Till College Debt do We Part

“Marriage can change everything for couples– in some cases even their student-loan payments” writes Cheryl Munk for The Wall Street Journal. 

The media has educated us about the high costs of attending college and the massive student debt load facing many millenials and their parents. Often house buying, procreation and investing for retirement are delayed as couples struggle to pay off student loans while earning less than stellar incomes in a high cost housing market.

Munk writes that “marriage also can trigger changes to one or both partners’ actual student-loan payments and loan-related tax breaks.”Specifically:

Marriage might make one ineligible for income-based repayment plans, depending on the couple’s income or might raise the required payment.
Use this tool to determine the impact of marriage: https://studentloans.gov/myDirectLoan/repaymentestimator.action
Think twice or three times and consult a tax professional if you are contemplating filing taxes separately when married. The implications and consequences are numerous.

Student debt taken on after marriage presents potential complications.
In community property states if one spouse defaults, creditors may pursue the other spouse for repayment.
In the event of divorce, complications arise if one spouse co-signed for the debts of the other spouse. The co-signing spouse is legally responsible to repay if the former spouse defaults.

Defaulting on a federal loan can result in wage garnishment, withholding of federal income tax refunds, and destroy the defaulting spouse’s credit score. A default by one spouse can ruin a couple’s chance of getting approved for a home mortgage.

Of course, no one expects any of the above to happen to them…

Sequence of Returns Risk in Retirement

Many have heard that it is “safe” to spend 4% of one’s nest egg (adjusted for inflation) each year in retirement, expecting funds to last for a 30 year retirement.
Michael Kitces explains both the up and down side risk:
https://www.kitces.com/blog/url-upside-potential-sequence-of-return-risk-in-retirement-median-final-wealth/
There are many reasons for adjusting one’s spending during a lengthy retirement rather than expecting to spend the same inflation-adjusted amount each year. First, most retirees spend much more in the first few years of retirement than they did while working because of pent-up demand for leisure. This often translates to extensive travel, purchase of recreational vehicles, and more time in costly leisure activities such as golf or other sports and hobbies.
Second, U.S. Consumer Expenditure Survey data documents the decline in spending with age as retirees transition from the Go-Go years to the Slow-Go years to the No-Go period at the end of life.

Income Inequality Explained in a Cartoon and Why the Disparity Matters (and is getting worse)

Alvin Change explains: “Something massive and important has happened in the United States
over the past 50 years: Economic wealth has become increasingly
concentrated among a small group of ultra-wealthy Americans.”

“You can read lengthy books on this subject, like economist Thomas Piketty’s recent best-seller, Capital in the Twenty-First Century (the
book runs 696 pages and weighs in at 2.5 pounds). You can see
references to this in the campaigns of major political candidates this
cycle, who talk repeatedly about how something has gone very wrong in
America.”

“Donald Trump’s motto is to make America great again,
while Bernie Sanders’s campaign focused on reducing income inequality.
And there’s a reason this message is resonating with voters:

It’s grounded in 50 years of reality.”
“You
can see lots of discussion and debate and political fighting over who
has wealth in America, and whether that should change. Or, you can look
at the the cartoon below to understand how the distribution of wealth
has changed in America, and why.”

Check out:

https://getpocket.com/explore/item/this-cartoon-explains-how-the-rich-got-rich-and-the-poor-got-poor

As a family economist I actually read Thomas Piketty’s massive book but don’t recommend it for the faint of heart. Instead, a much more readable and digestible book is Joseph E. Stiglitz’s The Price of Inequality: How today’s divided society endangers our future. Published in 2012 (2013 in paperback) before the last presidential election. And it’s even more relevant today.Stiglitz won the Nobel prize in economics.

Big Firms Pay CEOs $1 Million a Month

Writing in The Wall Street Journal (3/18/19) Theo Francis explains that job growth has helped more Americans find employment while also helping corporate CEOs earn $1 million/month. Yes, per month. According to WSJ analysis, “median compensation for 132 chief executives of S&P 500 companies reached $12.4 million in 2018, up from $11.7 million in 2017.” The median raise for CEOs was 6.4% even though most of these companies reported disappointing returns for shareholders.
Compensation for the head of Walt Disney corporation was $66 million last year, an increase of 80% over 2017. Yes, an 80% increase in pay!
And you can bet who has the ear of our politicians; it’s not you or me.

The Medicare Debate

ID theft targets children

The Wall Street Journal (by Yuka Hayashi, 8/29/18) reports that a new federal law going into effect in September 2018 will make it easier for parents to check a child’s name and freeze their credit to combat the growing problem of ID theft of children.
“A child’s Social Security number can be used by identity thieves to
apply for government benefits, open bank and credit card accounts, apply
for a loan or utility service, or rent a place to live. Check for a
credit report to see if your child’s information is being misused. If it
is, visit IdentityTheft.gov to report and recover from identity theft.”
Read about Child Identity Theft
https://www.consumer.ftc.gov/articles/0040-child-identity-theft

How does my networth compare to other Americans?

Check out your status using the
The Squared Away Blog explains: “An online tool tells you where you stand financially by stacking up your net worth against other Americans.

The calculator
compares a family’s net worth – financial and other assets minus debts –
with all other U.S. families. Homeowners can choose to include the
value of their home equity in their total net worth – or not.” Read more at:  https://squaredawayblog.bc.edu/squared-away/how-does-your-wealth-compare/

Check out how your wealth compares:
https://dqydj.com/net-worth-by-age-calculator-united-states/
Also find out:

What is the Average Net Worth By Age Group in America? (And Median Net Worth by Age)

Note the incredible differences between average wealth and median (mid-point) wealth (much higher than average due to the huge inequality gap in our country.

Get help paying for prescription drugs

“Consumers are powerless to control spiraling medication prices, but
low-income, uninsured and under-insured individuals can often get help
paying for their drugs.

The help, in the form of subsidies or prescription price reductions,
comes from four sources. The first is exclusively for seniors on
Medicare, but the rest are available to everyone.”
1. Medicare’s Extra Help program
2. Price discounts in an app
3. Drug company discounts
4. Pharmacies will negotiate prices  
Get the details from the Squared Away Blog:
https://squaredawayblog.bc.edu/feature/drug-discounts-other-help-available/

Wells Fargo CEO got 5% pay raise despite all the company’s anti-consumer & illegal behavior!

The Wall Street Journal (3/14/19) reports that Wells Fargo CEO Timothy Sloan received (note I did not use the verb “earned”) “$18.4 million in compensation for 2018, including a $2 million incentive award.”
WOW! Can you believe #1 that level of compensation and #2 in the face of all the illegal and anti-consumer practices of that nefarious company? Writer Maria Armental also reports: “The pay disclosure comes a day after the San Francisco bank received a rare rebuke from a top regulator, minutes after Mr. Sloan finished testifying before Congress, and as regulators consider whether to force out top executives or directors.”
Yikes! Get rid of those guys! It’s time for a clean sweep at WF. If you aren’t familiar with all the many misdeeds and misbehaviors of Wells Fargo executives, simply search online for “Wells Fargo Scandals.”
And we wonder why we have an escalating gap between the 1% and the rest of us!
WF execs and board members are probably the same people who argue against raising the minimum wage!
If you are STILL a Wells Fargo customer… WHY?!?

Maybe your financial "adviser" has been taking advantage of you

“The Securities and Exchange Commission’s program to persuade investment
firms to self-report conflicts of interest has led to a settlement under
which 79 firms return $125 million in fees to clients. The firms placed
clients in share classes with expenses higher
than those in other share classes available without disclosing that
fact.” (Retirement Security SmartBrief)
“Advisers to Repay Fund Investors” by Dave Michaels in The Wall Street Journal (3/12/19) states that 79 investment advisory firms have agreed to pay $125 million to clients thwo were over charged for their investments.
If you are not familiar with the term “fiduciary” then it’s time to search this blog and educate yourself.
These “advisers” sold high cost mutual funds to their clients in order to boost their own earnings or qualify them for earning prizes like vehicles and trips. These practices have been around for as long as the industry has been selling financial products. Equally suitable lower cost funds were available for these clients who ended up earning less on their investments due to the difference in fund costs.
Top of the list is Wells Fargo, the “king” of egregious consumer practices. Why does anyone still do business with Wells Fargo? Deutsche Bank is also involved in this settlement.