 year level term 24.06/month (actual quote from Zander Instant Quote)
The trick: invest the difference!
Do just the cursory calculation of $25 vs $100... investing $75/month into a good growth stock mutual fund which has averaged 12% (stock mkt avgs since the inception of the stock market) from age 35-70 (i.e. 35 years) is a total of $900 invested each year.
$75 invested monthly for 35 years yields $482,636.46
And this is not even "financially sophisticated" practices... This is park the money in a mutual fund. It's not even doing high end technical mumbo jumbo.
Now, let's look at the math from the high end!
Same 35 years... now investing $225/month into the same growth stock mutual fund totaling of $2,700 invested annually...
$225/mo invested monthly for $35 years yields: $1,447,909.39
If i'm half wrong, you're almost a millionaire... and no magic beans... and your HEIRS keep the money after you die...
What gerber doesn't tell you up front in bold letters: when you die... THEY keep the cash value savings of the policy. not your heirs.
I promise, I'm not trying to SPAM your posts. Just pointing out bad deals when I see them... especially when folks say they're actually GOOD deals. It's just not true.
Now, if you're uninsurable and all you HAVE is whole life... DON'T cancel it. Something's better than nothing. But If you can choose... the better deal by far is 20 year level term.
A great article: http://www.zanderins.com/term/term_vs_cash_value.pdf
Friday, August 13, 2010
The Big Banks
Wow! I can't tell you how often I've heard bad things about the big banks (Bank of America, Wells Fargo, Citi, etc). Why do the big banks treat their customers so crappy? I think it may have to do with the fact that they think you're just a number. In reality, you are... just a number to them. You're a bank account number, a social security number, a drivers license number... you're just a number in their system.
My dad once told me about being able to walk into a bank and being greeted by name by the local tellers. Well, partially that was a product of small-town USA! But, there is some truth to having a place where "everyone knows your name" because it was a goode name (pun intended). This is why I would recommend most folks use a local credit union or community bank to do most, if not all, of their banking. Most of these smaller establishments have the ability to work with their brains & hearts where policy & procedures bar a big-box bank from moving.
Not to mention, many of the smaller banks have made less risky loans in the recent past as the capital is less available to them to guarantee such loans. Smaller banks are often more capable of working to the benefit of their customers as many of these banks are actually OWNED BY their customers. The bank president & tellers are all sitting in church with their customers on Sunday... this keeps them in check as they're more responsible for how their business is run.
Also, many of the big-box banks like Bank of America, Wells & Citi are nazis in their collection department. Their collections folks are frequently using intimidation techniques & bullying those in financial hardship. Their collections departments break federal law on a daily basis.
I actually saw a facebook status post from a pastor friend of mine that mentioned that Wells Fargo was being difficult to work with. I don't know exactly what he was talking about, but I will say that it doesn't surprise me.
Word to the wise, pastor: don't do business with them. I'd move EVERY dime I have away from them... I'd move the church's money, too!
My dad once told me about being able to walk into a bank and being greeted by name by the local tellers. Well, partially that was a product of small-town USA! But, there is some truth to having a place where "everyone knows your name" because it was a goode name (pun intended). This is why I would recommend most folks use a local credit union or community bank to do most, if not all, of their banking. Most of these smaller establishments have the ability to work with their brains & hearts where policy & procedures bar a big-box bank from moving.
Not to mention, many of the smaller banks have made less risky loans in the recent past as the capital is less available to them to guarantee such loans. Smaller banks are often more capable of working to the benefit of their customers as many of these banks are actually OWNED BY their customers. The bank president & tellers are all sitting in church with their customers on Sunday... this keeps them in check as they're more responsible for how their business is run.
Also, many of the big-box banks like Bank of America, Wells & Citi are nazis in their collection department. Their collections folks are frequently using intimidation techniques & bullying those in financial hardship. Their collections departments break federal law on a daily basis.
I actually saw a facebook status post from a pastor friend of mine that mentioned that Wells Fargo was being difficult to work with. I don't know exactly what he was talking about, but I will say that it doesn't surprise me.
Word to the wise, pastor: don't do business with them. I'd move EVERY dime I have away from them... I'd move the church's money, too!
Tuesday, August 10, 2010
Couponing Concepts
If you're looking to save a great deal of money on groceries & everyday purchases, we have a couple friends who are savings superstars! Renee Lewis & Mandy Devine have started a coaching & teaching folks how to maximize coupon savings. I've included a link to their facebook page below:
Couponing Concepts Facebook Page
Couponing Concepts will ferret out coupon locations, online savings & local deals through regular status updates on their facebook page. Both Mandy & Renee teach workshops in how to utilize loyalty cards, coupons & weekly circulars to find the best deals. The ladies frequently highlight outstanding savings found through working the home economist lifestyle. It's common to hear about folks taking $200 of groceries down to a $10 total bill!
Take a moment to learn about their program! Sign up for their coaching sessions & learn how to turn your personal economy around!
Couponing Concepts Facebook Page
Couponing Concepts will ferret out coupon locations, online savings & local deals through regular status updates on their facebook page. Both Mandy & Renee teach workshops in how to utilize loyalty cards, coupons & weekly circulars to find the best deals. The ladies frequently highlight outstanding savings found through working the home economist lifestyle. It's common to hear about folks taking $200 of groceries down to a $10 total bill!
Take a moment to learn about their program! Sign up for their coaching sessions & learn how to turn your personal economy around!
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