Archive for the ‘General Musings on Life’ Category

Fred’s Final Tribute – Remembrance of a Father Loved and a Life Lived.

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A Tribute to Fred Stanganelli – June 27, 2011, St. Lucy Parish, Methuen, Massachusetts:


Best Wishes to the Groom: Fred and Steve - Wedding Day, May 25, 2008

We are here to celebrate the life of a good man and a better drummer … as he would say, probably “the best drummer in the country … but I don’t know about the city.” (#84)

A man who was the king of one-liners developed over 40 years playing for bands in night clubs, bars and wedding halls – so many that we decided to number them.

A man who at one time looked so much like the Baker in the Dunkin Donuts commercials of the 1990s that we teased him for it and kept telling him it was “time to make the donuts”.

A man who loved all the good things in life especially his cars.  A man of few words or deep thoughts but who showed his love for his family in so many of the things that he would do.

If a life can be summed up in a phrase it is this:  Being There.  He was there for us, for the most important thing in his life – his family.

On May 4th, Fred Stanganelli, former wedding band drummer and Raytheon retiree, celebrated the 47th anniversary of his 39th birthday at home resting after a recent dialysis treatment.

We celebrated Father’s Day together (Sunday the 19th) in the emergency room of Ana Jacques Hospital in Newburyport before he was transported to Portsmouth.

At 4:11 PM on Thursday, June 23rd, shortly after receiving Last Rites, our father passed away. Good altar boy that he was, he waited.

Fred had a quirky sense of humor which I inherited. So, as Fred would probably say “he’ll never do that again.” (#7)

We are here because of two immigrants in a new land who came from Palermo and Siracusa, Sicily and found each other in Lawrence: Giuseppe Stanganelli and Giuseppina Coco.

Giuseppe (or Joe) was known as George to his coworkers in the mills of Lawrence because there were too many Italians named Joseph.  He worked in the mills and as a mason and opened a small grocery market with Italian imports.  A knack for business that passed on through our Dad and to us.

Giuseppina (or Josephine) also worked in the mills. She was a great cook and baker who loved to sing while she cooked. And she pampered her baby.

They had four children: Silverio (known as Sammy), Mamie, Josie and their baby Alfio or Freddy as he came to be known.

Fred was born at home at 182 Garden Street in Lawrence on either May 3, May 4 or May 5. (He always said the records were not so accurate so he split the difference).

He was predeceased by his brother Sammy who was Killed In Action in Italy during WWII, his sister Mamie Matthews of North Andover and Josie DiPari of Methuen.

Fred was raised on Garden Street, attended Holy Rosary School and graduated from Lawrence High – he was very proud of that.  He saved a classmate from drowning once in one of the fountains on Lawrence Common – a legacy in itself. He was an altar boy at Holy Rosary Church (but that didn’t make him a saint – just ask our mom).

We are also here today because a co-worker friend of my mom who was the wife of one of his band mates set them up on a date.   As our mom tells it, he drove up in a new car, had one of his fancy suits on and his drums in the backseat.  I don’t know how long they courted but eventually, he popped the question with this romantic line:  Let’s go get a blood test.  (I told you he was not a man of many words).

For most of his life he lived in Methuen – The Valley as we called it –  where he raised a family that included me, my older brother, Joe, and our mom Olga (and let’s not forget his beloved cat Baby). Like Archie Bunker, he had his favorite chair that he watched TV from. He retired to York Beach, Maine and returned to Amesbury several years ago to be closer to his family — and, unfortunately, his doctors.

He was never afraid of hard work.  He held many different jobs.

At one time he worked for Eastern Airlines and Pan Am Airlines in New York City and often flew to Florida and pre-Castro Cuba – the Las Vegas of its day so we’ll leave it at that.

He even got appointed to Deputy Sheriff of Essex County. While it never turned out to be a paying gig, he looked good in uniform and when he marched in parades.

For most of his life he worked as a finish presser in the textile mills of Lawrence showing the pride of craftsmanship when he would point out a coat in a store with a London Fog label. After many years of trying, he finally got a job as a material handler at Raytheon that he retired from after several years.

He was best known for his lifelong passion as a musician or as one EMT wrote in a report “a retired physician” – which I guess is true — he was doctor of the snare drum.  For more than 20 years he played with The Five Knights and then the Sears Brothers.  He played at Canobie Lake and Nurembega Park when dance halls were filled with Big Band music. He would tell us stories of when he would take the train to do gigs in Maine or drive to Salisbury Beach when gas cost a nickel. He also marched with the Italian Colonial Band which accompanied the saints paraded through the streets of Boston and other North Shore towns during the Italian festivals on summer weekends. And I remember marching with him.

He was very proud to be a 4th Degree member of the Methuen Knights of Columbus and was briefly a member of the Lawrence post of the Sons of Italy.

He was a generous man but not one of deep thoughts or many words.  While I never recall him reading a book, he was street smart but he wanted us to go to college. He was devoted to his sons –  Joe and me – and then his grandsons (Joseph and Stephen — as you can tell we don’t like variety in names in our family). He was willing to support each of us in any endeavor.

He was just always there. You bring him an idea and he was there to support it.  It wasn’t about money – there often wasn’t any – but he was there.

He brought me to Little League. For a man who didn’t read, he brought me to libraries. He was so often at my high school band functions that he was recruited along with three other dads to help carry the equipment needed for our field shows.  For this he and the dads became “The Box Crew” and all were awarded T-shirts.

For anyone who remembers the 1992 campaign for state rep here in Methuen, you may recall seeing Fred sitting in a lawn chair holding a sign in one hand and a Dunkin Donuts coffee in the other at the entrance to the on-ramp of 495 South on Merrimack Street. Every day he was there.  (I think I at least got the Dunkin Donuts vote).

He would drive us anywhere and be there during practices or school functions no matter when or what the time.

Before there was GPS, there was Fred.  He would drive anywhere.  Once when I won an essay writing contest, I had to go to Milton Academy.  Where the heck was Milton?  He found it.

Once we visited my mom’s brother, our Uncle Peter, in Harrisburg, PA.  He found it.

In fact, our dad was always in and out of the house so much, our mom would call him “popcorn.” He would pop in and then pop out.  Always busy going here and there (maybe our Spencer inherited that).   Going to the Methuen Mall – when there was one here – to “walk” which really meant to sit on the benches and drink coffee and shoot the breeze with the guys. Or visiting his mom – who he was devoted to.

My fondest memories:  Sundays coming home from church and getting fresh-baked bread from Tripoli’s; walking down Common Street during the Feast of the Three Saints; the time the roof leaked and all four of us camped out in our living room to stay warm.

Fred’s Dreams:

Fred had dreams like we all do.

It was a lifelong dream of his to build a home in The Valley on “The Farm” – every Italian family needed to have one – that he inherited from his dad.  That dream came true not for him directly but when my brother Joe built his house there and we often had our family holiday meals there.

I remember that he was always quick to buy the latest gadgets – an electric knife he used for Thanksgiving dinner; cameras; cars; TVs; you name it.  Another trait that was passed on to Joe and me – but more my brother than me.

Let’s not forget about the time he bought the barber clipper set when I was about 3 and Joe was about 11. He did such a sheep- shearing on us that I cried but my mother said “but Joey has to go to school this way.” My poor brother looked like he was attacked by a raccoon. (Needless to say, his idea of becoming a barber or saving money on haircuts didn’t last long).

I remember it was his dream to own a summer-house on Canobie Lake.  While that didn’t happen, he did get a chance to live near the beach in York, Maine in retirement.

I remember it was his dream to own his own business.  In fact he even worked at his uncle’s bar in Lawrence and tried to buy it.  While that too didn’t happen, he helped his sons with their dreams: whether it was selling hot dogs at parades or developing photos in the basement.

There were many times that I recall he would drive down from Methuen to my office in Woburn (on one of his popcorn runs) to gladly fold and stuff envelopes for my business.

He would gladly do you a favor and lend a hand but if you crossed him or tried to make him out to be a fool he would show you what it means to be a Taurus. Pity the poor car salesman who tried to separate him from his money.

We are all saddened by his passing. Over the past three years he has been in decline and while in good spirits he grudgingly accepted the medications and procedures that he received.

As Fred would say “Freddy Stan for Short but Not for Long.”   But he stayed a long time:

He survived to see his sons graduate from college, a grandson from law school and his other son (me) miraculously get married.  He lit up when he saw Kristin enter a room – he was always a bit of a sucker for a pretty girl. He got to see the Red Sox win the World Series (though his favorite team was the Braves because they once were from Boston). He enjoyed our precocious 21-month old toddler Spencer.  And he was an avid card player – the Lawrence game of 45s being a favorite (and he always had a knack for drawing the Ace of Hearts).

In many ways life was rough but Fred was lucky and we are lucky to have known him.

While Fred is dead, his legacy lives on – in us.

The beat goes on.

Good-bye for now, Padre.


Remembrance of a Father Loved and a Life Lived


Thanks to Sondra Adelman, Brookline, MA who forwarded this.

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Dad with Spencer at His Grammy's B-Day 2010

Dad with Spencer at His Grammy's B-Day 2010

On May 4, Fred Stanganelli, former wedding band drummer and Raytheon retiree, celebrated the 47th anniversary of his 39th birthday at home after a recent dialysis treatment.

We celebrated Father’s Day in the emergency room of Ana Jacques Hospital in Newburyport before driving up the road to Portsmouth.

At 4:11 PM on Thursday, June 23, shortly after receiving Last Rites, my father passed away at Portsmouth Regional Hospital.

Fred was born as Alfio Stanganelli at home at 182 Garden Street in Lawrence, Massachusetts on either May 3, May 4 or May 5 (the records were not so accurate so he split the difference). He was the fourth child and second son of Giuseppe Stanganelli, formerly of Palermo, Sicily, and Giusippina (Josephine Coco) Stanganelli, formerly of Siracusa, Sicily.

He was predeceased by his brother Silverio (Sammy) Stanganelli who was Killed In Action in Italy during WWII, his sister Mamie Matthews of North Andover and Josie DiPari of Methuen.

Fred was raised on Garden Street in Lawrence, attended Holy Rosary Elementary School and graduated from Lawrence High School.  He was an altar boy at Holy Rosary Church.

For most of his life he lived in Methuen where he raised a family that included me, my older brother, Joe, and our mom Olga (and let’s not forget his beloved cat Baby). He retired to York Beach, Maine and returned to Amesbury, Massachusetts several years ago to be closer to his family — and his doctors.

Fred retired from Raytheon after several years of service. At one time he worked for Eastern and Pan Am Airlines in New York City and often flew to Florida and pre-Castro Cuba.

He was best known for his lifelong passion as a musician.  As he would say “he was the best drummer in the country … but he didn’t know about the city.” For more than 20 years he played with The Five Knights and then the Sears Brothers.  He also marched with the Italian Colonial Band which accompanied the saints paraded through the streets of Boston and other North Shore towns during the Italian festivals on summer weekends.

He was a 4th Degree member of the Methuen Knights of Columbus and was briefly a member of the Lawrence post of the Sons of Italy.

He was a generous man but not one of deep thoughts or many words.  He was devoted to his sons and then his grandsons willing to support them in any endeavor.  He would drive us anywhere and be there during practices or school functions. There were many times that I recall he would gladly fold and stuff envelopes for my political campaign and my businesses. He would gladly do you a favor and lend a hand but if you crossed him or tried to make him out to be a fool he would show you what it means to be a Taurus.

Kristin reminded me that my dad’s passing was on her Uncle Dougie McCowan’s birthday.  Hopefully, they can both share a cup of Dunkin together. (Since my dad was not a golfer, he’ll probably sit in the golf cart).

Fred had a quirky sense of humor which I inherited. So, as Fred would probably say “he’ll never do that again.”

Others may relate to his other one-liner as you read this:  I didn’t even know he was sick.

We are all saddened by his passing. Home is where the heart is. So he was ‘home’ surrounded by the love of family and friends. Over the past three years he has been in decline and while in good spirits he grudgingly accepted the medications and procedures that he received.

But he survived to see his sons graduate from college, a grandson from law school and his other son (me) miraculously get married.  He enjoyed our precocious 21-month old toddler Spencer.  And he was an avid card player – the Lawrence game of 45s being a favorite (and he always had a knack for drawing the Ace of Hearts).

He is survived by his wife and companion of 55 years, Olga (Petrosino) Stanganelli of Amesbury.  He leaves behind his sons Joseph S. Stanganelli and daughter-in-law Donna (Breen) Stanganelli of Naples, Florida;  Steven J. Stanganelli and his wife Kristin (McCowan) Stanganelli of Amesbury, Massachusetts.

Along with many nieces and nephews and special friends throughout the Merrimack Valley and North Shore, he also leaves behind three grandchildren and one expected in September: Joseph S. Stanganelli, Jr of Malden, Massachusetts; Stephen A. Stanganelli of Naples, Florida and Spencer J. Stanganelli of Amesbury (and one to be named later).


The family will be receiving friends on Sunday, June 26 from 4:30 PM until 7 PM at the Cataudella Funeral Home (www.CataudellaFH.com), 126 Pleasant Valley Street, Methuen, MA.  The funeral mass will be celebrated Monday, June 27 at 10 AM at St. Lucy’s Church, 254 Merrimack Street, Methuen.

Interment will follow in the Immaculate Conception Cemetery where his parents now rest.

Donations may be made in Fred’s memory to either the American Diabetes Association, P.O. Box 1132, Fairfax, VA  22038 or to the American Kidney Fund, 6110 Executive Blvd., Rockville, MD  20842.

Final Thoughts

He is with God and his former band mates who probably needed a drummer finally to help them keep the beat.

The beat goes on.

Fred the Drummer with Future Drummer Spencer

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We certainly don’t need another case to justify the mistrust that consumers have of all things financial.  There’s been no shortage of scams, lawsuits and perp walks over the past couple of years.

Here is a recent example of a slew of cases involving broker-dealers selling either private placements or other illiquid securities that have ended up burning investors.

As reported in the Wall Street Journal and Financial Advisor magazine earlier this week (June 1), an independent brokerage firm with representatives across the country, has been accused of misleading elderly and unsophisticated investors without proper consideration of whether the investments were suitable.

The article reports that the brokerage firm sold billions of dollars of non-traded Real Estate Investment Trusts (REITs) to individuals since 1992 and pocketed more than $600 million in fees. Sales of these investments generated more than 60% of the firm’s total revenues.

Now there is nothing wrong with a REIT per se. They are great ways to buy into a diversified portfolio of real estate. And there’s nothing wrong with illiquid investments either.  They serve a purpose and have a place in a portfolio assuming that it makes sense for the individual.

The problem comes from the way these investments are sold by some in the industry who do not have the best interests of the client at heart. When there is a profit motive involved, there is the potential for misbehavior arising from this basic conflict of interest.

Brokerage firms are held to a certain standard called “suitability” which is a sort of legal test to see if a particular investment makes sense for an investor.  Presumably, a broker working for a brokerage firm will ask a range of questions about the investor’s income, other assets, investment goals and time frame.  Then a brokerage firm’s compliance department will review the information and the application for the investment before the purchase.

Red flags would be if an investor has a large chunk of money to be tied up in any one type of investment or asset class.  Another might be if the investor indicates that they need the cash for some specific goal on a certain date but the investment is tied up longer than that and thus subject to an early redemption penalty.

Apparently in this case, the brokerage firm did not even do this type of “due diligence” on the investors buying into the REIT.  For many who were not knowledgeable of things like asset allocation or reading complex investment documents, they allegedly simply relied on marketing materials provided by the brokerage firm.

In previous cases, we have seen how there has been an incentive by brokerage firms to not complete any significant due diligence on an investment product that is sold by their representatives. Investors who think that they are protected by a firm’s “compliance department” have often found that no one was really checking on the investments being offered.  And like the fox guarding the hen-house, there is the potential for hanky-panky.

And the one who pays is the investor.  In many cases, the brokerage firm gets paid twice:  A 1 to 2% “due diligence” fee paid by the investment’s sponsor and then from the 5% to 10% commission paid by the investor. And in some cases the brokerage only pocketed the fee instead of hiring the team of due diligence analysts.

There is a battle going on in the financial industry especially since the passage of the Dodd-Frank financial regulation reform bill.  While not the greatest, it did offer change.  And one key change was to implement a universal “fiduciary” standard on those working with clients.

Right now, stand-alone registered investment advisers (RIAs) and specifically fee-only financial planner and advisers already subscribe to a “fiduciary” standard.  The standard is a higher legal duty to do what is “best” and “right” for the client and not what is the highest profit option for the adviser’s firm.

In the recent David Lerner Associates case as well as many others, the inherent conflict of interest between profit for the firm and the products sold to the consumer is glaring.

In all likelihood, consumers searching for higher yields heard the sales pitches from brokers.  And remember that when it comes to investing, the motivations are either fear or greed. In this case, the “greed” of the consumers looking for higher rates of return met the “greed” of the brokers looking to sell the product.  It should be no surprise that supply met demand.

But it also clearly shows how the most vulnerable need special help.  While they may go to a broker or agent thinking that the nice guy is going to do what’s right by them, they end up paying a price because they don’t realize who is representing them in the transaction.

As investors search for yield they need to do more due diligence.  And they should not be afraid to be working with a fiduciary who can help them with a second opinion.

Brokers are not all bad.  They serve a valuable role in our financial system.  But consumers really need to know that not all financial professionals are alike and the help of a fiduciary may keep them from getting burned by their fear or their greed.

Now’s as good a time as any to once again get back to basics:  Protect yourself from scams with this guide from the CFP Board of Standards.

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I know that it’s been a while.  And for those who have been dropping by, I appreciate your continued support. Hopefully, others will find their way back and find the fresh perspective enlightening.  In a world of confusion, my mission continues to be to bring to light fresh ideas on how to plan better and wiser for college funding, divorce, retirement and investing.

As I noted in my last post, I became a registered tax preparer and member of the National Association of Tax Professionals.  Through my company Clear View Wealth Advisors, I had acquired the assets and client base of XtraRefunds, an income tax preparation service located in South Lawrence, Massachusetts.

I Survived

My last post was titled “adventures of a tax preparer” and I had hoped to provide some ongoing commentary on how things were going.

Unfortunately, getting the business relocated to new offices, organizing the IT and systems, learning the software and providing tax prep services to walk-in clients took up most of my time leaving me with very little brain power to provide any commentary here.

This has truly been a learning experience.  And I truly believe that it provides me with added tools and perspective to be a better financial adviser to individuals and business owners.

Bringing Financial Planning Services to the Masses

One thing that I had learned as a banker (I was a mortgage banker for more than 18 years you may recall) is the truism of the expression that a bank will gladly lend you money when you don’t really need it.

The same holds true for financial planning.  As a former representative of a wirehouse broker-dealer, I found that everyone wanted to give advice to the very rich and those who are well-off. But more often than not those who had less than some minimum amount of money were shunned and pretty much told “come back when you have more.”

That’s why I formed my financial planning practice as an independent registered investment adviser firm.  People need help at all stages and should not be left out in the cold just because their bank balances don’t have enough zeroes.

This is what I noted on my website and what I truly believe.

So I saw the integration of a tax preparation service as a way to help individuals by being there to offer financial planning tips and services.

Still Working Through the Growing Pains

Time will tell if my ideas in action make sense.

But from the stories that I heard I know that people of all income and education levels can benefit from having access to an objective financial professional who is not going to simply try selling them something.

Cost of Avoiding a Bad Mistake: Priceless

So I created financial plan program options for folks to use like the Advisor-On-Call program: pay one fee for the entire year and get access to me to answer any question on any issue during the year.

I know the need is there. Someone came in to see me and told me about her sister who lost everything when her apartment in Worcester burned down.  She didn’t have any renter’s insurance.  This was  a learning experience and I was able to teach the client why she needed the same type of coverage for herself.

Back in the Saddle

Now that tax season is over and the calendar has turned to spring (despite the weather I see outside my window), I am back on the bike saddle as well.   It’s usually on these long rides I do solo or with my cycling club that I get to clear my head and come up with new topics to write about here in the blog or in my newsletter.

Some of the wisdom that I expect to share with you over the coming weeks:

  • How to build a better retirement income plan using the bucket strategy
  • How to save on the cost of college even if your kid is a senior in high school
  • How to lower the cost of divorce in the long-run by selling the family home
  • How to get better yield outside of a bank money market

Thanks for stopping by and please keep on checking in.

And as always, your comments are greatly appreciated as are any questions or issues or story ideas that you want me to address.

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It’s hard to tell if anyone actually missed my posts.  Trying to come up with fresh and interesting perspectives on topics can be a time-consuming and thankless task.  But I’ve tried to maintain my discipline.

But for those of you who have been reading my missives, you’ve probably noticed that there has been a pretty big gap (about four weeks) since my last post. My apologies.

Well, since my last post there have been a whole lot of changes happening in the world at large and in mine in particular.

We’ve seen several revolutions culminating in changes in the Arab world. The spark of democracy has turned into a bit of a wildfire.  And all of this has had an impact on global trade and markets.  And as much as I have wanted to comment and make my views known, it’s been next to impossible because of the all-consuming changes occurring with Clear View Wealth Advisors and Team Stang.

On January 20, Clear View Wealth Advisors entered into an agreement that acquired the assets of an established income tax preparation business with a principal office located in South Lawrence, Massachusetts.

Getting the business relocated, systems up and running and dealing with my favorite friends from Verizon has pretty much taken up all my time.

Adding tax preparation to the line up of services may sound good in theory.  Now we’ll see how well it works in reality.

It will make for some interesting commentary as I go through the growing pains.

And speaking of growing pains, Team Stang has officially announced that we are adding a new member with an expected due date of September 1, 2011.

Stay tuned.

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They say white-collar crimes tend to increase in times of economic stress.  This is one of those times.  And it’s all the more important to be watchful.

For most of us, our personal identities extend beyond just our name.  In many ways we are also our online profiles and our credit, too.

Identity Theft: A Growing Problem and Cost to All of Us

Right now, there are scammers out there trying to steal not just what you own but trying to steal you.  Identity theft is a real problem and a drag on our economy. The Federal Trade Commission (FTC) estimated in 2006 that more than 3.6 million households affecting over 9 million people were victims of identity theft. One study noted that the cost to consumers was nearly $57 billion dollars (that’s with a ‘B,” folks) in 2005.

And according to the Government Accounting Office (GAO-02-363, March 2002), this costs the federal government (and us taxpayers), too.  The average cost for a financial crime investigation is about $15,000 for the Secret Service, more than $11,000 for the US Attorneys and nearly $20,000 for the FBI.

I have a client whose niece works for a regional office of the FBI who has sent out around this notice for a new twist on a “phishing” scam.

Watch Out for Folks Gone Phishin’

Phishing is where the scammer posing as a legitimate company or authority tries to get an unwary consumer to divulge valuable personal information like a Social Security number, account number or other details like a date of birth.

The Jury Duty Hoax – A Twist on An Old Scam

In this latest reported scam, the FBI has confirmed that scammers are calling and posing as “jury duty coordinators” saying that an arrest warrant has been or will be issued for failing to show up for a recent jury summons.

If you protest that you never received a notice, the “coordinator” will ask for your Social Security number, date of birth and address so that he can verify the information and cancel the arrest warrant.

Most of us are sufficiently deferential (or even scared) of the court system so the scammers are relying on us to simply roll over and give them what they ask for on the phone.  In some cases, the “coordinator” uses intimidation and bullying tactics to get you to comply.

Once you give them your information the scammers have hit the jackpot.

So far this type of phishing scam and fraud has been reported in eleven states including Illinois, Ohio and Colorado.

So be wary of unsolicited calls asking you to provide your Social Security number and other personal identifying information.  No legitimate government agency or business you deal with will ever ask you to just give them your stuff.  They may ask you to verify what they have (if not ask them to read out what they have).  And if you’re ever unsure, ask for the website and a call back number so you have time to check it out independently.

So protect yourself and others you know by letting them know about this scam.

Go to the FBI website to check out details on this and other scams.

And if you ever suspect a scam, you can also check out the website for the Federal Trade Commission as well.

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Do you want to clear a room or stop a conversation fast?  Talk about life insurance.  Mention life insurance to someone and the reaction is something like hearing nails across a chalk board. Folks will either run for fear that you’re going to try to sell them something or their eyes will glaze over.

Most folks don’t want to talk about it.  The topic is boring.  And it’s kind of weird to talk about death.

Heck, when I speak with folks about planning, the inevitable phrase I hear in the conversation is “If I die …” as if they have found some secret to living forever.

So assuming that you’re not featured in the Vampire Diaries, there is a very high likelihood (about 100% give or take 0%) that you may die someday. So it only makes sense to consider life insurance as part of your overall planning.

Life Insurance Through Work Is Only A First Step

Most folks will get some insurance through their employer.  It’s cheap. It’s fast. There’s no medical exam.  It’s simple.

And as I’ve said time and again, there’s always a simple solution to every problem.  (In this case, employer-sponsored group life insurance). And as I’ve also said before, simple solutions are probably wrong.

Now don’t think that I’m saying that the group policy that you get and pay for through your paycheck is wrong.  It’s a good start.  But there’s more to proper life insurance planning than simply figuring a multiple of your salary.

How Much Life Insurance Is Needed?

The reason for any insurance is to cover the costs of risks that we are either not willing or don’t have the resources to cover ourselves.  That’s true whether you’re insuring a car, a home, your life or your paycheck.  So first you need to know what it is that you’re covering.

In the case of life insurance, it’s usually a good idea to figure out how much money your family needs to maintain their current standard of living if you and your income are no longer part of the picture.  Then add in any large expenses to cover.  Typically, this would include an amount to pay off any mortgages and loans and even college funding or other similar expected obligations. Net out the amount of other insurance and investments available and this will give you an idea of the amount of insurance coverage to get.

The amount of insurance that one needs throughout life changes with circumstances.  This is why it’s critical to include an insurance needs analysis as part of your regular financial planning progress reports.  This is why I use a particular tool from ESPlanner that helps project the amounts of coverage needed over time.

Insurance as An Asset Class to Reduce Risks

Now I’ve said that insurance is an asset class.  Why?  Well consider this.  When you invest, you’re likely to spread your money into different types of asset classes:  stocks and bonds of large, small, US and foreign companies.  This is the basis of diversification: don’t put all your eggs in one basket. You do this to help reduce risk.  In this case, you’re trying to reduce the risk of having your investment wiped out by spreading your bets to other sectors of the economy and even parts of the world.

Like asset diversification, insurance is also a risk tool.  In this case insurance is there to replace things that you may not have the cash or investments to cover on your own.  Or maybe you feel you’d be better off investing the cash and earn a return on your money that will hopefully increase the resources you need for your lifestyle whether now or in retirement.

Think of it this way.  You could hit home run after home run picking stocks but what happens if you or your family are hit with an unexpected loss?  You’d have to dip into your savings and investments.  You’d need to sell those winning stocks.  You’d probably incur huge capital gains and have to pay taxes on it.

Life insurance is there to cover living expenses, replace in some small way the loss of income if you or your loved one dies and it does this for the most part tax free to the beneficiary.

And you can carry over the idea of diversification to insurance.  Just like mixing up the kinds of stocks or bonds you own, you can carry insurance from two or more insurers.  You do this by having your employer-sponsored group plan plus something you pay for on your own separate from your employer.  You can further diversify by mixing up the kinds or terms of coverage dividing some between term and permanent type policies.

Kinds of Life Insurance: Term vs Permanent

Insurance comes in two basic varieties: term and permanent.  Term insurance has a fixed premium for a fixed time period.  It’s great for covering specific risks for a defined time period (i.e. a mortgage, college costs).  Permanent life insurance has many flavors but in essence the key is that some of your premium that you pay is used to build up cash value.

Now for those who are unhappy with the stock market, you may want to consider some of the benefits offered by permanent life insurance.

  • The value is guaranteed. You’ll always know how much you have. And the insurer is required to credit a minimum amount to your value each year.
  • You receive dividends and their tax-free. Policyholders will receive dividends that increase the value of their account.
  • You can access the cash value at any time. Unlike going to a bank for a loan, the insurer will give you access to your account’s cash value with very little delay. You pay no penalty when receiving the cash as long as you repay yourself.  And if you set up the account properly, you can build up enough cash value to tap into for anything from buying a car to buying a home to funding retirement without paying a penalty or taxes.  (This is described by some as the Infinite Banking Concept where you become your own banker).

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We’ve all heard of horror stories of someone stealing a credit card or hijacking your identity online to “party like it’s 1999” and leaving you with the bill.  It’s become a cultural cliche and even popularized in TV sitcoms and commercials.

But it’s anything but funny when a scam is played on you.  So prepare to protect yourself and your credit.

Credit is vital in this economy.  We depend on it to get us through the day.  It’s part of our identity (and the credit reporting bureaus know it and charge lots of money to sell soci-economic demographic data to marketers keen on target marketing.)

And in a time when banks and lenders of all sorts are skittish about lending and getting burned, it’s all the more important to maintain a good (if not great) credit score.

The difference between a credit offer and interest rate for someone with a 780+ FICO score and someone with “only” a 700 can be 0.25% on a mortgage, maybe more for an auto loan.  Doesn’t sound like much but believe me when you’re making that payment each month you’ll appreciate the lower payment resulting from the reward you get for great credit.

This brings me to my tale of woe for today.

Check Your Credit Reports Regularly

I’m kind of obsessive about maintaining my credit and paying bills on time.  I’m no stranger to disputing charges.  I check my credit report regularly.  If you don’t you should.  And you can do it for free.  Just go to www.annualcreditreport.com which is a site offered in conjunction with the Federal Trade Commission.

The FTC has set up the site to help consumers get a copy of their credit report for free each year.  Since there are three main credit bureaus to which virtually all creditors report:  Trans Union, Experian and Equifax.  You can get a free report from each of these reporting agencies.

Once you log in and verify yourself you can choose which bureaus to compile your report.  The best tip I can suggest is to stagger your requests.  Order one report from one bureau and then order another free report from a different bureau three months later.  And then repeat three months later with the third and final bureau.

Why go through the trouble?  Well, each bureau will more than likely have the same information as the others.  Not always but most times.  So you can basically monitor your credit for free by staggering your requests throughout the year.

So while there are services out there offering “free” credit monitoring services (and they have really catchy jiggles), you can do it yourself for free.

The Robo-Call That Started It All

So what happened to me?  Well I started getting “robo-calls” in December from a “Kelly Smith” of ER Solutions located in Renton, Washington.  Kelly had a wonderful British accent.  Her sister must reside as one of the voices in my car’s GPS.  Kelly asked me to call her.

Now, I’m a married guy (and Spencer’s dad if you can’t tell in the pictures posted here) but it’s certainly flattering to have a woman with a sultry voice ask you to call her even if it is just a business call.

So I call the young lass.  While I don’t get her on the phone, I do find out that ER Solutions is a nationwide collection agency.  I’m told this by the message I receive from the robot attendant when I call. While not pleasant, I’m sort of used to calling collection agencies.  In my past life I used to own and run a credit reporting agency that produced credit reports used in mortgage lending or property rentals.  So calling these kinds of companies was a necessary chore every now and again to verify the legitimacy of something that appeared on a consumer’s raw credit data file.

But in this case, I’m calling for me. Now once I get past the shock that I’m calling a collection agency on an account that supposedly belongs to me, I try going through the frustrating voice mail tree.  Ultimately, I get to a point where I’m asked to leave a message but before I can another message tells me that the “mailbox is full.”

Not one to be stonewalled, I do my best to find out more about this company. I search online and find another phone number.  I call it with the same result.  I do this over the course of a couple of days.  But despite the time of day or day of week I am unable to ever reach a live attendant or leave a message.

I do more research.  I check the government records at the Secretary of State’s office for my state (Massachusetts) and the corporate HQ (Washington).  I file complaints with the Washington Office of the Attorney General and with my state’s regulator for collection agencies, the Massachusetts Division of Banks.  I also go online to the FTC and use their online complaint process at www.FTC.gov. I send a certified letter to the company demanding that they verify the debt per my rights under the law.

In my research I find several websites that have posts from many irate consumers who have had dealings with this company.  All of them report various kinds of abuse.  Many show how seedy collection agencies try to scam consumers by trying to collect on fictitious charges, using abusive tactics in their calls and ignoring any inbound contact with the consumer.  You can check out the consumer reports on this company online at Ripoff Reports, Complaints Board and Complaints.com.

In many cases the stories sound like mine.  It’s either a fictitious debt or a debt that was in dispute with a creditor that should not have been turned over.  But being big faceless corporations that they are, one hand doesn’t know what the other is doing.

Without any help from my British friend at ER Solutions, I tracked down the problem.  Since the folks at ER Solutions never answer their phones and never provided any account reference in their call, I checked my free credit report that I got from http://www.AnnualCreditReport.com.  I found a cryptic reference to Verizon Wireless, my cell phone carrier.

One Computer Glitch Leads to Another

After a long and frustrating runaround I found the problem.  I had transferred my old individual wireless account to a new family plan account with Verizon.  This was supposed to be seamless but it was apparently not.

Despite paying through Verizon’s One Bill bundled service, the wireless side of Verizon had a wrong address for me. While they had no problem confirming where to send my new phone, they didn’t bother to correct an incorrect entry in their billing system tied to an address I haven’t had for more than 8 years.  While I had been told that the old account would be merged with the new account, the faceless phone rep was very wrong.

So while the family plan account was being paid in full each month, a statement for the old account with a charge for the new phone I bought was being mailed to a defunct address.  And even though I would call and speak with customer service from time to time no one bothered to mention that there was anything outstanding despite my inquiries.

Protect Yourself

Protect yourself by vigilantly monitoring your credit report and disputing erroneous and false information quickly.  Don’t simply roll over and pay the amount without verification.  Often when someone is going through a loan process an underwriter will require that old debts get paid off before closing on the loan.  While good for the lender this is bad for you and your credit score. Since credit scores are skewed toward the most current activity, paying on a disputed amount will likely result in a hit to your score as the creditor or collection agency updates the record with the payment activity.

As the veteran cop on Hill Street Blues would say after morning roll call, “Be careful out there.”

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The other day I was contacted by Evan Lips, a reporter from the Lowell Sun who was doing a timely article on financial planning tips for the new year.

He had spoken to other financial planners and investment representatives and he had a wide range of opinions provided by them.  These included ways to manage credit to savings to kinds of investments to use for a retirement account.

Because everyone is at a different place in his or her life, some of these tips may not really help now. For instance, how you take money out of retirement accounts when retired is a tip that is less important to someone recently graduated looking to pay off student loan debt.

But there is something common that really can help anyone of any age.

Number One Tip for 2011 and Beyond

So my Number One tip for any consumer of any age:  Control What You Can and Leave the Rest.

What do I mean?

Consumers are usually their own worst enemy.  Too distracted by daily affairs, it’s easy to become overly focused on the news of the moment.  And this can lead to an emotional reaction that can otherwise sabotage long-term financial health.

Things You Can Control

1.      Investors have control over certain things: Their emotions (and reactions to the crisis of the day), investment expenses, asset allocation and amounts they save.

2.       Investing is long-term but the financial media is fixed on short-term crises of the moment.  Be mindful of that and try to tune out the noise.

3.       Your mom was right: Live beneath your means and you’ll have extra cash to save; build up your emergency reserves (minimum 3 months of fixed expenses for married couples working; 6 months for couples with one-earner and nearer 12 months for someone with variable income).

4.       Pay yourself first.  Make it automatic. Have a portion of your paycheck directly sent to a high-yielding savings account.

5.       You can lower your investing expenses and improve your diversification by using Exchange Traded Funds.  ETFs are investments that can trade like stocks but represent a broad basket of investments.  (Sort of like an index mutual fund but with even less expense). If you have less than $100,000 to invest and are looking for efficient core holding for global stock diversification, consider something like the OneFund® ETF from US One at www.usone.com (ticker symbol: ONEF) which is composed of 5 other ETFs from Vanguard and costs less than 0.35% per year while providing 95% exposure to 5,000 large, small and medium-sized companies throughout the world.

6.       Develop good money habits: Reconsider that fancy coffee or fast-food lunch and pocket the savings for a more meaningful goal (i.e. vacation, paying off debt, down payment for a house).

7.       Pay off your debt by snowballing payments.  This technique will help you see progress toward paying off debts.  Start with the ones with the lowest balances and pay above the minimum.  Then when this debt is paid in full apply the amount you were paying toward the next debt.  Eventually, like a snowball rolling down hill, you’ll be applying all these payments in large lumps toward the highest balance debt.  And this will help accelerate paying the debts off and lower your interest expenses.  Then when everything is paid off you can direct this toward your emergency reserves or investing goals.

8.       Position yourself to qualify for more student financial aid: Skip the allowance and put your kid to work.  See my post on this here.

Want Some Low-Cost Globally Efficient Ways to Invest?

What is an ETF?  Go to https://moneylinkpro.wordpress.com/?s=exchange+traded+fund or http://www.investopedia.com/terms/e/etf.asp

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