Tuesday, December 30, 2014

Screaming at Customer Service

We've all lost it, at one time or another, trying to deal with customer service.  However, when you lose your temper, they win.  How you can avoid the customer service meltdown?

OK, let's face it, there is something satisfying about screaming at someone on the phone.  A lot of people do it - I think everyone has done it at least once.  Maybe not as bad as this guy, but bad enough.

This guy literally lost his mind, trying to get satisfaction from customer service.  Click to play.

But while this may give you existential satisfaction by screaming at a giant corporation, in reality, all you have done is browbeat some minimum-wage telephone operator, who probably is either laughing at you with his co-workers, or just ignoring you by muting your side of the conversation.

I used to do dumb things like this.  I try to do them less.  I have friends who think that screaming at people on the phone is the way to get ahead.  A neighbor thinks they got a better deal from their insurance company by screaming on the phone.  Another neighbor thinks a cable provider is "afraid" of her, because she screams on the phone.  The reality is, neither is true.  These companies just screw you royally and let you think you have satisfaction by letting you use their customer service rep as a punching bag.  They win, you lose.

How can you avoid the customer service meltdown?  There are a number of ways to prevent it from happening.
1.  Eat something.  Yes, low blood sugar is the number one reason you get upset - that and dehydration.   If your blood sugar is low and you are dehydrated, your blood turns to a thick goo with no sugar in it.  Your brain literally starves and it devolves to lizard brain mode. You revert to a caveman mentality.  Og angry!  Og kill customer service rep now!  Taking time away to eat and hydrate also allows you time to think about where you are going with this.

2. Gather Documentation. Get all your account numbers, statements, and other evidence that shows what has happened.   If there is an error in the bill, you'll need the bill - and your account number - in order to get something accomplished.   You'd be surprised how many people dash off a call to customer service without even having their account number.  It adds a lot of time to the call if they have to look up your account.  It also helps to be able to refer to the bill while you are talking to them.

3. Are You Wrong?   It is easy to make a mistake and end up in the wrong.  I got a charge for Bank of America the other day, for $7.99.  I had asked a friend to deposit a check and gave them a deposit slip and they deposited the check using a bank teller.  I had forgotten that as part of my online banking account that I was not allowed to use tellers - without paying the monthly fee.    I had not bothered to check that out before calling.  (I was nice to the guy, and he was nice back - waiving the fee this time, due to my "oversight").

4. Is the Service Worth It?  Unnecessary subscription services like Cable television, satellite radio, and smart phone plans, can drive you bankrupt, a little bit at a time. Calling up and complaining about bad service or poor billing practices isn't going to change anything.   When customers leave, a business goes under, or makes changes to bring them back.   Consider dumping the service entirely instead of trying to "fix it".   Companies that have shady billing practices and poor service are not going to change their stripes.

5.  What Are Your Goals?  Before you call, chat, or write, figure out what it is you want done.  Many folks have unrealistic goals.  "You made a mistake in my billing.  I want a complete refunds of all fees paid since the beginning of time.  You should pay off my mortgage, and then kill yourself and erase any record of your existence or that of any of your ancestors, going back at least 20 generations.  Oh, and the entire company should be given to me, tax-free"  You think I am exaggerating?  Some people really think this way.  Figure out what it is you really want, and then ask for that - and ask for something reasonable.  Again, people get into trouble when they expect outlandish bargains, when usually a basic "fair deal" is all you can expect.

6. Check out the Chat Box:  I recently had a problem with my UVERSE service that AT&T could not fix.  I went to the website and used their chat box and the people were very helpful and even called me to try different attempts at a fix.  They could not fix the problem - and I eventually fixed it by switching to Google's DNS server (Score: Google 1, AT&T 0).  But it was a lot easier and less frustrating to use the chat box than to wait on the phone  While waiting in queue, or waiting for the customer service rep to respond, I could do other things.  With a phone cradled in your neck, it is hard to multi-task.

7. Write a Letter:  Customer service phone calls often are not treated seriously.  Why?  Because the company knows that about half the people calling to complain are just blowing off steam.  They will yell at the customer service rep and then hang up and forget about whatever it is that was pissing them off.  If you write a letter, they generally have to respond to it, if nothing else to tell you to piss off.   And if you write a letter, you create a paper-trail which can be handy if you decide to go to court, even if it is just small claims court.   And companies realize you are creating a paper trail (and they are too) and act accordingly. Written letters, with documentation, often get better results than phone calls.

8. Be Nice:  The customer service rep can only do so many things.  Many can only just tell you the balance on your account. Some have trouble speaking English.  Being mean and nasty to some poor Indian dude at a call center isn't going to get your problem resolved.  However, you will perpetuate the myth (or reality) that Americans are a bunch of spoiled petulant brats who throw a hissy fit when their Vente Latte doesn't have the foam in the shape of a leaf.  If you figure out that the customer service rep can't fix your problem, or they are having trouble with language, just thank them and hang up.  Consider using chat (where language is less of a problem) or writing a letter.

9.  Don't Spend Four Hours on The Phone:  The fellow in the video linked above blew his mind on a customer service call, screaming and yelling and basically not getting anything accomplished.   He would not provide his name or account number, so the rep could do nothing to help him. So the rep likely muted his call and then interspersed it with bland comments.  Likely he and his friends were mocking the guy on the phone - as evidenced by the fact the call was recorded. Spending hours on the phone just isn't a cost-effective way of solving a problem.  If a problem takes more than 20 minutes or so to resolve, fall back and punt.   Write a letter, go to chat, or just consider disconnecting from the service, which was probably unnecessary anyway.

10.  Understand Customer Service Cutoffs:  Customer service reps have rights, too - at least in some call centers.  In some call centers, if you use threatening language, obscenities, personal insults, or raise your voice, the next thing you will hear is a "click".   The customer service rep is authorized to disconnect the call if you get all bent out of shape.  The more you yell, the more you holler, the worse off you are.   You will end up, like the guy in the video, calling back again and again and getting madder and madder - and getting nothing done.
11.  Have a Pen and Paper Handy:  If you are disconnecting or changing service, or getting a refund, or whatever, ask for a confirmation number, name or number of the representative.   Make notes and date and sign the paper.  It might not be a bad idea to follow up with a written letter confirming what was agreed upon.   One of the biggest gags in customer service - particularly by dying companies like AOL - was to say you were disconnected, and then not disconnect the service.   Document everything.
12. Understand the Retention Specialist:  If you call to disconnect service, you may be shunted off to a retention specialist, who is on commission.  Sometimes, you can play this game right and use the retention specialist to garner some swag.  For example, I called to cancel a credit card once, and they shunted me off to a retention specialist.  He asked me why I was cancelling the card, and I told him the rate was too high.  He said, "If we switch you from a Visa to a Mastercard, we can offer you 5.9% interest" - and he "retained" a customer.  Other times, however, "retention specialists" are on quotas and will harangue you to keep your service.  One way to deal with this is to say that you are moving overseas.   They will stop trying to re-sell you a new service if you are moving away.  if you tell them you are moving overseas, they won't try to sell you service for your new home.  Otherwise, they will just keep trying to sell you.  And be sure to get a confirmation number.
As I said, for many companies, customer service 1-800 numbers are provided just to let customers blow off steam.  Probably half the people calling up angry, end up going away unsatisfied.  When you call up and scream and shout, they win, as you (a) likely don't get what you wanted, and (b) they continue billing you for your service.

Karma is a bitch - and the Karmic wheel turns very fast.  I got very upset with Hughes Satellite Internet service, when they charged me a $40 disconnect fee.  I reluctantly paid it (after they sent a collections agency after me) but ended up getting the money back as part of a class-action suit. A similar thing happened with Vonage VoIP service.  As it turns out, there was no reason to get upset - in the long run.

Sirius XM did a similar thing recently - charging me $21 or so saying I hadn't properly disconnected the service.  I had called to disconnect, and the "retention specialist" tried to talk me out of it.  Since I did not stay on the line for a "confirmation number" the specialist counted me as a retained customer (and they have quotas).   Two weeks later I called again, and this time got a confirmation number.  I paid the $21, by money order - but a month later, they sent me a refund check.  I guess they realized they were being a dick.

I guess I am getting older and mellowing out. Or perhaps after dealing with telephone and cable companies and other service providers for a few decades, you start to see patterns emerge.   And one pattern that seems to be consistent is, if you get upset on the phone with customer service, well, you automatically lose.

The other thing is, I realize that most of these services are unnecessary in life, or at the very least, I should limit myself to as few as possible (today, just one, GoPhone from AT&T).  Having all the bells and whistles doesn't necessarily make one happy, just angry all the time, when half this stuff never works as advertised.

Jesus and the Cult of Personality

Many people who call themselves "Christians" really have no idea what Christianity is, other than a brand name for their particular form of hate.

Here in the South, you run into a lot of people who call themselves Christians.   A particularly odious form of them are called Baptists which is a synonym for hypocrite.   For some odd reason, Baptists claim they don't drink alcohol, even though Jesus turned water into wine and drank wine at the last supper.   There is nothing in the Bible to suggest that Jesus was a teetotaler.  But Baptists claim there is.

Compounding this problem is that many of them are closet drinkers and where I learned this was from, well, Baptists, who, after a drink or two, will talk trash about all their Baptist friends.

It strikes me that they really have no clue about what Christianity means.

Many people devote their lives to following Jesus' life - without really practicing what he taught.  Jesus the person is not nearly as important as the lessons he tried to impart.  But to many Christians - particularly those on the far-right, the core beliefs about Christianity have less to do what what Jesus taught than with Jesus as a brand-name superhero.

In their view, Jesus is a kick-ass vengeful angel of death, who will come back any day now, armed to the teeth, and start judging the righteous from the sinners.  Concepts like "turn the other cheek" and "Judge not, lest ye be judged" are tossed by the wayside in favor of a cult of personality they create about Jesus - not dissimilar to the one created in North Korea surrounding Kim Jong Un.

In their view, Jesus is Mr. Perfect, and like his Dad, is pissed off at sinners.  Sinners make him mad!  He can't wait to get back to Earth so he can kick some sinner's ass!

Yet, the Bible tells a different story - of a man who befriended sinners and forgave them - and died for their sins.   His best friend was a former prostitute.   Does that sound like the kick-ass judgmental Jesus?

And these right-wingers will twist and distort the Bible to make it say what they want.   On a long car trip through rural America, I listened - appalled - while a fundamentalist preacher tried to explain that Matthew 7:1-3 actually means that Christians should judge people.

"Judge not, lest ye be judged," he said, "Doesn't mean we shouldn't judge people.   Since we're Christians and are prepared to be judged for our actions, then we are in a position to judge others!   Not only does this Bible verse not say to not judge, it is a commandment to judge others!"

Yea, stop me when the world stops spinning after reading that one.  Kinda makes you dizzy, eh?

It gets even weirder.

Based on the rapture theory - a biblical theory that has only existed for about 100 years - some far-right Christians don't even think you go to heaven when you die.   Rather, you are dead, dead, dead, and until Judgement Day or the Rapture, then the dead will rise up from their graves (Zombie Apocalypse) and then fly off to heaven (if they are judged worthy).   So, you'd better be prepared to suck a lot of dirt for a few thousand years, until Judgement day rolls around.   If you think that's bad, consider all those people who died centuries ago - they've been waiting a long time!

These views of Christianity are distorted, weird, and often evil.   They do not teach real Christianity, which is a religion of compassion and charity, anymore than the Taliban teaches real Islam.   Both have gotten caught up in "brand name religion" which is more concerned with "my religion is right!" than with "What does my religion really mean?"

There is, of course, hope on the horizon.   We have a new Pope, who has stood the Catholic church on its ear.  Unlike our previous Pope, who wanted to go back to "brand name religion" and "how many people can I throw out of the church today?" the present Pope is making Catholicism more hip and trendy and accepting that most Protestant brands.   And this is ironic, as Protestantism was founded as a more liberal alternative to the Catholic church. 

Today, the roles have switched - sort of like how Democrats and Republicans switched sides.   The GOP, believe it or not, used to be the anti-slavery party.   Today, there are many Republicans who would argue that slavery "wasn't all that bad" - and they do this all the time, on Fox television.   Funny thing, too, they have created a "Cult of Personality" around Ronald Reagan, while denouncing "Amnesty for Illegal Immigrants" - a policy which arguably was the greatest achievement of the Reagan Presidency.

I think this "Cult of Personality" is one reason why I am not a "brand name" religion shopper.   It seems that each religion, over time, turns away from its original message an instead turns into a tribal identity and cult of personality.   People are less and less concerned with the actual teachings of the religion (or what it should teach) that with the "everyone else is a heretic!" kind of deal.

They wear their "WWJD" bracelets, not as a reminder to think what a compassionate Christian person would do, but as a brand identity - to say, "I am one of the chosen" or as one bumper sticker proclaims, "Christians Aren't Perfect, Just Forgiven!"


Scraping Air Fares

 Airlines have arcane pricing structures, which sometimes allow for loopholes in pricing.
This young man exploited a huge hole in the pricing system and is now being sued.

When I was a young hotshot attorney, I used to fly to Silicon Valley every month, from Washington, DC.  If I went on a Monday and came back on a Thursday, the air fare was very high.   In order to get the lower fares, you have to stay over a weekend - or at least that was the rule back then.

Why this rule?   I think it was to differentiate between the business traveler (traveling during the week) and the vacation traveler (traveling over the weekend).   The vacation traveler is price-conscious.  The business traveler, less so.

Owning my own business, I was price-conscious.  Since I made the trip once a month,  I booked a one-way ticket to SFO and then booked a round-trip flight from SFO to Dulles, "staying over" in Washington, DC for four weekends.  The airfare dropped from $1000 to $250 this way - round-trip.

So long as I kept traveling and booking these tickets, it worked well.  When my main client closed their Silicon Valley office, I stopped traveling - and threw away one-half of that last round-trip ticket.  While that was "wasteful" I did end up saving thousands of dollars in airfare.

And back then, frequent flyer miles were awarded based on miles traveled - not money spent.  So I quickly racked up frequent flyer miles to the point where I could get an upgrade to business class or even first class, if the planes were empty.   And I quickly figured out which flights were most likely to be empty, and booked those.

But of course, the airlines cried foul over this, and threatened to revoke tickets of passengers who attempted this scheme.   But it was an empty threat.   How could they tell I wasn't staying over in Washington for four weekends?   They wrote the ticket, took my money, and that was that.

Recently, a young Engineer was sued by both United Airlines and Orbitz for operating a website called skiplagged.com   What was he doing that was illegal?

Well, it turns out, nothing.  But the airlines are pissed, as he is providing a service to allow users to "scrape" lower fares from the airlines.

What is fare scraping and do you need to use this website to scrap fares?  The answer to the second question is "No."   Anyone can scrape fares and it takes only seconds to do.

For example, I went on www.usairways.com and looked for fares to Washington DC from Jacksonville, Florida on January 11th.  The first flight to pop up was this one, at $204 non-refundable one-way.

  • 4546 
  • 7:20 AM JAX
  • 9:17 AM DCA
Operated by Republic Airlines dba US Airways Express
(0) 1h 57m $204 $411 $353 $560

OK, that seems reasonable.  But can we get it cheaper?   Well, try to book to another city that might use DCA as a layover.  For example, New York's JFK airport:

  • 4546 
  • 7:20 AM JAX
  • 9:17 AM DCA
Operated by Republic Airlines dba US Airways Express

  • 3370 
  • 10:40 AM DCA
  • 11:59 AM JFK
Operated by Envoy Air dba American Eagle
(1) 4h 39m $137 $385 $456 $1,129

Whoa, did that just happen?   It is cheaper to fly to New York than it is to fly to Washington, DC, even though both itineraries use the same base flight.  And not just cheaper - a whole lot cheaper.   Almost 50% off - $137 versus $204, one-way!   Note however, how the prices change as you move up the scale.  First class passengers pay twice as much to go to JFK, but intermediate fares may vary.

To "scrape" the best fare, you book one-way, to a further destination, and simply get off the plane at the transfer point and don't bother getting on the second leg.

This does require that you book one-way and not check any luggage.  If you checked your bags, they would go through to JFK, which would obviously create problems for you - and the airline (since you would not be on the flight, your bags would be yanked off - or should be, anyway).

It should be noted also, that usually, you have to get on the plane at the first leg.

But what about round-trip airfares?  Aren't they cheaper?   Well, I tried booking round-trip from JAX to DCA on USAir, and the airfare was...... $204 each way.

By the way, do you see why I say that airline miles are shit?   We got a "companion certificate" from U.S. Airways, offering to fly a companion anywhere for $99 if you buy another ticket "at the regular price".   When regular prices are $137, a $99 fare is not really a huge incentive - especially considering what you have to go through to get it.

So why do airlines have such wacky fares?    Well, USAir may be competing with other carriers for flights to JFK, and thus has to offer a lower fare to that city to compete.   But for flights to DCA, there may be less competition, so people are willing to pay more, so they raise the price.

Again, prices are not determined by adding up your costs and then tacking on a "reasonable profit" - communists and emotional thinkers actually believe that.  Rather, you charge what the market will bear and in some cases, this may be below your costs.    An airliner leaving the gate with an empty seat is an airliner not optimizing its revenue.  So if you can sell that last empty seat, even if the revenue is half the cost-per-seat to fly a passenger, you still come out ahead.   Obviously, you can't fill the whole plane with passengers like that - you'd go bankrupt.  But a hundred bucks more is a hundred bucks more, so you take the money if you can get it.

And what people are "willing to pay" is quite easily quantifiable.   And yes, companies realize that some folks will use techniques like "fare scraping" or "ultimate couponing" to score deals.   This is part of the marginal pricing strategy.   Those desperate enough to seek out extreme deals, often can get better deals.  To those whom price matters less, well, they pay more.   Why offer low prices to people who don't care about price?   This does not mean, of course, that you can always score extreme low prices - or that the effort involved is always worth it.   I am not a fan of couponing as a way of getting rich.  Couponing is not a way of getting rich - it is a sign that you are poor.

The CNN article cite above states that in order to "scape" airfare, you should book to a less popular city.  I think they have this backwards, and clearly New York City (JFK) is not a "less popular" city.  And in fact, if you book to a less popular city, prices go up even further.

Now this same flight to DCA, continued to Syracuse, gets really expensive:

  • 4546 
  • 7:20 AM JAX
  • 9:17 AM DCA
Operated by Republic Airlines dba US Airways Express

  • 4668 
  • 9:59 AM DCA
  • 11:14 AM SYR
Operated by Republic Airlines dba US Airways Express
(1) 3h 54m $377 $901 $632 $1,076

Wow!  I can fly to JFK to $137, but if I wanted to fly to Syracuse (which is not that much further) it costs nearly three times as much.   Why is this?   Well, likely there is less competition on that flight (no one wants to go to Syracuse, believe me!) and they can get away with charging more.

And these fares are not set manually by human beings, but programmed by computer algorithms, who check competing fare prices, plane schedules, historical data, and the like.   They try to optimize how many seats are empty (preferably none) versus the optimized fare price they can receive.

So why is this young man in hot water?   Well, his website, skiplagged.com basically automates what I found out in about two minutes of clicking online, only with more options, routes, and airlines.  And I must confess that I cheated - I searched initially for a JAX-JFK flight and then found that for USAir, all flights go through DCA, and then checked on that.  If I was booking to DCA, I probably would not have thought to check flights to JFK as part of a fare scraping scheme.

Should you fare scrape?   Well, I would have to say, use at your own risk.   The airlines can deny service to people for a number of reasons, and if they think you are scraping fares this way (which they would figure out, when you continually "skip" those last legs of flights) they might ban you from the airline or deny you boarding.

But they threatened to do that back in the 1990's, when I was using a similar technique to fly across country on reverse round-trip tickets.   They never caught up with me.

I suppose we should argue that airlines should have more transparent and logical pricing.   But that ain't gonna happen anytime soon.   The name of the game is to fill each seat with the passenger who will pay the most for each seat on the plane, until the plane leaves the gate with every seat full (or just one seat empty, which means you have just satiated demand).

So airline pricing games will be around for a long time.   And so long as they have these pricing games, there will be loopholes you could possibly exploit.

Monday, December 29, 2014

Are Mom and Dad Rich? No.

Your parents aren't as wealthy as you think they are.

It is a funny thing, but we all like to think that our parents - or other people - are wealthier than they really are.   The other day, Mark was talking to some lady on the island and she asked where we had been, and we said we just got back from two months vacation.  "I had heard you were rich," she said, as if we were Warren Buffett or Carlos Slim.   The sad reality is that our income is not that much above the median household income in the USA, and this year, might actually be below.

Appearances can be deceiving.   I have a 15-year-old BMW that looks brand-new, and it only has 50,000 miles on it.  People say, "Gee, you must be rich to afford such a fancy sports car" and when I tell them they could buy one just like it for about $12,000 (or less!) they freak out.  After all, they just spent more than that on a Toyota Yaris.   Appearances can be deceiving.

As I noted before, many folks think their parents are wealthy - and parents often don't discuss finances with their kids.   Sadder still, in this day and age, where the median household income in the USA is about $51,000, many people believe that a hundred-grand is "a lot of money" and that maybe $200,000 is enough to retire on.   Really?  Four years of income?

Part of the problem is the reluctance that many have in discussing finances.  People like to be weird and secretive about things, partially to hoard information and appear important.   The other part is the possible embarrassment they likely will have if it turns out their net worth is less than someone else's - or the discomfort they feel if it is more.   And if it is a lot, well, you get people camped out on your lawn asking for money.   So people tend to naturally be close-to-the-vest with regard to personal financial matters, for a variety of reasons.   Embarrassment is the largest single reason.

A law firm decided to put an end to this, and publish everyone's salary.   Rather than eliminate problems, it created more.  "He's making more than me?  He's an idiot!" someone might think.   Better not to know, in some instances.   And that is the problem with unionism.  Since each person knows what the other is making, one worker gets resentful when he sees another slacking off.   "Hey, if he gets $30 an hour and just goofs off, then I should goof off too!"  The union workplace rapidly becomes a race to the bottom.   But I digress.

Counting on an inheritance can thus be a tricky thing, as it will likely turn out that your parents left you a lot less money than you thought they would.   Worse yet, you may inherit an amount you think is "a lot of money" but in reality, it isn't all that much.   A million dollars sounds like a pile of dough, but it really is only enough money to generate about $50,000 in income for about 30 years.  Start tearing through it with new cars and houses and such, and well, it might not last even a decade.

One hit I get regularly on this blog is "how much do I need to retire?" or "Can I retire on $500,000?" (yes) or sadly, "Can I retire on $1,000 a month?" (probably not).   It is a question we all want answered, and there are no clear answers.

And one reason why has more to do with how much you spend.   A reader writes that they stand to inherit $400,000.  Is this enough to retire on?   Well, with Social Security benefits of $25,000 a year, and $20,000 a year from their inheritance (using the 5% rule) they will likely collect $45,000 a year - which should be enough to be comfortable, if they live in a modest house that is paid for.   But of course, the point is sort of moot.   $400,000 is the amount they are going to retire with unless they win the lottery or something.   As I noted before, most people lurch into retirement, and what they have saved is what they have.   Few plan it out to any degree.

And that, in part, is one reason your parents are not as wealthy as you think they are.   My parents retired sooner than they expected, when my Dad lost his job at age 55 and basically never worked again.   They had a small inheritance, a small pension, and Social Security.   They got by.   But by the time he dies, well, that will be the end of that.   There will not even be a small inheritance for me.  Good thing I made my own money, eh?

Mark's parents left him a fairly substantial sum of money, from houses and investments.   And it is funny, but if you were to ask - based on appearances alone - who was wealthier, you might say my parents were.   After all, they had a fancy lake house and Dad was an executive, right?   But such is not the case.  My Dad made more money over the years - but he also spent it just as quickly.  Mark's Dad had a lot of money - and saved it and lived fairly modestly and carefully.   They didn't starve, for sure.  They took trips around the world and bought new cars every few years.  But they bought Ford Tauruses, not Lincolns.  And they watched the little expenses, to make sure they didn't add up.

It is sad, but I meet folks waiting around for their parents to die, thinking they are going to inherit a fortune and never have to work again.   Sometimes, this works out.   Other times, they are shocked to discover that their parents left them a house - but no means to even pay the taxes on it.

Even when Mom & Dad leave a considerable sum, there is the spending problem.   As I noted in an earlier posting, for a lot of people a "million dollars" sounds like a lot of money.   So they get an inheritance and blow through it in short order.   Kind of hard to feel sorry for that.

But odds are, you won't have to worry about that scenario.   Your folks aren't as wealthy as you think they are.   They may have a nice house and all, but it is paid for, and what is supporting them is not vast riches, but Social Security, pensions, and a small amount of savings - which can go a long way for them, once they retired - but may not be enough for you to retire on.

Yet Another Reason Not To Get A Reverse Mortgage

A reverse mortgage may allow you and your spouse to stay in your home until both of you die.  But what happens if you are not married?

I was talking to a friend from retirement village the other day, and he related another reverse-mortgage nightmare scenario to me.

Joe and Judy are a couple in retirement village and they bought a big house there, right at the height of the housing bubble.  Problem is, they hadn't sold their previous home, first.  Saddled with the expenses of owning two homes, Joe decides the solution is to take out a reverse mortgage on his new home.  He has money in some investments, but doesn't want to tap into those.   The reverse mortgage promises to provide him with the money he needs to maintain both homes, until he can sell one.

Joe is not in good health, and had a health scare.  And the problem for Judy is that the house is in Joe's name.  You see, Joe and Judy are not married.  And if Joe dies, well, Judy is out on the street.  And the rest of his assets go to his children by his first marriage.


A reverse mortgage sounds like a solution to life's problem.   But it is just another re-fi, and serial re-fis are a bad idea all around.   When you start to think about refinancing your home - to take out equity to pay off debts - it should be a wake-up call that you are spending more than you are making.

In Joe & Judy's case this is particularly heartbreaking, as Judy is much younger than Joe, has little saved of her own money, and can expect to live decades longer than he will (as he has several illnesses, one of which will eventually kill him).

Before you take out a reverse mortgage, think about where this is going - and how the surviving spouse will live, when the other dies.

You see, even if Judy and Joe were married, or Judy's name was on the house (and reverse mortgage), since she is so much younger than Joe, she may live for many more years.   When Joe dies, she can stay in the house and continue receiving reverse mortgage payments - but her income will likely be far less, as she will collect a survivor's benefit on Joe's Social Security (if they were married) or if not, have to collect only her own (and no longer have Joe's income).   The four-bedroom home may no longer be seen as desirable.   She may want to downsize.

Problem is, much of the equity of the home has been sucked out of it by Joe's reverse mortgage - so that Joe could live large in his final years - leaving Judy to pick up the pieces.

Gee, this sounds familiar, don't it?

Oh, yea, another fun couple who did the same thing - only this time the dead husband left an "upside-down" motor home for the wife to deal with.   Men really are no damn good.

Or take another couple.  Husband and wife, living in a house that was literally falling down around them.  They had a hoarding problem - the house being full of boxes and junk, and two broken cars in the driveway (along with a defunct golf cart).   The wife is finally put in the nursing home due to dementia, and then the husband decides to clean up the house and remodel it.    That's nice.   Don't you think your wife would have enjoyed that new kitchen while she was still ambulatory?   Instead, they lived in squalor, and once the wife is in the home, he lives like a king.   I don't think he intended to be cruel to his wife as he loves her very much.   It is just the way things worked out.  And I don't get it.

But you know, living among the elderly, it is a refrain I hear a lot.   The women outlive the men, usually by a decade or more.   And when the men die, the women find out that their husbands had made a mess of things, financially.  This is not an uncommon occurance.

The problem is, as I see it, twofold.   First, men love their motorized toys, and will spend huge amounts of money on them.   This reduces the net worth of the marital estate considerably over the years - all so that one partner in the marriage can have fun with expensive toys.

Second, men are usually older in a marriage, and usually the first to lose their faculties and the first to die.   They lose their minds as they get toward the end, and often make unsound financial decisions.   Men like to think they are clever or getting ahead of the game (with all those frequent flyer miles!) but they get suckered into bad deals along the way.

Reverse mortgages can be one of those bad deals.   For the husband, it is a good deal - increased income during his last years of life are certainly enjoyable.    But once he dies, it is the poor wife who is now stuck with a huge house she no longer wants, an a huge mortgage that needs to be paid off.

Men.  No damn good!

Total or Repair?

When your car is wrecked, should you get it fixed or just total it out and take a check?

A neighbor just got his car back from the shop - again.   It was in a wreck and he had a lot of work done on it, and then it needed to go back for frame work.   All told, he was without the car for nearly three months, which is not very long by car accident repair standards.

It is a 13-year-old car, which according to Kelly Blue Book (the highest of the car appraisal books) is worth maybe $4250 in private party sale in excellent condition.

I asked him why he didn't just let the insurance company total the car out and send him a check.   The cost of repairs and the hassle of dealing with it (as well as the problems with the frame issues) certainly give one pause.   With check-in-hand, one can simply go out and buy a similar car in similar condition.   

The reaction I got was interesting, but not unexpected.   "I wouldn't be able to buy a similar car for what they would pay me!" he cried.

Now think about this a minute.   They would pay him book value - the average retail value of the car.   He could go out and buy the same make, model, year, and color car and be back in the game again, within a week.  But this entire concept eluded him.

The reason why is that people tend to value things that are theirs more than they value others.  So to him, his 13-year-old Buick is a $15,000 car, because that is what he paid for it, thirteen years ago, and the idea of getting a check for "only" $4500 doesn't seem right.

Sadly, for some reason, he went after his own insurance company to make the repairs (and thus had to pay the deductible) even though the other party was at fault.   I would try, at least, to go directly to the other fellow's insurance company, and have them pay for the car, with no deductible.   And be sure to ask for compensation for your time and expenses, as well as "soft tissue damage" and any other injuries or medical expenses.

But maybe that is just me - I am more aggressive about these things.

I got into a wreck a few years ago, and the insurance company wanted to "fix" the car - and stupidly, I let them do this.  This was a car they claimed had a book value of $16,500 and for which I had paid $17,000.   They spent over $22,000 fixing the car, plus paid me for my expenses, soft tissue damage, and $3000 in "depreciated value."

At that point, I could have just asked for $16,500 and told them to keep the car, and in retrospect, I should have.  I kept the car another two years and sold it for $6800.   I would have come out ahead if I had taken the cash.   As it was, the car, while beautifully fixed, had further issues (rattles, an axle that needed replacement, etc.)   And with the recession, the car depreciated rapidly.   Cash would have been better.

If you get in a wreck, think about which option you want to take.   The insurance company will try to steer you to the cheapest body shop in the world, and while they may do "OK" work, there may be ancillary issues down the road (which are always hard to tie to the accident).   For example, I had my Camry repaired after a fender-bender and shortly thereafter the power window failed.  It felt like the body shop people had forced it open or something.   They claimed it was unrelated and fortunately, I was able to fix it myself.   But no matter how nice a job they do, it never is the same as new.

One problem with taking a cash payment is that you have to pay registration and title fees plus the sales tax, which can be a hefty 5-7% in most jurisdictions.   Negotiate with the insurance company on the amount of payout.   They will want to use low book value, such as Edmunds, private party sale.   You want to use NADA or KBB retail values.   Print out all three, and be sure to add in options and color and mileage, to show maximum value.

You won't come out ahead, of course, but at least you may be less behind in the deal.

Fallen Headliner

When the headliner falls down, what do you do?

One of the problems with keeping a car a long time, is that a lot of little things go wrong - little things that are expensive to fix, particularly if you are not handy with tools.   So yea, power seats sound really cool, until they stop working.   You go to the mechanic and he wants $600 to fix them, and that is more money than the car is worth.   Unless you are handy like I am, you basically hope the seat broke in a position that is comfortable - and then drive the car until it dies.

But eventually, enough of these "little things" add up until owning the car is just an experience in frustration.   If the A/C goes (or worse, the heat!) or defroster fan, the power seats are broken, one or more power windows break (usually the driver's side) and so on - the car becomes an annoying pain in the ass to drive.

One of these really annoying things is the headliner.   Once a car gets to be a decade old or so, these can rot out and fall down and you look like a dork driving down the road with this drape hanging down.  Worse yet, with the windows down it flaps in the breeze and bangs against your head.

Is there a cheap way to fix this?   Sadly, no. 

Are there lots of people willing to sell you various cans, jars, or spray cans of glue "guaranteed" to fix it?  Sure there are.  None of them work.

The problem is that modern headliners are not the fabric-and-bow type that cars from the 1960's had.   Sometime in the 1970's, they started using these composite headliners, which were a large piece of cardboard with foam glued to it.   Glued to that is the fabric that you see as the headliner material.   If the car is left out in the hot sun a lot, the foam eventually breaks down and turns to powder.  The fabric is thus no longer attached to anything, and sags and falls down.

The glue hasn't failed - the foam has disintegrated.   And the problem with trying to "re-glue" the fabric is that you are trying to glue fabric to powered foam, which resists all attempts at gluing.

And since the fabric is often thin, the glue soaks through and you get a big gluey mess on the inside of the fabric.

I have tried just about all of the headliner glues and other ho-made techniques in the book, over the years, and none of them have been successful.   The spray-on "headliner cement" sold in auto parts stores (by 3M) might work (for a while, anyway) only if you first remove the headliner completely (including the cardboard backing panel), scrub off all the powdered foam that has disintegrated, and then carefully follow the instructions on the can, and apply new fabric to the panel and then apply some sort of weight on top (perhaps using a sheet of plywood as an intermediate layer) and then letting it set for a week.

The only method I have found that really works is buying a brand-new headliner from the factory.   This had to be truck-shipped, and as top-freight (shipped in cardboard - cardboard shipped in cardboard, basically) and hopefully will arrive undamaged.   The installation is much easier - remove the trim screws, install the new headliner, re-install the trim screws.  The only sticky part is that sometimes an edge may need to be glued.

But failing that, ho-made repair attempts, such as pots of glue and such, basically aren't going to work, unless, as I noted above, you basically take the entire headliner backer board out and rebuild it with new fabric (the old fabric will be porous to the cement, and it will shrink, leaving edges exposed.   The best bet is to use a large sheet of automotive-grade fabric (if you can find something wide enough) and then cut off the excess.

Of course, the best thing to do is keep your car in a garage.   What kills these headliners is heat, which breaks down the foam layer between the cardboard backer and the fabric.   And cars parked outside in the hot sun can experience temperatures of 140 degrees or more - enough to dry-rot the foam in the headliner - and even the fabric itself, as illustrated in the photo above.

Fallen headliners are one reason I say that most folks should think about fishing further upstream when it comes to older cars.   Trying to get heroic mileage out of a car can often be more costly than simply selling the car and buying something newer.  Every piece of equipment reaches a point in the Wiebull curve where it basically has to be rebuilt - or discarded.

Paying a lot of money to repair and older car - while living with things like broken A/C, fallen headliners, and broken power accessories, makes no sense at all.

Sunday, December 28, 2014

Living in a Camper?

Can you live in an RV and use it as a house?  In most cases, no.

A reader asks:

"How safe is it to live in an RV?"

I am not sure what they were referring to specifically, but it raises an interesting issue.  Most RVs were not intended to be used as full-time homes.

When we bought our fifth-wheel trailer, there was a sticker on the inside of the door that said to the effect, "This RV was not intended to be used as a full-time home but for camping purposes only."

Odd they would say that.   This was a 1992 model, and I notice today, they don't put such stickers on newer units.

Why would they put such a sticker on an RV?   I think the answer is mold and mildew.   RVs are sealed up like a tomb - or at least they are when new.   Unlike a house, which has soffit vents, ridge vents, attic fans, and other means of allowing air to flow in and out of the attic and wall spaces, an RV is sealed with outer fiberglass walls, caulk, and a rubber roof.   There is nothing to let the humidity out.

Over time, moisture builds up.   Your breath, your showers, your cooking, whatever - it all adds moisture to the air.  And since many RVs are thinly insulated (and have single-pane windows) the humidity may condense inside, and then form an ideal environment for mold and mildew to form.

If the RV develops a leak - which they all eventually do - then the problem gets worse.   And this is why when you are shopping for a used RV you should shy away from an RV with mounds of caulk on the seams and a funky overpowering moldy smell when you open the door.

The problem is mold, and in particular toxic mold.   Get a mold test kit and use it - to insure that you are not living in a mold habitat.   It could kill you, over time.

And open a window - or a roof vent - and leave it open when you are in the rig, even if it gets cold out.  Better to have fresh air and to dry out the camper than to be breathing in the same old mold spores.

Running the Air Conditioning can dry out your camper and reduce mold and mildew.   If you can run the A/C and the heater at the same time, it can act as a giant dehumidifier and help keep the unit dry.

But really, most campers were not meant to be used as full-time homes.   Maybe a month or two here and there, but not for months or years on end.

Eternal Life - Eternal Money

To some folks, a big bag of money seems like an infinite amount.   Don't be one of those folks.

In  previous posting about eternal life, I posited that mankind cannot contemplate infinity, and that any large enough number, to some people, seems like an endless amount:
"To people living in olden times, when living to age 40 seemed like an impossibility, "eternal life" must have seemed like a good deal.  That would be like what, 80 years or so!   Like the robin who cannot count more than three eggs in her nest (and thus doesn't notice the fourth being stolen) primitive man could not conceive of numbers greater than 50."
In a previous posting about homelessness, I noted how when poor people are given huge sums of money (lottery winnings, or whatever) they burn through it in no time.

Is there a connection?  In short, yes.   People think a million dollars is essentially an infinite amount of money - or even $100,000.

As a kid, I thought these things, too.  A thousand - that took forever to count to! 

And yes, even as an adult, I've done this - we all do, you know.   As a self-employed person, I can go for months with not getting paid.  Then I get a check for tens of thousands of dollars.   It seems like a lot of money!

But I have learned to squirrel away money, as it is tempting, when you bank account is in the five digits, to think you are "rich" and then be tempted to spend.   The problem is, little purchases and expenses add up, and before you know it, you are broke again.

Pay your taxes - for this year, and next.  Pay off your debts.  Pay all your bills - in advance, if possible.   Spend the money on fixed expenses and put away a big chunk into savings.  When you are all done, well, you realize you really don't have that much money to spend.

Sadly, even this level of financial discipline is rare among the poor.   Like our friend given $100,000, the first thing on his agenda is to party - after all, that is "a lot of money" and he can always save tomorrow, right?   Tonight is the night to celebrate!

That, in a nutshell, is what keeps the poor, poor.   And it is what keeps the middle class, middle class and sinking slowly towards poverty.

In the not-too-distant past,  a person could go to work for a big company - IBM, GM, Xerox, or whatever.  Whether you were salaried or hourly, it didn't matter.  You got a regular paycheck, which you divided up among the monthly payments you were making on your Oldsmobile, your cracker-box tract home, your utilities, and the consumer loan for your television set.  Your health care was provided by your employer, and your pension was also fully funded by them.   Corporate Socialism, I called it, and it existed in a big way back then.

Our ancestors were not necessarily better paid or smarter than we are today, they were just controlled more and prevented from squandering their retirement on ill-advised investments and schemes.   They were not "forced" to buy health insurance through Obamacare, because their employers provided it for them.

And they had a lot less "stuff" in their lives.  One, maybe two cars, one television, one telephone (maybe one extension, if you were "rich").   No video games, computers, flat-screen televisions, snowmobiles, jet skis - at least not much of this sort of thing.   If you really wanted to save up your money, you might be able to buy a 14' "runabout" with a 35 HP Evinrude.   That would be showin!

Today, we have choices on how to spend our money and we also have far more horrific choices to make.    I keep harping on this, as it is one of those "obvious" things right out there in the open, that no one talks about.   We didn't have payday loans, title pawn loans, rent-to-own furniture, high interest rate credit cards, or toxic mortgages back in 1965.

We didn't have student loans that could not be discharged through bankruptcy.   Indeed, back then, nearly all debts were discharged through bankruptcy.  Today, they are "worked out" - even your credit card debt!

Today, we have financial instruments that are designed to ruin the consumer and the only thing protecting the consumer is their willpower to make the right choices.

The poor and the homeless are distinguished by their utter lack of willpower.    And the middle class is shrinking for the same reason.   Unfettered from the leash of Big Corporate America with its defined-benefit pensions and cradle-to-grave health care, middle-class people have to choose to save and choose to buy health care.   And surprisingly, many are choosing to do neither, even though they face fines for not doing the latter!

What is going on here?  Are people dumber than in the past?   Well, I think the answer is, NO.   It is just in the past, we coddled people by controlling their lives more.   Funny, too, because people on the Right decry "big government" and Michelle Obama "telling us what to do."

But back in the "good old days" of America, big companies did just that - told you that you were getting a pension (in lieu of more money) and health care (in lieu of more money) and people went along with that.

Of course, in some instances, the corporations failed to fund these plans properly.   Nevertheless, an entire generation retired with defined benefit pensions and never worried about health care bills.

No more.

So what does this all mean?   Well, if you want to give $100,000 to a homeless man, then blow your brains out and do it.   But don't expect him to suddenly acquire financial acumen, having that money.   Because lack of financial acumen is what got him into trouble in the first place.  Odds are, he will blow through that cash in short order, and end up homeless again.   Unless you dole out the money and control his actions, he will not stay wealthy for long.   And doling out money and controlling our actions is how Corporate America created the middle-class in the first place.

It also means that if you want to even survive in today's economy, you have to acquire some financial acumen and financial discipline in a real hurry.   Being careless with money is no longer an option in today's dog-eat-dog economy.

I get e-mails from readers now and then, and the e-mails from younger readers is interesting.   I get two types.   The first castigate me for being a moron, as they want to tell me that leasing a car is a swell deal, and that you can "make out like a bandit" with frequent flyer miles.   They also want to tell me that spending $10,000 on a hydronic heating plant for their house "makes financial sense".   These are the folks who want to spend their way to success and think that if they can score enough coupon deals and cash-back bonuses, they will be millionaires.

And I have even heard people like this decry the 401(k) plan (which some employers now make participation the default mode).   "You can invest money in other things and get a better rate of return!" they cry, but of course, the "other things" they are investing in are a new Harley or a Jet Ski.  They will do poorly in life, because they have a poor mindset toward money - as something to  be spent as fast as it is earned.

I do get occasional e-mails or meet young people who do get it.   They are starting out, at age 22, and want to save money for the future.   Some already have managed to accumulate a few thousand dollars - which is pretty amazing for that age.  They will do well, not because they picked the right investment or anything, but because they have the right mindset.   If you start saving young, you have a huge leg-up on people who try to catch up later in life.

You see, for young people today, being a Millionaire is not just some wild fantasy, but thanks to inflation, a necessity.   If you are to retire today, you'd need about $500,000 (a half-million) plus Social Security, just to get by on the median income in the USA.   Thirty years from now, that number will easily double.  A million dollars is not a lot of money anymore.   Yet many folks think it is basically an infinite amount.   Millionaires are - or will become - a dime a dozen.

As for the homeless or poor?   I am not sure there is much we can do to "help" them, as they will always squander money, if you just hand it to them, as experiments seem to show.  They have no financial skills and are not interested in acquiring any.   If you tried to teach them, they'd give you a fist in the face.  Unless you are willing to constantly intervene in their lives (which they likely would not want you to do) they will end up where they started, in short order.

The best we can do (and it is a lot) is to provide a safety net - Social Security, SSI, TANF, SNAP, Obamaphones, Section-8 and so forth.   And by worldwide standards, it is quite a safety net.   Maybe not up to Swedish standards, but far better than what you get in Africa or India these days.  This safety net dribbles out small amounts of money, over time, so people can survive.   It doesn't leave them a lot of money to squander, however.   And this is as it should be.

And yes, homeless people do qualify for food stamps - as well as other benefits.   That "poor helpless man" you give $20 to (tax free) has a benefits card, an Obamaphone, and so forth.  He ain't just living on he money he begs for or the deposit bottles he gets from dumpsters.  And if you are among the working poor you can do quite well, if you can qualify for a lot of these programs.

It is interesting to me that you see these postings online or these YouTube videos where people try to raise $100,000 for a homeless person or give them a home for free.   I guess everyone has to learn this for themselves - but when you give someone something for free, they generally don't appreciate how valuable it is.   And people have to learn for themselves that the reason why someone is living under a bridge is a lot more complicated than "they don't have money".   

It is a fine thing to be generous and empathetic and all.   Sadly, a lot of the folks doing this "I'm helping the homeless guy" routine are quite ready to trumpet to everyone how altruistic they are and thus what great human beings they are (and by extension, what heartless bastards the rest of us all are, for not doing the same).   In other words, it is just the same old status seeking thing raising its ugly head again and again.

So save the flames.   They only prove my point, in that regard.   If you really want to "help the homeless" then contribute to a homeless shelter, soup kitchen, or other organization who is more familiar with their needs and can do more with $100,000 than help one man.   Anything else is just narcissism.