Service of What’s the Question?

April 2nd, 2012

Categories: Back to Basics, Banking, Details, Lessons Learned, Medical Care, Paying Attention, Questions

question-what-is

With $67 billion of student loans in default it appears that some of the borrowers aren’t asking the right questions. Janet Lorin wrote: “Almost two-thirds of U.S. student-loan borrowers misunderstood or were surprised by aspects of their loans or the student-loan process, a study shows.”

She continued, in “Student Borrowers Lack Understanding of Loan Terms,” on Bloomberg.com: “About 20 percent of the respondents in an online survey said the amount of their monthly payments was unexpected, according to the study released today by Young Invicibles, a nonprofit group in Washington that represents the interests of 18-to-34 year-olds. The respondents had an average of $76,000 in student debt.”

college-studentsIn addition, borrowers probably didn’t calculate what their potential salary might be in their chosen field, what the job opportunities are and what the added value would be to attend a private school with its $60,000/year tuition, room and board–taking Georgetown as an example–vs. a state or community college where they can live with relatives. Undergraduate tuition at the City University of New York is $5,130.

How do you Feel?

fever-thermometerMeanwhile, the Justices of the Supreme Court are looking at the legality of Obamacare. What they are considering is if there are limits to Congressional intervention in people’s lives. Talk show pundits refer to this question as “Can Congress make you eat your broccoli?” Wonder what the answer will be.

Hot Topic

I heard an articulate spokesperson make her case about tanning beds in a radio interview. She wanted the legislation in her state to follow California where it’s against the law for teens under 18 to use them. Emma Jones on Limelife.com reported on these findings by the Skin Cancer Foundation: “…indoor tanners are 74 percent more likely to develop melanoma than those who have never tanned indoors. What’s more, across the US each year, 2.3 million of tanning bed users are teens.”

tanning-bedJones also reported:  “California had previously banned minors under the age of 14 from using tanning beds, but allowed those between 14 and 18 years of age to use tanning beds with parental consent. Texas has also banned the use of tanning beds for children under 16, but California’s new bill has made them the first state to set a higher age limit.”

When the MC asked this spokesperson: “How many tanning bed businesses are there in the US and how big a business is it?” she had no clue. Within a minute of hanging up, his producer had the answers. The takeaway: When you are a spokesperson, think of the obvious questions you’ll be asked about the topic you’re covering and keep the answers at hand. It’s so easy to do these days!

How Taxing

On his radio show about money, Ric Edelman was trying to make losers feel better about the outcome of the Mega Millions lottery. He told the audience about a winner of $10 million who divided her winnings: 49 percent for herself, 51 percent for her mother and siblings.

tax-2She lost a court case in which she fought the tax man, ending up paying 90 percent of her winnings to gift taxes.

Before picking up her winnings, she should have asked a whole bunch of questions. She’d have learned that the maximum amount of money she can gift someone without paying a gift tax is $13 thousand a year. She’d have been better off to have picked up the winnings with family members as a group. Ric was being funny when he said she should have hired an accountant and lawyer even before buying the winning ticket.

Have you landed in a spot because you didn’t ask the right question or weren’t prepared with the answers?

 unprepared

6 Responses to “Service of What’s the Question?”

  1. Lucrezia Said:

    No one is immune to costly errors, and that goes for the careless student (where were the parents?)and the well meaning winner of a huge lottery. The lottery person may have won a great deal back from the IRS upon appeal.

    On a personal level, a number of tests revealed either lack of study or of understanding, or both – and have cost grades. I am sure there were a ton of other errors, but being a self forgiving soul, have either forgotten or am unhappy sharing such information. Wearing a hair shirt and/or airing ones weaknesses is a poor policy.

    Life usually presents a series of challenges, and usually doesn’t pick the ones in which one has expertise. The best approach is to use them as learning experiences. We will never live long enough to know everything, but it’s a start.

  2. Jeanne Byington Said:

    Lucrezia,

    I hope you are right about the lotto winner although the finance people on the radio show didn’t hold out much of a chance. A friend who is a CPA told me that she could have given money to her relatives to pay for education or necessary medical procedures and there would have been no gift tax penalty.

    I was shocked to find out–think I may have mentioned it in a blog ages ago–that parents no longer see their child’s grades. Everything goes to the student even if the parent pays the entire bill. And the bill also goes to the child and parents who miss deadlines because Mr. or Ms. student forgot to pass along the bill nevertheless face late fees. My guess: Lenders aren’t much better at sharing info with parents and take advantage of the many kids who think they know everything.

    The takeaway is to bring in expert help as in the long run, it may save you money and angst.

  3. Mary P. Said:

    That’s an awful lot of tough questions in one gulp, so I’ll limit my comment to one of my favorite stories. It answers your question, “Have you landed in a spot because you didn’t find out or weren’t prepared with answers?”

    An old friend of mine, when he was quite young and unemployed, was looking for work. He didn’t know what he wanted to do, but he badly needed a regular pay check. A mutual friend arranged for him to have lunch with the new head of international operations at what was then one of country’s largest banks. Shortly after ordering drinks (I guess bankers drank in those days. Perhaps they still do, but I doubt it.), the banker asked my friend, “Why do you want to work in a bank?”

    My friend who had only the vaguest idea of how banks worked, far less of what bankers actually did, was at a total loss. In desperation he blurted out, “I like money.”

    The banker, a Scot with a sense of humor, who it turned out was new to banking himself, although not to international finance, laughed and said, “That’s as good an answer as any.”

    My friend told me that the rest of lunch was a delight, good food and wine and stimulating conversation about how to travel well in Europe, which was something he did know about.

    Three decades later the no longer young man was running the international department of a big New York bank himself, and all was right with the world. Apparently in those ancient times, liking money was as good a qualification for being a successful banker as any.

    No wonder the world economy is a mess now; we ask too many questions these days.

  4. Jeanne Byington Said:

    Mary,

    What a wonderful story.

    My guess about the young man and his answer is that the Scot sensed he was dealing with an honest man. Today, I fear, the one who would get the job would be the blah blah blab BS expert. I have met a few and they drive me nuts but then I couldn’t be a banker: My talents don’t run to numbers.

    I agree with your conclusion as well. At the same time as we protect people with coats of politically correct Puritanism, we think a person’s most private business is ours. Contradictions on steroids!

  5. Lucrezia Said:

    If the radio show people were acting in good faith, they would have shown the tax victim roads to financial recovery rather than indirectly beating up on the IRS. Have these so called finance people forgotten about the existence of successful tax lawyers?

    If a student is on full scholarship and/or paying his own way, there is no reason for sharing his grades with anyone. Conversely, there have been a number of court rulings which have established that parents are neither responsible for, nor do they owe their offspring a college education, a huge deterrent for Mr/Ms student from withholding grades from paying parents.

  6. Jeanne Byington Said:

    Lucrezia,

    I didn’t make clear that the radio finance folks were referring to a news article: The lotto winner wasn’t on the phone with them.

    However, my accountant friend said that gift taxes are huge, there’s no way out of paying them short of not giving more than $13,000 a year, though she didn’t understand why they were so high. Earlier I noted the exceptions—paying medical or education bills.

    Colleges don’t show grades to parents–the decision is the schools’ not the kids’. A father with two children in private colleges had to ask for a day or two of grace as when he learned that he owed the huge chunk of money for the first term he’d already missed the deadline. His daughter forgot to pass along the bill. The school didn’t charge him a late fee. He and his wife pay. Their daughter gets the grades.

Leave a Reply


Clicky Web Analytics