New Costco email "Message Providing Notice of Amended Fuel Temperature Settlement"

On December 24th I got a new letter from Costco about their pending class action lawsuit over fuel temperature.   If you are a Costco customer then you may have also received an email recently with the subject  "Message Providing Notice of Amended Fuel Temperature Settlement".    This is a legitimate email and it is not a scam or anything.   However the email isn't really noteworthy and you can basically ignore it.

I talked about this lawsuit in the past when I wrote Costco Fuel Temperature Class Action Lawsuit : What does it mean?.

The letter starts out like this...

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NOTICE OF AMENDED CLASS ACTION SETTLEMENT

TO:   All persons who, between January 1, 2001 and April 22, 2009, purchased gasoline from Costco at a temperature above 60 degrees Fahrenheit in any one of the following States: Alabama, Arizona, California, Florida, Georgia, Indiana, Kansas, Kentucky, Maryland, Missouri, Nevada, New Jersey, New Mexico, North Carolina, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Utah, and Virginia.

YOU ARE HEREBY NOTIFIED that based on concerns regarding class representation, the Court did not approve the settlement agreement previously entered into between Costco and Plaintiffs on or about April 12, 2009 (the "Original Settlement") in In re Motor Fuel Temperature Sales Practices Litigation, Case No. 07-MD-1840 (United States District Court, District of Kansas). On or about January 3, 2011, the parties entered into an amended settlement agreement (the "Amended Settlement") based on suggestions made by the Court.

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For reference I also found a copy of the email posted online at another site.


Then it goes on for a while.    If you skim down you'll see the important detail...


"Except for the class representatives, class members will not receive any payment."

So you are still not getting anything.   Move along folks... nothing to see here.

The purpose of this email is to explain that they split the class action into 21 separate classes for each of the 21 states in question.    Otherwise there really isn't anything new or noteworthy for us.


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2011 Total Returns for my Stock / Retirement Investments

My stock investments are all in my retirement accounts.   In total my retirement accounts are up 3.9% for the year 2011.    Thats not bad.

I have retirement spread over 3 accounts :
Roth IRA +3.7%
401k -7.6%
Company retirement +6.9%

The Roth IRA and the 401k are controlled by myself and the company retirement money is managed by my employer.  

I did fair with my Roth IRA money but I didn't do very well with my 401k investments for the year.   Combined the Roth & 401k are up 2.3% total.    I didn't have much of a strategy for my 401k.   Much of the year I wasn't paying a lot of attention to my Roth or 401k investments.  

Most of the money is in the company retirement account.   I'm fortunate that my employer did a pretty good job of handling that investment on my behalf. 

If I had put all my money in the Vanguard S&P 500 ETF (VOO) then it would be up about 1.3% for the year total.

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How My Predictions for 2011 Fared

At the end of 2010 I made some predictions for the economy in 2011.   It was mostly for entertainment purposes.  

1. Unemployment will remain high but drop under 9%.   =  CORRECT.     
 I got this one right.   Unemployment stayed high all year and then dropped down to 8.6% in November.

2. Stocks will be up over 10%, year end with S&P 500 > 1400 and Dow > 12,500 = FAIL
 I was wrong on this one.   But I would have gotten it at least half right if I'd predicted a 52 week high of 12,500 for the Dow.   It did exceed that during the year but the Dow didn't end the year over 12,500.   The S&P 500 came close to hitting 1,400 and hit a max of 1,370.

3. Gold will hit $1500 within 2011.    50/50 chance it drops below $1000 =  PARTIAL 
Gold did certainly hit $1,500 during 2011.. and then some.   I was wrong about the 50/50 chance of it dropping below $1000.  But then I am not sure how citing a 50/50 chance was really a prediction so I'm giving myself -1 point for making a non-prediction.

4. Real estate prices stabilize.  Up 1-5%.   = FAIL
Median home prices are down about 4% nationally.   Prices have however been on the rebound for 3 straight quarters.  It does look like things are turning around.  However the annual total change is still negative.   Of course things differ based on what region or city you live in.  As they say : Location, location, location.

5. GDP up 3.5-4% = FAIL
GDP is up more like 2-3% on an annual basis for the year so far.  I was a bit too optimistic on this one. Final numbers aren't out yet but I suspect the trend will not change much when we get Q4 figures.  

I didn't do a very good job playing fortune teller for 2011.

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Credit Card Debts In Retirement

A while ago I saw this article on USA Today Dying with debt: A dirty little retirement secret about retirees who have credit card debts.    I have one relative who I know of who retired and then built up a lot of credit card debt.

 Yes many senior citizens do also have credit card debts.    If you look at the Survey of Consumer Finances from 2007 (latest available) they give average debt levels by age groups.    Credit card debt is not as common among retired people but it still happens.    In the SCF 2007 report 37% of people age 65-74 had credit card debts averaging $8,400 (among those with debt) and 18% of people age 75 or over had credit card balances averaging $3,900.   If you look at all families 46% had debts averaging $7,300.

Of course not everyone age 65 or older is actually retired and many people over 65 are doing well financially.   But I assume that most of the seniors with debts are using credit cards for emergencies for which they can't afford or simply not being responsible with their finances.  I would also suspect that at least some retired people with credit card debts think they are going to 'stick it to' the credit card companies by racking up a large debt balance and never paying it off within their lifetimes.   I don't imagine this is how most people think about their debts but I assume that at least a few people don't feel so much pressure to repay a credit card debt in such a situation.

You aren't going to beat the bank with minimum payments
As we all know credit cards have very high interest rates as a general rule.   These interest rates can cost you significantly more than the original purchase over the long run.   Lets say for example your card as a 19.9% interest rate.  In 5 years you'll have paid them the entire amount of the loan in interest and you'll still owe them money.    My AmericanExpress card has a 15.24% rate right now.  If I only paid the monthly minimum payment on the balance then it would take 21 years to pay it off and it would cost me 216% of the original loan.   So if I borrowed $10,000 I'd have too pay them $21,600.   If you're 65 years old then there is a very reasonable expectation that you'll live another 20 years or more.    So you could end up paying high interest rate for decades.   Thats not exactly sticking it to the bank in my opinion.  

Will your relatives have to repay the money?
If your debt out lives you then your relatives will not have to pay the bills.    However your estate IS responsible for any debts that you owe.   You might think, well doesn't that mean the same thing?  If the estate has to pay the bills then the heirs won't get the money.   While that is true there is an important difference here.   A creditor can not come after relatives for money if the estate can't cover all the debts.

What to do?
How you ought to deal with credit card debt in retirement depends on your situation.   If you are living on a low fixed income without much in assets then I would strongly consider pursuing credit counseling from a non-profit member of the National Foundation for Credit Counseling.   They will help you figure out how to best deal with the debt.    Otherwise you should figure out how to put extra money towards your debt and pay it down faster rather than just pay minimum payments.   If your credit score is good then you may be able to move the debt to a 0% promotional rate or get other financing at a lower rate.



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