Before I finish on the flat rate taxes for 2022 and look at some personal finance reminders, there are a few things that caught my eye this week. Of course, as I’ve written many times, these things are often old news by the time the column goes out on Sundays.
First, as I have often stated, too many people in this country have not saved and are not saving enough for a retirement with dignity, and the largest increase in personal bankruptcy filings before the pandemic was among people. 65 and over because too many of them had not saved enough for retirement, had not budgeted realistically for retirement, and were still living beyond their means on credit cards. An acknowledgment of this credit card element is contained in a reverse mortgage ad that I finally focused on this week. It was clear that this was for “older homeowners” but also that one of the things you could use the product for was paying off high interest credit cards. The financial industry is aware of the credit card problem in this age group and is marketing it.
Speaking of reverse mortgages, we’ve discussed this in the past, but here are some possible drawbacks to look out for, according to get.askmoney.com. That is why you need reliable legal advice before taking out such a mortgage. First, you may not be able to refinance the loan; there are generally high upfront costs, higher than those of a refinance; and interest rates, which can be adjustable and subject to changes in interest rates, are generally high. Second, they may have a higher risk of foreclosure; you may not be able to move in, even in a retirement home, without paying; and there could be spousal issues, if you die and your spouse was not at least 62 years old when the mortgage was entered into. Every mortgage is obviously different, but these are issues to be aware of.
Second, I needed replacement 123/3 volt lithium batteries for my alarm system, so I went out to do my usual “comparison / unit price”, something you need to perfect in 2022, if you don’t. ‘re not already engaged. At a local hardware store, one was $ 9.50, but a two-pack was $ 14.99 (a unit price of $ 7.50). At Home Depot (even without my vets discount), a two-pack cost $ 12.97 (a unit price of $ 6.50); a six-pack cost $ 20.99 (a unit price of $ 3.50); but a 12-pack was $ 29.99 (a unit price of $ 2.50, a steal if you end up needing 12). By the way, a two-pack on Amazon was $ 11.99 (a unit price of $ 6, with no shipping costs). I went with the 12-pack to Home Depot (a unit price of $ 2.25 with my rebate) and will use them.
On the topic of flat taxes, some form of hybrid tax, and a goods and services tax, I would like there to be a series of roundtable discussions on TV that the American public could watch and find out about. pros and cons of each, and how they might in fact be affected by them as a taxpayer, given such things as their income level, whether they detail their income taxes, whether donation taxes and / or estates are a problem for them, etc.
I remember seeing a group of PBS experts years ago discussing solutions to address long-term financial problems in the social security system. They generally agreed early on that increasing taxes on some entities and reducing benefits for some was the winning solution, and then settled for their preferred combinations of taxes and benefits. It was incredibly constructive and informative. There were no politicians, just academics.
Maybe for the flat tax, a hybrid and a GST, there could be three panels over three weeks. One is made up of non-partisan academic economists, a second of politicians and a third of behavioral economists, to re-equip us for possible changes. Maybe PBS could do it. It would be a great public service, and it would shut me up.
Let’s finish with a few of these personal finance reminders for 2022.
First, given the likelihood of interest rates going up to three times in 2022, it’s important that you have good credit if a loan is in your future in 2022. Maybe not by much, but loans like auto loans, private student loans, and mortgages will be more expensive, so the better your credit, the better your chances of qualifying and getting a great interest rate. So, make sure you get these three free credit reports, spread over 2022. Also, if there are any errors in any of these, take the necessary steps to correct them. Plus, if your credit score isn’t as high as you’d like, now is the time to fix it. We’ve talked about this in the past, but three things you can do are: pay all of your bills on time; if you have credit card debt, which hopefully you’ll pay off, or at least reduce, make sure it’s no more than 30% of your available credit; and work on lowering your overall debt-to-income ratio. There is a lot of information on the Internet to help you increase your credit score.
(By the way, here’s a bit of humor about the credit score. A man says he had his identity stolen, but it was okay. The thief returned it because his credit score was so low.)
Second, with inflation continuing and increasing in some areas, be proactive and be aware of reports of commodities that seem to be increasing for sure, and then consider stocking up, if possible. So, for example, I stocked up on instant coffee, as coffee prices seem to be going up yet again.
We’ll look at a few more reminders next time.
John Ninfo is a retired bankruptcy judge and the founder of the National CARE Financial Literacy Program. Find his previous weekly columns at http://www.mpnnow.com/search?text=Ninfo.