I am preparing for a possible media appearance on a program broadcast across the world.
I’ve been reading a number of news stories as well as comments from readers in order to get a sense of what Americans are concerned about today. One of the biggest issues seems to be the so-called fiscal cliff. I’ve avoided writing about this topic as the discussions seem to be overly partisan, and when that happens, common sense seems to disappear. For a while, the tenor of the debate seemed to be that if politicians in Congress could not strike a deal, the world would end.
The fiscal cliff.
It now looks like the federal government is closer to reaching a deal regarding tax law changes and spending reductions before the deadline. Even if they didn’t, and the automatic elimination of the Bush-era tax cuts and spending cuts were to go into effect on January 1, everyone seems to forget that Congress and the President can continue to negotiate, and any changes can be put in place retroactively. The danger is that the stock market would crash and force the country into another recession.
If you’re in a place in your life where you’re investing for the future at least a decade away, investing in stock index funds right now is probably a good idea. The stock market stagnates or worse when there’s uncertainty, and there has been a lot of uncertainty with a government that has difficulty working together.
A month ago, I said it was time to go all in, when the market seemed to be reacting negatively from the election and the uncertainty that comes with a Democratic President butting heads with Republicans in Congress. Since that date, November 12, the S&P 500 index is up 4.85%. I don’t pretend to think that kind of progress will continue, nor do I think I can come anywhere close to predicting the market, but uncertainty and negativity create good environments for increasing the chances for a well-balanced stock portfolio to do well in the long term.
Paying off holiday debt.
Big concerns right now are the holidays and the consumer spending associated with ensuring families are happy with their gifts and their experiences. The National Retail Federation releases figures on how people are spending, and the organization’s figures show increases over last year’s spending. Keep in mind the NRF exists, among its other purposes, to handle public relations for the retail industry, focusing on results that favor the industry and downplaying those that don’t. Regardless of the organization’s motives, if spending is up, credit cards will see higher balances. While there have been some improvements in the employment sector, salaries may not have risen enough to cover increased spending.
A concern for consumers will be how to handle leftover credit card balances when the dust settles after the holidays. Last week, I appeared on a HuffPost Live segment with a panel of experts to discuss holiday spending, debt, and credit.
The costs of healthcare.
Another concern I’ve been seeing expressed by the public is the cost of healthcare. I can’t remember a time when this was not a concern, though. I have my own healthcare annoyances to deal with. I currently have health insurance from COBRA, having been an employee of the company that purchased my business. The company changed its insurance company a few months ago, and the doctor I had been seeing is no longer “in-network.”
Looking back, I could have saved myself some trouble by switching healthcare providers and finding a new doctor who is “in-network.” I didn’t, and I decided to maintain a relationship with the same doctor I’ve had. Billing has become a complete mess, with the doctor’s small office unable to get the insurance company to pay claims. Somehow, I’ve been placed in the middle, trying to get some answers between the insurance company and the doctor.
Besides the time I’ve spent on the phone trying to help my doctor’s office deal with the insurance, the cost of coverage through COBRA is painful to my bank account. Individual health insurance is not cheap, either. Health insurance is a prized benefit when you can get it from your employer, but costs to the consumer don’t seem to be slowing down. Depending on your political leanings, you’ll blame the government or the insurance industry — very few blame the doctors and other healthcare providers — but regardless of the blame, the costs are still increasing at a pace never to be matched by cost of living increases.
What are your biggest financial concerns, considering the election, which is now behind us, and the start of the new year?