May 31, 2020

Enough...Actually Way Past Enough

The following was written by my youngest daughter and posted on Facebook. She has given me permission to use it here. It deserves a place on this blog as a heartfelt plea for change as America faces upheavals after the death of yet another unarmed black man at the hands (knee) of one or more policemen. The message is a spotlight on our national failure. 
"As I sit in my bed, tears streaming down my face, I have these thoughts:
Hate is fear and ignorance. Someone taught you to hate, you weren't born with it. Think about that person. Think about who taught them, and the others before them. Think about how that fear and ignorance shaped their lives and how it spread. Hate is easy, it's weak and it's lazy. It's just a repetition of those before you.
Now think about someone who taught you to love. Think about the way their example of compassion, curiosity, and kindness made you experience joy and fulfillment. Love can be hard. It takes courage and commitment to learn about that person and accept them into your life.
You have a choice. You can break the cycle of hate that has been passed down for generations, or you can continue to spread it.You can honor the person who taught you love, or you can throw away that gift.
If you are a parent, you have that power to choose for your children now. They will see you, hear you, and emulate you. You have to mean it.
If you are a teacher, highlight the people who may not be in the standard curriculum - Maria Gaetana Agnesi, Ada Lovelace, Ann Hutchinson, Marie-Madeleine Fourcade, Elizabeth Blackwell, Kate Sheppard, Vigd√≠s Finnbogad√≥ttir. Don't know who any of these ladies are? Exactly, that's the problem.
If you are in entertainment, write and cast fully-realized characters from all genders, orientations, races, ethnicities,  and religious affiliations. And don't stereotype them and perpetuate the fear.
Elect leaders who reflect your values of kindness and respect.
Don't elect sociopathic, narcissistic, misogynistic, racist, xenophobic, lying bullies.
Travel. Talk to people who aren't like you. ( not right now of course, but when you can ) Some with a different race, gender, orientation, hobby, ethnicity, religion, pet. Anything. Just talk to people and educate yourself. It becomes so much harder to hate."

The key person in the cause of this death  has been arrested and charged; others may follow. Justice has started its slow process of accountability.

The fires and rioting are not to be condoned and have no place in our society. They are counterproductive to the long term goals they are meant to highlight. The vast majority of police officers are honest, dedicated, hard-working people who put their lives on the line every day to protect and serve all of us. They are essential to the lives we live. The men involved in the death of Mr. Floyd do not represent this profession. They are aberrations.

That said, as a privileged white male I can't possibly feel the fear and separateness that this segment of our population experiences on a daily basis. But, I can try to understand the rage and helpless feelings that has driven this behavior. 

Thank you to my daughter for saying something that needs to be said and repeated over and over and over until the message is heard.

May 27, 2020

The U.S. Postal Service: It's Future Is At Risk

For 228 years our country has depended on a government controlled agency to deliver the mail. Checks, magazines, medicine and supplies, catalogs, gifts, letters...all manner of communication and commerce have arrived, without fail, six days a week, in our mailbox.

The shift in how we communicate, shop, pay bills, and receive income has changed over the past few decades. As a result the U.S. Postal service lost nearly $9 billion dollars in 2019. With the economic effects of Covid-19, that loss will certainly be much worse this year.

The Postal Service receives no taxpayer funding. It must deliver whatever it takes in to every address in the United States, six days a week, and pay for all that strictly on income. As an added problem, the postal service must pre- fund retiree health benefits for 75 years. Seventy Five years! No other government agency, even those who receive tax funds, must do so. Obviously, that is a burden that almost guarantees the service will operate in the red.

All that money, more than $110 billion, is supposed to be held for future retirees. In a typical government move, most of it has been siphoned away to help pay down the national debt. So, the enforced savings plan does not have the resources to pay future needs. 

The cost of mailing letters and packages has risen steadily. Under the category of unintended consequences, each price increase results in lower mail volume, thus less income. The problem feeds on itself.

When the postal service officials have presented requests to Congress to modify or improve service, they have often been rebuffed. In 2013, for example, there was a move to eliminate Saturday delivery, saving $2 billion dollars in desperately needed expenses. Congress vetoed that idea, demanding the service continue with universal, six-day-a-week service, but providing no additional funds. Basically, the service was told:" You don't generate enough income to fulfill your mission. Tough Luck. Figure it out." 

So, the Postal Service has projected it will run out of money in September. A recent request for bailout money has been rejected out of hand by Congress and the administration. Again, a reminder: this organization is like any private company that has requested a bailout, except it must provide its full range of services, and cannot raise its prices without Congressional approval.

President Trump has stepped into the mess, calling the U.S. Postal service a joke. He demands the service raise its package shipping rates by 400%. Of course, he fails to realize that package shipping is the one area in which the postal service generates the bulk of its income. First class and junk mail lose money.

Quadrupling the rates would drive most of those customers to other services, like UPS or Fedex, accelerating the death spiral. It would impact Amazon, owned by a man in great disfavor inside the White House. That fact seems to be the major motivator.

Now, here is where the survival of the U.S. Postal Service suddenly becomes incredibly important. Because of the pandemic, it is very likely that much of the November election will be conducted by mail. A crippled organization financially incapable of meetings its mandate will be in charge of sending out and receiving tens of millions of ballots. 

When there are problems, as there certainly will be, the losing side will likely claim all sorts of miscreant behavior, throw the totals into question, and demand the results be voided or investigated. The result? The current occupant of the White House and all members of Congress up for election, will remain firmly in place. The November election will become a non-event until courts sort it all out.

To demand that a service like the Post Office do a particular job but not provide a way to pay for it is ludicrous. Is there waste in the organization? Sure. There is waste in anything. But, that is not why the U.S. Postal Service is failing. It is about to go out of business because of the requirements put in place by its boss (Congress) are not properly funded, and attempts to adjust its business model to reflect reality are shot down.

There are some in Congress who believe the postal service should be privatized. That would likely result in an elimination of service to many rural and out-of-the-way places, since they are expensive to serve. It might mean a reduction in service to only a few times per week and for only certain types of mail. It certainly would usher in much higher prices. The company granted this hold over a basic communication and commerce service would be picked for its support of a certain political viewpoint. In short, allowing a private company to control our country's mail service would be a very bad idea.

Two weeks ago, a new Administrator of the Postal Service was appointed. He has zero experience in this field; his only qualification is he is a supporter of and donor to the administration. It is pretty obvious this will not be the route to solutions.

The failure of such a basic service to our society has enormous consequences, never more so than at a time when a general election hangs in the balance.

Wiser minds than mine need to find a solution before it is too late.

May 24, 2020

Financial Uncertainty and Paying Off a Mortgage

An earlier post, A Recession is Very Likely: How Will It Affect Us?  took a predictive look at what may lie ahead of us. The economic recovery from the world's shutdown will be no little thing. White House spokespeople who say the economy will be rocking in July are simply not seeing the facts the rest of us are. The CEO of Southwest Airlines says he would be surprised if airplane travel was back to pre-virus conditions in less than five years. That sober view is probably mirrored by many people in many industries. 

The focus of this post is on retirement and a mortgage. Whether to pay yours off before leaving the workforce is a major decision as you plan your retirement finances and one without a clear cut answer. Add in the turmoil ahead with a serious recession virtually assured, and how you approach this decision is even more important. 

If you have already paid off your mortgage, please keep reading. Your comments and thoughts will be very helpful to others who are not mortgage-free.

Is it best to pay off the mortgage before retirement, or is that extra money better off being invested? With changes in the tax law, the mortgage interest deduction is no longer as important since the standard deduction has been dramatically increased. What if I have a major health expense and can't pay the mortgage..could I end up retired and homeless? 

Good questions with no obvious answers. But, they are worth asking and taking a look at some of the ramifications. As an disclaimer, I am not a tax expert or a financial guru, so what I offer is opinion and some basic thoughts from my own research. Please think through your own situation carefully, consult a trusted adviser, and proceed with caution. 

If you do a Google search about retirement and mortgages the majority of the sites and articles that rise to the top suggest paying off your home loan before retirement. They do admit that many people can't do that, but it should be a goal.

 The reasons most often cited to pay off your mortgage:

1. Peace of mind. Even without a monthly payment you still have real estate taxes, HOA fees, maintenance, repairs and upgrades. But, if you delay fixing a leaking toilet for two months you won't risk losing your home. That big monthly Must Pay bill is gone.

2. Home equity is available. I strongly suggest this source of cash be used only for major repairs and upgrades to your property or something like a large medical expense. Home equity is not a piggy bank so you can take (someday!) a 12 day trip to Hawaii or buy a new truck. Too many people get stuck when they spend their home equity only to find the worth of the house has dropped below the size of the loan. With home equity lines of credit at low interest rates at the moment,  smart use may be able to save you interest over more conventional loans.

3. You have more freedom to relocate or resize. Get in trouble with your mortgage and someone else might tell you when to move. Have no mortgage and you can decide when to downsize or move closer to the kids....or stay put.

4. You have a large source of retirement money available. If you move to a smaller home or condo, or even rent an apartment, any profits after the house sale and purchase are yours. Though expensive and sometimes risky, reverse mortgages can provide a steady income from the equity you have in your residence too.

On the other side of the argument, these points are made:

1. Don't pull  money from other investments to pay off a cheap mortgage. Even losing the tax deduction of a mortgage may not be enough to make up for better performing investments. If you take a chunk of your retirement funds to pay off a mortgage the money left may not produce as much income or growth.

2. Tying up too much of your net worth in an illiquid asset. You own a $300,000 home free and clear. But, depending on the market conditions it might take you six months or more to be able to sell the house and see any net profits. If you need quick cash a house is not the place to find it (except through a home equity loan which comes with its own risks).

3. If you plan on selling soon, or offering your home for rent, there is no real reason to pay it off right away. The cash flow from the rental might cover all or most of your payment, meaning your renter is paying the mortgage. If you think you will be selling soon, there is no major advantage in paying off the rest of your mortgage.

Betty and I plan on moving from our current home in the next eight years or so. We know that at some point we want to move into a continuing care community (CCC). The "buy-in" will be somewhere around $300,000. If we own a home or condo and need to move rather quickly into the CCC because of health issues, our buy-in money will be unavailable until we sell. That maybe too late.

So, if we sense another major drop in housing prices is coming, we will give serious thought to selling our home and renting an apartment/town home. The bulk of our profits from our current home will be invested for safe growth. While the yearly rent is lost in terms of equity, we will have liquidity when we are ready to move to the continuing care community. 

Again, I will remind you I am not a financial planner or expert. I have bumbled along pretty well for the past several decades, but there is always more to learn and consider. If you are a financial planner, investment guide, or CPA, I welcome your input (as long as you aren't trying to sell something!). 

All that said, you have thoughts, concerns, questions, and insight that will help of of us, expert or not. Please add your comments to this important subject. Since a home is generally the biggest expense for most of us in our lifetime, knowing what to do with that resource is vital.

Pay off the mortgage or not...that is the question.

May 21, 2020

: When The Tide Goes Out You See Who’s Swimming Naked.

(Spoiler alert: if you believe the current administration is doing a good job, or has been unfairly attacked by the media and/or liberals, this is a post I suggest you skip. It contains my personal, strong opinions. Comments have been turned off since you will either agree with me or suggest I jump off a cliff.)

Warren Buffett was right.

His well known quote implies that you can fake it for awhile, deceive people for a time, and get away with something until the retreating tide reveals something you would rather remain hidden. Eventually, the Emperor is shown to not be wearing any clothes. Smoke screens and deception only work for so long. "I take no responsibility" is a bill that comes due.

It is hard to accept, but easy to believe, that CDC guidelines, developed by qualified scientists and doctors for safely reopening the country, was shelved by the current administration. Instead, a 6 page, watered down version was released. I assume the theory is if we do not tell folks what the real risk are, the restart of the economy will be more robust and rapid. That would play well for the election narrative, until the infection and death toll starts to skyrocket again. Of course, then, the governors can be blamed for moving too quickly and not following the "rules" in the hidden report.

In a deeply ironic twist, the people who advise wearing face masks do not do so. Surprise, surprise, Covid-19 is now inside the White House. Even so, a recent meeting of 20 "leaders," showed only the reporters properly protected. The odds are quite good that some of the politicians sitting with the president, seen wiping their noses on their hands before touching microphones, sitting and gathering much closer than the range of the infection, will become ill. But, never fear. One of these stalwart guys has already said if someone gets sick it is because of the media presence (the ones wearing masks).

We are told that vaccines are not really required: the virus will eventually die out and simply go away, probably right after the election. Even so, the pressure to develop an "unneeded" vaccine continues. Of course, these are the same fine folks who told us this is nothing more than a flu, and maybe 15 people will wait, 30,000, hold it, 40,000, well maybe 60,000....certainly not 2 million! Things are under control. And, it is China's fault anyway.

Great Depression levels of unemployment, a majority of Americans refusing to start "regular" contact even as things slowly reopen. Wait: it's the Governors' fault for shutting everything down. Didn't they realize we were just kidding with that whole social distancing thing? Our people want to be Liberated to get sick, infect others, and have some die. We value our freedom to act irresponsibly and put our personal needs above others.

I am very aware that the shutdown has devastated our economy. The impact will take many months, or probably years, to be moderated. To restart the businesses in this country (and around the world) is very important. But, in the rush to do so without enough testing, we run a tremendous risk of bringing on a new outbreak sickening and killing thousands more of us. 

In one of the newest conspiracy theories to emerge, a doctor claims, with zero supported evidence, that many of the deaths attributed to Covid-19 are actually for other reasons. Of course, the reality is far different: the reported Covid-19 deaths are much more likely to be badly underreported; those deaths occured months before anyone was even aware of what coronavirus was. But, no matter, State TV (Fox) and other wacky folks grabbed on this assertion as proof that the disease was really around to harm people politically, not to just kill them.

I could continue, but you get the frightening picture. The people we elect to help keep us safe, do what is necessary to combat an enemy, tell us the truth always and put the country's best interests above their own, are naked beneath the water. 

Unfortunately, we are the ones exposed.

May 18, 2020

Who Would You Salute?

There has been a lot written about the extraordinary efforts and scary working conditions of the health care workers, doctors, nurses, and hospital staff. We have a new awareness of the importance of the people who keep the grocery stores stocked, the truck drivers, delivery services, and drive-through folks who give us a break from two months of home cooking.

I imagine most of us have someone, or a group of people, who we want to thank during this unusual time in our lives. It may be the fellow who still shows up every Monday morning to take away your trash. It could be the mailman who still makes her rounds. Maybe you have a neighbor who regularly checks on you and offers to go shopping for you. It could even be a spouse or partner who isn't driving you crazy during total together time.

It could be neighbors who say hello and offers a smile each morning while you are walking your dog. Maybe a group from your church stays in touch or offers to take you to a doctor. How about the barber or hair salon that just reopened and cut your hair that was as long as you wore it in 1973? The vet that takes care of your puppy or cat.

So, here is a simple opportunity to express thanks to someone in your life who has made this virus experience a little less stressful, someone (or maybe some place) that deserves a public pat on the back.