Excerpt from the East Valley Tribune newspaper December 10. By Rebecca Warren, certified financial professional planner and certified senior adviser at Warren Financial Services.

As the long-term care (LTC) insurance market has matured over the past 20 years, features have been added to the costly policies to make them more attractive in a tougher economy. The IRS has helped out by making a portion of the premiums tax-deductible.

Enter the “shorter-term” long -term care policy for individuals who are willing to play the odds. These policies eliminate the “lifetime” feature in favor of a shorter time limit on benefits, usually between two and three years, currently the length of an average nursing home stay. These shorter-term plans can potentially cut the cost of average annual premiums in half, and if couples buy a combined policy, they potentially may cut the premium cost further.

The idea of lower-cost LTC insurance is certainly attractive, but it makes sense to get some advice and ask some very important questions before committing. You will need to assess how well-prepared your finances are to sustain a serious long-term illness with the current national average of $70,000 in annual nursing home bills that would not otherwise be covered by (health) insurance.

Rebecca Warren advises your to assess your health, but to understand that while you may be in good health now, this is still no guarantee that in the future you will only need two or three years of expenses. Warren also noted that 40% of long-term care is provided to individuals between the ages of 19 and 65.

Having a long term care safety net may be more important for women, since women typically live longer than men and individually women earn less than men. But financial resources need to be considered along with their health history.

And if you don’t want to go to a nursing home? The idea is to cover every eventuality. The best-designed policies will pay the same amount of benefit for a long-term care facility, assisted living facility, an adult day care center or in the home.

Another consideration Warren says is what’s the record of particular companies in this business. Over the past generation, more companies have gotten involved in the LTC insurance business, and it makes sense to see not only who the leaders are at the time you’re buying and what they’re offering, but how financially healthy these companies are and have been over the course of time.

Excerpt from the East Valley Tribune December 7, 2008. By Edward Gately, Tribune

Banks cutting back when needed most.

The $700 billion bailout for banks is moving along, but you wouldn’t know it. I thought - my mistake - that the bailout money was not just to prop up failing or financially troubled banks, but to also get credit flowing in a restricted credit market. Obviously not.

Michael Sullivan, director of education at Take Charge America, a Valley-based (Phoenix), nonprofit credit counseling agency said, “It’s obvious already from the record number of calls we’re getting that consumers are feeling the impact of tighter credit, and when combined with job losses, it’s forcing many, many people over the edge. Sullivan continued, “The credit crunch for consumers is probably really just getting under way now and, as banks tighten things, it will get worse.”

American Express, siting a “challenging economic environment,” raised it regular interest rates by 2 to 3 percentage points on certain groups of cardholders, said spokeswoman Desiree Fish. It is also raising rates on cash advances, late payments and defaults as well as increasing the charge for transactions involving foreign currency from 2 percent to 2.7 percent.  At Bank of America and Wells Fargo customers that get notice of rate increases are allowed to close their accounts and repay the balances under the original terms if the customers opt out. Citibank allows customers who opt out of rate increases to continue using their Citicards until they expire, and then pay off the remaining balances under the old pricing terms.

Who gets hit the hardest with the increased interest rates and fee increases?  Jim Pierpoint of Bank of America said, “We definitely take into account both how a customer has performed with us - and we’ll also consider external risk factors, such as taking out numerous loans(,) using substantially all of the credit available to them or defaulting on loans to other lenders.”

According to Take Charge America’s Sullivan, those concerned about increase bank fees probably shouldn’t be using credit cards at all. He goes on to say, “That will eliminate the interest and it will eliminate all of the fear,” he said. “Of course, it will also eliminate a lot of the profits to banks, but that’s fine. People need to look out for themselves right now.” One couple living in Phoenix, AZ , said their solution is to skip credit cards and pay as they go. “Its hard still because (Sebastian) just go laid off so our budgets are tight, but we just live that way, not on credit. We had some (credit cards) before, but it ended up hurting us in the end so we just got rid of them.

So what does all this tell us. Well for one, if you prudently use and manage your credit, you probably won’t fall into the risk category that will get your rates increased, fees added or accounts closed. If you are maxing out your credit limits on cards and lines, past due with creditors or taking out too many loans, you will likely get notifications of rate and fee increases or having you credit lines closed.

What I do find interesting, is that I still receive 2-3 pre-approved credit card offers weekly and offers from existing card issuers to use the checks they send me; all of these offers I dutifully shred. I use one card, which I use for normal monthly purchases and expenses and pay off the card each month without incurring any interest. This way I get the rewards, which I use for airline travel, and maintain optimal cash flow. In addition I owe less than $1000 on another card that has zero interest and will be paid off before incurring any interest. I made the decision that money in my pocket is something that I can use to my advantage, instead of the bank’s pocket.

Too much debt is a major problem for Americans. We see it every day in mortgage foreclosures, bankruptcies and, likely as a factor in many divorces. Debt is a stressor. No doubt about it.
I made the decision to reduce my debt, pay off my mortgage early and have more disposable income to give me financial freedom by using the Money Merge Account system, and you can too.

Jeff Polhill

Excerpt for the East Valley Tribune newspaper December 3, 2008.  By Edward Gately of the Tribune

(Home prices) Drop breaks record for consecutive months of falling prices , according to the latest Arizona State University-Repeat Sales Index.  The index compared repeat sales prices of a single house at different points in time. Comparing August 2007 to August 2008, showed a drop of 26 percent in the Valley.  Declines varied from a low of 16.4 percent to a high of 37.2 percent.  Karl Guntermann,  ASU W.P. Carey real estate professor, stated, “If you go back to the Great Depression, you might find something like this.”  John Stih , CEO of the South East Valley Regional Association of Realtors, calls this the worst down cycle that he has seen in the 40 years he’s been in the real estate business.  They’re scared.  Stih says, “Let’s say a house last year was worth $250000 to $300,000, and today they’re selling for $150,000.  He went on to say, “Interest rates are still affordable, but people aren’t buying because of the economy.  They’re scared.”

So what can we expect going forward.  Stih feels that many sellers still have unrealistic expectations on who much their homes are worth, while banks have continued to restrict credit, making it difficult for potential buyer to obtain credit to buy these homes.  Added to that Stih see a lot of potential buyers sitting on the sidelines, betting that prices will drop further.  Guntermann takes a more optimistic view, saying there is evidence that sales have rebounded to where they were a year ago, and year-over-year rate of declines in sales prices is expected to bottom out in early 2009, and then make an upward move toward zero.  Guntermann did hedge a bit by saying prices moving up may not occur until late 2009 or even into 2010.

Jeff Polhill

In an independent report by the National Center for Public Policy and Higher Education on American higher education all but one state - California - failed when it came to affordability.  And how badly did they fail? miserably, coming in with a grade of F.  A few years ago education costs were increasing at a 6-7 percent annual rate per year, which was twice  the overall inflation rate.  Now with the overall inflation rate of 5.5 percent the cost of paying for a four-year degree has increased even more dramatically.  The cost in Illinois, for example, measured in percent of family income spent for higher education costs, jumped from19percent in 1999-2000 to 35percent in 2007-2008.  For the same period in Pennsylvania the increase went from 29 percent to 41 percent.

Which families get hurt the most?  Nationwide families in the bottom fifth of family income average spending 55 percent for higher education costs.  The top fifth of family income earners pay only 9 percent.  And for those who least can afford paying for college, many schools now offer financial aid  to high-achieving students, regardless of need, to boost the school’s reputation.

Why have education costs gone up so much in the past few years?  The public institutions garner much of their aid from their state’s government budget, and with so many states facing growing budget deficits, the schools are getting less dollars.  So what do colleges and universities do?  They have 2 choices: They can cut programs, teachers, staff, non-revenue sports and/or they can increase tuition and fees to their underclassmen and incoming students.  Some schools are being forced to do both.  Based on the reduction in income from the State of Arizona, who is facing the largest budget deficit ever, my alma mater, Arizona State University, has done both.  The state regents recently approved a 5 percent tuition increase for 3 schools within the university - Engineering and Nursing are two of them - and a 10 percent increase to incoming students.  Along with that university president Crowe announced additonal budget cuts affecting departments, staff and teachers to balance the school’s budget.  Earlier in the year our athletic director dropped three non-revenue producing sports.  Luckily two of the affected sports were able to get commitments from alumni to fund the programs for at least the next several years.   But in times of a rough economy and dwindling 401ks and other individual funds donations are not so easily come by.

So with a worsening economy during the worst recession in a long time, loss of jobs, mounting foreclosures, increasing bankruptcies and dwindling savings, 401ks, IRAs, stocks and mutual funds, how are many of our children going to be able to attend colleges and technical schools?  Who is going to foot the bill.  We can’t have a growing nation of high school students graduating with little ability to get the skills and knowledge they will need to get a good job, raise a family, and retire in comfort.

And here is another “fly in the ointment:”  Consumer debt stands at record levels.  According to an article posted in Money-Zine.com from Consumer Debt Statistics, “The latest statistics from the Federal Reserve indicate that the total amount of outstanding consumer debt remained fairly steady in 2007.  In case you’re wondering the total amount of consumer debt in the United States stands at nearly $2.6 trillion dollars - and based on the latest Census statistics, that works out to be nearly $8,500 in debt for every man, woman and child that lives here in the US.  The article went on to say that if $8500 in debt for every person in America doesn’t seem all that daunting, the $8500 does not include mortgage debt.

Americans are swimming in a large cesspool called debt,  If we don’t get a handle on it, we will be in the same fix (if we are not already) as our government.  The solution is to make a budget and live within it, cut down on unnecessary expenses, eat home more often, eat out less, buy fewer electronic gadgets, cut back on entertainment: it costs less to rent a DVD movie and pop some popcorn in your home than go to the theater.  And just as important is to eliminate your mortgage and debt as fast as possible.  If your mortgage was paid for and you owed nothing on your cars and credit cards and other loans or lines of credit, what would life be like?  How much could you reduce the stress in your life?  Could you take more and better vacations? How much money could you save for your retirement?  How much for your children’s education and their future?  There are many MORTGAGE AND DEBT ACCELERATION PROGRAMS out there.  Some better than others.  Incorporate one of these into your overall financial plan so that you will have enough income and assets to retire comfortably and ensure that your children get the education they need to succeed.

Jeff Polhill

Excerpt from the East Valley Tribune newspaper December 1, 2008.  From Staff Reports

“As the upheaval in the American economy continues, more and more Americans are becoming desperate to find a solution to help them get out of debt,” said Jack Craven, president of Debt Settlement USA.  Furthermore Craven remarked, “The current economic crisis and America’s addiction to credit has created a perfect storm in which consumer credit delinquencies will be the next crisis to hit the economy.”  According to Debt Settlement USA’s 3rd quarter Consumer Debt Index the mortgage delinquency rate is up almost 16 percent from the previous quarter and nearly 87 percent from the 3rd quarter 2007!

In other news Friday, December 5th, the Labor Department reported 533,000 jobs were cut in November, the most in 35 years and unemployment is at 6.7%, the highest in the past 15 years.  Additionally 1 in 10 homeowners are delinquent on the mortgages or are in foreclosure as of September.

Lenders appear to be on track to initiate 2.25 million foreclosures this year, up from an average annual pace of less than 1 million during the pre-crisis period, Federal Reserve Chairman Ben Bernanke said this week.