Where’s George?

I was on vacation on Cape Cod this summer, staying with my parents in the house where I grew up. Most days or nights we walk, bike or drive to the homemade ice cream shop down the hill. My chocolate sundae tasted especially sweet a few weeks ago because I received a $1 bill in change with intriguing red, stamped, markings. “Track This Bill” said the stamp, like a mystery message from Louis Carroll, followed by a URL for the website www.wheresgeorge.com

But oh joy! Unlike Alice puzzling over the White Rabbit’s invitation, I knew just what to do. 

The “point” of that website – if there is something as prosaic as a point here – is to upload and track individual paper bills as they move around the country.

My ice cream store-acquired bill with serial number G55…..H (2006) had been first entered into the WheresGeorge website just 35 days earlier, in upstate New York. For each bill ‘found’ and uploaded by another person the site reports the distance traveled and “average speed.” After uploading the info, I learned the bill in my hand had travelled 306 miles and 8.6 miles per day.

In addition to uploading a specific bill’s serial number, the site prompts you to enter a few lines of description about where you found your bill and what condition it is in. 

The “George” in the title is of course President Washington, the handsome dude whose visage adorns the $1 bill, but you can just as easily upload serial numbers for Jeffersons, Lincolns, Hamiltons and Jacksons, all of which I have done over the years. I have never uploaded Grants or Franklins to WheresGeorge, as I don’t traffic in these as often.

The WheresGeorge site launched in December 1998.

I created a profile there nearly twenty years ago, and entered my first few $1 bills in December 1999. I recall reading a newspaper story that year about WheresGeorge. Even then it appealed to my money nerdiness.

But also, I remember in 1999 the site represented a cutting-edge use of the internet, a kind of cloud-based social media site built around numismatics. Remember, this was five years before MySpace, six years before Facebook. 

I distinctly remember feeling the WheresGeorge site was pretty darn exciting, allowing everyone to upload disparate data points to create an accessible but personalized profile. It’s an activity that Facebook made universal and therefore banal. It still had the power to excite back then.

Funny enough, the site hasn’t much updated its format since 1999. It looks just how you’d expect a 1999-era website to look. Which is to say, pretty clunky. But, I learned, it still does the job in 2019. And if you’re the type of money weirdo who likes to track data, as I am, there is a lot going on here.

According to my personalized stats, I have entered 56 bills for a total value of $201. Three of these have had ‘hits,’ meaning another user has found my bills in the wild and uploaded the serial number to the site. I have, in turn, found 12 bills previously marked by other WheresGeorge users. My ice cream shop bill was the first one I’ve seen since 2016, and as a result it’s the first time I’d logged onto the site in 3 years.

“That’s really cool!” my 9 year-old exclaimed enthusiastically when I showed her my profile with earlier notes on dollar bills that I’d uploaded over the past 20 years. Her enthusiasm made me so happy because – obviously – no need for a paternity test, right? That kid’s clearly mine. 

I reached out to Brian Brummer, in La Vernia, TX, known as “Big B” on WheresGeorge. He’s the highest-ranked Texan on the site, and the 20thmost active user overall. Big B’s dedication to the site is, well, astonishing.

Big B’s stats, as of this writing: 

305,150 bills entered.

51,802 bills that have ‘hits.’ 

While Big B’s bills flit around the country, he himself is the most travelled person I’ve ever corresponded with. He’s been to 117 countries. Since retiring in 2002, not only has he uploaded bills from all 50 states, he’s managed to upload bills from all 254 counties in Texas, as well as having others report ‘hits’ from his bills from all 254 counties in Texas. 

I wasn’t wrong in thinking that WheresGeorge serves as a key social media site for its active users. The socializing has moved from on-line to in-person. Big B has attended 117 in-person gatherings of fellow WheresGeorge enthusiasts. And counting. The next Texas get-together will be in Austin in October, followed by one in La Vernia in 2020.

Joe Causey of Cullman, Alabama is ranked as the third most active user and known by the WheresGeorge handle MrNiceGuy. He replied to my query through the site and said he used to stamp nearly 20,000 bills per month, and would distribute them through his friend’s 10-plex movie theater, through change at the box office and concessions. The site, and affiliated forums, is by far his most active social media outlet.

I asked Big B what participants shared in common. He replied, “Most Georgers do have an interest in statistics and many have an interest in Geography.  Many folks claim we are all weird and having met more than 680 of them I will not argue this point too much.  Like any hobby people carry it to extremes and others just enjoy it as something to fill the passing time.”

I always try to pay with $2 bills…

That sounds…right. I can relate somewhat. I am the guy who orders $1,000 worth of $2 bills from my bank just so that I always have a bunch to buy my daily coffee with, or for my weekly poker game buy-in. So, yeah, I’m a little quirky about my money hobbies. But I recognize Big B and MrNiceGuy have taken the game to a whole other level.

About my ice cream sundae dollar: I spent it, releasing it like a prized fish back into circulation. If you find it – my $1 bill with a red stamp on it – please upload its info to WheresGeorge.com so that I can track its travels from Cape Cod in the summer of 2019 to across the country, and beyond.

Please see related post:

What’s my deal with $1 coins?

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More Nerdy Social Security Stuff I Found With My Spreadsheet

Social_security_calculations

I went to my happy place this past week, which faithful readers (both of you!) will understand means I got to build myself a really neat-o spreadsheet.

I built it so that I could see “under the hood” of Social Security benefits calculations. This isn’t something I’d necessarily recommend to people who grew up in a loving household and who know how to relate to real live humans. But everybody has his or her hobbies. Don’t judge.

Generally, if you want to know what you should know about Social Security, I strongly recommend creating a My Social Security Account and I also strongly recommend going online to your Social Security benefits estimator. These online sources are easy to use, full of insights personalized to your own situation, and they could save you the hassle of a phone or in-person visit with a Social Security office.

garage_tinker
I don’t tinker with cars in my garage

But for the small percentage of you who’d like to talk nerdy with me, I thought I’d add a few more insights into what I found as a result of my custom-built spreadsheet and by pulling my own reports.

These insights include the effect of low earnings, the effect of entrepreneurship, and a benefit of working deep into one’s retirement years.

My Own Report

In the example of my own Social Security report, since I graduated from college, between 1996 and 2017 I have twenty-two years in which I have reported taxes. (2018 taxes, obviously, are not yet filed.) Of those twenty two, eight years represent high earnings. Three years represent virtually no income (I’ll explain that a little later on). In the other eleven years my income was “meh.”

I mentioned in the last post on Social Security that having a high income for a short amount of time is not as valuable – for the purpose of maximizing Social Security benefits – as having a moderate income for a long period of time. That’s because every year out of 35 years of earning income and paying taxes matters. Miss out on one year of earnings, and your benefits go down, at least a little bit.

As a soon-to-be forty-seven year-old, I have twenty more years in which to earn income, pay Social Security taxes, and therefore maximize my benefits. “Full retirement” age for me, by the time I get there, is scheduled to be 67 years old.

Incidentally, for current Social Security retirees today, the “full retirement” age is 66 and a half, but that age keeps creeping upward. And it ought to creep upward because we live way longer on average than people used to, so it only makes sense for the solvency of the Social Security program to increase the retirement age. But that’s a controversial topic for another day.

The point is that I’ve got a mere twenty more years to maximize my eventual benefits. And yes, one way to increase benefits is to delay starting your monthly payments. But that’s a well-known fact, and also not the topic for today. The topic today is getting the best thirty-five years of earnings possible.

Racking up thirty-five steady years can be difficult, for example, if you start or run your own business.

My_social_securityEntrepreneurial income varies tremendously year to year, which will have an effect on your final Social Security Benefits. I noticed from my own Social Security report that in the first three years of founding my investment business in the mid-2000s that I earned essentially zero income. The losses incurred in my startup years zeroed out my taxes – which was delightful at the time – but it also meant I did not pay into the Social Security system. Since all thirty-five years of earnings count toward building up Social Security benefits, entrepreneurs with volatile earnings may accrue far fewer benefits over a lifetime than will long-time employees with steady earnings. Even very successful businesses have years of losses, at least from the owner’s tax perspective, so that could lower Social Security contributions and therefore eventually benefits.

Work Past Retirement Age

So how does somebody improve his or her benefits, even with some low-earning years?

My mother, age 76, presents an interesting data point on Social Security benefits, which she has been collecting for the last six years. After raising us kids, she racked up some low-paying years during her career as a private school teacher. She continues to work as a consultant now, however, making decent income well past her full retirement age. Because Social Security benefits depend on calculating your highest 35 working years, her recent income years – in her mid-70s – have been slowly replacing lower earning years from her 40s. As a result, her monthly Social Security check has adjusted upward by a little bit each year.

Katrina Bledsoe, Management Analyst at the Dallas region Public Affairs Office of Social Security, confirms that this upward adjustment should happen automatically every year, if you continue working. If you don’t see the automatic adjustment, Bledsoe says beneficiaries may contact their Social Security office. Don’t do so until the 2nd quarter of the year, however, because Social Security will need to see your official IRS tax data to recalculate benefits, and that generally doesn’t happen before April 15th.

Social_security_calculationsTwo final Social Security thoughts. Monthly benefits generally are not enough to live on, comfortably, in retirement. Social Security payments should be thought of as a living supplement, not a sufficiency.

On the other hand, as much as 40 percent of American households do not have appreciable retirement savings. The median net worth of Americans between ages 65 and 74 is $224,000. With that statistic, we can see that Social Security constitutes the single most important source of funds retirees have to live on.

To do some simple math 1 for which I don’t even need my cool spreadsheet, I would divide annual benefits by 5% to get a rough value of Social Security for an individual, as if it were the equivalent of a lump sum in the bank. That would make $2,500 in monthly Social Security benefits worth $600,000. That rough estimate shows us that Social Security is the largest safety net that a majority of Americans have.

 

Please see related post:

Social Security Nerdy Spreadsheet Part I – The Rabbit and the Hare

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  1.  And please don’t @ me to quibble about this last math assumption. Chill. I’m creating a quick and rough estimate for comparisons’ sake. Thank you.

FICO Scores – Part I

confessionI’m 43 years old and I have a terrible confession to make: I still know my SAT scores by heart. Wait, it gets worse. I still know my PSAT scores by heart. I know, I know, I’m that guy. I’m not proud of this so let’s move on quickly to another semi-related topic: FICO scores.

Unlike the SAT, everybody should track his or her FICO score throughout adulthood.

I bring up the SAT analogy because you should no more apply for a loan without knowing your FICO score than you would think of applying to college without knowing your SAT score. Like the SAT, FICO serves as a sorting mechanism determining your eligibility, in this case, for lending products.

Any credit card, auto-loan, mortgage, or business loan application you submit will prompt your lender to pull your credit score as a major determinant of your access to their best, or worst, products.

Unlike the SAT, however, you only need to remember one single number to achieve total success: a 720 FICO.

An online universe of FICO-score nerds exists and I’m not writing with that audience in mind, any more than I would encourage SAT nerds to remember their scores 25 years too many. (Yes, I’m looking right at you, mirror.)

FICO determines loan quality
If you’ve got a 720 FICO, considered by most banks the cutoff for “Prime” loans – the ones with the lowest interest rate and best terms – then you can stop nerding out about your FICO score. A higher score than 720 gives you nothing but bragging rights.

If you’ve got lower than a 720 FICO, expect to pay more in fees and interest, with fewer options. Borrowers in the high 600s may still qualify for what’s known in the banking world as “Alt-A” loans. Borrowers with a FICO score in the mid 600s or below either qualify for Subprime loans – a high interest rate, high fees, and somewhat punitive terms – or no loan at all.

What to do

So how do you access your score? The FICO company, as well as the three credit bureaus Equifax, Experian, and TransUnion each offer personal credit reports and scores for less than $20 each. You can spend a couple of minutes online to access your report and score, and I highly recommend doing this before applying for a loan anywhere.
You really don’t need to buy more than one score with one report from one bureau, so you should be able to accomplish your goal for under $20.

Free credit report?
Consumer advocates trumpet the idea that you can get a free credit report each year, which is true.
But that report does not come with a FICO score. I don’t think that a credit report without a credit score fully equips you with all the knowledge that you need.

To return to my college analogy, a free credit report with no FICO score is like a college application full of essays but no SAT score. You are not getting the full benefit of seeing your application the way a bank sees it, which is ultimately one of the main points of reviewing your credit profile. I advocate spending the money to get the score along with your credit report.

Inputs to FICO
So what does FICO measure? The Fair Isaac Corporation, the company behind FICO, reports that five factors go into their mathematical formula, all of them measurements of past borrower behavior.

I’ll list the factors in order of importance, according to their formula.

fico_scoringFirst: – Have you ever missed debt payments, and if so, how often and how recently? (35 percent)
Second – How much do you owe now? High debt lowers your score, while low debt compared to your available credit actually raises you score. (30 percent)
Third – How long have you been borrowing money? A longer time raises your score, while a shorter time lowers your score. (15 percent)
Fourth – FICO considers some types of credit like installment loans riskier than other types of credit like mortgage loans, and adjusts your score as a result. (10 percent)
Fifth – Have you applied recently for credit? This lowers your score a bit, as it shows you need to borrow money. (10 percent)

Lesson One: Time
Reviewing these five factors, we can see that the biggest determinant of your score is time: Specifically, are you timely with your bills, and how long have you responsibly handled debt?
Because of the impact of time, even younger borrowers with perfect credit history cannot achieve very high FICO scores (in the 800s), whereas older borrowers have a natural advantage because they may have very ‘old’ credit lines boosting their scores.

Lesson Two: No tricks
You should never make a financial or borrowing decision based on how it will affect your FICO score. Instead, just do the ‘right thing’ in your situation, and the FICO will work itself out. Paying your bills on time, lowering your balances when you can, building up a long-term track record of ‘safe’ borrowing behavior is the only reliable method for boosting your FICO.

Plenty of ‘services’ claim to be able to boost your credit score, but I would never recommend attempting any of these. Like many other areas of finance, the best practice is to ignore short cuts and tricks. Just stay focused on the long-term unsexy practice of paying back your debts. The FICO score will work itself out in the long run.

a_lanniseter_always_pays_his_debtsWhen I say you should avoid tricks and mostly ignore your FICO score, I don’t mean to ignore the underlying issue of settling past debts. The best practice is to make like a Lannister, and always pay your debts.

Next week I’ll write about when to totally ignore your FICO score, but also the financial advantages of not ignoring your FICO.

A version of this post ran in the San Antonio Express News.

 

Please see related posts:

Ask an ex-banker: FICO scores and monthly balances

FICO Part 2 – When to ignore FICO, and why FICO is awesome

 

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