FREEZE (your credit)

Let’s all get ready for the new year by adding a layer of protection – freezing not just our credit, but if you have Guardianship or a Durable Power of Attorney, do it for the individual(s) you represent as well.

Why – because it prevents ANYONE from opening new credit cards or taking out new loans in your name. Yes, if your card is stolen the thief can still max it out or drain your bank account; but if your information is compromised (and let’s be real, nowadays whose hasn’t) the thieves cannot run rampant. Best of all, it is now FREE to do so.

What if I need new credit? If you’re considering a home or car purchase in the next month then sure, delay the freeze. But if you’re just “thinking about it” then freeze your credit – you can always put a temporary thaw when you’re ready to move forward with the purchase. The only thing I encourage you to do BEFORE freezing your credit is open a Credit Karma or Credit Sesame, especially if you’re concerned about your credit scores.

How do you freeze your credit? See below, I’m breaking it out by credit agency (x3) – courtesy Clark.com.

TransUnion

  • Online: Visit the Credit Freeze page here
  • By phone: 1-888-909-8872
  • By mail: Request your credit freeze by certified mail using this sample letter. Please note the attachments you must include.
    • Use the following address:
      • TransUnion LLC
        P.O. Box 2000
        Chester, PA 19016

Equifax

  • Online: Visit this page to freeze your credit with Equifax. Important note: With such high traffic to the website, if you can’t get your request processed, just wait about a day and try again.
  • By phone: 1-800-685-1111 (NY residents please call 1-800-349-9960)
  • By mail: Request your credit freeze by certified mail using this sample letter. Please note the attachments you must include.
    • Use the following address:
      • Equifax Security Freeze
        P.O. Box 105788
        Atlanta, GA 30348

 

Experian

  • Online: Visit the Credit Freeze page here
  • By phone: 1-888-EXPERIAN (1-888-397-3742). When calling, press 2 and then follow prompts for security freeze.
  • By mail: Request your credit freeze by certified mail using this sample letter. Please note the attachments you must include.
    • Use the following address:
      • Experian Security Freeze
        P.O. Box 9554
        Allen, TX 75013
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When You Go Through Hell

Life can often feel overwhelming and unfair, made worse by platitudes from well-meaning friends and family. After all – what could they possibly know of what you’re going through, how do they know everything is going to be ok? They don’t know what it’s like – they’ve never had anything like this happen to them!

I know I’ve had these thoughts on many occasions, they didn’t stop after my wife died. Recently I pushed through a really dark spot, and although I never saw the result coming (we seldom do) I’ve been very happy with how things have turned out. And despite my wishes I didn’t experience what I went through, I feel it’s made me a better person (as is so often the case in my opinion).

So why do some of us wallow in our misery? Have you, or have you known someone, who just can’t seem to get their legs under them? Wave after wave knocks them over, sometimes when they are so close to getting out they can almost taste it. Though they may not ask, may even fight you when you offer, in many situations they need help.

Pride is vicious. Our egos get in our way – they prevent us from owning our mistakes, opening the door to worse problems. Life is not rainbows and unicorns all the time, if it were think how gray it would be – we’d have nothing to compare it to. Life is going to happen.

When it does you can either embrace it, understanding nothing lasts forever as long as you are taking measures to change your situation; or you can do nothing and wait for it to pass. Other than when I get a bug or cold, I have not had much luck with the negatives in life just passing. When I do nothing I find myself sinking deeper – I need to take action; and I would wager it’s probably the same for most of us.

So when life hits you in the face and you feel all is lost, take a moment to really take stock of your situation. Change your self-talk, by focusing on at least one positive thing happening in your life – be it your health, reliability of friends, the job giving you an income, etc. Please don’t fall into the self-pity trap, feeling worthless or alone. Or when/if you do, reach out to a friend. Put things in place when life is good, so friends know what to look for and when to help.

A Few Planning Rules of Thumb

This week will be short and sweet, I’m addressing a few questions I get quite often.

1. Is there an average amount most people spend on groceries? How do I know if I’m spending too much?

First – I will never tell someone they are spending too much on anything, it’s not for me to say. What I will continue to do is help them understand what they have available and work with them to weigh what their priorities are. From there we sort out what to they should be spending.

But if you’re just starting out with and would like a good baseline to estimate how much you may be spending on groceries, I recommend USDA’s cost of food plan (https://www.cnpp.usda.gov/sites/default/files/CostofFoodJan2018.pdf). It’s a PDF, and breaks it down by family size, ages and a range of plan types (thrifty to liberal).

2. We want to have children, how will this affect our plan? 

USDA has another great tool – the Cost of Raising a Child Calculator (https://www.cnpp.usda.gov/tools/CRC_Calculator/default.aspx). What I really like is the feature asking where you live, because it can help those considering a move understand in real terms what will happen to their cost of living. Down side, it doesn’t consider the cost of raising a child with a disability.

Given the broad range of disabilities, from physical to intellectual/developmental, I haven’t found a single rule of thumb to use. This is because calculators like the USDA’s consider a child’s care until age 18 in most cases, and when you have a child with a disability you could be caring for them for much longer.

So I ask parents to calculate how much they are paying out of pocket for therapies and other disability specific costs per month. This gives us an annual expense, which is then multiplied by the number of years they reasonably expect to care for their child – in most cases I encourage them to expect to transfer the responsibility around age 70. Not being cruel, but realistically how able do many of us think we will be to perform very physical tasks for our adult children?

3. How much should I spend on a house? 

Lenders will almost always offer more to my clients than I am comfortable with them taking on. I encourage families to spend no more than 30% of their gross income (so if you make $100k don’t spend more than $30k/year) on housing expenses. Where do I get this number from? From HUD’s website – “Families who pay more than 30 percent of their income for housing are considered cost burdened and may have difficulty affording necessities such as food, clothing, transportation and medical care.” (https://www.hud.gov/program_offices/comm_planning/affordablehousing/).

I’ve lived in the DC Metro area, I completely understand how difficult it can be to find housing within this price range. But I’m also aware it can be done, and in nice neighborhoods as well; provided you’re willing to be realistic about what you can afford. Unfortunately I’ve seen too many cases where someone’s wants win out over their needs, and they sacrifice saving towards retirement to pay their mortgage.

But Eric, aren’t homes investments? They can be, if they are bought for this purchase – your primary residence should not be considered an “investment”. In my opinion, an investment property is a property which will generate you income – that’s it. Money put into your primary residence can only come back out in the form of a loan (you owe someone else interest) or when you sell (and you will need someplace to live so at least some of that money is going away).

These are my rules of thumb, I’m certain other Advisors/Planners have their own. I’ll gladly consider opposing view points, but please provide supporting documentation. Although I respect opinions, I’m not willing to shift my position on just a persuasive argument, I need data and numbers to make a decision.

Feeding America

As we recover from food coma’s and the trauma of Black Friday shopping, I would like to highlight how many people go hungry in the US every year – it’s more prevalent than I had previously considered. I was prompted to research this by the increase in signs I’ve seen at schools offering free breakfasts and summer lunch programs. So this month’s non-profit in the spotlight is Feeding America.

Who They Are 

Feeding America has been around for 35 years, they are a network of over 200 food banks across the country. They, like many grass-root organizations, started from very humble beginnings – as St. Mary’s Food Bank in Phoenix, AZ by a retired business man named John van Hengel. This grew into a network of other food banks called Second Harvest, which is now known as Feeding America (changed in 2008).

What They Do 

They “rescue” food that would otherwise head to landfills or incinerators; by working with manufacturers, distributors, retailers, food service companies and farmers to gather the food before it’s wasted. A few of the examples I found on their website include Starbucks Foodshare and MealConnect.

They also use their established network of 200 food banks and 60,000 food pantries to serve people across the United States. This comes in the forms of school-based food pantries, emergency disaster relief and Kids’ Cafe – you can learn more by clicking here.

What Else Should I Know

There is, in my opinion, so little awareness about how wide of an impact hunger has – and programs like SNAP (food stamps) barely scratch the surface. It’s an unfortunate truth we don’t see something until it affects us, and for those of us with children who have disabilities or aging parents on fixed incomes their diets should be on our minds.

The same goes for those who aren’t immediately affected – think of the homes the California wild fires have destroyed. I’m willing to bet many of those families never thought they’d be in the position they are now. Helping organizations like Feeding America, or your local food bank, can have a HUGE impact with much less “cost” to you than you would think.

Disclaimer

I am not an employee of Feeding America; and any errors noted are my own.  If I have misrepresented, or misstated anything please provide constructive feedback so I may make the appropriate change(s). All opinions and views are my own.

Home Ownership Potential Landmines

It’s amazing to me how much mortgage companies are willing to underwrite, it’s easy to see how so many people get in trouble. Just stretch the payments out over 30 years, and you can “afford” even more home. Here’s the thing, if you are buying a house after the age of 40, and you get a 30 year mortgage, how are you going to make those payments? Especially if you buy at the limit the mortgage company allows?

The median Social Security monthly income in 2018 was $1,400 (Business Insider, 23 April 2018), and according to LendingTree the average mortgage payment was $1,029/mth (National Average Monthly Mortgage Payment). Even if you’re living with someone and sharing the cost, this should be concerning. Especially when you consider housing costs will vary widely around the country, with much lower differences in Social Security.

When you retire your living expenses are not going to immediately decrease, you’re not going to stop doing things when you stop working. Yes, there will be things you currently have coming out of your check that won’t in retirement; but if we’re being honest how many of us even look at what we’re being paid before it hits our bank account? Most of the people I work with are using what they see on payday to live their lives – and this doesn’t change in retirement. So be careful using the argument you need to earn less – focus on how much money you are bringing into the house.

Can you grow old and live in the house, or will you need to sell it because you can’t navigate the stairs? Like it or not, as we age many of us will experience mobility challenges and risk falls – and we should factor this in when buying our “forever home”. Who will maintain the yard and/or shovel the sidewalk and driveway? When you stop working will you have enough money to pay for these services? Is it worth it to you?

If we die with a mortgage, and we want our children to continue living in the house, we need to ensure we have enough assets (investments) or life insurance to pay it off; otherwise the bank will take it back. Larger houses will often come with higher property tax and insurance bills, and these don’t go away when the mortgage is paid off. How your child pays for these when you’re gone should be considered. Yes, they may receive Social Security; but will it be enough to sustain them?

As you get closer to retirement please think about how much house you “need”. For families, like mine, who opt to buy in areas with more services your purchasing dollars will not go as far; because with services comes higher taxes (something has to pay for them). Housing is personal, and we may have blind spots around it. Invest in yourself and hire a financial planner to help outline what your true cost of retirement is likely to be. Don’t allow yourself to be anchored to spending “x” amount of dollars.

 

It’s OK to Say No

I don’t celebrate holidays, haven’t since my wife died (and if I’m being honest with myself didn’t really when she was alive either). There are many reasons, the biggest of which is my belief they do nothing more than perpetuate shameless consumerism. Now that we’ve established I’m the biggest wet blanket for every occasion, I want to give everyone else permission to say “no”.

I’ll hear people say they don’t want to do something but are going to because they feel “obligated”. I don’t think this is “fair” to anybody, because in my experience all too often the individual(s) who say things like this may be there in body, but are most certainly not “present”. I’ve admitted I’m jaded, and maybe I’m missing a bigger picture – but personally I don’t want to be around someone who doesn’t “really” want to be with me.

I’ve started giving my son permission to say where he does, and doesn’t want to go as well; because although I am his legal guardian he is still a 19 y/o man and should be allowed to make as many choices as possible (barring negative impacts on his health or well-being). Yes, we are our children’s parents; and in theory we know what’s best for them. But if they did not have the challenges they have would you honestly still be telling them what to do?

Let them tell you “no”, but teach them how to be respectful about it. Perhaps more importantly, educate them around when they actually have an option. Maybe I’m too idealistic, but I want my son to have as independent a life as he can; and part of his independence is allowing him to disagree with me. I’m working to help him communicate his thoughts and develop reasons; but I’m doing the best I can not to push back when he tells me he doesn’t want to do something.

I would challenge my fellow parents to act similarly, despite how difficult it will likely be. Yes, our children have disabilities; and, like my son’s, they may have manifested themselves in a lower IQ and reduced comprehension. But they are still people, and they should have a voice. I think we all (myself included) could do a better job allowing our children to find that voice and build their self-confidence; and it HAS to include the word “No”.

None So Lonely?

During a call with a potential client I was asked “how do you trust people?” This couple has a child with a disability; and I got the impression they felt disconnected & isolated, although they knew they had family who would have their back. My answer may surprise many of you, but I had to be honest and say “I can’t, I’m still struggling with this”.

Don’t read too much into this, I did not (and do not) mean people are inherently untrustworthy. I believe quite the opposite – most people want to help and will do what they can. However, and this is where I will admit to bias and potential error in judgment; I believe first and foremost people will look out for themselves – and, in my opinion, rightfully so.

So I struggle with relying on anyone I do not have a contractual agreement with, especially if I am not paying them. Again, not because I think people are mean-spirited or liars; but I believe we ALL prioritize. And frankly, if you are being paid (or have paid for something) there is a deeper level of commitment than if you are doing a favor – whether it’s for family or not.

I don’t have solutions for this, it’s a struggle I’m facing every day. I have had things fall through, and I’ve done my best not to judge the individuals. But I am unwilling to give them a second chance, my son is to important to me – it’d be different if I was just asking for help with my pets (maybe, but as I write this I can feel doubt creeping in).

I’m writing this for the other side, those who don’t have family members with a disability who may be wondering why someone doesn’t go out more, or seems withdrawn. Speaking for myself, I get you want to understand and many have tried to empathize – but it falls flat. I don’t want to hear “I get it” or listen to you drawing a comparison (and I will admit this may be selfishness – I’m a work in progress).

Here’s my thoughts on what to do about this. Make a contract and agree on an amount to pay. This creates skin in the game for all parties, and raises the stakes to be considered if alternatives present themselves. It will also help those, like myself, who have trouble accepting people will do things just because they’re nice (again, I’m a work in progress). I’d love to hear other ideas, trust doesn’t come naturally to me.

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