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Do No (Financial) Harm

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In getting to know my patients better, I often ask them, “What is your dream job?”

[women with future career titles in clinic waiting room]



This was especially true at PurpLE Clinic,(purplehealthfoundation.org) a program I piloted for four years in a New York City community health center that was designed to provide family medicine care for survivors of trauma, particularly human trafficking and domestic violence.

My question has been met with declarations of “Doctor!”http://www.aafp.org/”Food truck owner!”http://www.aafp.org/”Social Worker!”http://www.aafp.org/”Teacher!”http://www.aafp.org/”Actress!”http://www.aafp.org/”Farmer!” and more.

But patients also have shared struggles that prevented them from achieving these dreams: domestic violence that destroyed credit histories, intermittent incarceration that resulted in large resume gaps, severe debt that led to homelessness and exploitation, and physical and mental health diagnoses that persistently hindered their ability to thrive in school or keep a job.

Many patients are caught in the health-poverty trap:(www.healthaffairs.org) a cycle of poor health that leads to loss of economic and educational opportunity, which, in turns, results in worsening health and health care access. The health-poverty trap disproportionately impacts women, people of color,(cdn.americanprogress.org) and trauma survivors(static1.squarespace.com) — a reality that was reflected in my clinic.

[glad you came in for testing]



Understanding and addressing financial health is just as important for our patients as caring for their physical and mental health — especially in the midst of a pandemic and economic crisis. Here’s what I’ve learned from my patients: Key to understanding financial health is understanding financial trauma. And key to understanding financial trauma is understanding the diagnostic utility of a disconnected phone.

In the early days of my clinic, I found myself sitting with critical results – a positive sexually transmitted infection screen, a CBC showing severe anemia, a creatinine level indicating renal failure — and no effective way to convey them to patients. Each time, the dispassionate voice alerting me that a number was no longer in service triggered a production of “I Hope You Get Care: A Soliloquy in Three Acts”:

  • Hopefully, they’ll receive the letter I send alerting them to their results.
  • Hopefully, they’ll walk into the clinic for follow-up.
  • Hopefully, even if they don’t come back, they’ll still seek care somewhere else.

[disconnected phone]



On the other end of a disconnected phone and an unshared diagnosis lies the rest of the story: The symptoms that lead patients to seek medical care call for appropriate — but often costly — lab testing that results in unaffordable bills that lead to debts being sent to collections, resulting in constant calls from collectors that exacerbate the need to screen phone calls from unfamiliar numbers (a practice already in place to avoid harassment from abusive ex-partners), all of which ultimately lead to disconnected phone numbers.

Either the phone bills are unaffordable, or the phone numbers are untenable. Either way, health care is compromised. And in a world that hurtles toward telemedicine expansion, recognizing that both stable phone access and stable phone number access are luxury goods is essential in designing health care delivery options that ensure all patients have access to care. This is how a disconnected phone can diagnose financial trauma. And why it matters.

[past due bills]



For patients living paycheck to paycheck — the working poor — unpaid bills can become an entry into the health-poverty cycle through a mechanism known as fringe banking(www.healthaffairs.org) (i.e., utilizing cash-advance businesses, high-interest payday lending establishments and pawn shops). In some communities, fringe banking entities are more common than conventional banks. For example, paying a $25 Pap smear bill may involve paying a $15 fee to a payday lending company to borrow a $100 cash advance (to meet a minimum amount that a company sets for lending), with the total $115 to be paid back by the next payday (typically two weeks). If the payment cannot be made on time, then interest and fees can accrue on the original amount, potentially multiplying a $25 bill into a four-figure expense.

[payday loan business]



The Pew Charitable Trusts reports(www.pewtrusts.org) that 12 million Americans use payday loans each year. Those individuals spend more than $500 a year in interest to pay back an average of eight loans of $375. These expenses can trap patients in chronic debt.

And when private debts, including medical bills, can’t be paid, wages can be garnished. Several of my patients shared the stress and shame of employers garnishing their wages. Federal law protects employees(www.dol.gov) from losing their jobs for any one debt resulting in wage garnishment, but they can be fired if there is more than one, because wage garnishment places liability on employers for properly implementing the terms of garnishment. This can lead to a cycle of unemployment, increased debt and delays in accessing essential medical care. Early experiences with debt and wage garnishment can impact the interplay between physical, mental and financial health for the rest of a person’s life.

[wage garnishment]



According to the Federal Deposit Insurance Corporation,(www.fdic.gov) one in four U.S. households is unbanked or underbanked. Being unbanked means not having any savings or checking accounts, and being underbanked means having a traditional bank account, but still using alternative financial services (such as the fringe banking resources described above). The U.S. Department of the Treasury recognized the need to address this reality when issuing stimulus payments for households during the pandemic by providing prepaid debit cards to the unbanked.(home.treasury.gov) Notably, the disproportionate impact of the COVID-19 pandemic on communities of color is mirrored in the public health crisis of being unbanked.

A 2017 survey conducted by the FDIC (the most recent version available) showed that the most common reason for being unbanked is that people did not have enough money to keep a bank account open. The second-most common reason was that they did not trust banks. Learning this matched offhand remarks I would hear in clinic about bills patients couldn’t pay. They shared fears that using banks would allow the government or collection agencies to strip them of their savings — post-traumatic stress from their experiences with wage garnishment, in some cases.

[cash under couch]



For them, personal banking meant keeping their cash hidden in their mattresses, walls, floors and safes at home. But it also meant never having savings, a retirement account, or a safety net during a pandemic. And being without a financial safety net can mean ever-teetering on the edge of homelessness.

[woman with bags outside bank]



For some patients, the only relationship they have with banks is as a form of temporary housing — ATM spaces they sleep in overnight — when the threat of eviction becomes a reality.

Banks recognize this, too, investing in policies and signs to rid themselves of this nuisance — triggering an ongoing cycle of debt, homelessness, arrest, unaffordable bail, incarceration and poor health.

[officer at bank]



Working with patients who were newly experiencing homelessness taught me to expand the concept of a physical exam to include the physical objects a patient brings with them to an appointment. I used to naïvely think that patients with a suitcase had just returned from travel or those surrounded by shopping bags had just made a few purchases before an appointment. But as hospital discharge summaries were pulled out of suitcases and albums of certificates and awards were proudly pulled out of Ikea bags, I realized that the shopping bags were not filled with items that were new, but with moments from the past. My patients sometimes carried their whole lives with them to appointments because they had recently become homeless or were between shelters.

[doing fine, doc]



Accounting for financial pain expands the language of trauma, rendering a translation of “Everything’s great” to “I don’t want to bother you with my nonhealth problems.” And because “nonhealth” problems are almost always miscategorized, I learned to be prepared to ask, “How are you really doing?” The answer to this vital follow-up question can lead to better medical diagnoses, care delivery and connection to services.

[eat healthy exam room]



Expanding the physical exam to consider objects patients bring into the exam room also helped me better understand how nonhealth policy issues are almost always miscategorized, as well. For example, observing the traitorous presence of fast food in the clinic used to lead me down a road of resigned frustration. But eventually, just like with any concerning physical exam finding, I worked on getting a better history.

[fast food in exam room]



This is how I learned about a new type of food desert in the United States: “credit card-only” food establishments.

Many of my patients don’t have access to credit or are deemed to have bad credit and are unable to qualify for credit cards. For those who rely on cash, the promise of organic, all-natural and fresh foods at restaurants is often merely a food desert mirage. This leaves cash-accepting fast food establishments the sole reliable, ever-accessible option and, for some, makes food banks the only accessible banking option.

[food desert]



The issue of credit card access and banking ability permeates other aspects of health, as well, impacting the ability to perform such tasks as paying a hospital bill online or by check, receiving prescriptions from an online pharmacy, and setting up grocery delivery during a pandemic. Some cities have pushed to ban cashless vendors,(www.npr.org) citing the harmful impact of financial exclusion of the unbanked. And in these efforts, it again becomes clear that financial policy can be health policy.

In the age of COVID-19, when for both public health and financial purposes, stores are shifting away from cash to credit, the pain for those with poor credit is intensified.

[salad bar storefront]



Which means recognizing the shame that comes with financial trauma. The heat of shame can come when parents are counseled to make sure their children eat healthy, all the while knowing their food options are limited. It can appear when patients share the need for STI testing because their landlord is coercing them to exchange sex for rent to avoid eviction(www.nbcnews.com) (which can be considered a form of sex trafficking).(polarisproject.org) It can present when front desk staff divert a patient to see a case manager before seeing the doctor because they don’t have insurance anymore. And it can come out when a patient shares that he is being bullied at school for wearing smelly clothes because his mother, who is awaiting asylum and her work permit,(www.cbsnews.com) could only afford one school uniform on the income she makes braiding hair.

[no cash on premises]



These experiences pushed me to reflect on the health care system’s role in the health-poverty trap. And my own role in perpetuating it. I began incorporating “do no financial harm” into routine care. I know now that a physical exam is not limited to the patient’s body, that front desk staff should be trained to reassure patients that seeing a social worker first does not mean they will not see a doctor, that a “15-minute visit” needs to include time for having uncomfortable conversations about the eventual receipt of a medical bill so a patient is not caught by surprise (and making sure they know who to contact if they cannot pay) — and being prepared for patients to decline essential care because of this — that it’s essential to know whether a patient has access to a stable phone and phone number before they leave to set up an appropriate plan for sharing results — and letting them know the clinic phone number they should expect when I call with results so they feel safe answering the phone — and that pre-employment physicals need to be scheduled as urgent care appointments so that patients are not delayed in starting their jobs. These are ways in which I have integrated patients’ financial health into care delivery to mitigate my role in the health-poverty trap.

[women in clinic waiting room-1st take]



Despite these efforts, my frustration grew on seeing television commercials and billboards that advertise wealth management services, “smart” retirement planning, banks that “can do wonders” with your savings, and homeowner’s insurance, and recognizing the elusiveness of their applicability to my patients. After years of meeting potential doctors, food truck owners, social workers, teachers, actresses and farmers stuck in the health-poverty trap, I was being confronted by the possibility that economic mobility is a myth instead of an aspiration of the American Dream. And that was unacceptable.

So I decided to take a career leap in 2019 to work on transforming the health-poverty trap into a health-prosperity cycle for my patients — one where they would be supported in not only realizing their dream jobs, but also their vision for themselves and their families. Together with a team of fellow family physicians and multidisciplinary collaborators, we founded a nonprofit(purplehealthfoundation.org) and medical practice to improve the health of our communities by addressing the physical, mental and financial health of women and girls who experience gender-based violence. And when anyone asks, I tell them that this is my dream job.

Anita Ravi, M.D., M.P.H., M.S.H.P., is a family physician in New York and the CEO and co-founder of the PurpLE Health Foundation. You can follow her on Twitter @anitafamilydoc.(twitter.com)

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Loans Bad Credit Online – Loans Bad Credit Online – Reforming India’s deposit insurance scheme | Fintech Zoom | Fintech Zoom

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Loans Bad Credit Online – Loans Bad Credit Online – Reforming India’s deposit insurance scheme | Fintech Zoom

Loans Bad Credit Online – Loans Bad Credit Online – Reforming India’s deposit insurance scheme | Fintech Zoom



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Loans Bad Credit Online – Reforming India’s deposit insurance scheme | Fintech Zoom

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The government’s incentive to step in and bail out depositors when banks fail is clear from past experience.

By Anusha Chari & Amiyatosh Purnanandam

The failure of the Punjab and Maharashtra Co-operative Bank (PMC) in September 2019 shone a light on the limitations of India’s deposit insurance system. With over Rs 11,000 crore in deposits, PMC bank was one of the largest co-op banks. That the Deposit Insurance and Credit Guarantee Corporation (DICGC) insurance covered depositors, provided little solace when the realisation hit that the insurance amounted to a mere Rs 1 lakh per deposit.

The predicament of PMC depositors is, unfortunately, not an anomaly. Several bank failures over the years have severely strained RBI and central government resources. While co-operative banks account for a predominant share of failures, other prime examples include the Global Trust Bank and Yes Bank failures. These failures entail a direct cost to the taxpayer—the DICGC payment or a government bailout. More importantly, bank failures impose long-term indirect costs. They erode depositor confidence and threaten financial stability, presenting an urgent need for deposit insurance reform in the country.

A sound deposit insurance system requires balancing two opposing forces: maintaining depositor confidence while minimising deposit insurance’s direct and indirect costs. At one extreme, the regulator can insure all the deposits, which will undoubtedly strengthen depositor confidence. But such a system would be very expensive.

A bank with full deposit insurance has minimal incentive to be prudent while making loans. Taxpayers bear the losses in the eventuality that risky loans go bad. Depositors also have little incentive to be careful. They can simply make deposits in the banks offering high interest rates regardless of the risks these banks take on the lending side.

Boosting depositor confidence and reducing direct and indirect costs require careful structuring of both the quantity and pricing of deposit insurance. Some relatively quick and straightforward fixes could help alleviate the public’s mistrust while improving the deposit insurance framework’s efficiency.

India has made some progress on this front over the last couple of years. First, the insurance limit increased to `5 lakh in 2020. Second, the 2021 Union Budget amended the DICGC Act of 1961, allowing the immediate withdrawal of insured deposits without waiting for complete resolution. These are very welcome moves. Several additional steps could bring India’s deposit insurance system in line with best practices around the world. Even with the increased coverage limit, India remains an outlier, as the accompanying graphic shows.

The government’s incentive to step in and bail out depositors when banks fail is clear from past experience. However, these ex-post bailouts are costly. The bailout process also tends to be long, complicated, and uncertain, further eroding depositor confidence in the banking system. A better alternative would be to increase the deposit insurance limit substantially and, at the same time, charge the insured banks a risk-based premium for this insurance. Under the current flat-fee based system, the SBI pays144 the same premium to the DICGC—12 paise per 100 rupees of insured deposits—as does any other bank!

A risk-based approach will achieve two objectives. First, it will ensure that the deposit insurance fund of the DICGC has sufficient funds to make quick and timely repayments to depositors. Second, the risk-based premia will curb excessive risk-taking by banks, given that they will be required to pay a higher cost for taking on risk.

India is not alone in trying to address the issue of improving the efficiency of deposit insurance. The Federal Deposit Insurance Corporation (FDIC) recognizes that the regulatory framework governing deposit insurance is far from perfect and the United States is moving towards risk-based premia. The concept is similar to pricing car insurance premia according to the risk profile of the driver. The FDIC computes deposit insurance premia based on factors such as the bank’s capital position, asset quality, earnings, liquidity positions, and the types of deposits.

In India, too, banks can be placed into buckets or tiers along these different dimensions. The deposit premium can depend on these factors. It is easy to see that a bank with a worsening capital position and a high NPA ratio should pay a higher deposit insurance premium than a well-capitalized bank with a healthy lending portfolio. The idea is not dissimilar to a risky driver paying more for car insurance than a safe driver.

Risk-sensitive pricing can go hand-in-hand with the increase in the insured deposit coverage limits bringing India in line with its emerging market peers. In a credit-hungry country like India, these moves would build depositor confidence, possibly increasing the volume of deposits and achieving the happy result of the banking system channeling more savings to productive use.

Chari is professor of economics and finance, and director of the Modern Indian Studies Initiative, University of North Carolina at Chapel Hill and Purnanandam is the Michael Stark Professor of Finance at the Ross School of Business, University of Michigan

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5 Signs You’re Not Ready to Own a Home, According to a CFP

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The housing market has boomed over the last year, despite a global pandemic and millions of Americans struggling to make ends meet. 

Many people are spending less on entertainment, clothing, travel, and other discretionary purchases during COVID. Federal student loan borrowers have seen temporary relief from their loan payments. These expenses will most likely rise again after the pandemic, and many people who committed to a new home with a large mortgage will struggle to keep up. 

I often speak with clients and prospective clients who want to buy a home before they have a strong financial foundation. Buying a home is not only one of the largest purchases you’ll make in your lifetime, but it’s also a huge commitment that’s extremely hard to undo if you have buyer’s remorse

It’s important to make a thoughtful, informed decision when it comes to a home purchase. Before you take the plunge into homeownership, check for these signs that you’re not quite ready to buy. 

1. You have credit card debt

Credit card debt can be a drain on your monthly budget, and when combined with student loans and a car loan, it can lead to high levels of stress. 

Generally, more debt means higher fixed expenses and little opportunity to save for long-term financial goals. Your financial situation will only get worse with the addition of a mortgage. I always recommend that clients be free of credit card or other high-interest debt before they consider buying a home. 

To rid yourself of credit card debt, take some time to get a good handle on your cash flow. Take an inventory of your spending over the last six to 12 months and see where you can cut back. From there, develop a realistic budget that includes aggressive payments to your credit cards. 

There are several strategies to help you knock out credit card debt fast. Regardless of the method you choose, stick with the plan and track your progress along the way. Once you pay off your credit cards, you can allocate your debt payments to savings, which can help you avoid this situation in the future.  

2. You have bad credit

Bad credit is not only a sign that you may not be ready to take on a mortgage, it can also signal a high risk to

mortgage lenders
. A high-risk status results in higher interest rates and more strict requirements to qualify for a loan. A mortgage is one of the largest loans you’ll take out in your lifetime, and if you get behind on payments, you could lose your home. 

Just as with credit card debt, bad credit could be a result of past financial mistakes. Dedicating the time to repair bad credit and improve your credit score will help you beyond purchasing your dream home. 

Start by pulling a recent credit report from each of the three credit bureaus so you can review it for errors. Dispute any errors, address past-due accounts, and bring your overall debt balances down. It’s helpful to learn what has a negative effect on your credit score so you can avoid these mistakes in the future. 

3. You don’t have an emergency fund (or an inadequate one)

If you’re unable to save for a rainy day, you probably don’t have enough money to buy a house. Owning a home is a big responsibility, and unexpected expenses pop up all the time. In addition, you could lose your job, have a medical emergency, or another unexpected expense unrelated to the home. Maintaining an emergency fund is a good sign that you have discipline and are prepared for the responsibility of homeownership.

Many financial experts recommend saving at least six months of living expenses in an emergency fund. If you have variable income, own a business, or own a house, you should save more. To build an emergency fund, set money aside from each paycheck and automate transfers to make the process easier. Give your emergency fund a boost when you receive lump sums such as bonuses or tax refunds. Start by saving one month of living expenses and build from there. 

4. You don’t have separate savings for your home

I always advise clients to set aside savings for a home in addition to an emergency fund. It’s a bad idea to start homeownership with no savings. Whether you have unexpected expenses related or unrelated to the home, having no emergency fund after a home purchase will lead to unnecessary stress — and possibly more debt. 

When purchasing a home, you’re responsible for a down payment and closing costs. While a 20% down payment is ideal to avoid private mortgage insurance, a down payment of at least 3.5% is typically required. Closing costs can range from 2 to 5% of the home’s value. 

Also, you will have moving costs, costs to spruce up your new place (like new furniture or light cosmetic updates), and any initial maintenance and repairs. Be sure to budget for these items to know how much to save on top of your emergency fund. It doesn’t hurt to boost your emergency fund, too, in preparation for homeownership. 

5. You have a low savings rate

It’s much easier to develop good savings habits before you have a lot of responsibilities. To get on track for financial independence, several studies show that you should save at least 15% of your income. The longer you wait, the more you’ll need to save. 

If your savings rate is low before you purchase a home, it will most likely worsen after becoming a homeowner. Even if your mortgage is similar to your rent, ongoing maintenance and repairs, higher utilities, and homeowners association fees can wreak havoc on your budget. 

Take a look at your current savings rate and see if you’re on track for financial independence. If you’re saving less than 15 to 20% of your income, work to improve your savings rate before you consider buying a home. A strong savings habit can help you build your home savings fund faster and ensure that a home purchase doesn’t impede your long-term financial goals. Finally, understand how much house you can afford so you can avoid being house poor. 

Buying a home can be rewarding, and when done the right way, it’s a way to build wealth. Before you decide to buy a home, it’s important to understand your numbers and ensure that you’re ready for the commitment. Without preparation, your dream home could be detrimental to your long-term financial goals.

Chloe A. Moore, CFP, is the founder of Financial Staples, a virtual, fee-only financial planning firm based in Atlanta, Georgia and serving clients nationwide.

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