Saturday, September 28, 2013

"Count the Cost" of Affordable Healthcare for All Americans

Some Issues Can’t Wait! 

In preparing to publish Part 3 of the Count the Cost Series on Buying a Home, I felt there was a more pressing subject that needed to be addressed right away, and by many. As such, I ask you the reader to please forgive my interruption of this series and know that I will publish Part 3 in mid-October.

As October 1st is just around-the-corner and so many Americans are still confused about the Affordable Care Act (ACA), also known as Obamacare, it seems only fitting to try to address the many articles and viewpoints being expressed nationally that are for-or-against this seemingly unpopular legislation. Hopefully, this article will be fair and balanced in its approach; although I must say that I am writing [this article] because like Social Security, I believe that the Affordable Care Act is going to become one of America’s greatest legislative achievements.

There Is Good Precedent for Our Differences

There have been many public policy issues in the past few years that have splintered the ideological and practical views of Americans. Going back to the enactment of the U.S. Constitution during a time when dissenters preferred secession to a law that imposes federal power over states’ rights. During the days of Robber-Barons [i.e., a wealthy few running amuck] trying to monopolize the most prosperous industries serving our nation, its dissenters were against anti-trust legislation that would prohibit monopolies. And, after the Stock Market Crash of 1929 that led to the Great Depression, much of the public developed such a disdain for banks and investment markets that they started keeping money in other, safer places which they could control. It did not matter that a new Federal Reserve System—designed to safeguard America’s bank deposits against complete loss, was just instituted—the die was cast and Americans were against any innovations and social-economic progress by government.

And finally, when the Social Security Act of 1935 was enacted by Congress during the term of President Franklin Delano Roosevelt, the public outcry was extremely audible but contrastively muted by the millions of Americans whose social well-being was about to improve. There was no question that after the Great Depression and catastrophic losses of both property and lives, something major needed to happen. There was an outcry for sure, but not for our nation to remain a spectator of events but rather to take decisive action that might offer remedy to those millions of Americans who were poor , disabled and hurting, and without hope.

A House Divided

Well, the same outcry has permeated the airwaves within our nation today. With over 35 million Americans with no healthcare coverage, some 12% of our nation’s population and, in many cases to no fault of their own, a long-term infectious ailment has finally worsened. While the merits of why so many people are without adequate [or any] healthcare coverage today can be debated, are we really more concerned with the ideological view that some people are undeserving because they do not care for themselves, or others are simply poor money-managers? Clearly, both types are integral to any discourse of reforming a national social program. But, to what end is such a debate or discourse beneficial?

Let’s not get hung up on the rhetoric that has been ever vigilant in keeping a national debate on healthcare at the forefront. Keep in mind that such a debate has multiple sides and not just two. There are the taxpayers and the beneficiaries, the politicians (or elected officials) and their political affiliations who dig their heels in the sand, and there are the various businesses and professions in the legal, third-party administration, medical manufacturing, pharmaceutical, dental and medical fields that must also weigh in. All told, many voices have differing views in part because they are personally, professionally and, in some cases invested significantly in the potential outcomes of this social reform issue.

So, who’s Right?

Will there be winners and losers financially and where profits, salaries and job opportunities are concerned? Yes. And, like other industries that were causally impacted by federal intervention, such as the postal services system, the railroads and the utility conglomerates, there will be changes that make huge gainers of a few at a loss to many. But the real question we should ask is this: Are we better off as a nation today—given the railroads, highways and utilities infrastructure, and related regulations enacted—than we were before these unpopular but necessary reforms were implemented? Personally, I would say yes.

Let’s Look Within Ourselves and Find the Answer

While this is not a religious issue, generally speaking, our opinions [as Americans] should be informed (and perhaps persuaded) by what is the moral issue we are really debating. In the Old Testament book of Deuteronomy (15:11) we can find where our modern-day social challenges could be objectively considered by this verse: “There will always be poor people in the land. Therefore I command you to be openhanded toward your fellow Israelites who are poor and needy in your land.”

Now, some might say that America is not the Nation of Israel, and we are not living in the time before Christianity came on the scene. However, is the issue of the poor or the moral commitment to help those in need any less relevant in our day than thousands of years ago? In the NT Gospels, Jesus refers to this sobering truth about the poor as always existing within a nation’s borders—alluding, of course, to the Old Testament facts above—but His context also had to do with the right for any of us to prefer Him over the poor. So, His message is actually two-fold:

  1. A fact about the poor, but also:
  2. An exhortation that in His short time on earth that His presence should take precedent in what others focused on.
And, less we forget, His most important exhortation was to simplify the instruction to each of us to: “Love the Lord your God with all your heart and with all your soul and with all your mind. This is the first and greatest commandment. And the second is like it: ‘Love your neighbor as yourself.” Matthew 22:36-40 NIV).  Do I really need to say any more?

Truth and “Untruthful” Consequences

As the author of the Count the Cost Series, I would ask you to consider for yourselves how the Affordable Care Act will make life more difficult for any of our citizens. This is the central debate of our day, not just that some undeserving Americans (other people’s words, not mines) will benefit from free or subsidized healthcare by the government. To that I would respond, the ACA is not a government program and it is not free. Yes, taxpayers pay for the program guidelines to be adhered to and we all subsidize those who cannot pay. But make no mistake; ACA is still private, non-governmental insurance.

Another concern is that somehow the general cost of healthcare services will go up significantly. My question would be on whom will these cost escalate? Advertising campaigns against the healthcare law have presented images of older and not-so-healthy Americans who say their rights are being taken from them to visit their current doctor, specialist or to have the freedom to choose whoever they will. And the medical professionals are saying that their current rates for service will naturally rise because they have to reduce their billing to those who cannot pay or can only afford to pay less. Here are two more distortions of the actual law.

No one will be required to see any healthcare professional they do not want to see, unless they are part of a PPO (Preferred Professional Organization/Association). Well, that is exactly how medical insurance and medical professions have grouped themselves and are paid today. Nothing about these facts changes under the new law. And, as for the notion that some who cannot pay will be subsidized at the expense of the medical professional is a really bad distortion. Truth is, future billing schedules that healthcare company and independent professionals put out do not have to change. Americans qualifying for healthcare under the ACA, and even for subsidies, will have a specific healthcare plan that entitles them to certain services which are covered under their plan, or that may require them to pay a higher premium for a better plan. The only change from existing medical coverage today is that as on October 1st, millions more Americans become eligible to obtain the services of the current professionals, which—in turn—dramatically increases their business opportunities without causing them to charge less for care.

Still Feeling the Same about the Affordable Care Act?

There is no law mandating that a heart surgeon lower their rate for a bypass surgery. Instead of a long three-tiered process of billing and remittance, that surgeon can expect that every patient they see will have sufficient coverage to obtain their service or be re-directed [based on the plan] to someone who can assist them. This does not change who that surgeon would usually have as patients, nor does it prevent someone needing bypass surgery from obtaining it elsewhere. Again, I would ask, who is really being harmed in the enactment and administration of the Affordable Care Act?

My final thought is this. What is it that Wal-Mart discovered that may have overlap with healthcare? I think the success that Wal-Mart gained was in choosing a different business model than their retail competition. They built huge stores that allowed many businesses to be under one roof, thus generating tenant revenues. But, even bigger was the idea of volume discount, that is, the more of something we can sell for less, the more we will sell. Wal-Mart set itself apart from most competitors by using this strategy, and today they are heralded as one of the world’s most successful companies.

And, think about it this way. Ask any professional salesperson in the insurance, medical equipment, banking or real estate industries whether they would like to have millions of new customers/clients waiting for their services. Only the foolish among them would say no. My point simply, in a few months millions of Americans guaranteed to be eligible to have healthcare insurance will be hitting the marketplace and registering via exchanges seeking medical services. Should this really be seen as a problem by any professional genuinely seeking to help others medically, or who are interested in making more $ by serving more people?

An Objective Summary and Prayer

If the average new healthcare insurance were simply $1,000 a year in premiums, multiplied by 35 million new beneficiaries, imagine the amount of new money there will be circulating in America, particularly into the healthcare profession that is not there now. If you’re doing the math, that’s a $35 billion transfusion (on the low end) into an already very prosperous industry. Real losers?.. I think not!

Soon the sound of Ca-ching! Ca-ching! will pour over into many industries: such as preventative care services, higher education and training, nutritional food manufacturers, and other professions as well. So, why not keep our minds and biases in check and let’s consider those fellow Americans that will now realize that we—as fellow taxpaying citizens—do care for one another, just like after Katrina and 9-11, and are here to help.


If you have an opinion or other thoughts to share, please tell us. We value your feedback and we want to share truth and practical advice whenever we can. Please add your comments so we can begin real dialogue on this important topic. Thank you!


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Sunday, September 15, 2013

“Count the Cost” Of Becoming A First-Time Home Buyer (Part 2)

In Part 1 of this subject, we listed four considerations for any Believer that is considering becoming a home buyer. These are universal considerations, we believe, but they are especially important for Believers who, by virtue of their commitment to live for Jesus Christ, have a different standard to follow.

Part 2 attempts to provide further reasons to consider these tips, and it concludes by offering what we at the LifePlanning Institute consider are viable alternatives for the property virgin(s) or any home buying experience. We hope you agree.

Consider Everything before Deciding

And, let us not overlook the significant impact that today’s college loans will have on these property virgins. Young professional couples could be carrying between $150,000 - $300,000 in student loans, which is the equivalent of a conventional home loan and mortgage payment. This means couples already debt-burdened will now incur the equivalent of two mortgages, which well exceeds the recommended budgeting percentage for housing (of no more than 50% of gross income). Given this scenario, some couples are already obligated to pay $1,000 a month towards their student loans (for possibly 10+ years) and now will obligate themselves to another $1,500 - $2,300 a month (over 30 years) for a $300,000 mortgage loan. 

Combined, these two monthly expenditures could be a potentially damaging duo of debt-to-income for a new home-buyer especially if their annual income is not much higher than $50,000 annually or $4,250 a month. Add to this the usual monthly expenses for transportation, utilities and the common service contracts for cell phones, Internet and other electronic communications and, of course, food purchases for the home and eating out, and you can have real financial challenges brewing. And, even when couples say they will hold off having children for a few years, things have a way of changing when you least expect it!

Living like the Jones-es

Just think of it. In many cases first-time home-buyers say they are looking for a home like their parents or friends own who may have done well in buying their own sizable home. With that as their motivating goal, the only other consideration is simply how much [mortgage] they qualify for in the way of a home-buyers’ loan. 

Fact is, at its peak, home-ownership in the U.S. once reached nearly 70%. This means there was and will continue to be a segment of Americans that will never become homeowners, maybe never even pursue this lifestyle choice. When the U.S. wanted to incent home ownership (after the Post-Depression era of 1935-1940) it founded the Federal Housing Authority (FHA), and, in 1938 Congress enacted legislation to create the Federal National Mortgage Association or Fannie Mae. This helped mortgage-lenders gain further access to capital for mortgage loans. Then in 1968, Ginnie Mae (Government National Mortgage Association) was established, which provided the only mortgage-backed securities that are backed by the "full faith and credit" guaranty of the United States government. 

And to increase the assurance of a viable secondary market for trading mortgage-backed securities, the infamous Federal Home Loan Mortgage Association (FHLMA) known as Freddie Mac was formed (in 1970) as another government-sponsored enterprise (GSE). However, in spite of these many government-sponsored agencies and private enterprises, America still entered into its worst housing debacle ever, and in 2008, Fannie Mae and Freddie Mac went into conservatorship under another government intervention agency called the Federal Housing Financial Agency (FHFA). Today our nation is still reeling from the effects of our housing crisis, and millions of American homeowners have been adversely and irreparably harmed by this mortgage-based financial crisis. 

More to the point, in the past Americans thought long and hard about homeownership which resulted in a growth rate rising from 25% to almost 70% in sixty-five years. However, starter home prices back then ranged from $7,500 - $15,000 with interest rates around 2% for a 20-25 year mortgage. Today, of course, the average home is appraised at $190,000 and the interest rate most people hold today can range from 7% to double-digits.

From a Kingdom Financial Planning perspective, a Christian should consider the following before this or any other major purchase:

  1. Is This Purchase One That I Want Or Really Need? And, If Needed, Why?
  2. How Does This Purchase Fit In With The Accomplishment Of My “P” (Pursuit-of-Purpose)?
  3. After Careful Review Of My Entire Financial Budge and my “P”, Can I Honestly Afford This Purchase?
Viewed from this more comprehensive perspective, perhaps there are a few sensible ways to approach this major acquisition which can still accomplish the same goal. For example:
  1. Set a Goal to Save For that First Home

    While this option is usually the least desirable when someone wants immediate gratification, it is often the best first option for all purchases. This is what many other buyers did between the years 1945-1970. If they could not save 100% of the home’s value, they set aside at least 20-25% as a down-payment which prevented their additional expense for Property Mortgage Insurance (PMI).
  2. Buy a Smaller Home with Cash and Gradually Upgrade

    This does not result in getting that ultra-modern home with all the latest in silver or platinum appliances right away, but it does get you into your own home more quickly and securely. And, during your ownership, set aside money for do-it-yourself upgrades that add significant value to your home. That way, when you do list it for resale, it will appraise much higher, perhaps well above your purchase price.
  3. Ask Friends, Relatives and Colleagues Whether They Know of Homes for Sale

    Again, it may not result in getting you that dream home, but you might find that a good and affordable home was only an inquiry away. You may have a relative that is planning to move soon, or they may know no someone who is selling their property and prefer to sell to someone they know.
  4. Consider Unconventional Purchase and Payment Options

    By asking around you might discover a quick-sale option with much more favorable terms. For example, a seller might even agree to a private sale with payment terms more suitable to your own financial benefit. They may have an existing mortgage you can assume at a lower rate than you might qualify for today. And, there is always the Rent-to-Own option that is becoming increasing popular among sellers who are interested in helping others afford a home. Point is you will never know what options exist until you ask.
  5. Buying Simply to “Flip” or Rent A Section

    While many of today’s reality shows make the art of buying and flipping homes seem easy, it is not. More to the point, getting into this activity to make substantial profits is a strategy that is also a way of life. That means unless you are called to be in the real estate industry, beware. It is costly and time-consuming, so you must consider what the actual cost to you might be. Choosing a home that will allow you to rent a section—such as the basement or an extra wing—can present its own unique challenges and activity. So again, count the cost and related toll on your time and use of resources.

A Call for a Higher (More Purpose-Oriented) Standard of Living

Remember, our lives were designed with purpose, and God wants to use us in many ways as instruments that bring Him honor and glory in the earth. But to do so requires that we make ourselves available. Buying a home may be part of that plan, and it certainly will make the buyer feel as if they accomplished something important. So expect God’s favor on such an acquisition. However, do not let this goal undermine your willingness to serve Him as He directs (Proverbs 19:22) nor compromise your ability to respond to His will for your life.

In the end, by using one of these options you may avoid incurring high, long-term debt that could derail your efforts to make other more important purchases relating to your “P,” and that demonstrate poor overall stewardship of what God has entrusted to you. In Part 3 we will discuss more Do’s and Don’ts.


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Wednesday, September 4, 2013

“Count the Cost” Of Becoming A First-Time Home Buyer (Part 1)

For which of you, desiring to build a tower, does not first sit down and count the cost, whether he has enough to complete it? Luke 14:28-30 ESV

Ever watch any of the cable-network shows that feature first-time home buyers in the process of being shown potential homes? One of the more popular of these reality shows refer to its buyers as “Property Virgins.” Oftentimes these episodes feature young couples (or families) somewhere between the ages of 22–30 which, in this day and age, symbolizes early achievement towards attaining the coveted American Dream.

The episodes generally start out innocent with each potential buyer-couple being shown at least three different properties. The host starts with a brief overview of the home-buyer’s qualifications for a loan followed by a description of their dream home. This means they are looking to satisfy their wants, desires and aspirations in this first-time home buying experience. This is why, in my view, the home buying process becomes suspect, at least to me.

Think about it. A young couple usually both employed at fairly new jobs, usually well-paying jobs, are asked to describe the type house they are looking for. What often surfaces as common among all the property virgins is a desire for a home with no less than 3-4 bedrooms, at least as many bathrooms and a kitchen with all upgraded amenities. The husbands typically look for the must-have man-cave or a basement-room where he can set up the equivalent of an exclusive men’s club. Even couples without children ask for guest-rooms as large as a typical master suite so that the bundle-of-joy they know will someday arrive will have plenty of space for growth.

When Is Enough Really Enough?

In all, these property virgins are typically shopping for a first home ranging in price from $250,000 - $400,000, and interior space averaging between 2,000 - 3,000 square feet. Some of these buyers even seek up to 5,000 square feet of habitable space because: 1) they feel they can afford it (and deserve it), 2) it signals to others their perceived economic class and, 3) they believe lots of space is needed to entertain friends and family today, and to raise a family many years into the future. I consider this process suspect because one essential ingredient that is never shown is whether these couples receive any home-buyer counseling beforehand … and, if not, why not?

Financial counseling would ensure that each potential buyer is not just financially qualified to obtain a mortgage but that they also understand the many factors that affect home-ownership both near-term and in the years to come. For example, when setting your sites on a home you consider your dream home, yet you are only 25 years old, you should consider the following statistical facts about home-ownership:

  1. According to the U.S. Census Bureau, among many sources, half of all first-time marriages in the U.S. end in divorce, and often because of financial differences.
  2. According to the OMB (Office of Management and the Budget) and the IRS (Internal Revenue Service), the median annual income in the U.S. over the past decade has hovered around $49,000. And that includes two wage-earner householders. Divided over 12 months, this implies an average gross income of $4,000 a month.
  3. According to Fannie Mae and many real estate industry experts, the average length of home ownership (among first-time home-buyers) in the U.S. is six years. Better employment opportunities, military service, divorce and separation (as shown in Fact #1), even extended job lay-offs are the common reasons for this short-term ownership. Another reason is to upgrade to a bigger, more expensive (or rightly suited) home.
  4. Because of the recent Great Recession (2007-present), the national unemployment rate is still above the historical—and preferred rate—of 6.5% This reflects the continued malaise and lack of confidence among the business community, and the lack of steady and certain employment which has been at the heart of increased home foreclosures and loan defaults.

These are just four of several considerations that make a commitment to repay a 30-year mortgage a decision that deserves more thought than whether the property is affordable today. With the popularity of reality TV shows and the aggressiveness of realtors who are always out to make a market even under the worst of economic circumstances, purchasing homes without serious consideration of these facts has been bolstered, even encouraged by these realty influencers. To these two prominent forces, there is always a buyers’ or sellers’ market to promote, no matter the economic climate. So, truth is, it is just a matter of selling the benefits of same to the public. Never mind that 3-4 years into home ownership any number of things can go wrong, even to no fault of the home buyers.

Remember, one or both new home-buyers could be laid-off. One or both could get ill and incur a long-term illness. And, worst, one or both could be fatally injured. Homeowner’s insurance can make a huge difference where the mortgage balance is concerned, but will it provide enough (given such young ages) for everything else they will face in the decades to come? 

Is it possible one or more of these scenarios can happen to you? Who really knows… This is why proper planning from a Kingdom Perspective is so much more beneficial. Tell us whether you agree, and please read Part 2 of this article in the following week to get the full view—including recommendations—that the LifePlanning Institute offers.


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