June 29, 2022

How Inflation Is Altering People’s Behavior

Tobias Pratt, a 31-year-old mortgage underwriter in Atlanta, decided to look for his first home in the spring of 2021. He had a well-paying job and a solid down payment, and his rent was ticking higher. Getting preapproved for a mortgage seemed like a wise move.

“I finally felt like I was in a good space to do it,” Mr. Pratt said.

But with housing prices so inflated, Mr. Pratt was quickly squeezed out of the market. He decided to try again in March because his lease was about to expire and the rent on his one-bedroom was about to rise by another $200, to $1,900. This time, high mortgage rates, which began climbing earlier this year, have narrowed his prospects even further. Instead of looking solely at single-family homes, he started considering condos — but those are expensive now as well.

“I can afford maybe two-thirds of what I could afford last year,” Mr. Pratt said, adding that the monthly mortgage payment could be as much as $700 higher, depending on the size of the loan. “But with housing prices still soaring, the inventory is limited.”

He also noticed that his grocery bill, which reliably cost about $225 for an online order placed every two weeks, had jumped to $300 in mid-March. “I was like, ‘Whoa, back up a minute,’” he said. “I looked at my last bill and I ordered pretty much the same groceries.”

That was when he decided to start tracking his spending more closely, noting expenses in a journal, looking for places to trim. He eliminated several recurring subscriptions, including Spotify and Experian’s credit tracking service; negotiated a lower-priced plan with his cellphone company; and started ordering less takeout from Uber Eats. To reduce his grocery bill, he swapped name brands for generic products, eliminated bottled water and cut back on extras.

Article source: https://www.nytimes.com/2022/06/28/your-money/inflation-consumer-behavior.html

What Should You Do When Your Partner Lies About His Earnings?

This man was a financial adviser, and I would have thought that a useful piece of financial advice for two life partners is to be transparent about finances with each other. Learning his income shouldn’t have come as a gut punch. Now for a few caveats. You can’t be absolutely sure that he lied about his net worth, which reflects the value of his estate minus his debts. Either way, it would be odd to apportion your relative expenses by net worth, which can fluctuate with the market value of your assets, including highly illiquid ones. And that clearly wasn’t the arrangement you two had; otherwise, going by his reporting, your share would be 40 percent, not a third. (If, instead, you paid in proportion to the income you now know him to have, your share would come to a sixth, not a fifth.)

Your response to what you discovered makes it plain that he has been misleading you about how much money he has. That’s a breach of your agreement and an act of dishonesty. I doubt you will be able to begin to restore your trust in him unless you let him know what you are feeling. Maybe his shifty ways are restricted to the realm of money; maybe, though, he simply isn’t worthy of your trust. People differ in respect of how much bad character they can tolerate in a partner. That punch to the gut, however, may reflect the realization that this man isn’t the life partner you thought you committed yourself to. The fact that you, in turn, have kept from him what you’ve learned and how you feel about it — the fact, bluntly, that you’re pretending to be in the dark — suggests that a serious trust deficit has settled between the two of you. Have that uncomfortable talk. But it may not be possible to pay this deficit down.

Some months ago, a friend of mine went to Kenya, and we discussed his not being vaccinated when he was planning the trip. Both his doctor and I urged him to get vaccinated because of his age, his weight and his high blood pressure. He told me I was living in fear and went anyway. He almost died there after getting hit with Delta and later Omicron. He was in the I.C.U. both times over a six-week period. When he did not return home as scheduled, I called a Kenyan friend of his in the United States about his welfare. I was told he was in the I.C.U. a second time and that this friend was dealing with the hospital and the bill. His friend then asked me point blank: “Tell me something, and I want the truth. Was my friend vaccinated?” I told him no and explained that I tried to convince him to get vaccinated before his trip. Now my friend is back home with health issues and refuses to speak to me. I suspect it is because I told the truth when asked about it. Was I wrong? Under the circumstances, I felt that his Kenyan friend needed the truth for medical reasons. Name Withheld

You didn’t learn your friend’s vaccine status as a health care provider or as an insurer. It would seem, rather, that he told you himself, without demanding confidentiality. While random gossip about someone’s vaccine status might violate the reasonable expectations of a friend, you were discussing someone’s situation with another friend of his, someone involved in his care. You had no obligation to treat what you knew as confidential. It’s not that the other man needed the truth for medical reasons. But he did have cause to inquire — this patient’s mulish and misguided decision imposed a significant burden on him — and you certainly would have been wrong to lie.

Article source: https://www.nytimes.com/2022/06/22/magazine/what-should-you-do-when-your-partner-lies-about-his-earnings.html

How to Think About E.S.G. Investing in a Falling Market

And I view it as fulfillment of a fiduciary obligation. Assets aren’t being managed to the greatest interest of beneficiaries if, in fact, they can’t breathe or life is too dangerous at the end of their wealth building. So I see it as a means to an end, and that end is a planet that is livable — and lives worth living. And I see it as a strategy that explicitly acknowledges that investors have a role to play in providing these outcomes to the world.

LIEBER: Rachel, you were familiar with Amy’s funds. Did you come to a different conclusion?

RACHEL ROBASCIOTTI: We call our work “social justice investing.” It’s the deep integration of four areas: racial, gender, economic and climate justice.

LIEBER: Defining justice seems messy these days. On one hand, some investors don’t want to invest in weapons manufacturers. On the other, many of them would very much like to put more weapons in the hands of the Ukrainians.

ROBASCIOTTI: In the world our investors want to live in, the government is responsible for weapons and defense, and that is not a private activity.

LIEBER: Wait, so the government should be producing weapons?

DOMINI: Capitalism is great at distributing goods and services broadly and cheaply. Weapons shouldn’t be distributed broadly and cheaply.

LIEBER: Academics have been talking for years about how so-called active investing is a bad idea — that it’s just too hard to actively select the stocks that will do better than others over the long haul. Doesn’t E.S.G. investing violate these principles?

Article source: https://www.nytimes.com/2022/06/18/your-money/esg-investing-stocks-elon-musk.html

Why Some States Are Expanding Tax-Free Periods

The popularity of sales tax holidays is dismaying to many tax policy experts, who say the events offer shoppers a modest break at best and are often not well targeted to consumers who most need the savings. “State tax holidays tend to be political gimmicks,” Mr. Walczak said.

Some research suggests the holidays may simply shift the timing of purchases and, therefore, have limited net economic impact. And a report from the Tax Foundation says retailers may sometimes raise prices during the events.

“What we’re seeing is a lack of imagination about what to do in trying times to help people,” said Dylan Grundman O’Neill, senior state tax policy analyst with the Institute on Taxation and Economic Policy.

Still, that doesn’t mean an individual consumer may not benefit from buying specific items during tax holidays, he said, which helps explain why both politicians and consumers like them. “We all like to feel we’re getting a good deal.”

Here are some questions and answers about state tax holidays:

Most state revenue departments offer details online about how the sales work, including dates and lists of items covered.

It depends on the state and the item purchased. All but five states charge sales taxes, ranging from 4 percent of the sale to more than 7 percent, and some also have local sales taxes that can push the combined rate above 9 percent. Most states cap the amount of purchases exempt from tax during the holiday. Some require cities and towns to participate, while others make the tax holiday optional.

Yes. The tax exemption applies if the item is bought online during the tax holiday, even if it is delivered after the holiday ends, according to state websites. But items bought online and delivered out of state are generally subject to sales tax in the state where the item is received, said Scott Peterson, vice president of U.S. tax policy and government relations at Avalara, a provider of tax compliance software.

Article source: https://www.nytimes.com/2022/06/17/your-money/tax-free-shopping-state-holiday.html

Why We Still Haven’t Solved the Unpaid Internship Problem

Gatekeepers of various sorts could help reduce the prevalence of these uncompensated positions, if they were willing. There appears to be no groundswell of college or university career counseling offices refusing to post unpaid internship listings and barring employers that don’t pay their interns.

“Higher education has been complicit,” said Carlos Mark Vera, co-founder and executive director of Pay Our Interns, an advocacy organization that lobbied the White House to make its change.

Then there’s the glaring issue of schools that offer course credit for internships.

Schools benefit from this arrangement in two ways, said David C. Yamada, a professor at Suffolk University Law School in Boston and an expert on the rules around internships. First, intern-for-credit programs can allow institutions to collect tuition for that credit, even as students are working out in the world and don’t need classroom space or an instructor standing in front of it for four months.

Then, it allows a school to say it’s providing valuable career preparation. “If I hear another university invoke the phrase ‘Hit the ground running,’ I think I’m going to scream,” he said.

The gatekeeper with the most power here might be Handshake, a company you may have never heard of. In the nine years since its founding, more than 650,000 employers have used it to reach students for both internships and entry-level jobs, often via their career counseling offices. Unpaid internships would decrease pretty sharply if the company refused to post openings for them, thus cutting off the supply of ready labor to employers that wish to hire students without compensation. I challenged Handshake to throw down this gauntlet, and it declined to do so.

It is saying many of the right things, though, and doing at least some of them. “We believe unpaid internships shouldn’t be the norm, and we actively discourage them on Handshake because they often exacerbate inequities in early careers,” its chief operating officer, Jonathan Stull, told me in an emailed statement.

Article source: https://www.nytimes.com/2022/06/11/your-money/unpaid-internships.html

Why Adjustable-Rate Mortgages Are Still Risky

“For a borrower who wants to buy right now, they can realize significant savings” by choosing an ARM, he said. The average starting rate on adjustable-rate loans with an initial fixed-rate period of five years was 4.04 percent, compared with 5.09 percent for a fixed-rate loan, as of Thursday, according to Freddie Mac. That difference represents savings of more than $200 a month on a $350,000 loan — at least to start.

“That’s real money,” Dr. Fratantoni said.

Some borrowers use the savings to pay down the principal on their loan during the initial, lower-rate period, saving money over the life of the loan, Mr. Rugg said. “If you can afford it, I recommend putting the savings away or applying it to principal,” he said.

The catch, of course, is that the rate can rise after the fixed-rate period expires. Compared with ARMs available before the financial crisis, which offered low “teaser” rates and allowed rates to be reset quickly, today’s adjustable-rate loans are safer, mortgage experts say. They typically have a fixed-rate period of at least three years and limits on how often, and how much, the rate can rise after that — such as one change per year of no more than two percentage points. And the risky ARMs that let borrowers pay just the interest on the loan or choose their own payment amount are no longer widely available.

Still, borrowers may see their rates increase after the initial repayment period. So they need to plan ahead to be sure they can afford bigger payments if they can’t sell their house or refinance the loan. No one can say for sure what rates will be in five to seven years, but right now, they are rising.

“There’s not much room to go down, and there’s a lot of room to go up,” said Martin Seay, associate professor of personal financial planning at Kansas State University.

It’s wise to calculate what your payment would be if the rate rose to the loan’s cap. The Consumer Financial Protection Bureau offers a guide to adjustable-rate mortgages that can help you evaluate your loan. You can also calculate the higher payment yourself using online tools like one offered by Freddie Mac.

ARMs are more complex than traditional mortgages, with more terms to understand and potential changes to keep track of, so borrowers need to take time to truly understand the terms of the loan.

Article source: https://www.nytimes.com/2022/06/03/your-money/adjustable-rate-mortgage.html

Student Loan Borrowers Got the Debt, but Not the Degree

“I had really good professors who were for the most part really understanding, but it was too much,” she said. “It was a tumultuous time.”

Ms. Summers-Polite withdrew from her classes in spring 2012 with a medical note that prevented her from receiving failing grades, but the debt had already begun to accumulate.

She said she had deferred her payments as long as she could, which meant the unpaid interest was tacked on to her balance. Then she borrowed more in the summer of 2013, when she returned to take a few more classes. After that, she took a two-year break to work, which provided much-needed health insurance after she was no longer eligible for her parents’ plan.

Ms. Summers-Polite, who lives in Miami, gave schooling another try in 2016, but once an attractive job opportunity arose — communications director for the activist group — she took it, and hasn’t returned. She said she was making good money now, but her loans had already fallen into default, and getting out isn’t as simple as starting to send monthly payments again.

Ms. Summers-Polite was married in November, and her husband, a spa coordinator at a large gym, has $27,000 in debt of his own. He just went back to school after a 10-year break, and is taking out more loans to pay for it.

She would like to finish her degree, too, but isn’t in a position to pay out of pocket for classes, particularly with the pandemic pause on payments set to end later this year and her enormous debt looming.

“In the past few years, it has been this glaring thing in my periphery,” she said, “getting bigger and bigger.”

Alain Delaquérière contributed research.

Article source: https://www.nytimes.com/2022/06/01/your-money/student-loan-debt-degree.html

Vacation Alternatives for the Budget-Conscious

The sprawl of strip malls that comprises Houston’s Chinatown, for example, is the only tip-off that you’re still in Texas. These days restaurants serving Chinese, Hong Kong, Vietnamese, Thai and other Asian cultures fill these shopping plazas.

If you’re looking to channel France, go no farther than the cafes and green markets of Montreal, including Jean Talon Market and the Atwater Market.

Toronto has a virtual United Nations of dining districts, from Little India to Little Jamaica. Suresh Doss, a Toronto-based food writer who focuses on the city’s multicultural pockets, grew up in suburban Scarborough, where he takes small groups to Sri Lankan restaurants, among other food tours throughout the greater Toronto area (250 Canadian dollars, or about $195).

“There’s an ephemeral quality to the food, because you don’t know it if will be around in 10 or 12 years,” Mr. Doss said, referencing successive waves of immigrants over the past 80 years who have established Greek, Hungarian and Italian enclaves, followed by Vietnamese, Chinese and Sri Lankan and, most recently, Syrian.

For do-it-yourselfers, he recommends a progressive feast along Danforth Avenue in Toronto, home to Trinidadian, Venezuelan, Japanese and Ethiopian restaurants, among others. “It’s not fully gentrified yet, and has an inviting feel,” he said.

Among affordable accommodations in Toronto, try the Hotel Ocho near Chinatown where a recent search found rooms from 209 Canadian dollars.

The safest way to explore Ukraine right now might be to eat in Cleveland, which has strong Eastern European roots and a concentration of Ukrainian shops and restaurants in suburban Parma.

Article source: https://www.nytimes.com/2022/05/31/travel/affordable-vacation-alternatives.html

A Strong Summer Job Market for Teenagers

Instead of leaving it to customers to decide how much to tip, restaurants are increasingly adding standard “service charges” to diners’ bills, so servers can depend on making more money, Mr. Hamilton said. Eighteen percent is common, he said, with the option for customers to increase the amount — but it can’t go lower. Other establishments are offering free meals during or after the worker’s shift, or even dispensing gas cards to help workers cover the cost of commuting to the job.

“It’s a very hot market,” Mr. Hamilton said, adding that job applicants should be prepared to be hired the day they are interviewed.

“We’re definitely seeing strong demand from employers,” said Vivian Russell, executive director at the True North Youth Program in Telluride, Colo., a nonprofit group serving teenagers in the rural southwestern part of the state. Known for skiing, the area also has a busy summer festival season that draws tourists as well a seasonal ranch work. Some ranch and farm jobs pay $18 to $20 an hour, while service jobs can pay $25 to $30 an hour, including tips. True North helps students with résumé development, interview training, workplace etiquette and other job-seeking skills.

Brenda Gutierrez Ruiz, 20, a junior at Fort Lewis College in Colorado, said she had been hired for the summer as a youth-services specialist at the public library in Telluride. She said she had worked as a librarian’s assistant while in high school, earning $12 per hour, but would now make $21 per hour. “I’ve risen in the ranks,” she said.

Summer camps, which were often closed during 2020 and began reopening last year, are hiring counselors, said Tom Rosenberg, president and chief executive of the American Camp Association. Many camps are paying contract bonuses for counselors who remain the entire summer, he said.

The camp group is promoting summer camp employment as a welcome antidote to remote class work, which many students endured during pandemic lockdowns, as well as a way to gain management skills. Mr. Rosenberg noted that he had worked as a camp counselor as a teenager and that by age 19 he was overseeing a staff of 16 employees and “72 energetic seventh graders.” Counselors gain experience, he said, but they also “have so much fun.”

Students from low-income families tend to have lower rates of summer work than those from more affluent backgrounds, in part because there are often fewer opportunities where they live and because their parents may lack access to social networks that can help their children find jobs, Ms. Modestino said. They may have difficulty getting transportation to work if the job involves lengthy commutes.

Article source: https://www.nytimes.com/2022/05/27/your-money/summer-jobs-students.html

A ‘Glitch’ in Federal Health Insurance May Soon Be Fixed

The glitch means that families end up paying higher and less affordable premiums for the job-based health insurance — or skipping coverage altogether.

About 90 percent of people affected by the glitch are buying coverage deemed unaffordable, according to the Urban Institute’s analysis. In other words, while most people affected by the glitch enroll in coverage rather than going uninsured, “they’re paying through the nose,” Ms. Keith said.

If the glitch is fixed, the cost of job-based coverage would need to be considered affordable for the entire family. If the coverage wasn’t affordable, the rest of the family — other than the covered employee — would then qualify to shop on the exchanges, using tax credits to reduce their premiums.

The fix isn’t perfect, says Cynthia Cox, director of Kaiser’s Program on the Affordable Care Act. If the workplace plan is affordable for the employee — say, the mother in the family — she would need to enroll in that plan, while her spouse and children sought lower-cost marketplace coverage. That would mean paying two separate premiums and meeting two deductibles, which might not be more affordable, and perhaps navigating two provider networks.

That’s partly why, although an estimated five million people are affected by the glitch, far fewer would probably take advantage of the newly available tax credits. The Urban Institute estimated that 710,000 more people would enroll in marketplace coverage with tax credits. Another 90,000 — mainly children — would enroll in coverage through government plans like Medicaid and the Children’s Health Insurance Program because the Obamacare marketplace automatically checks eligibility for those options.

The Biden administration estimates that 200,000 uninsured people will gain health coverage, and nearly one million will have more affordable coverage under its proposed fix.

The proposal comes as expanded health insurance subsidies, offered to Americans during the Covid-19 pandemic, are set to expire. The pandemic relief, which made it temporarily easier for people to get affordable coverage on the government marketplaces, was approved through 2022. To extend the help or make it permanent, Congress must act. If the extra help is continued, fixing the family glitch would result in even greater savings for families, according to an analysis by Third Way.

Article source: https://www.nytimes.com/2022/05/20/your-money/federal-health-insurance-glitch.html