The Retirement Rise 2.27.2023
A Charity that Pays Off Medical Debt, Is Economic Data Irrelevant?, and Do Your Financial Decisions Reflect Your Core Values?
If you don’t design your own life plan, chances are you’ll fall into someone else’s plan. And guess what they have planned for you? Not much. - Jim Rohn
This Week’s Good Financial News
I enjoyed this story from Positive.News. Two former bailiffs created a non-profit that helps families pay off burdensome medical debt.
From the story:
For 56-year-old Texan Cherie Sharp, one of the lucky millions to receive a letter from RIP, opening it was a chink of light against the unrelenting gloom of a crumbling marriage, compounded by a foot-high stack of unpaid bills.
“I was having a hard time sleeping, I was on antidepressants,” she says. “I remember being in my office at work and there were times I would just close the door and cry.
“Then I got the letter. I was suspicious at first because it just seemed too good to be true. But then it was just – wow! It was just such a wonderful gesture, a bright spot in a sea of negativity.”
Ms. Sharp’s medical debt had been paid off by RIP Medical Debt, an organization founded by two former debt collectors.
Due to the nature of medical debt collection, $10,000 donated to RIP Medical Debt can pay off up to $1,000,000 of bills. Wow!
An Investment Note for Retirees
You’ve seen headlines like this.
Prices jump ‘x'%.”
Initial unemployment claims skyrocket!
Retail sales plummet!
Where do these numbers come from? What do they mean? How do we compare them to make sense of the present economic situation?
Most reporters, news readers, and investors have no idea.
In my view, headlines like this are, at best, meaningless and, at worst, attempting to scare people into reading more or paying attention.
Economic data is highly challenging to assess and think through.
For example, comparing economic data to previous months is challenging because of seasonality. We use more natural gas in the winter or gasoline over significant travel holidays, like Labor Day. Retail sales spike between Thanksgiving and Christmas and then dwindle off. You wouldn’t want to compare January retail sales to November retail sales, a month that includes Black Friday.
Analysts generally compare economic data to the year before to fix this in the data. For example, comparing January 2023 to January 2022 fixes the seasonality issue.
But it’s not perfect. These are different years! A lot has changed!
So economists also seasonally adjust data. Using complex calculation methods, they ‘smooth’ data to compare it quarter to quarter or month to month more easily. But, anytime we manipulate data, we only create more issues. Seasonally adjusted data can offer strange results after periods of extremes, like the 2008 Financial Crisis.
A recent article in the Wall Street Journal digs further.
“The sausage-making of it is economists and analysts are going to look at a lot of different time spans, different time periods,” said Ataman Ozyildirim, senior director of economics at the Conference Board. “You need a lot of different lenses to get a better handle on that momentum in the economy.”
He’s saying analyzing economic data is more art than science at the end of the day. It’s subjective. And if it’s this challenging to receive an accurate sense of where we are, imagine how fraught it is to forecast the future!
My advice? Take all economic data points with a grain of salt. Most are minor blips in a much larger and infinitely complex story. Instead, focus on what is in your control - your spending, your financial plan, how you invest - and fade the rest.
A Thought on Retire on Purpose
When we lean into purposeful money, we feel a positive impulse beginning to emanate outward. This happens when we know our values—our “why” becomes self-evident. And from our ‘why,” vision, purpose, and intention become manifest in our lives.
We begin, consciously and intuitively, asking two questions about our personal finances:
First, how do my financial decisions reflect my core values?
Second, how can my financial resources, present and future, help me move toward my envisioned life?
Sit with these questions for a moment this week. Can you draw a line between your financial decisions and your values or sense of purpose? How might you start doing this? What is your envisioned life? How can your financial plan support your desires? → From “Money with Purpose: Receive the Dividends of an Undivided Financial Life.”