Who, Exactly, Is Being Influenced?

Anyone my age would likely tell you if you asked (or even if you didn’t ask) that they grew up in a much simpler age.  For my television viewing as a kid I had three stations from which to choose, and one of those was mostly “snow.”  Internet?  Cable TV?  Career choice?  Oh, sure, doctor, lawyer, nurse, teacher, fireman, policeman, butcher, baker, or candlestick maker.  Huh?  What’s a systems analyst?  Or a software engineer?  Or a chief information officer?  Or IT security specialist?

And an “influencer” was someone who could manipulate others.  Perhaps a salesman.

I’ve been thinking a lot about that this week as two news/feature articles came to my attention.  In the first one, from the Wall Street Journal, an anonymous mother was interviewed about the social media account she and her young teenaged daughter set up during the pandemic to share with family and fellow dance students pictures and videos of the girl’s dancing.  It was also a means for the mother and daughter to pass time and bond during a socially restrictive time.  The mother soon began to notice a disturbing trend in the data on the account dashboard.  Yes, they were—much to their delight and surprise—getting offers of free apparel and sponsorships.  But 92% of the account’s followers were adult men, and some of them were starting to send inappropriate messages and pictures.

The mother blocked as many of the inappropriate users as she could keep up with.  But she felt that she faced a dilemma.  The particular social media platform she was using promotes content based on engagement from the audience, and the men she was blocking tended to be the ones who lingered the longest on the pictures and responded online.  How would her daughter ever become a social media influencer, earning tens of thousands of dollars a year, paying her way through college, and in the process losing this opportunity for mother-daughter bonding if mom continued blocking all these men?

Her eventual response was, “You have to accept it.”  I don’t think you’ll need a WSJ subscription to access the sad, disgusting, disappointing story at this link.

On the heels of reading that article, I saw in multiple news outlets that the surgeon general is “demanding” warning labels be placed on social media apps due to the risks they pose to young children and teenagers: depression, social isolation (ironically), potential for sexual abuse, and suicide.  Use of social media is nearly universal in this age group, and according to one Gallup poll they spend about five hours daily on these sites.

I am not going to engage in a debate about appropriate levels of government oversight of social media platforms, free speech, etc.  What I will say is that there is no cure for stupid and only very tough cures for greed.  And I’m not talking about the minors, I’m referring to the adults.  Are we selling our souls and our children’s safety for thirty pieces of silver?  Where is the conscience?  What happened to our moral compass?  Yes, the men ogling the young girl’s pictures are monsters.  Will we sacrifice to them that which should be most precious in life to us?

Until next time,

Roger

“They built high places for Baal in the Valley of Ben Hinnom to sacrifice their sons and daughters to Molech, though I never commanded—nor did it enter My mind—that they should do such a detestable thing." Jeremiah 32:35 NIV*

*Scripture quotations taken from the Holy Bible, New International Version® NIV® Copyright © 1973, 1978, 1984, 2011 by Biblica, Inc.™ Used by permission.  All rights reserved worldwide.

BOGO....and Go into Debt

 

The term “spaving” is new to me.  I just learned that it means “spending more to save more,” and with that concept I am very much acquainted.  It’s like a “buy 3 for $5” sale when the regular price is $1.99 each.  So you would save 97 cents if you purchased three of whatever is on sale; and that seems to be the default action by most people.  But if you bought just one you would still save 32 cents: one-third the savings for only buying one-third the merchandise.  And that would make a lot more sense if you don’t need three of the item or if it is unlikely you would use three within a reasonable amount of time.  (Always read the fine print on a sale; sometimes it will indicate that you must buy the full quantity to get the sale price.)

As reported by CNBC, financial experts warn that falling for these sales, buying more than what is needed, purchasing unneeded items in order to reach minimum purchase requirements or free shipping thresholds, or “BOGO” deals can lead to overspending, deeper credit card debt, and financial stress.

So how to fight the urge to “save more”?  Some suggestions are to pay in cash (studies show we spend about 15% less when we pay with cash versus credit card), make online shopping harder by not allowing merchants where you commonly shop to store your credit card number (it’s also a good security measure), and avoiding vendors who are always advertising “limited time offers.”

But my favorite tool: math.  Do you really save more per item by purchasing more items?  And is the savings worth the extra expense?  Use a calculator if you must.  There’s probably one on your phone.  

How many people were taken in by this “sale"?

 

Really?  Four cents per plant?  That’s less than a one percent discount.  So if you load up with a dozen plants, you save less than half a dollar and probably don’t have room in the garden for them all anyway, if you even have a garden.  But at least you saved 48 cents.

Until next time,

Roger

"God blesses everyone who has wisdom and common sense." Proverbs 3:13 (CEV)

Couples Do This Eighteen Times a Month

 

When teaching money management classes, I often cite statistics from authoritative sources such as Psychology Today and American Association for Marriage and Family Therapists indicating that arguments about money are responsible for more couples breaking up than even infidelity.

I may have to modify my presentations.  According to studies cited in the Wall Street Journal, the average American household has 18 arguments a month over…dishes; “from leaving them in the sink to who should empty the dishwasher.”  The paper even interviewed couples about the subject and referred to an interview with the prime minister of Great Britain that touched on the subject of how he and his wife differ on how to load a dishwasher.

Eighteen arguments a month.  More than one every two days.  That very well may supersede money as to frequency, if not in intensity, as a subject for marital fighting.  But it got me to thinking about how the matter of dishwashing has evolved between my wife and me.  Our first house did not have a dishwasher, and that in itself led to some “discussions” about prioritizing home improvements or listing desirable features to have in our second house.  But for years now we’ve had a dishwasher, and it is almost never a subject of discussion.  How did we get there?

Neither of us had a dishwasher in our childhood homes; so when we finally purchased one as adults, there was a bit of a learning curve.  Rinse before loading?  How to load?  Who empties it?  Who washes what could not go in the dishwasher?  My only “lesson” in dishwasher science came from my brother who worked for a while in a college cafeteria to earn his way through school.  He would come home and tell the family how the workers there packed the silverware so tightly together in the dishwasher that he could not fathom how they possibly got clean.  I think he started packing his own plasticware when he ate there.  So my take-away?  Load the dishwasher strategically to maximize water flow and promote thorough cleaning.  Unfortunately, I didn’t explain this very well to my wife, and she did not appreciate my undoing her machine-loading job to re-organize the dishes and utensils.  But I still don’t think we argued 18 times every month.  In fact, my insistence on there being a correct way to stack the dishes eventually led her to just leave the whole task to me.  So now nearly always (like 99 times out of 100) I load and unload the dishwasher and handwash what I choose not to cram into the machine.  I won that battle, huh?

Reading the Wall Street Journal article left me pondering whether there might be lessons in all this for how to handle arguments about money—which I am still convinced are generally much more serious than proper dishwasher loading.  But if there are any lessons that carry over, they are lessons in what NOT to do.  For example, neither partner in a couple should throw up his/her hands and turn over all financial matters to the other, just to avoid fights.  First, it just won’t work.  Attitudes and emotional reactions, learned in childhood from our own parents’ relationship with money, are woven too tightly into money matters to just surrender control to someone else without some resentment creeping in.  And second, if that partner dies, becomes disabled, or just leaves, the other will be hobbled by not having been involved in financial affairs and may even be unable to handle them alone.  It has become a problem for both widows and widowers and the survivors of gray divorce especially.

So you can cede control of the dishwasher or the remote to your partner, but insist on being involved in financial decision-making.

 

Until next time,

Roger

“Behold, how great a matter a little fire kindles!” James 3:5 KJV

Why Fred and Barney are at Knee Level

 I changed grocery stores.

For years I have been shopping primarily at a national chain grocery store, being pleased with their dedication to lower prices and decent quality.  But then they re-arranged their store.  I went in to shop one day and there was a team of contract workers who were moving merchandise en masse from shelf to shelf.  When I went back a week or two later, their task accomplished, I found….no, that’s the wrong verb.  I didn’t “find” anything.  Nothing was in the place to which I had become accustomed over the years.  Paper towels in an aisle opposite frozen food?  I literally spent double the normal amount of time doing the grocery shopping that day.  And I haven’t been back since.

Perhaps if that store had done some other things right I’d still shop there.  But of late even during busy hours they had at most two cashiers working.  The largest part of the checkout area was devoted to self-checkout machines.  And I often found mistakes on their pricing at the checkout.  (Yes, I admit it; I do check the receipt for mistakes and have been amply rewarded.  I’ve been refunded more than enough to pay for a nice restaurant meal in the last year or two and have received some merchandise for free for catching their errors.)

So I have started shopping at a smaller chain grocery store, as well as at a specialty local grocer, and am very pleased.  I’m saving money, which I did not expect.  The stores are cleaner, brighter, and less congested, and there are enough cashiers all the time such that I’m never more than third in line, and am usually first or second.  And there’s no self-checkout area.  Mistakes on their receipts?  Non-existent.  If the shelf or weekly circular advertises a sale, that sale price invariably comes up at checkout.

Thinking about this experience, I thought it might be a good time to review some grocery store tricks for getting you to spend more money, because that shuffling of goods that turned me against the one chain is a frequently used ploy; if you are having to wander the store looking for what is on your list, you will be exposed to more items, more temptations to buy stuff not on your list and not really needed.  But how about these tricks:

·         Placing higher priced goods at eye level, lower priced goods on the top or bottom shelves

·         Large shopping carts, to induce us to fill them (this works like a charm on my neighbor)

·         Cartoon character-themed goods placed at children’s eye level

·         Music playing to both keep you in a good mood and slow down your shopping experience so you purchase more (Then, once you are in the checkout line, the cashier rushes you through; one even told me they are evaluated on how quickly they move customers through the line.  No chit-chat, please.  Very impersonal.)

·         Essential and often-purchased items placed in the back of the store or the middle aisles, forcing shoppers to pass more shelves and hopefully purchase more non-essential items

 

And of course, don’t go to the store hungry.  It’s tempting to go to Costco to get a light, free lunch from all the samples, but that only whets your appetite and causes you to spend more, not to mention the temptation to actually purchase a box of those Girl Scout-style chocolate mint cookies being sampled just feet from the checkout area.  You get an A+ for your grocery shopping if you’ve ever resisted that pitch.

Until next time 

Roger

 “Don’t let anyone trick you with foolish talk.” Ephesians 5:6 CEV

Fifty Thousand Regrets and One Important Lesson

 

Do you recognize the name Charlotte Cowles?  No?  Then maybe you know her instead for what she did.  She is the financial-advice journalist—of all things—that fell for a scam that led her to hand over a shoebox full of cash—$50,000 of her own money—to a stranger.

There can be two basic reactions to that story: “What an idiot she is!  How could she let that happen?”  Or a more empathetic “I feel so bad for her.  Could that happen to me?”  And Ms. Cowles has had plenty of both on social media. 

I tend to fall into the latter group.  There are so many sophisticated methods that scammers can use, and so much personal information compromised through computer hacking of companies we legitimately deal with every day, from your bank to the local hospital to your own employer, that those who would steal your money stealthily seem to have all the advantages.  In Ms. Cowles’s case, someone posing as an employee of Amazon phoned her, transferred her to someone else posing as a worker at the Federal Trade Commission, and eventually even had a third person pretending to be a CIA employee involved.

But look at that sequence again.  She likely orders from Amazon (and by the way, evidence seems to indicate I’m the only person in the United States never to have ordered from Amazon; contact me if you know differently) so it was reasonable to assume Amazon might have reason to call her about an identity theft issue, especially if the caller had any personal information about her that he could cite.  The Federal Trade Commission is the agency to contact about identity theft scams, so that seemed like a reasonable next step to be handed off to them.  And if she were told that the identity thieves were based overseas and the victim is convinced she is part of a plan to help trap them, wouldn’t she do anything she could to help out?  Including handing over some bait money for safe keeping or to lure them into the trap?

Now that part about the CIA agent does seem far-fetched until we realize what happened in steps one and two.  Ms. Cowles’s defense mechanisms were turned off by inducing her fear response.  She was convinced her identity, bank accounts, reputation, and even her freedom (think: jail time for fraud) were in danger so instead of thinking rationally she went into panic mode, didn’t question what she was told, and simply followed the scammers’ directions.  And it is this aspect of the scam that causes me to empathize with the victim.  If a scammer hits just the right nerve, just the right fear and dread of the intended victim, then the path to a successful theft is paved for him.  A doting grandparent is told his grandchild is in jail unjustly in another state, wire some money to him.  A retiree is told that his Social Security account has been compromised and she could lose her benefits unless she can verify her direct deposit information.  Anyone can fall for it.  You can.  I can.

I salute Ms. Cowles for coming forward to admit her failing.  Her experience should teach us that anyone can fall for a clever scam and that these are not backstreet muggers trying to take our money.  These are organized criminals who can make a phone call look like it’s coming from a legitimate known business.  Who can use artificial intelligence to mimic a loved one’s voice.  Who are stealing billions of dollars every year from Americans.

I repeat here what I’ve said before: Stop.  Think.  Slow down the process if it seems you are being pulled into a similar situation.  You are not going imminently to jail.  Social Security does not phone you to tell you that you will lose your benefits.  No government agency accepts Walmart gift cards as a method of payment.  If ANYTHING seems the slightest bit off, call a halt.  Hang up, then look up online the real number of the alleged legitimate party that was calling (Amazon, Social Security, the FTC, etc.) and call them to ask if something really is wrong.  The same is true for e-mails or any other form of communication that seems strange and even slightly suspicious.  Keep your emotions in check, as hard as that might be. 

And have some empathy for Ms. Cowles.  You’d want the same for yourself if you fell victim.

Until next time,

Roger

 

“I see violence and strife in the city….and mischief and trouble are within it…oppression and fraud do not depart from its marketplace.” Psalm 55:9-11 RSV

Another Brilliant Idea from the "Experts"

 

I took one semester of economics as a senior in high school.  And though I enjoyed it, I am glad I never took an economics class in college or pursued a career in that field because some of the zaniest ideas about personal finance seem to originate with economists.  I wrote about one a year ago (see “Spend Now, Save Later?  What?!?!”), but now I’ve got a new one to share with you.

As reported by USA Today, two economists wrote a “research brief” last month arguing that the federal government should no longer allow pre-tax contributions to retirement accounts.   (Pre-tax means the money deposited is not taxed before it goes into the account.  If you earn, for example, $1000 but put $200 of that into a pre-tax account 401(k) plan you would only pay tax on $800 of your earnings.)

The rationale for their proposal: the current policy favors the rich, has not substantially increased retirement savings, and the savings reaped by changing the policy should be redistributed to others.  They cited statistics that show households in the top 10% by income have a median amount of $559,000 in retirement accounts in 2022.  By contrast, those in the 40^th to 60^th percentile by income had just $39,000 in such accounts.

By not allowing the tax deduction for contributions to retirement accounts, these two economists figure the government would increase its income by $185 billion per year, and that could go to shore up the Social Security system and increase benefits for those receiving checks from Social Security. 

Let me set aside my gut reaction to what amounts to a redistribution of wealth and the fact that I and millions of other middle-Americans DO (and did) benefit from the retirement account tax benefits and would suffer harm to our retirement planning and living if they were abolished.  Let’s look at some other statistics and facts, keeping in mind that there can be sizable variations in individual cases; these are averages.

According to the U.S. Bureau of Labor Statistics, workers at the 40^th percentile of income in 2022 made $54,945 per year.  Interestingly, with wage inflation being what it is, the average income that year for someone aged 25-34 was about the same, at $52,936.  So we can reasonably deduce that many or most of the people at the 40^th percentile are younger workers.  And how much should someone aged 30 have saved for retirement?  According to investment firm Fidelity, a 30-year-old should have saved one times his annual salary.  Okay, at the $39,000 figure cited by the economists, they are a little behind—but not that much, really. 

In short, the disparity between “rich and poor” as cited by these two economists does not take into account age differences.  Obviously, older workers will for the most part be making more money (i.e. be at the higher end of the household income scale and be in the middle of their peak earning years) and would have also had more time to build up their retirement savings.

And that $185 billion in savings?  That is about 12% of what Social Security doles out each year in benefits.  Can retirees use that additional money?  Absolutely.  But increasing the monthly check by 12% would hardly replace the income that would be lost from having even a modest balance in a 401(k) or IRA.  Moreover, it is disingenuous to claim that the $185 billion per year would “shore up” the Social Security system, certainly not if the money is used to increase benefits, which is what these economists advocate.  The whole problem with the system is that it lacks the income long-term to pay the benefits it already promises.  And now we’re going to promise beneficiaries MORE money?

The research paper also ignores the benefits that retirement accounts offer lower income workers.  For example, there is the Retirement Savings Contribution Credit on the federal tax return.  This credit gives low- and middle-income workers a credit of up to 50% of the first $2000 (or $4000 for a joint return) deposited to a retirement account.  That is a credit, not a deduction; it comes directly off the bottom line of what is owed Uncle Sam.  And while many financial planners decried the fact that workers were raiding their 401(k)’s during the recent runup in inflation (and in past recessions, too) just to cover living expenses, what would have happened if there were no 401(k)’s to raid?  Instead, that $185 billion would be waiting for the hapless 30-year-old victims of inflation thirty-seven years down the road when they finally qualify for Social Security.  Small comfort now.  Retirement accounts for many people living on the edge are a lifeline when they face a financial crisis many years before retirement.  Disincentivizing saving in those accounts would do a disservice to the very people that policy purports to help.

I could go on, but let me close by pointing out that the federal government does get its share of taxes from these pre-tax retirement accounts.  They may not tax the money when it goes into the account,  but they tax that money—and all the interest and appreciation it accrued over the years—when it is withdrawn.  And retirement savers DO have to withdraw it eventually.  Required minimum distributions begin at age 73 now.  Those withdrawals increase many retirees’ income to the point that it makes their Social Security benefits taxable, too.  And those taxes DO go to shore up the Social Security system.

The exception, of course, is Roth accounts which are post-tax.  In other words, money deposited into Roth retirement accounts is taxed before it goes in but is NOT taxed when it is withdrawn after age 59 and a half—nor is any of the years of interest and appreciation it accrued taxed.  It’s a bargain for people saving for their golden years.  But frankly, I hardly put any money into a Roth account over the years.  In the back of my head I always thought that it was such good deal that one day the feds would wake up and take away the benefit; and I would end up getting taxed on the money when I put it in and taxed again when I took it out.  And if Congress listens to bird brains like these two economists, it might just happen. 

Until next time,

Roger

 

“Suppose you of you wants to build a tower.  What is the first thing you will do?  Won’t you first sit down and figure out how much it will cost and if you have enough money to pay for it?  Otherwise, you will start building the tower but not be able to finish.  Then everyone will laugh at you.”  Luke 14:28, 29 CEV

Me? A Financial Faker?

 

Robert Benchley, a humorist from the first half of the 20^th century, wrote a short story/essay about how he cured his wife of always telling him to ask other people for directions when they were on a road trip.  In the story, titled “Ask That Man”, Benchley described his frustration over carefully plotting his and his wife’s trips on a map only to have his wife worry that they were taking the wrong road or turning the wrong direction and insisting he ask a nearby stranger or gas station attendant for directions.  He became so fed up with it that he resolved on one trip to do just as she instructed every time—except that instead of really asking for help, he pretended to engage in a conversation with the stranger then came back to his wife with bogus directions that took them ever farther afield.  Finally, after going through this exercise several times and becoming desperately lost, Benchley himself offered to “ask that man over there” for directions—to which his wife blurted out, “No!  Just do what you think best.”   Then he easily navigated his way home.

For any woman reading this, the lesson should be that men HATE to ask for directions.  But I suspect Suze Orman, the personal finance expert of television fame, had that thought in mind when she recently labeled men “financial fakers”.

Ouch.

Orman said on several occasions she had deliberately offered male clients complicated, nonsensical financial strategies that the men not only did not question but pretended to understand.  She insists that 95% of Americans, male and female, are financial illiterates; but the men are especially loath to admit their own shortcoming.

Orman is just one of many voices that are urging Americans to learn more about investing and managing money.  A group of women calling themselves Dow Janes (I love the clever name!) is on that bandwagon, too, with online courses and other teaching tools for women who feel deficient in this area.

As I’ve written before, women stand to be the immediate beneficiaries of the Baby Boomer wealth that will be passed on since they tend to outlive their Baby Boomer husbands by an average of six years.  And bigger gaps in the age of the man and woman in a marriage is becoming more common and spells even longer periods of widowhood.  Knowing what to do with that wealth and how to avoid ever-present scams to separate them from that wealth is critical.  Sadly, most financial advisors are Caucasian males, nearly half of them over age 50.  And as the Washington Post recently reminded us, a 2009 study by Boston Consulting Group found financial services “the industry least sympathetic to women”.  Women report being ignored in meetings they and their husbands have with their financial advisor.  The advisor doesn’t even talk in her direction or make eye contact with her.

No wonder women feel sidelined and maybe a bit reluctant to engage with an advisor to learn more about handling money.  Who wants to be treated as second class?  To them, I say seek out good teachers and good classes.  They are out there.  Being a good listener, regardless of sex, is an absolute prerequisite for the person you select to trust.

And speaking of trust, don’t discount your own instincts, ladies.  A study by the investment firm Fidelity found that women on the whole are better investors than men.  They are naturally more cautious and do not panic sell when markets drop.  Their buy-and-hold strategy is a known best practice for building wealth in the long term. 

Men?  Well, maybe we should be asking for more directions. 

Until next time,

Roger

“Don’t ever think that you are wise enough, but respect the Lord and stay away from evil.”  Proverbs 3:7 CEV

Getting Past the Past

 How many relationship advice books, talks, or articles have you read/heard that preach the importance of forgiveness?  Coming off a holiday in which Christians celebrate the supreme act of sacrifice and ultimately forgiveness, now is a most appropriate time to emphasize the healing power of forgiving others.

But are you forgiving yourself, too?  Only the most dysfunctional person doesn’t feel remorse over something he or she has done or neglected to do.  In January particularly, people wallow in regret over some social or familial misstep or are in despair and self-reproach over their extravagance during the holidays as they start to face their swollen credit card bills.  

When it comes to finances, I think I can safely say that almost no one can recall everything he has charged on his credit card over the last thirty days without consulting his card statement.  And hopefully he IS consulting it every month.  I have a friend that, despite being advised to do so, rarely if ever checked her credit card statements.   She got a shock last week when she discovered by reviewing her credit card bill that she was getting charged extra fees for the allegedly inexpensive items she was buying online and through TV shopping networks.  She swears she’s going to stop shopping like that.  A good New Year’s resolution, yes?

But resolving to do better with your finances is only half the battle, isn’t it?  The bills from December still must be paid, and trying to scrape together the money to pay them off might be a challenge.  You are reminded each month of your past financial sins.  But not moving past the guilt you might feel, not forgiving yourself, nor looking to the future, will inhibit you from implementing the change you desire.

I know.  This sounds very Pollyannish.  The power of positive thinking, self-forgiveness, and so on.  But remember the greatest event of all time that we just celebrated December 25.  It might have been buried in your spending spree, but it was still there and is still here as we begin a new year.  You are not defined by your mistakes or your worst moments.   

Set a couple of financial goals for 2024.  Share those resolutions with a friend who can help hold you accountable to them.  (And maybe your resolutions can also include fostering more of those types of friendships.)  And put the guilt behind you.

Until next time,

Roger

“I, even I, am He who blots out your transgressions, for my own sake, and remembers your sins no more.”  Isaiah 43:25 NIV*

*Scripture quotations taken from the Holy Bible, New International Version® NIV® Copyright © 1973, 1978, 1984, 2011 by Biblica, Inc.™ Used by permission.  All rights reserved worldwide.