Independent, Fee-Only Financial Advisor

Independent, Fee-Only Financial Advisor

Thursday, November 21, 2013

You Go, Girl!

I am absolutely over the moon about the impending approval of Janet Yellen as the next Chairperson of the Federal Reserve Bank. Dr. Yellen will be the first woman to hold this position. I'm especially proud of the fact that she didn't get there with a wink and a nod, but with a lot of hard work.

Dr. Yellen has been serving as the Vice-Chair of the Federal Reserve alongside Ben Bernanke. She has years of experience behind her in the central banking arena and is an intellectual powerhouse. I've been following her for the past few years, anticipating just such a moment.

So I acted a bit like a groupie as I watched her testimony before the Senate Banking Committee. She spoke clearly and confidently about the dual mandate of the Fed. Yes, they must keep inflation low, but first they must keep unemployment low. That second goal has alluded them, thus the aggressive action of the Fed over the last few years.

Yellen did not shrink from the committee's questions. She answered in simple and direct language that showed she possesses the heart of a teacher. She instructed Congress. Further, she lectured them on their responsibilities in a financial crisis. The Fed has done its part in the face of a dire financial situation. Congress has shirked its duty in the fiscal policy area.

The strength of this woman showed throughout her appearance. She will not shrink in the face of criticism. She will not deviate from her path and plan. This woman is no shrinking violet.

With nerves of steel and a twinkle in her eye, Dr. Yellen steps into the most powerful position on the planet. She will be the next Chairperson of the Federal Reserve Bank of the United States.

You go, girl!

Tuesday, November 19, 2013

Beach Bonanza!

When we make our regular trips to The Redneck Riviera (aka Gulf Shores), we always pick up the local newspaper called The Islander. The Islander is usually full of useless information and a ton of fun, personal stories-- my favorite kind of publication.

An article of actual significance caught my eye on the front page, though. The City of Orange Beach voted to give each of their 433 employees a $2000 bonus for the year. What??? What city employee EVER gets a bonus? And how can ANY municipality afford such a luxury in these difficult times?

It seems that Orange Beach ended the year with a $5 million dollar bonus. Whoa! How did this happen? Was BP so generous to them that they were able to line their coffers for the year? Or maybe business was just so good on Alabama's coast that tax revenues overflowed.

I suspect the truth is somewhere in between. Regardless, this abundance is a sign of good economic activity in an area that has suffered hard hits from natural disasters and man-made disasters in years past. Well, good for them!

It just shows that economic recovery often comes unevenly. The health of any economy depends on local conditions and may not match national averages.

Just look at Detroit. The question to ask there is whether they will ever recover. Or Ohio. Beaten down by the loss of manufacturing jobs, they are gaining some traction finally. Or Mississippi-- wasn't great before the recession and just now getting back to status quo.

Then there's Orange Beach, Alabama-- land of milk and honey. Hurricanes and oil spills are only distant memories in Orange Beach. That $2000 bonus going into every city employee's pocket will only add to their good fortune.

And the Great Recession of 2008? In Orange Beach, it's "What recession?"

Thursday, November 14, 2013

The Policy of Personal Finance

Yesterday I participated in a panel discussion on personal finance. The event was held at Mississippi College and was kicked off by Governor Bryant.

Not being a fan of  the Governor, I held my tongue as he held forth on financial issues and the state of Mississippi's economy. He pointed to high rankings for Mississippi on business issues. I'm not sure who produced these rankings or how sound they are. After all, we still have one of the highest unemployment rates in the nation. We have the highest poverty rate and the lowest median household income. Nothing to be proud of here. Just about cut my tongue in two listening to him crowing about his accomplishments.

The Governor also used the time-worn phrase, "Government does not create jobs." Of course, this came after listening to his intro. Bryant has spent his entire adult life in public service. Government created HIS job. He mentioned one short stint in the private sector as an insurance agent. He didn't last. Guess some people are just meant for government service.

The first panel was composed of Representative Greg Snowden from Meridian, Treasurer Lynn Fitch, and State Insurance Commissioner Mike Chaney.

Fitch focused on her efforts to include Personal Finance in the K-12 curriculum. This is a laudable effort. She commented on the importance of educating our workforce about money management. I could not agree more. Of course, I cringed a little at her grammar. She might be good with money, but she could use a little more time in English class.

Chaney came out of the shoot talking about Obamacare. He asked the audience who didn't have health insurance. Several hands went up. He encouraged folks to use the website... in December! He gave out the toll-free phone number and talked about the navigator program. I was surprised at his audacity. Of course, I was also surprised that we had both Chaney and Bryant in the same room and no one ended up with a bloody nose!

Snowden was a total unknown to me. Don't know if he's a "D" or "R." I like that in an elected official. He addressed our budget woes and hammered on healthcare. He said the biggest issue we face is the rising cost of healthcare and how it is consuming our state budget. Couldn't agree more.

Fitch later spoke about the two college savings programs sponsored by the State of Mississippi. While MPACT is in decent shape, it remains frozen as we consider ways to fully fund the program. She claimed that Mississippi's MACS program is one of the best in the nation. I took issue with that.

Later, when I spoke personally to her, I voiced my concerns about the poor performance of the TIAA-CREF funds. She looked like a deer in the headlights and couldn't get away from me fast enough. Lost points with me on that one.

Chaney won me over big time when he addressed the flood insurance program. I'm from the Coast, so this is an issue that's near and dear to me. He is suing and is trying to get Congress to reconsider funding the program. He decried the ultraconservatives who believe government has no place in private insurance. He said, "These are regular folks down there. They are building our ships at Ingalls. Working at Stennis Space Center. Just doing their jobs. They need help." He gave figures on the huge increases in property insurance faced by many residents. Some are having to walk away from their homes as a result. You go, Mike!

Finally, it was my turn on a panel with one of my colleagues, Bobby Perkins, and an alum who was with our sponsor, David Landrum. It was a great opportunity to hold forth on one of my favorite topics. I was delighted to have a platform to educate folks about personal finance issues.

I wasn't too sure about this event going into it, but it turned out well. I learned a few things. I got to see our elected officials up close, and I got to spread the word about the importance of sound financial management. All in all, a good morning.

Thursday, November 07, 2013

My Family's Experience With

My family has been waiting for the website,, to go live. Ken and I have been self-employed our entire married lives. We know the hassles that come with trying to find decent coverage.

My first husband worked for General Motors. This was in the day of fabulous coverage. When Keith got cancer at age 32, the coverage was a Godsend. Week after week, the bills piled up. One weekend of home health care came in at a whopping $14,000. The weekly drug bills were staggering.

Every time he went back into the hospital, we looked at each other and said, "How do people do this who don't have insurance?" After his death, I filled a drawer with the hospital and doctor bills and waited for the dust to settle. After the insurance company paid off the claims, I was left with a few hundred dollars to pay. What a relief!

I kept that great insurance until I remarried. Then it got really scary. Suddenly, we were on our own trying to get coverage that didn't break the bank. We have many horror stories about bad policies and rising premiums. As I crossed into mid-life, my policy was going higher than Ken's. I was still a long way from Medicare and nervous about where this would all end.

Then I started teaching at Mississippi College. This gave me access to their employer plan. Ken kept his BCBS individual plan, but the arrival of had us curious. Could he find better coverage and/or a better deal online?

The website has been a technological nightmare. Ken started trying to log on October 1st but with no luck. About a week later, he finally got in. There were some missteps along the way, but he finally got to the part where you get quotes.

First, some things to note. Age and state of residency are the only considerations in setting premiums. Ken did not answer questions about health problems. Thankfully, he's pretty healthy, but he's 57 years old. Second, household income determines eligibility for subsidies. We don't qualify, so the premiums listed for him are the starting points for coverage.

Mississippi has limited options and some of the highest premiums in the country due to our limited access to health providers. While some states offer a high deductible catastrophic coverage, Mississippi does not.

The bronze plan listed a monthly premium of $448 for him. It was hard to tell if this offered more or comparable services than his BCBS plan offers. His BCBS plan is $319 per month. He decided to stick with his individual plan for now. He logged off with his curiosity satisfied.

And what about his BCBS plan? Would he get the dreaded cancellation notice? Well, he got an e-mail about a change in the policy. We were a little nervous. Turns out they are going to increase the premium to $335 per month. Whew! That doesn't seem too bad.

For now, my coverage stays with my employer at the same rate as before. About half of Americans get their insurance through their employer. Another large portion gets coverage through Medicare or Medicaid. Only a small slice of the population will actually need these exchanges.

And while Ken is forgoing this coverage for now, it's reassuring to know we have options. After all, Medicare is still a long way off. And a serious health incident could derail our finances without good coverage. I'm telling you, folks. It's scary NOT having health insurance. For that reason, I hope this thing works.

Friday, November 01, 2013

An Easy Fix For Unemployment

On Wednesday, I attended our local CFA society luncheon at Nick's. The meal, alone, is reason enough to make the trek to Fondren, but this week's presentation added to the value.

Dr. Eugenio Aleman, Senior Economist at Wells Fargo Securities, had flown in with his PowerPoint slides and his quiet demeanor to address the condition of the U.S. economy. It was quite enlightening.

First, Dr. Aleman pointed out that federal spending has been declining in the last few years. Seriously? With his graphs, he showed the clear bump ups in spending corresponding to recessions in the economy but says our current condition is not alarming. He is not a deficit hawk.

Next, he spent time showing facts and figures on the state of our employment. Clearly, the weak jobs numbers reported from month to month have much to do with the decline in government jobs. But Dr. Aleman says that it's not just any government job that is the problem. While federal government jobs have remained stable, we have lost considerable positions on the state and local level.

States and municipalities, facing declining tax revenues, slashed government payrolls and added to the pain of unemployment. The decline in federal government support adds to this problem. When I looked at those figures, I thought of an immediate and easy fix.

Interest rates are at all-time lows. We expect the Federal Reserve to keep rates low until sometime in 2015. Mississippi has a stellar credit rating...


Why not have the State of Mississippi go to the bond market? Our universities have been screaming about the list of on campus projects that have gone undone. We have roads and bridges in need of repair. Certainly, there are many other projects that could help improve our lives and economy.

Why not take advantage of the low interest rates and lever up? Low cost money locked in for several years would accomplish two things. First, we get stuff done!! Second, getting stuff done means more Mississippians have jobs.

This all just seems too easy and too sensible. Then I remembered our legislature and Governor-- not an ounce of sense among the bunch! Oh, well, it was a good thought.