Corporate Pension Plans are Doomed by Impending Low Interest Rates

Written by adminOctober 11, 2019
Saving

General Electric the latest company to freeze their benefit pension plan.

The pension obligations are GE’s largest liability, with future benefits estimated to be around $92 billion. This is second only to IBM’s pension plan of $93 billion, which they froze in 2008. What this means is that new employees aren’t enrolled into the plan and employees already in the plan cease accruing any future benefits.

GE’s pension assets only cover 75% of their liability and the company has to put forward $6 billion each year to fund the benefits of its current and future retirees. As GE faces more financial troubles, they are offloading all the liabilities that they can.

This problem is not unique to GE however, as it stands among 16 remaining Fortune 500 companies that offer benefits plans. These programs offered have been steadily discontinued since the 80s and the remaining few are slated to go the way of GE.


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This issue of corporations struggling with pension plans is not isolated to just the US. The rest of the world is also experiencing low interest rates that make benefit plans unmanageable. Even Denmark which is historically known to have the best-funded pension plans in the world required their government to amend the regulations on how pension liabilities were calculated.

There are economists that prop up the benefits of low interest rates, which purportedly increase employment rates and economic activity. But there is also the flip side, as low interest rates make pension plans more expensive and companies end up offloading the costs to their employees.


The Pension Plan Killer

In the US, the enactment of the Employee Retirement Income Security Act of 1974 forced corporate plans to fully fund their internal pension plans. This resulted in many companies dropping their pension plans, leaving only the larger companies which were able to afford these plans and provide the benefits to staff that they wanted to keep on.

But as interest rates keep falling, this increases the costs of pensions, making them virtually too expensive for any firm to maintain.

The only employers that are still offering defined benefits are state governments and municipalities. These organizations face different accounting standards and are not required to use interest rates when calculating their funding liabilities.


Shifting the risk around

As companies drop their pension plans, the risk gets transferred to the employees. Most of them are oblivious to the fact that they bear this cost, as individual pension accounts only show an asset balance and not how much income the assets will have to provide.

That doesn’t mean that retirees won’t need income when withdrawing on their asset balances when they retire. Stable income comes from moving assets into fixed income or annuities, where low interest rates are a liability and make retirement more expensive for the individual. As a result, retirees could end up spending less, which cancels out the benefits of having low interest rates in the first place.


For any more financial advice, call the Financial Helpers, we are ready to assist you with planning for your future.


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Facebook Decides to Allow Trump (and Anyone Else) to Run Whatever Political Ads They Want

Written by adminOctober 11, 2019
Politics

There’s an ever-growing debate about how social media sites influence voters. Many people view the issues as moral and civil. The same types of questions Facebook faced during and after the 2016 election appear to remain. This is after many criticized the company for allowing President Trump to run ads they viewed as false ads.

Facebook, on the other hand, appears to be taking up for free speech. They say they’re not going to censor the President of the United States, even if he lies about an issue. That can be determined as politics as usual. What candidate doesn’t lie or even stretch the truth a bit? Should then Facebook censor all political ads? And who gets to determine what claim is legitimate and what isn’t?

Facebook’s position is, if a candidate or the president lies, it will be called out by the media. That is their job. Facebook’s job isn’t to decide what viewpoint is presented. All sides and all viewpoints have equal rights when you honor free speech. Still, not everyone agrees. This aggravation stems from 2016 when they view certain ads and ‘fake news’ swing the election in Trump’s favor.

Facebook and Free Speech

The latest criticism came after the whole Joe Biden/Trump/Ukraine controversy. As the impeachment inquiry heats up, Trump was using the opportunity to run ads against Joe Biden. Joe Biden is the current Democratic frontrunner and is, at this time, likely to win the nomination. Biden felt the ads were false and asked Facebook to take them down. They said no.

“Our approach is grounded in Facebook’s fundamental belief in free expression,” Katie Harbath, Facebook’s public policy director, responded to the Biden campaign. “Political speech is already arguably the most scrutinized speech there is. Thus, when a politician speaks or makes an ad, we do not send it to third party fact checkers.”

The opposition thinks free speech is good, but that is often in a world without Facebook. On Facebook, everyone is able to retreat to their individual corners. We only receive the news and information we agree with, and block the stuff we don’t. So, if President Trump or any candidate makes a false claim, they often don’t see anything to counter it.

Not to mention, Facebook ads are often highly targeted. The president can reach anyone he wants with his message. That is a concern for Trump’s opponents. Facebook doesn’t see it that way. They are a platform that allows all the candidates equal opportunity. Fans and supporters of everyone running for president in 2020 get to see whoever they want to see. If their mind is already made up, then that’s that. You should force someone to see content they don’t want to see.

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In Today’s Technology-Driven World, is a Virtual Receptionist Good for Your Business?

Written by adminOctober 11, 2019
Technology

When your business is expanding, you have to start looking elsewhere for assistance you can focus on your job. While you’re busy doing the work and it made you successful, you might start to realize how distracting it is to answer the phone and do a lot of other menial tasks that keep you from getting your work done.

If you’re always answering phones, you’re missing out on work. But if you’re always doing work, you really miss out on the opportunity to build relationships with the consumers who call you wanting to buy or looking for more information. This predicament is costing you money. So instead of hiring somebody in house for $30,000 a year, you have two choices.

You can hire an answering service or you can hire a virtual receptionist. Both will be extremely helpful in adding extra presence to your business without spending an arm and a leg. In this article, we’ll look at both options so you can decide which one is the best one for you. It really comes down to what your priority is as a business owner.

Answering Services

An answering service is probably one of the most popular options out there. Odds are, if you’ve ever done business and had to call someone, like the customer service department, your call did not go directly to the company, but to answering service. Answering services are essentially call centers somewhere in the world.

Usually call centers are huge office spaces crammed packed full of people answering phones. If you get a phone call, someone in the service will answer the phone and read the introduction and the script from the computer screen. They leave and then take a message or transfer the call to you or another team member.

And that’s essentially it. These call centers get thousands of calls per day pertaining to a variety of different businesses. You can call them a hundred times a day and get a different person each time. This might seem like a good option for a lot of people, but if you’re looking to build relationships, and provide customers with good information, the call center probably isn’t the option for you.

Virtual Receptionist

It can be easy to confuse a virtual receptionist with an answering service. You might think that they do the same job, but a virtual receptionist gives you more options. That means it’s your job requires you to chase leads and isn’t just for customer service representation, then you might get better service going with a virtual receptionist.

Unlike having one of 1000 different people answer the phone, you’d be assigned a small team of receptionists (maybe around 5 or so) whose job it is to handle your account. They know the ins and outs of your business, or read from a script that you write, will chase leads, and help you convert traffic.

This is a big difference from someone is reading a script for a monitor to someone who knows your company and lives by your mission statement. Using virtual receptionist’s our full support team that handle all kinds of different tasks. They can make calls for you, fax papers, take care of personal business, send emails, and really is a one-size-fits-all approach.

Only you know what your needs are. A virtual receptionist is the next best thing to hiring somebody in-house. An answering service is having somebody there to answer the phone. Either way, your business will not be a girl the next level unless you find help and a support system that allows you to focus on your job. 

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This is Often How Debt is Handled During a Divorce

Written by adminOctober 11, 2019
Credit & Debt

Divorces, for the most part, are emotional and messy. Both sides fight about joint money, possessions, and debt. It can be hard for two people, who bought and invested together, to suddenly decide what goes where. Money is especially hard to divide. There are many concerns and obstacles that go with that, including debt.

One part of the couple makes a lot more than other. Kids, and who gets custody, also helps determine where the money goes. Retirement investments, shared bank accounts, assets like the home, cars, and pets. Even debts you’ve accumulated play a role. So, how is debt handled during a divorce? Let’s take a look at it:

1) The Laws on Debt Responsibility Vary by Area

If you live in a community property state, like Texas, Nevada, New Mexico, Wisconsin, and others, the both parties are responsible for their debt under the law. Debt responsibilities cannot be shifted by one spouse to the other. There may be a few exceptions to the rule here, but for the most part, debts will have to be paid off together.

Equitable distribution states, which are most of the states in the U.S., looks to what is fair. What’s a fair breakdown of the debts? Both parties get to decide to claim what they think is right and legal under the law, include both assets and debts. Here, one individual can decide the other party took out most of the debt and should be the one who pays it off. That would be a reasonable argument they could make in court.

2) Who Signed the Contract?

In the case of your lender, they don’t care you’re separating. If you signed the contract, the place is yours and in your name. If both of you sign it, both of you are responsible for it. You got the loan to borrow the money and the obligation you made, putting your name on the dotted line, is what is binding. Moving out, changing your name, getting a new address, etc., doesn’t matter either.

3) You Still May Be Hounded

If your spouse is getting behind on paying some of the bills, the creditors can come after you. That’s true even after a divorce. Your name doesn’t even have to be on the account and you can be legally divorced. They will still come after you. There are some ways out of it. For example, if you live in a community property state, you can put a clause in the divorce settlement. That lets anyone know you are not responsible for the debt.

4) Student Loans aren’t Shared

The person responsible for paying back their student loans is the one who took them out. This is not a case in which the loan will fall on both of your shoulders. Your ex’s student debt won’t follow you into a divorce. But, it might if you agree to help pay for the debt as part of the prenuptial agreement.

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Considering Becoming a Franchisee? Don’t Make These Business Mistakes

Written by adminOctober 10, 2019
Business

As you begin your franchising venture, your success depends on you making as few mistakes as possible.  Becoming a franchisee may seem like a safe opportunity to invest in, but that’s not always the case. It’s possible to choose a thriving business, but make the wrong decisions that lead you into failure.  In this piece, we will look at 7 common mistakes made by potential franchisees.  

1) Not Doing Enough Research on the Market

Potential franchisees are often lured into thinking they are buying into a name or product that will ultimately be successful and choose a location without even considering if it’s desirable and/or promising.  Do you know how the market will react in that particular area? Is there tough enough competition that you’ll have a difficult time breaking through?  

Do they dominate the landscape?  If so, you may be required to invest more capital on advertising and find yourself in the midst of a struggle for the competitive edge.  Your franchisor may have market research available, but don’t rely on that solely. Do your own research and consider all the possible weaknesses of the area.  

2) Not Looking at Why Other Franchisee Have Failed

In the research phase, you need to take the time to contact the owners of failed franchisees and find out why those outlets closed or why they sold out.  This is especially important if you know of a failed business in your particular area. It may be economy related, but if you find common stories, they may be issues you can correct and do better.  At the same time, remember there are two versions of the same story, so take the time to contact the franchisor. Take a look at the big picture before investing.

3) Not Having Enough Starting Money

Another big mistake potential franchisees make is assuming a big name will lead to a financial windfall.  You pay all the fees and are ready to get started, thinking that in a few months you should reach even. But that’s not the case at all. It may take up to a year or longer to hit even on your investment.  It might not even happen at all, especially if you shorted yourself to begin with. There are a lot of pre-opening costs you may not be considering as well as operating cash and your living budget for your family.  As with anything involving money, it’s often more expensive than you think.

4) Not Understanding the Franchisee Agreement

One of the first moves you need to make is hiring an attorney to help you understand and interpret any of the legal documents and paperwork that comes with becoming a franchisee.  There will be other contracts as well, including real estate agreements and the franchise agreement. If you have any questions or concerns, contact the franchisor and get your responses in writing.  If you don’t understand every part of the franchise agreement, there is no going back after you sign on the dotted line, which can spell trouble for you.

5) Not Establishing a Good Working Relationship with the Franchise Personnel

It’s incredibly important for the success of your franchise, that you have a great working relationship with your franchisor.  You are in partnership together, so it’s only natural you go out of your way to meet and become involved with the franchise network.  Not only is a good idea, it’s vital for your long-term success. Be sure to meet everyone before you sign the paperwork. It’s also helpful for you to see if the potential is there you won’t get along with the franchisor.  It would be prudent to know.  

6) Not Contacting Current Franchisees 

Who better to ask about a franchise than someone who is already franchising?  There’s no better way to learn than to sit down and discuss potential issues, share questions and concerns, how things turned out financially, and what you can expect in that first year.  Have them give you a tour of the facility. Learning from the successes and mistakes of others is invaluable to your own success.

7) Not Seeking Advice from an Attorney

Part of this was covered previously, but it’s imperative that you seek advice from an attorney.  The franchisor is looking to make the best deal possible that looks out for his end. You need to look out for your bottom line, but if you’re not in tune with their demands, you will be left in the cold.  Make yourself aware of all the legal issues and concerns of the franchise. Even if you have a good idea of what everything is saying, you still need to hire help as assurance.  

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Will the Retail Apocalypse Hurt the U.S. Economy?

Written by adminOctober 10, 2019
Business

Here at Financial Helpers, we’ve often covered several stories involving the fall of retail. From Forever 21 to Toys “R” Us, brick-and-mortar seems to be going the way of the dinosaurs. Many cities now have massive warehouses that are empty. Malls are emptying fairly quickly as well. Even the number of people who work in the retail industry is dropping.

You might think this has to do with the economy, but it is continuing now. The economy is great and people are spending tons of money. We’ve had record-breaking holiday seasons the past few years and this season should be no different. If people are spending money, why are these stores closing down? Also, what impact is it having on the economy?

Its impact will mostly be felt if the U.S. enters a recession soon. Economists are split on whether that will happen in the next few years. Usually when a recession happens, job losses are numerous. People start spending much less money and instead start saving what they can. Right now, employment is at record numbers, so when the flow of money stops, so will job numbers.

Here’s the difficult part of this: retail jobs usually help Americans get through a recession. The number of people who leave office jobs for retail or fast foods starts to climb. They have no other choice while waiting for the job market to get better. Yet, if these places are closing down and they’re cutting jobs, where will they go?

The Recession Has Already Started in Several Retail Industries

“Brick-and-mortar retailers are already in recession,” said Mark Zandi, chief economist for Moody’s Analytics. “They’ve been laying off workers coming up on three years. And this is a time when consumers are out spending aggressively. If the broader economy is in recession, there is going to be blood in the streets.”

A major part of the problem isn’t that Americans aren’t spending enough. They’ve just changed the way they buy things. Why go to Forever 21 when you can get the same types of clothing online? Traditional stores and malls are on the outs. Not to mention, the trade war between China and the U.S. is already increasing costs. This will force many businesses with razor-thin margins to close their doors or cut back on jobs.

“If the economy were to struggle, it would accelerate the collapse of a lot more of the debt-financed retailers. And you would see an acceleration in store closures,” said Greg Portell, lead partner in the global consumer and retail practice of consultant AT Kearney.

“A lot of retailers are hanging on because the broader economic environment is strong, interest rates are low, credit is available,” Zandi said. “No sector is more dependent on credit. If a recession comes, credit will get cut off both to the consumers and the retailers. That is going to mean a rash of bankruptcies and a lot of lost jobs.”

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Is It Smart to Stop Saving for Retirement to Get Rid of Debt?

Written by adminOctober 10, 2019
Credit & Debt

If you’re one of millions of Americans who struggle with debt, you might be frustrated. Money seems to be going out the door at a fast pace. You just want to finish paying down your debts so you can enjoy life. At the same time, you also have to save for retirement. This is extra money leaving your account. It leaves many people to wonder if they should stop paying retirement until their debt is paid off.

You only have so much money. After paying all your bills, there might not be much extra to go around. Are you expected to both save for retirement and pay your debts? Well, yes. You borrowed money for whatever reason. Saving for your golden years is crucial. You don’t know how long you’re going to live and shortchanging that now can be devastating later. This is where you sit down and do an accounting of your assets and money.

On top of this, you’re also expected to put money into your savings account. Having a rainy-day fund for emergencies is also crucial. You never want to be caught in a bad situation with no money. What would happen if you lost your job, the economy turned sour, or you got injured? Having extra money saved up for these times can save you big time.

Let’s take a look at a few things you can do:

1) Determine Your Retirement Priorities

Seeing that you have debts to pay off, retirement to save for, and an emergency fund to add to, you might have to decide which of these is most important. Do you choose to aggressively pay off debts first? How do you balance that with saving money? In reality, saving money for an emergency is your number one priority. You may not agree with that, but an emergency can happen at any time. If you were to lose your job or had a major breakdown that cost big money, where would you be? Then you’d have nothing for your debts or retirement.

You also wouldn’t have money for rent and food. Financial emergencies can strike at any time. Be prepared for those first. Once you have 3-6 months’ worth of expenses saved up, you can shift to other priorities.

2) Make Sure You’re Insured

Along with building up an emergency fund, having good insurance to fill in the gaps is also important. Most people are underinsured. They want to save money so they get the cheapest policies possible. Yet, if something were to happen, like a natural disaster, they would lose out so much more in the long run.

It’s these types of emergencies that put most people in debt. Their health insurance doesn’t cover a needed procedure or surgery. Without being covered, you risk bankrupting yourself and your family.

3) Look at Your Debts

Once you’re financially safe and secure, it’s time to look at your debts. More importantly, some debts are more dangerous than others. A car loan, a high-interest credit card, payday loans, etc. These often have high interest and drain you financially. Focus on paying these debts off as soon as possible. Low interest debts can wait a bit. They aren’t a major risk to you financially.

4) Now You Focus on Retirement

High risk debts should take priority over retirement savings. When you have those paid off, you will start saving thousands of dollars. That’s extra money you can make up for towards your retirement goals. Yet, retirement saving should take priority over low interest debts. You should start saving for retirement as early as possible. If not, you might end up having to work for years longer than you anticipated.

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5 Bad Reasons to Refinance Your Mortgage

Written by adminOctober 9, 2019
Mortgage , Refinance

Mortgage rates have been at their lowest rates in recent years, it might be time to refinance your home.

If you would like to lower your mortgage costs or tap some of the equity you built up over the years, there are many good reasons to consider starting the refinance process.

It is not always the right move however, here are 5 reasons why refinancing your mortgage could be a terrible idea.


1. Incorrectly Focusing on the Immediate Savings

If the new home loan doesn’t really save you money, then refinancing to score that lower interest rate and monthly mortgage payment may not be the smartest choice.

If you are thinking about moving soon, a refinance could save you perhaps $100 a month. But if you have to pay closing costs of $2000, you will need to stay in the home for 20 months or more if you want to avoid losing those savings.

Another thing is if you’ve been paying into your mortgage for 10 years and then refinance into a new loan, you could get stuck with 10 extra years of interest charges.


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2. Seeking Relief from Credit Card Debt

If you are looking to wipe out your credit card balances, you will need to begin a cash-out refinance. What happens is you borrow more than you owe on your home and take out the extra in cash. This cash then goes to the card issuer.

You will be left with a larger mortgage and a larger monthly payment. You would also have to toe the line to make sure you don’t end up drowning in credit card debt, putting your house at risk.


3. You’re Eager to Renovate

A cash-out refinance can free up the equity you need to pay for the remodeling project of your dreams, like getting those granite counter tops you’ve always wanted for your kitchen or redoing the tiles in your bathroom.

Before you borrow the money for home improvement, make sure to avoid projects that do not add value to your home.

That would simply result in you taking on more debt. Ensure that you will make a good return on your investment before moving forward with the remodeling.


4. Playing the Stock Market

The best way to build long-term wealth is probably by investing in stocks, bonds and other assets. it is very risky however to invest with equity based on your home in a cash-out refinance.

It is hardly worth it to refinance your mortgage to earn modest savings on investments as safe as certificates of deposit. Riskier investments carry considerably higher risks, nobody wants to lose their money and be left with a higher mortgage.

If you refinance solely for the purpose of investing, it pays to be extra cautious. Consider automated investing services that will automatically adjust your portfolio to withstand market fluctuations.


5. You want a “No-cost” Refi

There’s no such thing as a free lunch when it comes to mortgages. Every mortgage comes with fees and other costs that will have to be paid. When a lender claims to offer a “no-cost” refinance, you would be wise to be skeptical.

These loans conceal the closing costs, and may be rolled into your loan amount or passed into you in the form of a higher interest rate.


These 5 reasons to hold off refinancing your mortgage can save you a lot of money. For any other financial advice, give us a call we are ready to assist you.


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4 Easy Ways to Make Money with Craigslist

Written by adminOctober 9, 2019
Real life

It’s a good bet that plenty of people have used Craigslist before. Maybe they were looking for places to rent, stuff to buy, or even looking for love. Craigslist does it all. You can really use Craigslist to start a side-gig and make a bit of extra money. The problem is, you have to know where to look.

Like any website that connects people and allows anyone to make a post, Craigslist has its fair share of scams and perverts looking to take advantage of desperate people. You’ll most likely come across an unsavory character, but that doesn’t mean you can’t find some really good ways of making money yourself using the site.

Let’s look at five ways you can safely make money using Craigslist:

1) Craigslist One-Off Quick Jobs

Life is unpredictable. Sometimes businesses and companies could use a little help. Maybe their busiest night of the year is coming and they’re offering $14/hour to come in for a day to help prepare. That’s a quick $100 you can make (depending on the number of available hours needed). If you have that day off and nothing to do, why not throw your hat into the ring? There are plenty of smaller jobs that need done, like house cleaning, pet or house sitting, and so much more. If someone needs to get something done, but doesn’t have the time, they might put up an offer.

2) Manual Labor

This sort of goes along with one-off quick jobs, but there are a lot of seasonal jobs out there that need to get done. Maybe an older person can’t get out to rake their lawn. Someone needs help to mow the lawn while they’re out on vacation. These are quick jobs, but sometimes people are just too busy. You can step in and make a few extra bucks in the process.

3) Remember that If It Sounds Too Good to Be True, It Probably is

Many of the scams go out of their way to make it sound too good to be true. No one is going to pay you $100 to take a survey. They might ask you to upload your driver’s license or other forms of identification, which is a clear sign of an attempt at identity theft. Be careful and watch everything you do. Other scams famously include data entry or jobs that seem really easy that don’t need a lot of work, but with the promise of a high hourly wage.

4) Focus Groups

Focus groups can be a great way to make a few extra bucks. Definitely be careful to make sure the company offering to pay for your insight at a focus group is a legitimate company. You’d have to call the company directly to see if the focus group is a real opportunity to a scam. Always double check.

Another way to keep yourself safe from scams is to Google every company and opportunity. There are plenty of websites out there that warn of scams. And always remember: if it’s too good to be true, it is. Don’t waste your time.

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Target is Looking to Help Bring Toys “R” Us Back for the Holidays

Written by adminOctober 9, 2019
Business

Back in 2017, Toys “R” Us declared bankruptcy and closed its doors. One of the mega retail stores of the bygone era, they weren’t able to keep up. Their stores lacked innovation and their website game was poor. In today’s technology-driven culture, having a great website is key. You need to offer convenience to keep up with the Amazon’s of the world. Walmart has done a good job of doing that, but many others haven’t. And they’ve all died painful deaths.

Now, Target is looking to help revitalize the brand. The timing couldn’t be more perfect as we get nearer to the busy holiday shopping season. They’ve partnered with Toys “R” Us, the company that was already looking to make a comeback. They completely rebuilt their brand-new website and relaunched it on Tuesday.

Now you can order toys on the Toys “R” Us website and have them delivered to any Target store for you to pick them up. As part of their new strategy, the toy company isn’t going to have massive warehouses anymore. They will focus on their website while testing much smaller stores. While they unroll this new strategy, being able to pick up toys at Target will be helpful.

“By applying our capabilities in a new way with Toys “R” Us, we can serve even more toy shoppers, drive new growth, and build on our toy leadership,” Target executive Nikhil Nayar said in a statement. The new parent company for the brand is Tru Kids. They bought the rights to the Toys “R” Us name after the bankruptcy. They’ve since been looking at ways to bring the dead franchise back to life.

Toys “R” Us is Back in Time for the Holidays

Rather than going back to the old model of filling up a massive warehouse, the relaunch is going to be quieter. They’ve already made a deal to partner with Kroger during the holiday season. Kroger stores will have a section called “Geoffrey’s Toy Box” to help market toys and other gifts for the holidays. Geoffrey is the name of the famous giraffe mascot.

“Our US strategy is to bring back the Toys “R” Us brand in a modern way,” Richard Barry, the CEO of Tru Kids, said in a statement. The strategy is going to be slow and steady. The holiday season is always crazy busy, so smaller partnerships with Target and Kroger will do for now. They hope to have at least 10 new stores ready by the 2020 holiday season.

Make no mistake about it, there was a massive void left behind when Toys “R” Us shut down. Target has been facing major competition from the likes of Walmart and Amazon, who are always fighting for the top spot. Target hopes that partnering with Toys “R” Us will allow them to grab some of the profits.

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