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Dollars and Sense

July 13, 2016

Q:

How real are the threats to take away some of our Social Security?

A:

The threat is not real. Individuals who were born right after World War II are now drawing, orsoon will be drawing, Social Security and they are a substantial portion of the U.S. population.  Common sense should tell us that our government cannot and will not take away the primary  source of retirement income for millions of people. To many, it is their only source of income.  Politicians routinely throw out comments like this for political purposes to scare voters into  supporting them. They like to make it appear as though their opponent will take away Social Security and they are there to save them. It would take the total collapse of our country to  put our Social Security at risk. If I were you, I would not waste time worrying about it and Icertainly would not let this fear keep you from planning your retirement. Unfortunately, ourchildren and grandchildren will have to pay more into Social Security so that we can receive  ours just like we did for our parents.

Q:

What can I do to keep up on financial matters and issues the way you seem to do?

A:

:     If your profession is not financially related, I don't think you should expect to keep up with itlike I have to. Being a banker and reading literally thousands of books, articles and publications about finance and the economy is my source for information. In addition, 40  plus years of practical experience have offered numerous situations similar to the ones being  addressed today that I can draw from. However, I think everyone can take steps to enhance  their knowledge about financial matters. Read the business section in your newspaper.  Watch news shows in the evening. There are many books written about successful people and companies. It's not always exciting reading but, if you want to learn, these are steps you could take. Don't feel badly because you don't know much about finance. There are a lot of things that are not in my realm of responsibility that I know nothing about. None of us can be well versed in everything.

Q:

A friend wants me to lend him money for his business but I'm a little scared. What kind ofquestions should I ask to help me with a decision.

A:

Maybe you're scared because you don't want to do it. You have concerns and you should  have. If you don't want to do it and you feel it's too much risk, just say no. As for the  information you should ask for, what are you going to do with it if you get it? Are you able to analyze financial data on his company when he gives it to you? If I were you, the first thing I  would ask is, why didn't you go to the bank and borrow the money? Chances are good that he did and got turned down or, he can't go there because he has already worn out his or her welcome. I would guess that at least 90% of the time a person imposes on a friend to borrow money, they have some serious financial problems that forced them into a situation where they had to impose on others. Unless you have money to throw around and it won't hurt you if it's not paid back, you might want to decline. A true friend will understand. It's your call  but, never feel badly about saying no to something that will be too much risk for you to take.

 

July 6, 2016

Q:

Do people lie about their credit history in order to get a loan?

A:

That's pretty hard to do. A person can falsify their credit application but, when we check their credit through a credit bureau, the report will tell us the truth about their credit history. Does it happen? Yes, once in a while someone will tell us they have perfect credit and they have never missed a payment on their loans. The credit report will expose these individuals.   Sometimes it isn't too serious and other times it's serious with previous auto repossessions or  a foreclosure. People who do this are either desperate for money or uninformed about the information credit bureaus have on them. It's also interesting sometimes as to what peoplethink is good credit. Maybe they have repaid all their debts but they have a lot of delinquency with previous lenders. In other words, they pay their debts but not without the lender having to constantly contact them for payments. It's best to be honest about everything. Falsifyinginformation will not do any good because it's easy to check out.

Q:

I've read reports that women do better at preparing for retirement than men. Is it true?

A:

A few months ago, I remember reading a report that suggested that women are 14% more likely to contribute to an IRA or 401K than men are. This was the result of a survey that was  conducted. I don't have any idea if it has any merit. However, women make up a larger portion of the work force today. So, it might be true. Whether it is true or not, both men and   women should take advantage of the tax laws on these types of plans that allow you to defer  taxes on the amount contributed until you retire. In most cases, your income will be lower in retirement so your tax liability will be less. If you have a limited amount of money to save, Iwould definitely do it in a retirement plan. One of hardest things to do is convince young   people to save for retirement. Retiring seems so far off in the future for a 25-30 year old but,it comes around very quickly. If you have a young adult son, daughter or grandchild, please encourage them to start saving for retirement.

Q:

Are more young people staying at home with parents after their schooling due to the  economy?

A:

I've read articles about this trend of more children graduating from high school or college then staying home with their parents rather than going out on their own. If it works for everyone and they like it, I suppose there is nothing wrong with it. However, you have towonder if the parents are really OK with it. They just don't know how to say no. Parents put a  roof over our heads, they feed and clothe us for 18 or so years and the time comes for us to  leave the nest. I can tell you staying home was not an option for most kids 40 to 50 years ago.  Our parents loved us just as much as parents love their kids today but, we were taught to be independent when we came of age. Just the idea of my mom and dad allowing us to continue  living off of them after our schooling was complete is amusing. That didn't and never wouldhave happened. I'm sure all you senior citizens know what I am talking about. Parents earn   the right after raising their kids to be alone and not have family to support. We should respectthat.

 

June 29, 2016

Q:

 Does the success or lack of success of our farmers have any effect on the rest of our economy?

A:

It absolutely affects us. If our farmers have good crops and solid income from their crops, they will spend more money in the community. It doesn't matter if it's agriculture or factory  workers. When they succeed and do well, we all benefit from it. We are also affected  indirectly. If our farming friends have a bad year, the cost of food will be impacted as well.Agriculture is by far one of the biggest parts of our global economy. It has always been that way and always will be that way. We sometimes forget that agriculture is much more than  just what we see around this area. There are the areas in the U.S. that grow cotton, oranges, grapes, vegetables and many other things. Globally, there are coffee beans, bananas,  cocoanuts, pineapple and many other items that are part of farming and agriculture. When you consider all these things, it proves just how far reaching agriculture is and how it affects all of us.

Q:

Back several months ago Target store had a security breach. Why couldn't the bank stop it?

A:

The breach at Target department store did not happen because of anything the banks did. The breach in security happened on the other end. I don't know all the details but, as I  understand it, Target's computers were hacked and the information on checks and debit cards was obtained by the hackers. There is absolutely nothing that the banks could havedone to stop it because it did not affect your bank's computers. I'm not aware of this incident costing anyone any money or if it was just information on their customers that was obtained.The danger of someone obtaining your information is always there but, the banking industry has done a pretty good job of protecting their customers. Of course, anything is possible. So, protect your information as best you can. Be careful who you share information with. Don't make it easy for crooks to be successful.

Q:

Is there a time of the year when it is easier to borrow money?

A:

No, there isn't. Our business is not cyclical. We are always ready to approve loans to qualifiedborrowers. Whether it is a loan to buy a home, new car or any other worthwhile purpose, we do not distinguish between seasons as to when it's the best time. I can't even tell you that acertain season has more application volume. Certain types of lending are stronger than others at different times of the year but, our willingness to lend money is the same year round. I  think customers are sometimes more prone to borrow at certain times of the year. For  instance, springtime is generally when people begin fixing things up around their house and some don't like the idea of buying a new car until the weather is nice. These are choices  people make that suit them. We really don't care what time of year it is for you to requestloan funding. We're ready whenever you are.

June 22, 2016

Q:

Should we be concerned if Donald Trump is elected President?

A:

What exactly should you be concerned about? The truth is, there are things about both candidates that should concern us. Having said that, I don't know that they are any worse than others who have won past elections. My advice is you should not let other people do your thinking for you. Forget about all the loud talking and bickering back and forth and listen to what the candidates say and listen to the debates when they start having them. It doesn't doesn't matter whether you are a registered Republican or Democrat. Vote for the one you  think can handle our three major issues and those are terrorism, the economy and our national deficit. We each must decide who that person is for ourselves. It only takes listening to TV newscasters for 2 minutes to tell who they are backing and this should not be your sole sourceof information in making a decision. The same goes for radio and newspaper.

Q:

If I have an adult child still coming to me for money, how do I handle it and stop it?

A:

You're not going to like the answer but, you probably should have addressed this when they still lived under your roof. Being independent and responsible should be taught when they are  young and under your supervision. Your issue is one of the most common ones for parents.However, it's not too late for you to have a meaningful conversation with your grown child to  put a stop to the handouts. Start by asking them to itemize for you everything they spend. There's a pretty good chance you are going to feel a bit irritated when you learn how they  spend their money and it's a lot easier for them to just ask for money from you to finance their  fun life. If you are not willing to take this tough love stance with your kids, learn to live with thefact that you will probably be supporting them to some extent the rest of your life. It's not a tough decision to make if you want to make it. Obviously, you can afford to do it or you would  not do it. However, It doesn't matter because you are not doing them any favors

Q:

If one of my children is abusing my debit card, am I responsible?

A:

You actually let your child have your debit card and pen number? I'm not sure why you thinkthat was a good idea but, you are obviously finding out that it wasn't. Yes, you are 100% responsible for your account if you give access to anyone. Your child is not mature enough to  handle the responsibility that comes with easy access to cash like a debit card. There are other ways to address your child's cash needs without giving them the keys to all your money.   Your child may be the smartest and most trustworthy in the world but, there are reasons we   call them children. It's because they are not adults. There may be some that will read this and they will not agree with what I am telling you. Nevertheless, if you want 100% assurance that your account is safe, don't share the card and password. Your banker is not going to pay for   your bad choices and you shouldn't expect them to.

June 15, 2016

Q:

How important is the Presidential Election to our economic recovery?

A:

It's important but, I don't think the future of our economy rests just on who wins the election.  Neither candidate will have enough power on important issues without the backingof Congress and the Senate. Presidents can't just do everything they want to do. However, it still matters who is elected. We have some critical issues that need to be addressed. The two biggest are the economy and national security. We need someone who understands  business and who will watch out for us when it comes to being safe. Watch the debates and  look at the records before you make a decision. Don't get hung up on them being either aDemocrat or Republican. Look past all that and look at the issues and who has addressed  them best. This may very well be the most important election in many years and we shouldtake an interest in it whether we are interested in politics or not.

Q:

You commented on veterans getting a free education. What's it called?

A:

It's commonly referred to as the G.I. Bill. This Bill was passed under Franklin D. Roosevelt's presidency in 1944 to help soldiers returning home from the war to get an education.  Millions of veterans have gotten their degree through the G.I. Bill. Veterans have been slighted in many ways over the years but, education is not one of them. I have no figures on  how much of our tax dollars goes to pay for these educations but, as far as I'm concerned it is  more than fair for those who risked their lives for our country. Some may feel it is not a  justifiable program but, I disagree. Soldiers are not compensated well to begin with and thehazards to their health and wellbeing are high. My Dad dropped out of high school, joined the U.S. Navy, came back and got his high school diploma and went on to receive a college degree through the G.I. Bill. Allowing these soldiers to receive a free education is a small price to pay for what they do for us.

Q:

Some states are requiring mandatory drug testing to receive Welfare. Why not all of them?

A:

I find it very disturbing that our government will spend millions of dollars to prosecute a proathlete for taking drugs but they won't pass mandatory drug testing for anyone seekingwelfare benefits. This gives you a clue as to how out of touch with reality our elected officials are. I applaud those states that require drug testing for welfare recipients. It should be afederal law in all 50 states. If you want to live off tax payer's money, prove that it won't go to  support a drug habit. Not everyone on welfare is using illegal drugs. I know that. However,  studies have shown that the percentage of welfare recipients using illegal drugs is higher than those not on welfare. I cannot vouch for the accuracy of this information but, it should not come as a surprise if it is accurate. Some say it is a violation of their civil rights to test for drug  use. Those who live off of taxpayers don't have the right to spend that money anyway theywish. Illegal drug use is one of our country's worst problems and it is costing all of us billions ofour tax dollars and increases the cost of our healthcare. 

June 9, 2016

Q:

Last week you were critical of forgiving student loan debt. Why is that? It helps the kids.

A:

Going to college is expensive. I understand that. However, when someone accepts tax payermoney to get their education and doesn't pay it back, it's not right. I realize that good jobs arescarce for graduating students. However, if graduates can't find a job immediately in their field of studies, take a job that doesn't utilize your education until one comes along. It's called being  responsible. You won't be the first college grad who was forced to take a job they didn't like so  that they could pay their bills. If you are one of those individuals who paid for their educationthrough a loan, pay it back when you go to work. Don't start your adult life by taking handouts from the government and parents, don't encourage this kind of behavior and attitude. The only individuals who should get a free education from the government are veterans who served in the military and risked their lives. We have a program for them and that's fine by me.

Q:

Can you explain what an IPO is and if they are a good investment?

A:

IPO stands for Initial Public Offering. It's usually a company that needs to raise capital to support rapid growth or, it could be someone who wants to maximize their personal  investment in the company by selling stock and giving up a part of their ownership. Some of the more famous IPO's were Amazon, Yahoo and Facebook. Most of the high tech companies were started with an IPO and a lot of people got very wealthy by investing in them. However, don't assume that every IPO will be a success. When you purchase stock in a company, you arerelying on someone or some group of people that you don't know anything about who have no obligation to you as an investor to be successful. They plan on being successful but, there areno guarantees. I would say that there has been much more money lost on IPO's than money  made on them. It's risky and I would not invest any more than you can afford to lose. If you arenot a gambler or risk taker, I would be very careful on an IPO.

Q:

I get the impression that Presidential candidates are more interested in protecting consumersthan they are businesses. Why?

A:

I don't necessarily believe that the candidates are against businesses. However, what you might be seeing is "pandering" to voters. It's a word that we hear a lot during elections and  what it means is the candidates are saying what they think people want to hear. Businessesdon't vote. People vote and speaking from a financial point of view, the candidates want to   leave the impression with voters that they are going to protect them against the business world taking advantage of them. The voters don't need protection but that's the impression they want to leave. Our free enterprise system allows people to do business with whomever  they wish based on service and pricing. The average voter wants to believe, based on what    they hear, that the candidate will look after their best interests. I wouldn't place any  importance on these kinds of comments from the candidates. Bashing some segment of society to win votes is an old tradition with political candidates whether it's deserved or not.

June 1, 2016

Q:

How bad is the student loan debt crisis they keep talking about in the news?

A:

There is approximately $1.3 trillion dollars in student loans in this country and virtually all of it is backed by the U.S. Government. The most recent reports tell us that 40% of this amount is individuals being either behind on their payments or not paying at all. This SLA loan program started out as a good idea. However, as happens with most government sponsored programs,  it has become a nightmare. President Obama wants to forgive all this debt and let them walkaway without paying a dime. If you have student loan debt or your children have it, you are probably excited about this. If you do not have student loan debt or your children don't have student loan debt, you are probably very angry about this plan of forgiveness. Especially if you paid your own way through school or paid for your child's education. This idiotic forgiveness of debt is another example of what has gotten our country into this financial mess. It's our tax  dollars they are giving away and it has to stop for our nation to get better financially.

Q:

What is this new law that raises the level for qualifying to be an exempt employee?

A:

For years, this government imposed rule stated that a worker had to exceed a base salary of $23,660 per year to be eligible for exempt status. Most exempt employees are not paid overtime and usually have official titles or they're a part of management. As of December 1, 2016 it will be increased to $47,476. In other words, anyone on a salary under that figure  must be paid over-time pay if they exceed 40 hours per week. The department of labor estimates that this will affect 4.2 million workers and additional income to workers of $12  billion collectively over the next 10 years. Furthermore, it may be necessary for employees to use time card who currently do not do so in order to give employers appropriate records. Thismajor change affects everyone regardless of their status or title in a company. Once again, politicians with no business experience, making rules that unfairly affect workers and it will notmake a substantial difference in wages for those 4.2 million individuals. All it will do is create more paperwork for employers.

Q:

Why do banks change the pricing of their fees so often?

A:

I don't believe it's fair to say they do it often but, from time to time, all banks take a look at their pricing on products and services. Why? Because your bank's cost to provide the products and services change. Employee compensation is the biggest factor. Not only the expense in  what we pay employees but also health insurance which has been rising by double digits  annually for some time now. Most banks set a level of relationship at which you can avoid fees.  We are no different than any other industry. Our cost of operating our business is constantlyrising. This isn't just about making the bank a profit. It also allows us to continue contributing   to important projects and programs in our communities. A strong and profitable communitybank is essential to a strong and progressive community. Charging appropriately for services isessential in accomplishing this.

 

 

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