PERSONAL FINANCE/JOHN NINFO: Some frequently asked questions
We talked about the trucker shortage and the resulting supply chain issues – but from my perspective there are apparently just as many trucks on the roads in the west and parts of central New York. York than there was before the pandemic. I go to schools all over the region, south to Horseheads and Elmira in the southern part, west to Fredonia and east past Ithaca to Spencer-Van Etten. In these trips, at any time of the day, sometimes starting as early as 5:30 a.m., there are a lot of trucks slowing me down on the Thruway, highways and back roads. I wonder if the shortage is, in fact, regional.
On another topic, in my presentations on financial literacy from CARE, when we talk about the need to save, I tell students that the biggest increase in individual bankruptcies before the pandemic was among people 65 and over. This was in part because many of them had not saved enough for their retirement and they were still addicted to living beyond their means on credit cards. That’s why I’m a little worried after hearing a recent report that the post-pandemic retirement rate is three times higher than before the pandemic. This is definitely something that I will continue to follow and perhaps report back.
On another topic, we have talked a lot about the fact that Americans are willing to take on non-need debt in this hyper-consuming society where debt is OK. We also discussed how, as of November 2019, 34 million Americans were still paying their credit card fees as of Christmas 2018, as if Christmas had happened to them that year, so they weren’t financially ready for it. with savings for these expenses. This is why I wanted to be shocked by a recent report which indicated that 40% of those polled said they would be willing to take on debt during the holiday season to surrender or make someone else ‘happy’. . Is it just because of the pandemic?
On yet another subject, I cannot tell you how many people come to me and want to talk about a “fair share” of taxes, and more and more of them seem to think that the idea of both a flat tax and a tax on goods and tax on services seems to solve much of the fair share and taxation of hidden / unreported income problems. By the way, none of them earn more than $ 400,000 a year.
We may have covered this, but an October letter from the Wall Street Journal to the editor once again put it this way: while the poorest 50% earn 11.6% of the money and pay 2.9% of taxes. “
On a final topic, as I finished my financial literacy presentations before the Thanksgiving vacation, I thought I’d share some of the most frequently asked questions from students.
First, if you’re only using a credit card for convenience – only charging for things you can otherwise pay for that minute, so you can pay off the balance in full each month and never pay interest , fees or charges – why don’t you just use a debit card? I think a lot of this question arises from the fact that many high school students now have debit cards.
My answer is first that there’s nothing wrong with a debit card, as long as it doesn’t have over-limit protection, which for me is an oxymoron, and I explain what can happen with the over limit protection. Next, I explain that the debit card company withdraws the money from your account within 24 hours, so that you no longer earn interest on the money in the account the card is linked to. On the other hand, I can earn interest for about an additional 20 days, depending on when I billed the item, before the statement is due.
I tell them, yes the interest rates are low but it’s all about developing good money habits, and in my day you could get up to 14% interest on a bank account. savings (the looks on their faces are superb). Next, I explain that credit card companies give you things like defective merchandise protection that debit card companies don’t, and I explain that if you have a faulty purchase, you can often get 10 to 15 days to settle something with the trader. because the credit card company will charge the debit or not clear it. Finally, I tell them that for this reason, they shouldn’t use a debit card for a large purchase.
Second, you tell us that we should be saving something from whatever we get in life. How much would you recommend that we save? I generally recommend that they save 20%, explaining that when I grew up I must have saved 50%. Then I tell them about a student at Churchville-Chile High School who told me he was saving 80% and had already saved $ 19,000 for college.
Third, who is responsible for the debt if a couple divorces? I explain that the debt is contractual, so you have to be on the debt to be responsible for it. So on a joint debt, like a joint credit card or a mortgage that both parties executed, they would both be liable. However, on a credit card that is only one name or the other, the other is not responsible. I might go into more detail, but that is the gist.
Finally, if I want to invest in what should I invest? I tell them that I am not qualified to give investment advice, but to remember that investing comes with risk and that at their age they should not invest if they cannot afford to lose money. ‘silver. If they have the money and want to invest, see a fee advisor with their parents and discuss their options.
John Ninfo is a retired bankruptcy judge and the founder of the National CARE Financial Literacy Program. Find his previous weekly columns at http://www.mpnnow.com/search?text=Ninfo.
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