This column is running Nov. 1, which is one day before my birthday and two days before the presidential election, and I am not as encouraged about the state of things as I would like to be. I expect that many of you feel the same way.
As I write this column, it is 10 days before the election, and there is yet to be an additional stimulus bill passed by Congress, although there is bipartisan acknowledgement that there are far too many Americans and businesses that continue to be hurting financially and need help from the federal government. There is simply no way that these Americans and businesses can otherwise work their ways out of the pandemic and its restrictions, even with all of the sacrifices and creative efforts we have seen them make. On the one hand, I am taken back by our $3 trillion federal budget deficit this year and worry about its impact on future generations, but on the other hand, I continue to say, like many others, we simply have no choice, under the present circumstances, but to pass at least the targeted stimulus that does have bipartisan support.
The news about the pandemic continues to be mixed, at best, as we head into flu season and the colder weather. With 83,000 new cases in the U.S., a single-day record, the FDA approved Remdesivir as the first drug to treat COVID-19 for hospitalized patients.
All of that said, it seems best for me to just continue to do my job and look at some personal finance issues.
We recently looked at the unsurprising increase in commercial bankruptcies in September, but you might be surprised to learn that consumer bankruptcies were down 36% in September from last year, according to a report by the American Bankruptcy Institute. At first, that may seem counterintuitive, given the state of the economy and all of those Americans out of work who can’t pay their rent or mortgage.
Here are some reasons that have been offered by experts for this lack of filings. First, it is difficult for many individuals to come up with the roughly minimum $1,500 in fees and costs to pursue a case. Second, some may feel that strategically delaying a filing could benefit them more down the road. Third, because many of the civil courts have been closed down because of the pandemic and the many pandemic relief programs, like suspended student loan payments, rent eviction and mortgage foreclosure preventions, and the many other expanded hardship options that have been made available by lenders during the pandemic, debt collectors have not been able to be as aggressive as they otherwise would be.
Fourth, in my experience, too many honest, but unfortunate potential debtors, as opposed to credit abusers, don’t know enough about what really happens in a bankruptcy and as the result of a bankruptcy. For example, there are exemptions, so you don’t necessarily lose everything, like a retirement account. Also, it is possible to start right away to rebuild your credit after a bankruptcy, for example by getting a secured credit card, where you put up a certain amount of money, as security, that becomes your credit limit. Then you use the card like a regular credit card, and you need to pay the balance off every month, on time. My advice to those honest, but unfortunate debtors, is to see a credit counselor or bankruptcy attorney to get an education on your options.
By the way, when students ask me how to build credit, that secured credit card is the first thing that I tell them to do.
I had two interesting conversations this past week about saving, something I talk a lot about in my CARE financial literacy presentations, which I will be doing soon via Zoom for several schools.
First, I took my own advice and talked to my financial adviser about whether we needed to make any moves before the election. By the way, he said no, we have a good plan, but then we somehow got into the whole national deficit and debt thing, and its potential effect on the economy going forward.
I told him how I tell students that they need to save more than any generation before, because of three unique challenges for them. First, there will be Social Security, but I doubt it will be as generous as mine. So, they need to save more for a retirement with dignity and pay more taxes to save Social Security, a double whammy. Second, health costs will increase, so they will need to pay more for it and more taxes to subsidize others who can’t, another double whammy. Then there is the national debt, which is real, not metaphysical, and they will have to pay more taxes to just get it under control, not pay it off. The message — start saving now and save more! My adviser thought that was very important advice.
Then I ran into an attorney at Price Rite, my favorite discount grocery store. He indicated that he has followed my…
Read More: Three days until the election