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Summary of President Trump’s August 8 Economic Executive Orders

On August 8, 2020 President Trump issued four Executive Orders (technically three memorandums and one order), that offer possible additional eviction and foreclosure assistance, a payroll tax holiday, student loan payment and interest deferral, and unemployment pay.

There is a question of the legality, as federal spending is a power reserved for Congress, and they could be stopped by a court order, but so far Democrats have not proposed that, as negotiations for another stimulus package have stalled, and they are unlikely to stop the additional unemployment amount given under the orders.  

This article will be updated as more information becomes available.

Memorandum: Student Loan Payment Deferral

The CARES Act deferred payments and interest on Federal Direct student loans until September 30, 2020. This memorandum offers further deferral until December 31, 2020. The memorandum specifies that those who want to can continue to make payments.

We don’t know yet if this continued deferral will be automatic (it most likely will be), and whether the skipped payments will count towards forgiveness programs, such as Public Service Loan Forgiveness (PSLF).

Memorandum: Unemployment Pay

Under the CARES Act those who are unemployed received their state benefit plus $600 a week, fully funded by the federal government. However, that $600 extra per week ended in late July. This memorandum provides $400 extra per week, ending no later than December 27, 2020.

Of that $400 extra, states have to pay $100 of it.

What we don’t know is what will happen if the states don’t have the funds, as many states have already said they don’t. Will the unemployed get an extra $300? We also don’t know when the extra $400 per week will start.

Memorandum: Payroll Tax Deferral

This memorandum defers payment of payroll tax from September 1 through December 31, 2020. This only applies to those with bi-weekly pay less than $4,000, calculated on a pre-tax bases (or $104,000).

This is a deferral only, and the tax will be due in the future, most likely with April 2021 taxes.

The major criticisms of this memorandum is that is does not help the unemployed, and that it will have to be paid back. It is also extremely unpopular among both Republicans and Democrats. If Congress decides to extend it, they will have to decide how much to reduce it and how long it will last.

If the deferral is the full employee portion of the payroll tax (7.65%) someone earning $40,000 year will get approximately $255 extra on their monthly paycheck, while someone earning $100,000 will get approximately $637 extra per month. Again, though, this is simply a delayed tax, not a cancellation. My concern is that people will spend that money and not be able to pay it back when it becomes due.

Chances are, if Congress chooses to include this in their bill, that they will cancel the collection of the tax, but nothing is sure yet.

President Trump has tied this directly to his re-election, stating that if he is re-elected he will make the deferral permanent and that it will not have to be paid back. Presidents, however, do not have this authority, so it would take an act of Congress to enact this.

If this is upheld, we don’t know whether that $104,000 is for single or married borrowers, and there is no word on whether or not there will be a deferral of the employer portion (it is unlikely that there would be a deferral of that portion).

Executive Order: Assistance to Renters and Homeowners

The CARES Act moratorium on certain evictions and foreclosures expired on July 31, which could start a wave of people losing their homes or rental. With unemployment still high the concern is that a loss of housing will spread the Coronavirus faster if people end up in homeless shelters or in a crowded multi-family home.

This Executive Order, however, does not really stop either evictions or foreclosures. It simply directs the Secretary of the Treasury and the Secretary of Housing and Urban Development to identify Federal funds to provide temporary financial assistance to renters and homeowners who are struggling to meet their monthly or mortgage obligations.

Basically this order says these groups need to look into it and try to figure out how to help. Measures mentioned in the order may include, “encouraging and providing assistance to public housing authorities, affordable housing owners, landlords, and recipients of Federal grant funds in minimizing evictions and foreclosures.”

We don’t know what will come of this – it could be a full moratorium, or a partial one. If there is direct money we don’t know if funds may be provided directly to landlords or to tenants to pay their landlords.

My Favorite Podcasts (Financial and other)

I love learning, and one of my favorite ways to learn is while I am driving. A while back I discovered podcasts, and today I want to share with you some of my favorite podcasts that I listen to while I am driving. They are not all financial, but all of them will help you be a better person and learn some interesting things along the way!

  • Optimal Finance Daily: This podcast is part of a larger series of podcasts including Optimal Living Daily, Optimal Living Daily – Relationships, Optimal Health Daily and Optimal Living Daily – Business. On each of these podcasts they narrate a blog post (with the author’s permission). On a recent episode of Optimal Finance Daily, for example, they read from Kristin Wong’s blog about how to budget with a variable income. Each of the shows publishes one podcast each weekday, while Optimal Living Daily also publishes on the weekends. Each show is about ten minutes long.

  • The 5 AM Miracle with Jeff Sanders: Sanders is the author of The 5 AM Miracle and on his weekly podcast he interviews productivity experts. Each show is about 45 minutes long.

  • The TED Radio Hour by NPR: I love TED talks, so this show is perfect for me. NPR selects a topic and features portions of TED talks about those subjects and interviews with the speakers to get deeper into the subject. Each show features about 4 talks and authors. A few recent topics include Prevention, Crisis and Response, Beyond Tolerance and Shifting Time. Each episode is about an hour long.

  • Malcolm Gladwell’s Revisionist History: I look forward to the publishing of each episode of Gladwell’s Revisionist History. I highly recommend you download both season one and two and listen to every episode. Gladwell finds fascinating subjects that have been overlooked or misunderstood and do an in-depth episode about the topic. Each season is 10 weeks, and each episode is about 45 minutes long.

  • Achieve Your Goals with Hal Elrod: Elrod is another author of books about productivity, focusing, like Jeff Sanders, on getting up early. Similar to Sanders, Elrod publishes a weekly podcast focusing on productivity and goal achievement. Elrod is currently recovering from cancer treatment, so he has a guest host who tends to talk more than his guests, which bugs me, but I still pick up valuable insights. Each episode is about 45 minutes long.

Obviously this is more than I can listen to in a week, so I delete a number of episodes and just choose the ones that sound the most interesting.

What am I missing? Which podcasts do you enjoy most and why? Share in the comments below or on Facebook.

How to Set and Achieve Your Goals

GoalsSuccessful entrepreneur, author and public speaker Jim Rohn tells a story about meeting his boss and mentor, Earl Shoaff, for breakfast early in his career to discuss success. Shoaff suggested they start by reviewing Rohn’s list of written goals.

“I don’t have them with me,” Rohn responded.

Surprised, Shoaff asked, “Well are they out in your car?”

Hesitatingly Rohn responded, “Well…no…when I say I don’t have them with me, I mean that I don’t have a written list of goals at all.”

“Then,” Shoaff responded, “I know exactly where we need to start.”

Jim Rohn became an avid goal setter and credits it as one of the key principles behind his success, and he isn’t alone. Many other successful people credit goal setting with their success as well.

To be honest, I’ve known about goal setting for years, but I haven’t been great at actually writing them down and tracking my progress. Most people are similar. The average American sets the same resolution ten years in a row unsuccessfully, and most resolutions are abandoned within four months.

I’m working on changing some of my habits, though, and setting goals is a great place to begin.

I’ve been doing some research and want to share with you some thoughts on how to set and achieve your goals.

“I thought this was a personal finance blog, not personal development” you might be thinking. It is! Setting clear, concrete, specific financial goals is one of the keys to success in your personal finances. Goals gives you a reason to budget and to say “no” now because you are focused on what you want to achieve long-term. Also, personal development is one of my favorite topics to study, so as I learn things I will continue to share them here. I hope you find it helpful.

Let’s get to it, then. Here are the seven steps to successful goal setting and achievement[i].

Step One: Get specific

Many of us have vague goals in mind, such as, “I would really like to lose some weight,” or “I would love to be financially successful.” This is a good start, but it doesn’t answer a key question: How will you know when you have reached your goal? In other words, what does success look like?

“I would like to lose fifteen pounds” is much better than “I want to lose some weight.” After all, if you go down by a pound you have technically achieved your goal of losing some weight, but that isn’t what success really meant.

Step Two: Decide when you are going to act

Setting and achieving a goal requires you to change your behavior in some way. To lose weight you need to eat healthier and exercise. To be successful financially you need to start budgeting, paying off debt, and saving for the future. The most successful goal setters realize that behavior change is hard, though, and they set up a plan for when they are going to do the new action (such as exercise or budget).

They do this with a specific technique called if-then planning. If they have a goal to exercise regularly, they get specific about when to act by saying, “If it is 7 AM, then I will work out for 30 minutes.”

This concept has been tested over and over. For example, there was a group of people who all said they wanted to exercise regularly. The first group was taught about if-then planning and they collectively agreed that, “If it is Monday, Wednesday or Friday, then I will hit the gym for 30 minutes before work.”

Group two had no specific plan for when to act.

Weeks later 39% of group two was still exercising regularly, while 91% of the if-then planners were still exercising!

Step Three: Take small steps

When we decide we want to achieve a goal we usually get excited and want to jump in the deep end. For some people, this might work, but the majority of people are going to sink. Research has shown that taking really small steps can be the best way to achieve a goal. Robert Maurer, author of “One Small Step Can Change Your Life” tells a story about a girl named Julie who needed to lose weight and get her blood pressure down. He was tempted to tell her to exercise aerobically for 30 minutes every day, but he knew from experience that while the advice was good, she was unlikely to do it and would just feel misunderstood and guilty.

Maurer decided to try something different. “How about if you just march in place in front of the television, each day, for one minute?” Julie responded that of course she could do that. After all, there was no way she couldn’t succeed.

Was she going to get healthier exercising for a minute a day? Probably not. What happened the next week, though, was that Julie came back excited that she had achieved her goal. Together they built up the exercise habit, minute by minute, for a few months, until she started exercising for 30 minutes each day.

If you set really small steps towards your goal you will achieve success over time. The steps should be so small that you are guaranteed success.

This can be easily incorporated with if-then planning:

“If it is a commercial break during this show then I will march in place during one commercial.”

“If it is noon I will go on a five-minute walk.”

“If it is 8:00 in the morning I will read one verse in the Bible.”

“If I am getting home from work I will spend five minutes connecting with my spouse.”

“If it is after dinner I will play with my kids for three minutes.”

Step Four: Honest and regular monitoring

Thomas S. Monson said, “When performance is measured, performance improves. When performance is measured and reported, the rate of improvement accelerates.”

Honest and regular monitoring, and preferably reporting your progress to someone else, will help you improve.

Different goals will have different monitoring periods, but monitoring weekly is a good step for most goals. “Did I stick to my budget this week” or, “did I hit the gym three times?” or, “what is my current weight?” are all great weekly questions to ask. Remember that early on the goal should be much smaller. Did you march in place during one commercial break each night? Did you read one verse of scripture each day?

You need to set aside a specific day and time to review your progress. I have read that reviewing your progress on a Wednesday is a good idea – you are half-way through the week and can still make some changes before the week is over. You should review your goals daily, but track your progress on a Wednesday.

Step Five: Be realistic

There is a vital difference between believing you will succeed, and believing you will succeed easily. A group of people who were enrolled in a weight-loss problem were interviewed and asked if they thought it would be hard when they were faced with temptation, such as free donuts in the breakroom. Some said it would be easy to avoid temptation while others thought it would be hard, but believed they could be successful.

The second group (the ones who recognized that it would be hard but believed they could do it) lost 24 pounds more than the ones who thought it would be easy!

For most people, behavior change is hard. Believe in yourself, but be realistic about obstacles you are going to face.

Step Six: Focus on getting better, rather than being perfect

My seven-year old son is playing coach-pitch baseball this year, so he goes to practice each week and he and I play catch and practice batting. Do I expect him to be perfect – to hit every ball and throw every ball perfectly? Of course not! Is he getting better, though? Absolutely. He and I both recognize that is the goal – to get better.

It is important to remember that you are developing ability and learning to master a new skill. A smoker, for example, may have the goal to quit smoking. If he has been smoking 20 cigarettes a day but has cut down to 10 has he failed? No! He is getting better and that should be celebrated.

Step Seven: Build willpower

Most goals have one thing in common – resisting temptation, and you need willpower to resist those temptation.

Willpower, however, varies from moment to moment, and gets depleted with use. Willpower is like a muscle – it needs time to bounce back, but it does get stronger over time.

Making and keeping commitments to yourself is one of the best ways to strengthen your willpower muscle. If you commit to get up at a certain time, do it! If you commit to track your spending every day, do it! Don’t commit to do something unless you are going to keep it. Making a commitment to yourself and then breaking it will weaken that muscle. For this reason you shouldn’t take on two challenging goals at once.

Here are the seven steps again:

  1. Get specific
  2. Decide when you are going to act (If…then thinking)
  3. Take small steps
  4. Honest and regular monitoring
  5. Be realistic
  6. Focus on getting better, rather than being perfect
  7. Build willpower

I encourage you to take some time this week to set some goals using these steps. I commit to do this.

 

[i] I have gathered this material from a number of sources, but I am a fan of using research to back things up, rather than anecdotal evidence. Two books that I have really enjoyed are “9 Things Successful People Do Differently” by Heidi Grant Halvorson and “One Small Step Can Change Your Life” by Robert Maurer. “The Compound Effect” by Darren Hardy is a great follow-up to these books.