Credit Cards and Insurance Costs

Posted on by

We recently received notice that our auto insurance will be coming up for renewal. Reading through the several pages of privacy notices and disclosures finally led me to the last page warnings about opening new credit card accounts. There are discussions about the importance of paying balances on time, which wasn’t a surprise. However, I thought many people might not be aware that the “insurance risk score” considers how many new accounts you’ve opened in the past twelve months and the past five years. According to the insurance company, “Research shows that consumers who open a large number of accounts experience more insurance loses.”

I was skeptical about the statement, thinking we have a long term relationship with our insurance agency and they undoubtedly understand our record of filing claims without checking how many new credit cards we’ve requested. I called our agent and was told that insurance companies do look closely at credit cards as a part of their assessment of “insurance risk score,” and opening new credit cards definitely can increase costs of both auto and home insurance. I was told that three new cards in three years would be considered a negative in calculating that score. I inquired whether cancelling seldom used cards would be a good idea and was told cancelling a card is equivalent to opening a card. This was making less sense to me all the time. Why would cancelling a card not be considered a positive if opening accounts is considered to be a negative?

I hope I can learn more. My cynical thought is that insurance companies are happy to have found a way to charge more. They are assisted by all the stores that offer discounts if you apply for their cards. The money saved by having those store cards might be more than offset by additional insurance costs.

 

Working Poor in America

Posted on by

hand to mouthIn 2013, Linda Tirado saw a forum question online: Why do poor people do things that seem so self-destructive? Tirado is a poor person and wrote a lengthy reply. Her essay was picked up by huffingtonpost.com and has become the introduction to her book, Hand to Mouth – Living in Bootstrap America.

Though Tirado makes some wider comments about the working poor, this is a memoir, written about her personal experience. Memoirs are not the genre we typically review for this blog. But public assistance may be debated in the upcoming election cycle and the book offers insight you’ll get nowhere else.

I don’t know if the publisher tried to verify Tirado’s story, but her tales of a chaotic work history ring true for me. I spent my working career at Rocky Flats, where employers invested a lot of time and expense in recruiting and training employees, and therefore invested patience and expense in retaining them. Since I’ve retired I’ve met people whose work seems disposable. Supporting what Tirado writes, their employers invest little in them and fire them for (what seem to me) minor offenses. They invest little in their jobs and quit over (what seem to me to be) minor conflicts with bosses or coworkers.

If you’ve ever asked the question that led to this book – Why do poor people do things that seem so self-destructive? – or the many related questions of why – here are answers in poignant, personal terms.

Tirado notes that this is her story. After her essay went viral she received comments from poor people saying they had different experiences. “That’s fair and true. Keep it in mind,” Tirado writes. “What is neither fair nor true was the criticism I received inferring that I was the wrong sort of poor… that I was not born into poverty… [But that’s not] the only way someone might find herself unable to make rent.”

I’ve read complaints that public assistance goes to people who are undeserving. In contrast, Tirado is surely the deserving poor. She is married to the father of her two children. Her husband is a military veteran. They often work two or more jobs each, have tried to better their educations, and do not use illegal drugs.

Anyone who has been led to believe all poor people live in publicly-funded leisure, or should be ashamed of the help they receive, or that healthcare can be had for free at emergency rooms, owes it to themselves to read Tirado’s book.

I’m struck by the futility of her life: Continue reading →

Straight from the Horse’s Mouth

Posted on by

The UK Phrase Dictionary explains that the expression means “From the highest authority.”  Bettors are always eager to hear which horse is likely to win a race and are eager to hear what stable workers and trainers believe. “The notional ‘from the horse’s mouth’ is supposed to indicate one step better than even that inner circle, that is the horse itself.” The Syracuse Herald published a comment in May 1913, “I got a tip yesterday, and if it wasn’t straight from the horse’s mouth it was jolly well the next thing to it.”

Too Much Money

Posted on by

US_productivity_and_real_wagesI’m afraid our country has too much money – or, at least, too much money in the wrong places.

America had a wonderful run after World War II when the middle class blossomed, but over the past thirty years or so there has been a gradual redistribution of wealth upwards.

Over the decades, the wealthy and powerful have tweaked the tax code and financial regulations to make it easier for them to make and keep money. When rising workforce productivity does not lead to rising wages, something seems unfair.

This trend has been documented in many places, for example:

“Unequal wealth distribution is hardly a new or uniquely American problem. In fact, it’s been prevalent throughout society since humans first built civilizations: A small minority of aristocrats has always wielded the most power throughout history.

“The [top] 1 percent [executives, doctors, lawyers and politicians, among other professions] are worth about 70 times the worth of the lower classes.

“It’s historically common for a powerful minority to control a majority of finances, but Americans haven’t seen a disparity this wide since before the Great Depression — and it keeps growing.” forbes.com

Ideally, the wealth at the top would be used to capitalize increased production and an expanding economy, but America today doesn’t need more production. Wealthy people, quite reasonably, want to invest money in a safe place that earns a decent return, which fueled the 2008 recession debacle – the financial industry decided to meet the demand through fraud.

Are we in the same place again?

I fear we will see increases in corporate corruption and more frequent bubbles. If more of this wealth (and the income that precedes it) belonged to the middle and lower classes, they would spend it on products and services which would grow the economy. That would be good for everyone, but I doubt many wealthy Americans (despite Warren Buffet) see their own enlightened self-interest here.

By the way – it may not be just the wealthy driving the problem. If Wall Street can count on a certain amount of money flowing into the stock market through 401k’s every month, but that money is not needed to increase production, will it just feed corruption and bubbles? More money to Wall Street could have negative consequences. This leads me to deep skepticism about, for example, privatizing Social Security Insurance.

The obvious solution many liberals jump to is to tax the wealthy and use that money for services to the rest of the country – to build roads and bridges perhaps, or provide direct subsidies. It would be better, in my opinion, to reverse the many tweaks to our economy that have lead to this imbalance, but that would involve a huge amount of work. With such polarization in our legislatures today, the problem is overwhelming. But returning the middle and lowers classes’ wealth seems imperative to our future.

The Fate of the Earth

Posted on by

fate-of-the-earthThis book by Jonathan Schell presents a stark prediction of the nuclear apocalypse. I found the writing style to be too grandiose, but kept slugging away to consider the author’s point of view. As an example of it being grandiose, the cover tells us, “Schell has taken upon himself the task of speaking for man, and acting for man; and it can be hoped that what he has written here will lead the way for many.” More to the point of the content, “Schell describes, within the limits of what is dependably and unarguably known to science, a full-scaled nuclear holocaust.” He writes as if he needs to convince readers that nuclear war would be bad. The book was written in 1982 when multiple books were written predicting the end of civilization. I recommend this one as being a good example of that genre.

The first section of the book is titled “A Republic of Insects and Grass,” which describes what would survive a nuclear holocaust. Note there is no indication any humans would survive. The book begins with irrefutable facts about the number of nuclear weapons and megatonnage that have been built since the first nuclear detonation at Alamogordo, New Mexico on July 16, 1945. The book then gives a brief primer of the horrible effects of a nuclear exchange. President Dwight Eisenhower recognized the risks in a 1956 letter that said, “…one day both sides have to ‘meet at the conference table with the understanding that the era of armaments has ended, and the human race must conform its actions to this truth or die.” There are many examples of political figures making statements that reinforce or confirm that comment. Secretary of State Henry Kissinger said in 1974, “…the accumulation of nuclear arms had to be constrained if mankind is not to destroy itself.” President Jimmy Carter said in his farewell address that after a nuclear holocaust, “…the survivors, if any, would live in despair amid the poisoned ruins of a civilization that had committed suicide.” (Those were surprising words for a President who authorized more nuclear weapons programs than any other President.) Continue reading →

Law of Holes

Posted on by

Wikipedia says “the law of holes refers to a proverb which states that ‘if you find yourself in a hole, stop digging'”. This means, if you find yourself in an untenable position, you should stop and change, rather than exacerbate it. Wiki identifies the first use of a similar phrase and meaning in 1911 in the Washington Post. A version closer to the modern phrase has been attributed to humorist Will Rogers, and a modern version appeared in print in 1964 in The Bankers Magazine. The phrase has become popular in the UK thanks to British politician Denis Healey in the 1980s, who expressed the thought as “’when your opponent is in a hole and digging, for god’s sake don’t stop him’ or alternately ‘why would you want to take away his shovel?'” [ipglossary.com] If you sort out the “black hole” references in a google search, this political meaning seems most popular.