March 10, 2007

Shameless Plug: Don’t Fall for the Debt Consolidation/Debt Elimination/Credit Score Hype

Filed under: General,Scams — Tom @ 6:03 pm

It’s amazing how bad this is getting:

….. Credit doctors are sprouting all over the country, promising — for a fee — to knock down the frightening amounts that borrowers owe to credit-card companies. Their hard-sell ads are the latest sign that more and more debtors are growing desperate, that the four most nagging addictions in modern American life are nicotine, caffeine, alcohol — and credit cards.

….. Enter the self-described consolidators, who are created by the lenders to deal with die-hard deadbeats. They pull together all the debtors’ assets and make up a schedule of repayment. The debtors then pay one pretty big check every month to the consolidator instead of many relatively small checks to the individual creditors. For this, the debtors may pay a fee of 10 percent of their total debt.

….. Still other companies claim that they almost effortlessly can arrange to increase your credit score. But about the only way they can do this is to petition the scorekeeping credit agencies to wipe out or reduce any false or inflated charges in your record. You could just about as easily do this yourself.

Warns the Federal Trade Commission: “[Some companies] promise, for a fee, to clean up your credit report so you can get a car loan, a home mortgage, insurance or even a job. The truth is, they can’t deliver. After you pay them hundreds or even thousands of dollars in fees, these companies do nothing to improve your credit report; most simply vanish with your money.”

Adds Scott Kays, president of Kays Financial Advisory Corp. in Atlanta: “Common sense says that if they’re paying for TV ads, they gotta be charging higher fees.”

Radio time and banner ads aren’t inexpensive either.

There’s a better way — one that will work:


Do it yourself. makes it as easy as it gets to see exactly where you stand, to identify areas where you can economize, and to see how long it will take to get that debt burden off your back.

Are Millions of Americans Saving TOO MUCH for Retirement? I Doubt It

Filed under: Soc. Sec. & Retirement,Taxes & Government — Tom @ 1:54 pm

At MarketWatch on Thursday (requires free registration), Paul Farrell did his roughly annual “you’re being lied to by financial planners about retirement” schtick:

….. Warning, you’re being hypnotized: Wall Street insiders, bankers, brokers, advisers and their buddies want you to pile up assets. Why? Not for your own good, but because the more securities you own, the more money they make in fees! Get it?

….. In other words, Wall Street and friends have a substantial unstated self-interest in encouraging you to invest more than you need for retirement. I’ve been making this argument for years and finally it’s being documented in research by economists who also aren’t buying into Wall Street’s hype.

The leader of this counterintuitive challenge is Larry Kotlikoff, a Boston University economics professor and co-author of “The Coming Generational Storm,” an analysis of dire solutions necessary to cover future unfunded Social Security and Medicare benefits. His co-author is financial columnist Scott Burns of the Dallas Morning News. Kotlikoff’s research says investors should focus on income while working to figure out retirement needs.Saving too much? You bet. A New York Times review of Kotlikoff’s numbers “showed that Fidelity’s online calculators typically set the target of assets needed to cover spending in retirement 36.4% too high. Vanguard’s was 53.1% too high. A calculator offered by TIAA-CREF, one of the largest managers of retirement savings, was 78%” higher than the calculations generated by Kotlikoff’s ESPlanner.

Well, I have a “self-interest” in this too, because I do workshops designed to help people think this issue through, and build customized models for each individual company’s class for that purpose. But do I think I’m misleading people into saving too much? Nope.

Cutting to the chase — Most retirement calculators, and my retirement class, make an assumption about your “required income replacement percentage” during retirement, meaning the percentage of income you will need in your first year of retirement compared to your final year of work to be able to maintain your standard of living (after that, the models usually assume that a retiree’s needs will go up with inflation). The calculators tend to allow you to assume an income replacement percentage requirement of 60%-90%; my class assumes 80%.

Farrell, though he doesn’t hang a number on it, makes the perfectly valid point that many retirees are indeed able to get by on relatively little, because for them all of the often-substantial expenses involved in raising kids have gone away, and haven’t been replaced by other expenses.

But that’s today. What about the future? I believe that you can consider Farrell to be generally right about his complaint only if ALL of the following things are true:

  1. There is no chance Social Security benefits will be reduced below where they are now in real terms (the typical retirement model assumes that Social Security will stay as is).
  2. There is no chance that Medicare premiums or post-retirement health care costs will will become much more significant out-of-pocket costs for retirees than they are today.
  3. The typical retiree will go into retirement relatively debt-free.

All those who believe those three statements are true, raise their hands. (I’m not seeing any; I never do.) The younger you are, the more likely it is that you will be whipsawed by one or more of these three factors, especially Social Security and/or Medicare.

Now here is a rough cut at the potential impact of those items:

  • If Social Security benefits have to be cut substantially (and at the rate we’re going, which is nowhere in a hurry, either there will be big benefit cuts or huge increases in other taxes, and they could even start kicking in within 10 years), a typical retiree could very well be required to come up with about 10% or so of his/her/their total needs from somewhere else — i.e., savings, if it’s there.
  • If post-retirement health care costs go up by a lot, it would not be at all surprising to see the required income replacement percentage jump by 8%-10% — which of course will have to come from savings, if it’s there.
  • Farrell is clearly assuming that the typical retiree is debt-free. For discussion purposes, let’s assume that a debt-free retiree who made $60,000 ($5,000 a month) in the final year of work only needs 50% income replacement for “living expenses,” or $30,000 ($2,500 a month, to get by during retirement at a comparable standard of living:
    – Ah, but what if that person has a $400 monthly car payment? Add 8%, and hope the car goes a long time without needing to be replaced after it has been paid off.
    – What if that person is also 15 or more years away from paying off their house, which has a $750 payment? Add another 15%.
    – What if the person still has about $10,000 in credit card debt, against which a reasonable person would try to pay at least $500 every month (there is not a shortage of seniors who come into retirement in that condition)? Add 10% more, at least for the first few years.
    – You can see that I’ve easily pushed this retiree’s income replacement percentage requirement above 80% for at least the first few years of retirement — and I haven’t even factored in any possible changes for the worse in Social Security or Medicare.
    – Any or all of these items, if present, will have to be covered by (you guessed it) savings — if it’s there.

So what are some of the “bad things” that could happen to people who save too much for retirement? Here are just a few:

  • They could get laid off a few years before they planned to retire, and essentially be forced to retire early, or to find a job that won’t pay them anywhere near what they were earning before. It’s not like this doesn’t happen — a lot. It would be sort of nice to have what you thought was “too much” money in the 401(k) at that point, doncha think?
  • They may have the flexibility to quit work or go part-time to assist in the care of an aging parent or relative should that become necessary.
  • They could end up with a bunch of extra money that they will conclude they can give to charity, family, or friends. Nice problem.
  • They’ll be less likely to be compelled to sell their house or to seriously downsize living arrangements during retirement, because the chances of the money not lasting as long as expected will be pretty low.

I would suggest that these and other similar items are “bad things” most people would enjoy having the financial ability or flexibility to deal with. And, I should add, nobody would suggest that you live like a miser during your entire working career in hopes of “guaranteeing” a comfortable retirement.

In fairness, Farrell makes a lot of good planning and other suggestions for making sure that post-retirement expenses are as low as possible. But neither he, nor you, nor I can individually control what the politicians are going to do to Social Security and/or Medicare, and the current crew in Washington (legislative and executive) doesn’t inspire a lot of confidence.

Farrell’s point about the financial services industry’s self-interest is also spot-on. So is there a way to save a lot for retirement without lining the industry’s pockets excessively? Sure — and that’s a subject for tomorrow.

Today’s Reporters Won’t Do Their Real Jobs — And How We Are Worse Off Because of It

I saved this USA Today piece from Wednesday for the weekend, because the whole story at the link is fairly long. It is a pretty important story, because it showcases so much of what is wrong with the FORMERLY Mainstream Media, and why the uppercase letters in FORMERLY will almost undoubtedly become larger in the coming years.

You see, many, if not more, reporters in the FORMERLY Mainstream Media don’t seem to want to do their basic jobs any more. Their main tasks should be to:

  1. Objectively decide what is worthy of coverage.
  2. Go and observe what happens, and where needed, ask questions about what’s happening (the old who, what, where, when why).
  3. Take thorough notes of what you have found, observed, and discussed.
  4. Tell your audience what happened in a complete, accurate, thorough, and yet engaging manner.

Anyone who thinks that the above four tasks are “easy” probably isn’t doing the job well.

Even though doing the job a reporter should be doing is anything but easy, it would appears that it’s too boring. Today’s reporters want the excitement of being “advocates“:

More reporters embrace an advocacy role

The “social journalism” that made Oprah Winfrey an international fairy godmother is the new rage in network and cable news, and it’s expanding to other media.

Increasingly, journalists and talk-show hosts want to “own” a niche issue or problem, find ways to solve it and be associated with making this world a better place, as Winfrey has done with obesity, literacy and, most recently, education by founding a girls school in South Africa.

Experts say the competitive landscape, the need to be different and to keep eyeballs returning, is driving this trend, along with a genuine desire from some anchors and reporters to do good.

….. For example, as weatherman at WABC in New York for 18 years, Sam Champion did what he calls “a friendly version of weather.”

But in his new role as weather anchor of ABC News, Champion reports extensively on the effects of global warming and severe weather on Good Morning America, Nightline and World News Tonight, a unique beat in broadcast news.

“We want to do weather that matters, to be informative and expand the topic to help people better understand the climate,” says Champion, who unveiled GMA’s “weather center” last week.

….. But Brian Ross, who runs the investigative unit at ABC News, worries about the growth of this “agenda” reporting.

Though not singling out Dobbs or O’Reilly, Ross says the practice “clouds your vision and makes it sometimes difficult to see all sides. You want to be able to report and turn on a dime if the facts aren’t exactly fitting your agenda.”

Where to begin? The biggest problems are in the bolded items, and they all revolve around the idea of allowing yourself to be associated with an agenda to the point where you might not back away from it if the facts either don’t fit, or no longer fit.

  • If you “own” a niche issue and the facts and circumstances surrounding that issue change, will you have the integrity (or the objectivity) to change course? Or will you, in the process of “taking ownership,” blinded yourself to anything that would or should make you question the matter that you think you “own”?
  • If you really want to “do good,” would you not be doing more “good” for your audience by getting all the facts you can, getting both sides (or all sides) of an argument exposed, and leaving it to the viewer to make up their own mind? (Or do you think viewers can’t be trusted to evaluate a complete set of facts and that it is your “duty” to filter it for them?)
  • Champion reports on global warming and related matters as if they all involve indisputable facts. There is plenty of information indicating that global warming may not even be occurring; that it may not be occurring at a meaningful rate; that, even if it is occurring, it may not be caused by human activity; and that even if it is occurring at a meaningful rate and is caused by human activity, it may not be harmful. How much of THAT is Champion exposing? Or is his entire journalistic persona so tied up in reporting about global warming that he is blinding himself to any conceivably contrary information?
  • I daresay that the number of human beings able to “turn on a dime if the facts aren’t fitting the agenda” is very small. Witness the lack of people willing to unconditionally say “I was wrong, I am sorry,” in even the most obvious of circumstances. By choosing to be agenda-driven instead of sticking to the facts, that ability and willingness to “turn on a dime” really turns into a more difficult “willingness to admit a mistake.”

It’s hard enough to have to admit a mistake on basic facts, but it’s infinitely easier than having to admit that your agenda has been wrong all along — which is why it should be very obvious that “advocacy journalism,” if practiced over a period of decades, is a recipe for progressively less and less reliable news. This, I submit, is exactly what we have seen take place during the past 40 years, and we are all worse off for it.

Cross-posted at

Positivity: Wonder Twins Defy the Odds

Filed under: Positivity — Tom @ 7:01 am

From Australia:

March 06, 2007 12:00am

UNBORN twins given just a one in 10 chance of surviving to birth have been saved by a miracle operation in their mum’s womb.

The successful surgery means it can now be used to save dozens of Victorian babies each year.

Megan Duggan initially was told her identical unborn sons Flynn and Jaxon would almost certainly die when they were diagnosed with twin-to-twin syndrome.

But a team of top surgeons from three hospitals used radical in-utero surgery to save both twins in a Victorian first.

The operation at Monash Medical Centre was undertaken on September 11, but is only now being revealed after both boys were delivered safely in December and have had a chance to develop.

Yesterday Flynn and Jaxon met their lifesavers for the first time.

“It is because of them that the twins are here,” Ms Duggan said of the team. “They’re miracle workers.

“I am just happy to have them. I try not to think that they may not have been here because I have got them and that is all I think about now.”

Twin-to-twin syndrome affects about 42 Victorian pregnancies a year, or 15 per cent of identical twins who share a placenta.

Without surgery, nine out of 10 affected twins die, with one twin getting too much blood for its body while the other starves to death.

Pre-natal surgery to close blood vessels shared by twins increases survival rates of both to 50 per cent, while at least one baby survives in 80 per cent of cases.

The complex procedure has been offered in Sydney and Brisbane since 2001 and was undertaken twice in Melbourne last year before Ms Duggan’s breakthrough operation, which was the first time both Victorian twins survived.

Head of peri-natal surgery at Monash Medical Centre Andrew Edwards said the new Victorian Fetal Therapy Service – a collaboration of the Royal Women’s Hospital, Monash Medical Centre and Mercy Hospital for Women – would attempt to save about 40 threatened babies a year with the procedure.

“Most women know what is at stake,” he said.

“They know how bad outcomes can be and, even when they get one baby, let alone two, it is a big success.

“We have all ended up choosing to work in a high risk area of obstetrics where survival is not guaranteed.

“From our point of view, we see things go wrong fairly often so it is very exciting to see things go well.”

The twins were born after 35 weeks’ gestation at the Royal Women’s Hospital on December 5, before being transferred to Ballarat Base Hospital so Ms Duggan could be close to home.

By placing a telescope fitted with a light, camera and laser through a 3mm hole into Ms Duggan’s uterus, the surgeons identified five “communications of blood vessels” shared by the 325g Jaxon and 439g Flynn.

The laser was then used to seal the vessels so blood from the placenta would be distributed evenly between the boys.

Dr Stephen Cole, from the Royal Women’s Hospital, said the laser procedure also reduced the one-in-five instance of affected children being born with disabilities such as cerebral palsy, blindness and intellectual disabilities,

“The hardest part is working out where to put the telescope to get the right angle . . . to identify all of those vessels.

“Once you have mapped them out the actual lasering is usually pretty straightforward.”

The VFTS collaboration was established with a $642,000 donation from the Pratt Foundation and ongoing support from the State Government.