Friday, June 27, 2008

Too Young for a Durable Power of Attorney?

Too Young for a Durable Power of Attorney?

Dr. Cynthia Crawford[i]

My niece is a student at the University of Missouri. Her roommate this past year was a very likable young woman. I found her to be brilliant, beautiful and just plain comfortable to be with. Toward the end of the Fall 2007 semester, Patti (not her real name) started sleeping late and complained that she just didn’t feel well.

She walked out of her last final of the semester on a Wednesday morning and headed to student health with the worst headache she’d had in her 19 years. Within hours, she was in the hospital and diagnosed with a life-threatening illness.

By Thursday evening, she was transferred to a health center in one of our larger cities and diagnosed with an aggressive health condition, requiring very specific, swift treatment. Every hour counted. Unfortunately, her medical records weren’t transferred with her and the hospital required the original medical records - faxed records were not acceptable.

Patti’s mother called my niece early Friday morning and desperately asked her to drive the medical records three hours to the health center. The trouble was, however, that the first hospital would not release the medical records to my niece. She did not have durable power of attorney for health care for Patti and the Health Insurance Portability and Accountability Act (HIPAA) prevented them from releasing the medical records, even in this life and death circumstance.

Next, Patti’s mother called the hospital with her “Plan B”. She would get in her car and make the six-hour round-trip drive to pick up the critical medical records. Unfortunately, before long, she learned that the hospital would not release the medical records to her, as she did not have durable power of attorney for health care for Patti. HIPAA’s privacy standards prevented the hospital from releasing her medical records even to her mother, since Patti is a legal adult (age 18 or more).

Unfortunately, you and I can’t change what happened to Patti and her family. What we can do is learn from this family’s nightmarish ordeal.

Anyone age 18 or older needs to execute two legal documents – a durable power of attorney for health care and an advanced directive for health care choices. Don’t wait until you are old. Don’t wait until there is a need for them. Then, it will be too late. And, while you can use a family lawyer to draft these documents for you, you can get these documents in place with little out-of-pocket cost.

An advanced directive for health care choices allows you to express in writing what your health care wishes are if you become physically or mentally unable to communicate your desires for medical care. Advanced directives allow you to state what treatments you do or do not want, if you are unable to communicate your wishes.

A durable power of attorney for health care allows you to appoint another person to make health care decisions for you, if you cannot and you have not specified your wishes in your advanced directive for health care choices. The person you designate with the power of attorney on your behalf should be someone who understands your goals and values and that you can trust to carry out your wishes. Specifically, ensure that the document allows the person to request, receive and review your medical and hospital records.

While I would never suggest to a person how to fill out these two forms – these are very personal decisions – I urge every adult to carefully fill out both forms and then sign and have them notarized. I also encourage you to seek the advice and counsel of an attorney, should you feel uncomfortable doing this without one. (Peace of mind is worth a couple of hundred dollars.)

Admittedly, if these become necessary to use with respect to your care, your Financial Success is relatively meaningless, compared to your health. For most, however, making things easier for those your love and cherish is what Financial Success is all about.

Here are two sources for more information and legal forms:

The Missouri Attorney General:

The Center for Practical Bioethics:

- Robert O. Weagley, Ph.D., CFP(r)

Chair, Personal Financial Planning

University of Missouri

Columbia, MO 65211

Wednesday, June 25, 2008

Student Loan Interest Rate Alert

If you’ve taken out a variable rate student loan before June 30, 2006, the rate of interest charge against your loan will likely decrease on July 1, 2007. How Much?

All loans originated prior to 7/1/06 that have not been consolidated, will soon have a debiting rate (the rate you are charged on a loan) of 4.21% for the next annual period. If you are still in school, or in your grace period, the rate will be reset to 3.61%. Given what rates were prior to this change, this is a full 3+% less than what you are currently paying.

If you want to lock in this rate, you will need to consolidate through the Federal loan consolidation process. Generally, information on this is available at your financial aid office at your university.

Other loan rates will also adjust on July 1:

· New subsidized loans will drop from 6.8% to 6%,

· Fees on Stafford loans will drop 0.5%,

· Total borrowing limits will increase for independent students to $57,500 and to $31,000 for dependent students (BE CAREFUL WITH YOUR BORROWING!), and

· Undergraduate annual borrowing limits will increase by $2,000.

This is the good news. The bad news, as you all know, is that our economy is currently very weak. As a result, the federal government is lowering interest rates as a way to stimulate the economy. They want us to spend our money. Well, while it is a fact that you’ll be required to send smaller checks to repay your student loan, the option is always open to you to continue to make your current payments to repay your loan at a faster rate than planned. You could also save the money in your retirement plan or towards another goal that you have established for yourself.

What I’m suggesting: Take the opportunity to make a personal statement and take a step forward on your road to Financial Success.

Robert O. Weagley, Ph.D., CFP(r)

Chair, Personal Financial Planning

University of Missouri

Columbia, MO 65211

Friday, June 20, 2008

Checking Accounts – Your History Follows You

Checking Accounts – Your History Follows You

Dr. Cynthia Crawford[i]

Most employers expect to direct deposit their employee’s paycheck directly into a bank account. Imagine that upon graduation, you have to explain to your first employer that you’re not eligible to have a checking account because of your poor financial management during college.

If your relationship with your “checking account” bank was similar to how the Hatfield family got along with the McCoy family, the problems may follow you for years. Moreover, the likelihood of a longer term problem is greater, as companies like Chex Systems, Inc. make their living by providing deposit account verification services to its financial institution members to aid them in identifying account applicants with a history of mishandling accounts. An example would be a bank client that chronically overdraws her account to the point that the bank has had to close the account.

Unlike negative information in credit reports that stays in the records for up to 7 years (up to 10 years for bankruptcy), negative information stays in the Chex System for only five years. This can be shortened, if the bank or credit union that filed the report requests its removal or Chex System is forced to remove it under the Fair Credit Reporting Act.

You must remember that a checking account at a financial institution is a privilege, not a right. Financial institutions are not required to offer a checking account to any one, particularly those with a history of poor financial management.

It is important to foster a sound business relationship with your bank or credit union. Here’s how:

· Reconcile your checkbook with the bank statement every month. Less than half of all checking account holders reconcile their checkbook with the bank statement each month. You are exempt from this rule, if you have never made a math error or have never forgotten to write down a check or ATM transaction in your check register.

· Record ATM and Debit Card transactions. ATM and debit card transactions need to be written in your check book record just as quickly as paper checks. Far too many overdrafts are triggered by forgotten ATM and debit card transactions.

· Know your balance. Don’t assume that the balance on your ATM slip or the bank’s website is actually how much you have available to spend. You may have outstanding checks or other transactions that have not been posted.

· Know what your checking account costs. Is there a monthly service charge? Is there a per check charge? Are the ATM locations convenient (driving is costing more and more these days)?

· Keep a cushion in your checking account. With overdraft bank fees hovering around $35, keeping a $100 cushion in your account is good insurance.

· Ask about overdraft protection. Ask your bank about overdraft protection options and their costs. The peace of mind might be worth the interest charges you occasionally incur.

For most students and young families, the goal is to find a free checking account. Most require you to never overdraw the account and some may require you to hold a minimum balance in a savings account or money market account. Do the math, based on your patterns of use.

You might like to receive interest on your average balance in your checking account. For low balance checking accounts, however, it is probably unrealistic to expect interest to be paid in today’s market. Still, ask the question.

There will be a fee for check printing but you do not have to have your checks printed by your financial institution. You may have your checks printed by mail-order or through an on-line check printing company, sometimes at a substantially lower cost.

Finally, establishing a business-like relationship with your financial institution can be the factor that the bank uses to judge your character as client. Hence, it can have a great effect on your ability to make the most of your opportunities for Financial Success.

POSTSCRIPT: Alaska was great! The fish and bears are as large as they say.

Robert O. Weagley, Ph.D., CFP(r)

Chair, Personal Financial Planning

University of Missouri

Columbia, MO 65211

Friday, June 13, 2008

How Many S’s in Success?

If all goes well, while your email box was receiving this Financial Tip at 5:00 a.m., CDT, I was sleeping on a plane en route from Anchorage to Denver. I am returning from a week of fishing and bear watching with my two sons. The oldest went with me as a reward for his University of Missouri graduation and the youngest went with us, simply, because he loves to fish. Actually, he lives to fish.

Why am I telling you? Well, today’s Financial Tip is about goals.

I’ve always wanted to go to Alaska, ever since a neighborhood pal moved there shortly after Alaska was admitted to the Union. (Boy! Am I old?!) Until this week, I had never visited Alaska and I took my boys with me and they both WANTED to go with me. Now, that is SUCCESS!

A wise man once asked me how many S’s were in the word success. Counting three but knowing he was tricking me, I simply said, “Two”. He replied (of course), “No, you’re wrong. There are five. If you want to have success you need to do the five S’s.”

See it – You must first visualize your goals. See your goals as real and possible. They just might be scheduled for later in life. If you want to quit smoking, visualize yourself not smoking.

Say it – Tell others about your goals. Taking a public stand is very motivational. Others, also, can get on-board to help you.

Sign it – Write your goals down and put them where you see them: on your refrigerator, your mirror, or the first listing in your “contacts” on your cell phone.

Support it – If you know your goals in dollars and time, calculate how much you need to be saving each period (week, month, or year) to reach your goal and then do it. If you want to lose weight, make proper dietary choices and set intermediate goals for your weight.

Stick to it - Accept the fact that you are not perfect. You might miss a deposit, eat one too many Girl Scout cookies, or have a cigar at a social event. Don’t quit trying! Be true to your goals and soon you will be living them.

In closing, I want to thank you for reading this slice of (my) life. We are grateful for both your interest and your help in providing access to our MU Financial Tip of the Week to as many individuals as possible. We want all to reach their Financial Success, regardless of how many S’s they need to reach it.

Robert O. Weagley, Ph.D., CFP(r)

Chair, Personal Financial Planning

University of Missouri

Columbia, MO 65211

Friday, June 6, 2008

Are You Really You?

It seems that every week I’m either phished or pharmed by some imposter trying to be my bank, my credit card company, or my credit union. They claim my account has been compromised and they instruct me to link to another site and provide details about myself. Usually, I notify the institution to either 1) warn them of this imposter sending emails to their account holders or 2) see if it is real. (Some of the emails are darn good, while some imposters seem to have failed 3rd grade spelling.)

While I admit that I hate to be paranoid, we must each act to protect our identity. What should we do?

1) Don’t give out financial information such as your checking account, credit card, or Social Security numbers, unless you can trust the one who is making the request. If you’re suspicious, do not give them any information. Never.

2) Notify your institution about suspicious emails, phone calls, or other contacts.

3) Be aware of phishing (bogus emails) and pharming (redirecting a website’s traffic to another, bogus website).

4) Notify your institution of suspicious charges on your account.

5) Put your outgoing mail in a U.S. Postal Service collection box.

6) Shred unwanted financial statements.

7) Verify the data in your credit report ( ,, & )

8) Receive a free annual credit report ( )

9) Report lost or stolen checks or credit cards immediately.

While nothing is guaranteed, these steps will help put those who are out to harm or steal from others where they belong. Moreover, it will not put you on the detour around the road to Financial Success.

Robert O. Weagley, Ph.D., CFP(r)

Chair, Personal Financial Planning

University of Missouri

Columbia, MO 65211