Month: May 2023

There is a saying amongst planners that the average person spends more time planning a 2-week family vacation than they do planning their own retirement!  While the average person should spend more time planning their retirement, the planning time for your 2-week family vacation is justified for several reasons.

As per the NY-1 interview of Robert Sinclair Jr., Senior Manager of public affairs at AAA (Automobile Association of America) 2022 had some of the worst flight delays and cancellations in history!  The lack of travel followed by huge demand increases left airlines short-staffed and scrambling to hire and rehire personnel. 

Also, due to retirements and attrition, there is a national shortage of air traffic controllers.  “In 2022, 70% of ALL weather-related delays in the USA stemmed from New York’s 6 airports because of the connecting hub and spoke system,” said Mr. Sinclair.

Here are my updated TOP 10 Summer Travel Tips:

1. Book Flights Early: Aire fares are up 40% from last summer and there are projections for more increases; hence, now is a good time to book flights and lock down your trip.  Also, there is a 250% increase in international bookings so try and book those now as well.  Many countries such as Japan and China have lifted Covid restrictions.
2. Call Your Credit Card Company in Advance: Give them your full itinerary, with dates in each city.  I have had credit cards frozen after they have seen a string of out-of-town expenditures.
3. When Packing Start from Feet to Head: This is a good thing to do in the morning getting ready for work.  I start from feet to head and pack in piles.
4. Pack a Change of Clothes in your Carry-on Bag if Flying: Over 29 million bags are lost or delayed each year.  Be ready when and if it happens to you.
5. Buy an Off-Color Suitcase: This decreases confusion and is more easily recognizable during ground-transportation madness with people jockeying for their luggage.
6. Sign Up for the TSA: The TSA pre-check can make the difference between making and missing a flight.  It offers better distancing and eliminates the need to remove your shoes, belts, and/or laptops expediting the process.  TSA memberships cost only $85 and it is good for 5 years.  The renewal is discounted to $70 if done online at tsa.gov/precheck.com or $85 in person.
7. Research AAA and Airline Vacation Packages: It is no secret that airlines and hotels have been hurt by the pandemic.  There are some sweet short-notice vacation packages available right now.  Check out AAA.com, JetBlueVacations.com, and AAvacations.com to name a few, and save big money!  If you have points with your preferred airline, start with them.
8. Read Both Positive and Negative Hotel Reviews: Try booking.com, tripadvisor.com, and kayak.com for domestic travel.  For same-day rooms use hoteltonight.com.  It is a money-saving, excellent FREE APP to download onto your smart-phone to save big $$$.
9. If Driving, Schedule a Tune-up, and Map Your Journey in Advance: A good way to avoid getting into a spat with a spouse or loved one, lol.  There is nothing worse than a car breaking down or getting lost on a road trip.  My preference is WAZE over Google Maps.  WAZE (owned by Google) downloads faster and has an information-sharing agreement with over 800 US cities and international countries.  Waze also warns you about upcoming speed traps, red-light cameras, and debris on the road. 
10. Try to NOT Check Bags: Not if, when flights get changed or canceled last minute, it is much easier to adapt when you don’t have to retrieve your checked bag. 
11. Call Alternate Phone Numbers:  If you get stuck at the airport because of a canceled or changed flight, everyone rushes to the gate or calls the general phone number.  The smart move is to buck the trend and call the airline rewards number and/or international number to change your flights.
12. Consider Using a Professional Travel Agent:  Covid-19 has weeded out many of the weak travel agents.  There are hotels that share their room booking commissions with the travel agent, so it does not always mean more money out of your pocket.  Also, most travel agents have access to “The Apollo System” which allows them to access multiple airline sites at the same time, which makes it easier to rebook your flights and save money.

I have spoken with family friends who haven’t been away since covid-19, and some say they are a little rusty regarding travel.  Sometimes people put too much pressure on themselves to have a good time in this situation.  Planning in advance can help ensure a smoother summer vacation.  Have a fabulous trip and enjoy your summer!

The U.S. national emergency to respond to the Covid-19 pandemic ended last week as President Joe Biden signed a bipartisan congressional resolution to bring an end to it after three long years!

The national emergency allowed the government to take sweeping steps to respond to the virus and support the country’s economic, health, and welfare systems.  Some of these emergency systems have been wound down while others are in the process of being phased out.  I have no doubt there will be bumps in the road trying to unwind programs, such as the shakeout from the Covid-19 loan forbearance programs.

Does this mean that Covid-19 is over?  Not really, as Americans are still dying from this virus every week.  Arguably, 1.13 million Americans have perished directly or indirectly from Covid-19 over the past three years, which I call “the Covid-19 era!” 

There is no doubt it has been an unforgiving three years of Covid-19 and its ripple effect on our economy and families.  You would be hard-pressed to find an American that hasn’t been affected by Covid in one way or another.

On the positive side, there are some silver linings.  In some ways, Covid-19 has been an accelerant, meaning it has expedited trends that were already starting to emerge. 

My top 10 Covid silver linings include:

1. Remote Work Being Universally Accepted: More time working from home leads to less commuting and a better quality of life with more free time for the family if budgeted for properly.
2. More Disposable Income for Salaried Workers: Working from home between 2-5 days per week saves substantial time and money on a weekly basis.  In addition to commuting costs, working from home keeps purchasing several outside meals per week and improves the possibility of eating healthier. 
3. Opportunity for Better Work-Life Balance: With the extra time saved, parents can spend more time with children and attend school events such as plays and sports during work hours from time to time.
4. Increased Efficiencies: The emergence of Zoom like videoconferencing and e-signing documents has improved communication, efficiency, and effectiveness in many fields.
5. Less Junk Mail: Have you noticed how much less junk mail you receive from the post office and your email box?
6. Birth of “The Financial Wave:” This column started as a weekly Covid-19 briefing I emailed to clients, friends, and family until someone forwarded said briefings to Wave Editor Mark Healey, who called and asked me if I was interested in starting a new Wave Financial-based column.
7. Nurses Getting the Recognition They Deserve: One of the most significant silver linings is nurses being hailed as heroes, which they are!  The next step is to significantly raise their salaries commensurate with the amazing work they do taking care of us!  Doctors could not function and do their jobs without nurses helping health recovery strategies come to fruition!
8. Forced Creativity and Problem-Solving: Covid-19 created new lifestyle shifts for commuting, mixing business home offices with family life, and technical problem-solving.  I have several clients and friends that have become YouTube self-help experts!
9. New Hobbies Have Emerged:  With forced extra free time over the last 36 months, there have been shifts to pursue hobbies that we thought we would never have time for. 
10. More Focus on Well-Being: This one has affected me.  Pre Covid-19, I rarely got to sleep before midnight nor 7 hours of sleep per evening.  Covid has nudged me and many others to move up well-being on my priority list. 

The Biden administration is proposing new automobile pollution limits that would require as many as two-thirds of new vehicles sold in the United States to be electric by 2032!

On a state level, California has taken it further, as they are requiring 100% of ALL new cars sold in 2035 and beyond be zero-emission vehicles, which include battery electric vehicles, plug-in hybrid electric vehicles, and fuel cell electric vehicles.  Oregon and Washington are following suit. 

The fact that 47 other states have not yet made a commitment, and with the average lifespan of a car in the United States pegged at about 12 years, there will still be a need for gasoline for decades to come.  The gasoline demand should start to drastically reduce by 2030 going forward.

You might be asking yourself at this point, what does this all mean?  There will be many hidden costs during our national quest to go 100% electric:

1. Gas Service Stations Will Close:   California’s shift away from gas-powered vehicles could mean as many as 80% of gas stations would be unprofitable by 2035!  The state currently has about 250,000 station owners and employees.  There will be many job losses across America during this transition.
2. Crumbling Infrastructure: Recently, a lower Manhattan parking garage collapsed as a four-story Ann Street structure caved in, leaving cars stacked atop one another and rubble down to street level.  The garage manager was killed, and 5 employees were injured.  One of the reasons was too much weight on the rooftop.  This problem will not be going away as electric cars, due to their heavy car batteries, weigh much more than gas-powered vehicles.  For example, the battery of an electric GMC Hummer weighs 2900 pounds, roughly the entire weight of a Honda Civic.
3. New Regulations Are Needed: Because electric cars weigh much more than gas-powered vehicles, building regulations and standards must be reviewed and the bar raised for parking garages, bridges, and the double-decker roads that are found in most big cities across the country.
4. Electric Battery Replacement and Disposal:  Depending on what source you trust; the typical EV battery will need to be replaced every 3-10 years.  Batteries may degrade faster in hotter climates as heat adversely affects EVs.  EV battery replacement costs range from $5,000 to $20,000 based on the pack, size, and manufacturer.  A Tesla Y battery costs $20,000.  The length and wording of electric vehicle warranties will be critical going forward!  If a battery fails during the warranty period, the dealer will have to replace that battery free of charge. 
5. Precious Metal Shortages:  The lithium-ion batteries found in EVs depend on 5 critical minerals; lithium, cobalt, manganese, nickel, and graphite.  Ramping up EV production that quickly will create domestic supply shortages.  China knows this and has been siphoning natural resources (metals and minerals) from Africa for decades.  This has enabled China to lead the world in EV production.

The combination of the Manhattan parking garage collapse and a casual conversation I had with a nurse named Grace triggered the writing of this column.  Grace just purchased her Tesla Y in January of 2023 because her Mercedes came off lease, Tesla had decreased their prices and she “wanted to save money!” 

I asked her how it was going, and she gave me a surprisingly long answer and made several key points I didn’t think about, as I still drive a gas-powered car.  I expected to get a quick response that she was happy and saving money.  The points that she made were:

1. Geico Raised Her Premiums by Almost 30%: This was a surprise to hear.  I asked why and she said she called Geico, and they said it was because of the increase in the price of parts for Evs.
2. The Cost of Home Charging Installation: Grace said in the past, when customers bought Teslas, they received a home fast-charger with the car.  This was not the case for her.  She bought an aftermarket trickle charger that took days to charge as it charges only 3% per hour.  She also couldn’t use a blow-dryer while charging her car without blowing fuses.  She was quoted $1500 by an electrician to install the system, which did NOT include materials, permit, inspection, and a warranty.  She decided to abort that mission and tries to charge her Tesla at the North Shore Hospital garage (there are only 6 charging stations in total) during the 3 days she is working 12-hour shifts.  I know of parking garages that charge an extra $100 per month and charge the car for you.
3. She IS Saving Gas Money Weekly:  Nurse Grace was spending $50-$60 per week for gas commuting to work.  She now pays about $15 per week (measured in kilowatts) to charge her car at work when she can find a charging station. 

My Take is that we do need to transition to electric cars; however, for my Financial Wave readers, it is a little early to buy one now and expect to save big chunks of money every week. 

Over the next 2-4 years, there will be a proliferation of new EV cars introduced to the market which will bring down new EV car sticker prices.  As charging stations get funded and built and the technology advances, the kilowatt charges and charging times will lessen making the EVs a better purchase in the near future than they are now.  

This past Monday, May 1^st, was National College Decision Day, a significant day for high school seniors across the country!  It is the deadline day for seniors to decide which college or university they will attend in the fall of 2023.

For many students, College Decision Day can be a day of celebration!  For others, it can be a day of disappointment, as they receive letters of rejection and/or letters of waitlist notifications.  Either way, this date is the culmination of great student and parental planning, or the lack of planning, which has yielded their “Decision Day” results!

Aside from buying a home, a four-year college degree could be the largest expenditure that a family will make in their lifetimes.  Looking back to my own college planning experience, I was fortunate that my parents did plenty of research (not easy as the internet was in its infancy) and spent money they didn’t have to get me an S.A.T. tutor and drive me to visit many schools such as Lehigh University in Bethlehem, Pa., which I decided to attend.  These decisions have a profound impact on the rest of your life as I have two of my best friends in the world from my four years at Lehigh.

During this time, there were no college coaches, so my parents had to fend for themselves as college guidance counselors were mostly teachers handling college admissions part-time in addition to teaching multiple classes.  My parents stumbled upon “The Common Application” which was the most efficient way for us to apply to numerous schools. 

Mistakes with the first student can have a major ripple effect for younger siblings and for parents financially.  Over the years, I have seen many situations, due to poor planning, where parents felt they had to borrow from their own retirement to fund their children’s education!

Fast forward to the current Covid-19 era and wow has the game changed! And it has gotten much dirtier!  The reason I say this is because the colleges have stacked the deck in their favor as they take advantage of the emotional attachment parents have to their children!

When planning with my clients, it is ALWAYS a good exercise to explain to them what the insurance company’s point of view is.  For example, take group health insurance for a business owner with 10 employees.  There are 2 employees that are nudging the business owner to offer a group health insurance option for them.  The insurance company believes that these 2 employees will be “buying a claim,” meaning they have pre-existing health issues and will hit the insurance company with a claim the first month.  This is why health insurers have “participation rules,” meaning they require at least 50% of the 10 eligible employees (in this case 5 of the 10) must enroll in the plan from day one.  The insurance company is thinking that the extra 3 employees are healthy and will help defray early claims costs. 

It works the same with colleges, so we need to examine their point of view.  To dig deeper into this, I interviewed Hans Hanson, owner of www.MycollegeLogic.com.  I first asked Hans how the game has changed over the last 20-25 years, and wow, his answers were eye-opening!  He said that the “BIG BUSINESS of college admissions has transitioned into a profitable business unit WITHIN the colleges.” 

These are the reasons why:

1. Application Inflation: Application inflation results from the admissions strategies of colleges trying to boost their selectivity!  In 2021. Applications increased by 1.6 million over 2020 (at an average cost of $75 each) without an increase in the number of applicants.  This results in lower acceptance rates and the perception of higher selectivity and value.  For example, school A usually receives 20,000 applications for 10,000 spots, a 50% acceptance rate.  Now they receive 40,000 applications for the same 10,000 freshman spots so their acceptance rate just dropped to 25%.  This works well for colleges and adds to student and parental stress!
2. The Surge in Deferrals:  Hans says “deferral” is the new hot word in today’s world of college admissions and describes the college’s sales and marketing intentions.  With thousands of extra applications to review, this has created the advent of “the 10-second denial!”  Admission counselors have 4 button options to push; Accept, Deny, Defer, or Waitlist.  Deny is the fastest option; however, the deferral puts the student back into the pool and gives colleges more time to see if there is a better student option who perhaps, can pay the full sticker price!
3. Admission Counselor Evaluation: Counselors are ranked by their “yield rate.”  The college yield rate reflects the percentage of students accepted who enroll.  For example, Ivy League schools have a yield rate between 65%-70%.  This is where ED, or early decision comes in.  This was created so admission counselors can be confident that most ED-accepted students will enroll.  Colleges believe any other option than early decision means the student has a preferred destination somewhere else.  If a counselor’s yield rate is 75%, they get promoted.  If under 50%, they get fired!

Speaking with Hans, our past strategies would NOT work today.  Hans preaches choosing 6 or 7 schools and digging deeper instead of the distractions of applying to and completing specific essays for 12-15 schools as we did. 

You might be asking yourself what does this all mean.  My take is that we are in the era of specialization!  There are now “science camps” and “art and theatre camps” which are cottage industries serving a public with high demand.  The same is true with college admissions.  There are parallels between college planning and dating.  In order to “tip the scale” in your favor and have colleges chase/pursue your student instead of the other way around, it is essential to consider hiring a college admission coach by 10^th grade at the latest!  For more information or an introduction to Hans, feel free to email me at Rob@InsuranceDoctor.us.