Tag Archives: money

3 Money Mistakes Newlyweds Make

Being a newlywed is awesome. I reflect on that season of my life as one filled with joy and anticipation. Sure, that first year of marriage was full of challenges, enormous adjustments and unexpected changes, but on the whole it was great.

We found such relief in finally being married and out of engagement. Engagement is a funny time. You often take on new priorities and responsibilities you’ve never had before (like part-time event planner), and that can wear on you and the relationship after awhile. Engagement is meant to be a temporary phase in life, and most friends I know, myself included, have been thrilled to see an end to it — the lists, planning, preparation, etc. In the midst of all of the planning and celebrating, the topic of money is often overlooked (aside from the wedding budget). Yet studies tell us money is a top cause of conflict and divorce among couples. Money can be hard to talk about. Our culture has made money-talk a taboo subject, which can make it all the more difficult to start talking about money (regularly) with another person, especially if you were used to keeping your money matters private for so many years.

Here are a few money mistakes I see newlyweds make. Regardless of how long you’ve been married, though, it’s always important to check in and make sure you’re not letting the important things fall by the wayside.

1. Forgetting to Update Important Plans and Documents

When you start a job and enroll in your employer’s various benefits, you are prompted to assign beneficiaries to things like your 401(k), group life insurance, even an emergency contact in some instances. Getting married means it’s time to review these beneficiary designations.

You should also review current insurance policies and see if you need to add your spouse to the plan or review your coverage entirely. If you are both on individual health insurance plans through work, it’s worth comparing the cost of keeping your individual plans versus one of you joining the other’s plan. It’s possible you’ll save money by being on the same plan. When evaluating the cost, consider monthly premiums, deductibles, co-insurance and co-pays.

If you happen to have estate-planning documents like wills, health care proxies, living wills, etc., these documents also warrant review and updating when you get married.

2. Overlooking the Need to Get Organized

I know, it’s one more administrative thing that’s not fun to think about or act on, but it is important to be organized. If you don’t talk about it, habits will naturally form, and you’ll likely end up with unnecessary confusion and stress, which can lead to conflict. Don’t be scrappy with your finances. I survive by being scrappy as a parent (I’m a mom of two toddlers). But this ability doesn’t translate as well with finances.

Try this: Sit down and list out all the accounts each of you have and then talk about which accounts you want to join, leave separate, combine, close, etc. Simplicity is a wonderful thing. Decide which account(s) you’ll use for routine expenses, where you’ll keep your emergency savings, longer-term savings and investments. Even if you plan to keep accounts separate, have this conversation so it’s intentional and there’s no confusion about how bills and shared expenses will be handled.

You can also make your credit reports a part of this process — so you both have an understanding of each other’s credit history, and create a plan for building better credit, or maintaining your great credit if you have it. If you’re not familiar with your credit reports, you may find them to be overwhelming at first — here’s a guide to deciphering your credit report. You can get your free credit reports once a year from each of the three major credit reporting agencies, and you can get a free credit report summary on Credit.com, updated monthly.

3. Avoiding Money Talks

Money is a leading cause of conflict and stress for couples, which can be enough to discourage some people from discussing the topic at all. If you learn to talk about money early on (especially when times are good and emotions aren’t running high), you’ll be prepared when money issues arise.

Talking about money feels like creating a new habit. Sometimes you just have to start doing it, even before you’re comfortable doing so, and allow the habit to take shape.

Here are a few starting points for your conversations about money:

  • Your history with money (What lessons about money did you learn as a child?)
  • Current stress points with money
  • Goals you hope to achieve with your money
  • Expectations for your current lifestyle and how you want to use your money
  • Spending habits (Where do you spend money the easiest, with most resistance?)

A Word of Encouragement

Financial unity and stability with your spouse is a process. You don’t have to have all the answers or all of the kinks worked out from the beginning.

If you and your spouse have different approaches to money, (how you spend versus save, what you value, etc.), this doesn’t have to mean never-ending conflict. It’s possible you both need to learn to compromise, and pushing each other toward a middle ground may be the healthiest thing for both of you. And that’s one of the great benefits of marriage — the messy but beautiful process of refining each other and growing together in ways you never could alone.

This article originally appeared on Credit.com and was written by Julie Ford.

How to Close Old Work Comp Claims

You know the claims I’m talking about: the really old claims where the injured worker is representing himself. Let’s call them the SRAs, self-represented applicants. Active SRAs file one court paper after another, causing the insurer or self-insured employer to fund what seems like a never-ending stream of visits by a representative to the board.

The SRA’s papers may not state a recognizable claim. Pressed for time, the information and assistance officer may give the SRA short shrift. Defense attorneys with varying degrees of patience usually do, too.

But what if what the parties really need is a sort of an interpreter, a mediator?

Mediating an SRA’s claim demonstrates respect for the SRA. The feeling of lack of respect and inability to get heard is often what drives the SRA to keep summoning the employer to court.

You may ask: “Why would I waste time and money on a worthless claim?” Because you’re spending time and money now, and mediation is a way to end that endless cycle.

Sometimes the SRA has a bona fide complaint but without professional assistance has not been able to communicate it. The neutral mediator is often able to re-state the concern in a way the parties can address and get past. The mediator can help each party see the other side’s point of view.

Animosity can obstruct effective communication. Caucusing allows parties to avoid direct confrontation. The parties are separated, and the mediator shuttles between rooms. The mediator presents the parties’ views in a way most likely to lead to resolution.

At a minimum, mediation can improve communication and relations between the parties.

The Defining Issue for Financial Markets

For anyone who has spent time on the open sea, especially in a small craft, you know the sea can be quite the moody mistress. Some days, the gale winds are howling. Some days the sea is as smooth as glass. The financial markets are quite similar.

In late August, the U.S. equity market experienced its first 10% price correction in four years. That ended the third longest period in the history of the market without a 10% correction, so in one sense it was long overdue. But, because the U.S. stock market has been as smooth as glass for years now, it feels as if typhoon winds are blowing.

Cycles define the markets’ very existence. Unfortunately, cycles also define human decision making within the context of financial markets.

Let’s focus on one theme we believe will be enduring and come to characterize financial market outcomes over the next six to 12 months. That theme is currency.

In past missives, we have discussed the importance of global currency movements to real world economic and financial market outcomes. The issue of currency lies at the heart of the recent uptick in financial market “swell” activity. Specifically, the recent correction in U.S. equities began as China supposedly “devalued” its currency, the renminbi, relative to the U.S. dollar.

Before we can look at why relative global currency movements are so important, we need to take a step back. It’s simply a fact that individual country economies display different character. They do not grow, or contract, at the same rates. Some have advantages of low-cost labor. Some have the advantage of cheap access to raw materials. Etc. No two are exactly alike.

Historically, when individual countries felt the need to stimulate (not enough growth) or cool down (too much inflation) their economies, they could raise or lower country-specific interest rates. In essence, they could change the cost of money. Interest rates have been the traditional pressure relief valves between various global economies. Hence, decades-long investor obsession with words and actions of central banks such as the U.S. Fed.

Yet we have maintained for some time now that we exist in an economic and financial market cycle unlike any we have seen before. Why? Because there has never been a period in the lifetime of any investor alive today where interest rates in major, developed economies have been set near academic zero for more than half a decade at least. (In Japan, this has been true for multiple decades.) The near-zero rates means that the historical relief valve has broken. It has been replaced by the only relief valve left to individual countries — relative currency movements.

This brings us back to the apparent cause of the present financial market squall — the supposed Chinese currency devaluation that began several weeks ago. Let’s look at the facts and what is to come.

For some time now, China has wanted its renminbi to be recognized as a currency of global importance — a reserve currency much like the dollar, euro and yen. For that to happen in the eyes of the International Monetary Fund (IMF), China would need to de-link its currency from the U.S. dollar and allow it to float freely (level to be determined by the market, not by a government or central bank). The IMF was to make a decision on renminbi inclusion in the recognized basket of important global currencies in September. In mid-August, the IMF announced this decision would be put off for one more year as China had more “work to do with its currency.” Implied message? China would need to allow its currency to float freely. One week later, China took the step that media reports continue to sensationalize, characterizing China’s action as intentionally devaluing its currency.

In linking the renminbi to the dollar for many years now, China has “controlled” its value via outright manipulation, in a very tight band against the dollar. The devaluation Wall Street has recently focused on is nothing more than China allowing the band in which the renminbi trades against the dollar to widen. With any asset whose value has been fixed, or manipulated, for so long, once the fix is broken, price volatility is a virtual guarantee. This is exactly what has occurred.

China loosened the band by about 4% over the last month, which we believe is the very beginning of China allowing its currency to float freely. This will occur in steps. This is the beginning, not the end, of this process. There is more to come, and we believe this will be a very important investment theme over the next six to 12 months.

What most of the media has failed to mention is that, before the loosening, the renminbi was up 10% against most global currencies this year. Now, it’s still up more than 5%, while over the last 12 months the euro has fallen 30% against the U.S. dollar. Not 4%, 30%, and remarkably enough the lights still go on in Europe. Over the last 2 1/2 years, the yen has fallen 35% against the U.S. dollar. Although it may seem hard to believe, the sun still comes up every morning in Japan. What we are looking at in China is economic and financial market evolution. Evolution that will bring change and, we assure you, not the end of the world.

Financial market squalls very often occur when the markets are attempting to “price in” meaningful change, which is where we find ourselves right now.

What heightens current period investor angst is the weight and magnitude of the Chinese economy, second largest on planet Earth behind the U.S. With a devalued currency, China can theoretically buy less of foreign goods. All else being equal, a cheaper currency means less global buying power. This is important in that, at least over the last few decades, China has been the largest purchaser and user of global commodities and industrial materials. Many a commodity price has collapsed over the last year. Although few may realize this, Europe’s largest trading partner is not the U.S., it’s China. European investors are none too happy about recent relative currency movements.

Relative global currency movements are not without consequence, but they do not spell death and destruction.

A final component in the current market volatility is uncertainty about whether the U.S. Fed will raise interest rates for the first time in more than half a decade. Seriously, would a .25% short-term interest rate vaporize the U.S. economy? Of course not, but if the Fed is the only central bank on Earth possibly raising rates again that creates a unique currency situation. Academically, when a country raises its interest rates in isolation, it makes its currency stronger and more attractive globally. A stronger dollar and weaker Chinese renminbi academically means China can buy less U.S.-made goods. Just ask Caterpillar and John Deere how that has been working out for them lately. Similarly, with a recent drop in Apple’s stock price, are investors jumping to the conclusion that Apple’s sales in China will fall off of the proverbial cliff? No more new iPhone sales in China? Really?

The issue of relative global currency movements is real and meaningful. The change has been occurring for some time now, especially with respect to the euro and the yen. Now it’s the Chinese currency that is the provocateur of global investor angst. Make no mistake about it, China is at the beginning of its loosening of the currency band, not the end. This means relative currency movements will continue to be very important to investment outcomes.

We expect a stronger dollar. That’s virtually intuitive. But a stronger dollar is a double-edged sword — not a major positive for the near-term global economic competitiveness of the U.S., but a huge positive for attracting global capital (drawn to strong currencies). We have seen exactly this in real estate and, to a point, in “blue chip” U.S. equities priced in dollars, for years now.

In addition to a higher dollar, we fully expect a lower Chinese renminbi against the dollar. If we had to guess, at least another 10% drop in the renminbi over next 12 months. Again, the price volatility we are seeing right now is the markets attempting to price in this currency development, much as it priced in the falling euro and yen during years gone by. Therefore, sector and asset class selectivity becomes paramount, as does continuing macro risk control.

Much like a sailor away far too long at sea, the shoreline beckons. We simply need to remember that there is a “price” for being free, and for now that “price” is increased volatility. Without question, relative global currency movements will continue to exert meaningful influence over investment outcomes.

These are the global financial market seas in which we find ourselves.

Why We Must Stop ‘Bucketing’ Healthcare

Health insurance plans should be designed to spur the use of the highest-value pharmaceuticals as well as the highest-value care delivery services.

In some cases, plans do seek to ensure access to the highest-value care regardless of how it is delivered. Think for a moment about implantable devices, from drug-eluting coronary stents to replacement joints. Patients don’t have to pay for the stent outside of their insurance; it’s included in the total cost of their care because it’s less expensive to cure an individual’s heart or hip than it is to pay for the multiple episodes of care required by a lack of effective treatment.

Yet many plans are set up with “buckets” of money that don’t make sense and destroy value. For example, bucketing means there are plans that discourage the use of high-value blood pressure medications because the broader adoption of this therapy caused the plan to exceed its budget for medications – even though the therapy saved dramatically on the cost of hospital and disability care and the reduced incidence of heart attacks and strokes. (As a side note, these savings materialize much more quickly than many typically expect. Better use of blood control medications can reduce the incidence of strokes and heart attacks in as little as six months.)

There are also many specialty medications that are exceedingly expensive and tremendously effective. Their use can reduce the overall costs of care, but bucketing means the payment system often isn’t sure how to incorporate them. Examples include new medications for curing hepatitis C as well as “orphan drugs” for rare diseases, including unusual expressions of hemophilia, cystic fibrosis and Gaucher’s disease.

So what’s stopping providers from inciting the use of high-value medications? First, too few of the medications (or treatments of any sort) have good outcome data that shows results and costs over the full cycle of care. Second, few providers are set up to provide comprehensive, full-cycle care.

The way to get these high-value medications included in care is to eliminate the use of bucketing and instead look at the total cost of care for a patient’s medical circumstances. In the case of an infection like hepatitis C, that cycle of care would be from the time of diagnosis until the patient is cured. For conditions perceived as non-curable or lasting for an extended duration, it would typically be for a period of time or through a particular episode (e.g., an acute flare-up of Crohn’s).

This has been done for Gaucher’s disease, particularly in countries with nationalized healthcare, because the new drugs dramatically reduce the total cost of care. Untreated, the condition requires multiple, expensive and painful surgeries. For plans to encourage value-based care, they must similarly minimize fragmentation and instead consider the holistic needs of each medical condition. Only then can the industry truly improve health outcomes and reduce overall spending.