Monday, February 9, 2009

Prescription For Success

Fast Forward: 2019; the hospital insurance fund is projected to run out of funds. 2041; the Social Security Trust Fund will run dry.

The hospital insurance funds of Medicare (Government health care program) are currently paying out more than it takes in.

It is projected that Medicare’s payments for doctors and prescription drugs will rise faster than the nation’s overall economic growth. Therefore, causing beneficiaries’ premiums, co-payments, and deductibles to rise faster than their incomes!

As a retiree, it is assumed that Medicare (if you are eligible) will cover most of your health care costs. Though, if we are to believe that the Social Security and Medicare systems are in such a state, we best be prepared to bear potentially major health care costs.

It is estimated that a couple, aged 65 years, will spend in excess of $200,000.00 over the next 20 years on health care; even if they are covered by Medicare!

Consider this: if you are aged 65 years (or older), it is highly probable that you may need dental care, eye glasses, hearing aids, regular check-ups; at some stage, possibly even long-term nursing home care. Do you know that apart from ONE free check-up when you first enroll with Medicare, these services are not covered?!

Social Security was created in 1945. By 1955, 42 workers paying the system paid for ONE retiree. In 2007, they are paying for 3. By 2030, every working couple will have their very own retiree to support! Thus, the significant, and rising, imbalance between workers and beneficiaries.

There are 2 issues to consider when deciding “to retire, or not to retire;” life expectancy, and investment acumen.

If you decided to retire at 62 years of age, you will receive 75% of full Social Security benefits each month for the rest of your life. Wait to retire at age 66, and you will receive 100%. If you can hold out until you are 70, you will be paid 132% of your full benefit.

The bottom line is: soaring medical costs accompany increased longevity. The Social Security and Medicare systems seem to be worsening, not improving. Perhaps, saving for health care costs, in retirement, means thinking outside of the box; a health care mutual fund may be just the prescription for success?!

Debt Collection Protection - You Have Rights

The Council of Better Business Bureaus says that complaints against debt collectors, after plunging in 2005, are rising again. They surged 20% in 2006, and 26% in 2007.

Even the Federal Trade Commission says that they have seen a steady rise in debt collector complaints, and they receive the majority of them!

Common consumer complaints include debt collectors attempting to collect on more than what is owed; the use of vulgar language in an aggressive manner; the addition of late fees, court costs, and lawyers' fees; sharing of the consumers' personal debt information with family, friends, or work colleagues.

As the economy slumps, more people are falling behind in their loan payments, and consumer debts. Debt collectors are showing more aggression when it comes to collecting on delinquent loans, resorting to questionable debt collection tactics.

At the best of times, debt collectors can be aggressive when it comes to the collection of delinquent loans, however, debtors' lawyers comment that people falling behind in paying their bills are being threatened.

Some tactics being used to collect debts include false information in writing; false lawsuits; false pretense of assuming the identity of a lawyer; garnishment of Social Security benefits - illegally; intimidation and harassment; threats of prison; unauthorized, and improper, withdrawals from the consumers' bank account.

Federal Law prohibits debt collectors from repeatedly calling borrowers' especially if the debt collection agency has received a formal request in writing. It is also against the law for debt collectors to threaten people with lawsuits.

Debt collectors take advantage of the fact that most consumers do not know their rights.

The Fair Debt Collection Practices Act requires that debt collectors treat you in a fair, and ethical manner.

If you find yourself having to fight back against an aggressive, and unethical, debt collector here's some expert advice: the amount of your debt cannot be a misrepresentation; debt collectors cannot use profane, vulgar or threatening language; your retirement accounts (401k, Federal Benefits, Social Security) cannot be legally claimed by a debt collector; you cannot be called before the hours of 8.00 a.m. and 9.00 p.m.; if your place of employment disapproves, a debt collector cannot call you at work; by law, a debt collector cannot contact you if you write them a letter asking them not to - you still owe the debt, and can still be sued, but at least you won't have the added stress of all those harassing phone calls.

Some debts have an expiration date - in California, it is generally 4 years from the date of breach (if a Written Agreement), and 2 years if an Oral Agreement.

If you don't think that the debt belongs to you write to the debt collection agency within 30 days, they are obligated to send you proof of the debt. If you do not owe the debt do not be intimidated to pay it.

We've all faced some sort of financial catastrophe that has caused us to fall behind on our bill payments - whether it be ill-health or an accident, maybe even job loss - but if the money is owed, it is only fair to maintain your own personal ethical code by making every effort to pay off the debt.

Has Sub-prime Had Its Time?

The sub-prime crisis has had a rippling effect on the worldwide economy posing critical challenges for Governments, Businesses, and Investors.

The United States Banks and Trading Houses re-packaged sub-prime debts into attractive-looking securities and/or investment vehicles, which were then picked up in European and Asian markets by Traders and Banks.

Sub-prime basically refers to those loans being given at a higher rate than the prime rate (i.e. the interest rate that Banks generally use as an index in calculating rate changes to adjustable rate mortgages (A.R.M.'s), and other variable short term loans); according to data published by the Wall Street Journal On-Line, the prime rate in the United States is currently 5%.

Sub-prime lending is also known as B-Paper lending. Borrowers generally tend to have compromised credit histories.

Sub-prime loans incur a higher interest rate than an A-Paper loan due to the perceived increase of the Borrower being more of a risk.

Along, with sub-prime mortgages, the term encompasses sub-prime car loans, sub-prime credit cards, and the most abusive sub-prime lending practice of all, short-term "payday" loans.

The controversy surrounding sub-prime lending is high. It is alleged that sub-prime lenders engage in predatory lending practices, deliberately targeting the less-educated, racial minorities, and the elderly; those who may not understand exactly what they are signing, and/or could never hope to honor the terms of their loans.

Sub-prime loans are usually covered by collateral such as a car or house. As many of these loans include hidden terms and conditions, not to mention, exorbitant fees, Borrowers usually end up in default; their collateral is seized; or the property ends up in foreclosure.

As the United States is considered a powerful nation, extending it's control and influence over nations that may not be as economically fortunate, it can be better understood why the ongoing sub-prime lending and credit crisis in the United States has progressed to a restriction on the availability of credit in world financial markets.

Unfortunately, when the United States sub-prime mortgage crisis hit in 2006, Investors found their investments near valueless, or difficult to ascertain value; the inability to assess the value of an asset generally leads to market paranoia.

As a result, Banks tightened their lending policies, which led to higher interest rates, and difficulty in maintaining credit lines. Thus, overseas businesses with no direct connection to the United States' sub-prime mess suddenly began to find difficulty in maintaining credit lines; Banks stopped lending to each other and to businesses.
Don't be misguided though; sub-prime woes are now spreading into the prime market. Borrowers with good credit are experiencing sudden changes in financial security, causing them to fall 60 days or more delinquent on their loans, and foreclosures are climbing rapidly.

House prices continue to collapse and prime loan Borrowers are shocked to discover that they owe more money than their houses are worth!

Rate increases continue to rise making it more difficult to keep up with monthly mortgage payments.

The U.S. Government is stuck between a rock and a hard place. If they offer funding to assist troubled Borrowers avoid losing their homes will the effect cause more defaults or encourage riskier lending?

Foreclosing on Mental Health

Social Service Hotlines report a major surge in phone calls from emotionally distraught homeowners. The prevalent issue appears to stem from the housing crisis.

Psychologists state that the real estate meltdown is creating a wide range of emotional behavior.

Mental Health Groups, such as the American Psychological Association, say that problems such as domestic violence, marital disharmony, depression, alcoholism, gambling, and even suicide, are increasing as the pace of foreclosures escalates.

One in seven homeowners are not confident that they will be able to keep up with paying their mortgages over the next six months.

According to an Associated Press - AOL Money and Finance Poll, more than a quarter of homeowners in the United States fear the loss of value in their homes over the next couple of years.

Up until the housing crisis, the increased value of real estate had homeowners re-financing left, right and center; homeowners felt secure and cashed-up.

Unfortunately, April's foreclosure filings show a more dismal reality since the housing boom; one in every five hundred and nineteen households received a foreclosure filing this year. A surge of 65% since last year.

Leading analysts warn that the crisis seems to be accelerating; sinking home values, rising foreclosures, an excess of homes for sale, and tighter lending rules, which disadvantage those trying to re-finance, and shut-out those trying to purchase.

A survey by the American Psychologists' Association sites that half of the Americans they interviewed identified rent and mortgage costs as significantly high sources of stress.

Historical research shows that during economic turmoil, the rates of suicide and depression rise.

Financial stress can often be the last straw, triggering pre-existing mental health conditions to surface.

Suicide can seem like the only option available when it feels as if there is no future in sight.

Imagine how helpless you'd feel if the home that you had been working so hard for over the many, long years was all of a sudden taken from you. You'd feel anger, resentment, frustration, embarrassment, and overwhelmingly without hope.

In many households, the threat of the financial consequences associated with the housing slump has a huge bearing on one's emotional state.

Studies show a strong connection between emotional stress and financial distress. It is not uncommon to suffer from insomnia, migraines, nausea, depression and anxiety during these troubling times.

Unfortunately, due to excessively high medical costs, the dilemmas of not having access to private mental-health treatment in the midst of a financial crisis is also problematic.

As adults we tend to neglect the opinions and feelings of our children. Don't forget that our children are also feeling extreme anxiety and helplessness in our stressful financial situation.

Remember that children will sometimes blame themselves for the situations that we, as adults/parents, find ourselves in. Just as we need coping mechanisms in order to push through hard times, so do our children.

Be patient and kind with each other; these are trying times!

Faith Is Courage; It Is Creative While Despair Is Always Destructive (David S. Muzzey)

Health Insurance Up 78 Percent Since 2000, Along With Policy Terminations!

Health insurance went up 7.7 percent this year, thats twice the rate of inflation. Premiums have increased by 78 percent since the year 2000 compare that to salary increases of just 20 percent and the real picture starts to have an impact.

Individuals are now averaging a little over $4000 a year in premiums with American families paying out almost $11,500 this year. Companies offering health care benefits now stands at 61 percent this is down from 69 percent in 2000. It's estimated that over 155 million Americans will get their health care benefits from their employers. To lower the over-all cost of the insurance plans many companies are now offering benefit packages with higher deductibles. It should be noted that this report comes out after a recent Census reported that 1.3 million Americans where added to the ranks of the uninsured during 2005. What becomes clear here is the long term trend towards the decline of coverage supplied by small businesses from their employees.

“To working people and business owners, a reduction in an already very high rate of increase just means you're still paying more” said Dr Drew Altman, president and chief executive of the Kaiser Foundation.

Insurance companies have been under attack recently for dumping families that build up large medical bills. In an ongoing case in California the state is investigating a claim against Blue Cross who stopped coverage for a family when it's medical bills reached $20,000. The family have been left with outstanding medical bills of over $60,000. The company have accused the family of failing to disclose in their coverage application an undiagnosed lump on one of the children's chins. The family say they (or their physician) knew nothing of any tumor when they made the application.

These types of cancellations of coverage have now created a massive backlash towards the insurance companies and resulted in a number of ongoing lawsuits. The policyholders are saying their polices were illegally terminated which resulted in substantial financial hardship. State regulators are investigating and have said they are now preparing to take action against Blue Cross.

Something needs to be done to protect (us) the public against these (insurance) companies. The hardship caused when a family is faced with these medical bills at a time when they really need the most support is nothing short of criminal. Having taken our money every month for years on end they should not have the right to terminate our coverage. They should by law be forced to honor the agreement they wrote and we agreed too.