Setting the Right Foundation for Your Witness Testimony

While every witness preparation session I conduct is different depending on the needs, communicative issues and messages of a particular witness, there is one thing that I do with just about every witness. I ask the following question: "If I were a juror in your case, what are the three main things I need to learn from you and your testimony." The answers are often astonishing.

Setting the Right Foundation for Your Witness Testimony

While every witness preparation session I conduct is different depending on the needs, communicative issues and messages of a particular witness, there is one thing that I do with just about every witness. I ask the following question: "If I were a juror in your case, what are the three main things I need to learn from you and your testimony." The answers are often astonishing.

Setting the Right Foundation for Your Witness Testimony

While every witness preparation session I conduct is different depending on the needs, communicative issues and messages of a particular witness, there is one thing that I do with just about every witness. I ask the following question: "If I were a juror in your case, what are the three main things I need to learn from you and your testimony." The answers are often astonishing.

Setting the Right Foundation for Your Witness Testimony

While every witness preparation session I conduct is different depending on the needs, communicative issues and messages of a particular witness, there is one thing that I do with just about every witness. I ask the following question: "If I were a juror in your case, what are the three main things I need to learn from you and your testimony." The answers are often astonishing.

Your Money: VantageScore Ignores Paid Collections in Setting a Credit Score

But the old bill, which she ultimately paid, had gone to collections and showed up as black mark on her otherwise clean credit report. Ms. Barringer said she found out about it only when she applied for a mortgage last month and got an interest rate that was half a percentage point more than it would otherwise have been. As a result, she is paying an extra $94 a month on the $298,000 loan she took out on a three-bedroom ranch in Dallas, adding up to tens of thousands of dollars over the life of her 30-year fixed-rate mortgage.

And it was all because the doctor didn’t contact Ms. Barringer, an elementary school assistant principal, in a timely manner to let her know that she had mistakenly handed over her dental insurance card.

“I have always paid my bills on time and I put myself through school and have not had any kind of credit issues,” said Ms. Barringer, a single mother of twin 8-year-old boys. “If they want to punish somebody, does it really need to be on your report for seven years if you have not had credit problems and you pay it off? It just seems a little much.”

Credit scores try to capture your financial behavior and distill that identity into one all-powerful number. But that figure doesn’t differentiate between people like Ms. Barringer, whose credit suffered for an innocuous reason, and consumers who can’t keep up with their credit card payments after a wild shopping spree at Best Buy.

But now, at least one major credit score generator, VantageScore Solutions, has decided to ignore collection actions on credit reports — more than half of which are typically tied to medical debts — as long as the collections are paid. The change is not being made out of sympathy for people like Ms. Barringer. Instead, the company found that paid collections are less accurate at predicting future defaults than looking at unpaid collections in combination with a variety of other factors, like the age of consumers’ accounts and the size of their loans.

“There was no intentional decision to exclude a piece of behavior,” said Sarah Davies, senior vice president of analytics, research and product management at VantageScore Solutions, a joint venture of the three major credit reporting companies. “It was just about what was most predictive.”

VantageScore’s findings would also seem to lend support, at least indirectly, to proposed legislation that was reintroduced in Congress this year to require consumer reporting agencies to remove fully paid or settled medical debt information from consumers’ credit reports within 45 days of the debt’s resolution.

That sort of fix could potentially help some of the estimated seven million people who reported that a billing error prompted a collection agency to contact them in 2012, according to an April study by the Commonwealth Fund, a private foundation that researches health policy issues.

“While it doesn’t seem like an isolated collection account should have a significant impact on your scores, it can,” said Gerri Detweiler, a credit expert with Credit.com who supports the legislation. “We’ve heard from so many people over the years who thought that paying a collection account would help their credit scores. They were shocked to learn it didn’t. It feels terribly unfair to consumers not to feel like they are getting credit for doing the right thing.”

The VantageScore plays second fiddle to the FICO credit score, which is more widely used by lenders and continues to consider all collections valued at more than $100. So it’s unclear how many consumers the formula change will help. And ignoring paid collections does little for the millions of people who cannot afford to pay their medical debts because they are underinsured, uninsured or simply can’t keep up with the growing amounts their health insurance policies require them to pay. Among people who reported having trouble paying their medical bills, 32 million, or 42 percent, said they received a lower credit rating as a result of unpaid medical bills, Commonwealth found. And an estimated 28 million, or 37 percent, said they used all of their savings because of their bills, whereas 20 million, or 27 percent, took on credit card debt.

Even someone with a spotless credit history can fall into a downward spiral with just one hospital stay. “It is easy to point to someone who has run up their debt when it has to do with consumer spending,” said Mark Rukavina, former executive director of the Access Project and now a principal at Community Health Advisors, a Boston-based firm that consults with nonprofit hospitals. “But it is harder to say that about somebody that is dealing with illness and injury.”

The Consumer Financial Protection Bureau, which oversees both the major credit reporting agencies and debt collectors, has acknowledged that medical debts are a problem. Richard Cordray, the agency’s director, has said that consumers who have medical collections reported on their credit file can face a harder time getting a loan — or even a job, since some employers now look at prospects’ credit reports. And the agency has gone so far as buying its own batch of anonymous credit reports so that it can study how medical debts affect consumers, as well as to better understand the degree to which paid medical collection items predict defaults. But it remains to be seen what sort of action, if any, it will take.

The big question is whether FICO’s scoring strategy will eventually ignore paid collections, too, since that would have a much broader effect. A spokesman said that its scoring technique did not distinguish between paid and unpaid collections, though it began ignoring all collections for amounts under $100 when it introduced the latest iteration of its score in January 2009. All other types of reported collections are considered “as a derogatory because as a category they have proven to be strong indicators of credit risk,” the company said in a statement. “To ignore data that has been proven to be highly predictive of a person’s ability to repay a debt would not be in the best interest of consumers or lenders.”

Bucks: Six Tips for Setting Your Financial Goals

Carl Richards

Carl Richards is a certified financial planner in Park City, Utah, and is the director of investor education at BAM Advisor Services. His book, “The Behavior Gap,” was published this year. His sketches are archived on the Bucks blog.

If you managed to get unstuck and created your personal balance sheet recently, then you should have a really clear idea of where you are today. The next questions you need to be address are these: Where do you want to go? What are your financial goals?

This can be a frustrating process, since it involves making some really important decisions under extreme uncertainty. None of us know what next week will look like, let alone where we will be in 30 years. On top of that, making financial goals involves a whole bunch of assumptions — guesses, really.

We have to guess what our 60- or 80-year-old self will want to do. We have to guess what the markets will do, where interest rates will be and how much we can save. Those reasons and many more often lead us to forget that this is a process. We get stuck, unsure what to do next.

Well, despite all the uncertainty and assumptions, we need to have goals. It reminds me of the conversation between Alice and the Cheshire Cat:

“Would you tell me, please, which way I ought to go from here?”

“That depends a good deal on where you want to get to,” said the Cat.

“I don’t much care where,” said Alice.

“Then it doesn’t matter which way you go,” said the Cat.

“— so long as I get somewhere,” Alice added as an explanation.

“Oh, you’re sure to do that,” said the Cat, “if you only walk long enough.”

But the problem is that we do care where we end up, and part of deciding where to go depends on setting goals.

So there are a few really important things to keep in mind here. Before you get too excited or frustrated, here are a few things to consider.

1. These are guesses. 

While it is important to admit these are guesses, you should still make them the best guesses you can. Be specific. Just saying, “I want to save for college for my kids,” isn’t enough. How about, “I’ll find $100 to add to a specific 529 account on the 15th of each month”?

Even though you need to be specific, give yourself permission to be flexible. An attitude of flexibility goes a long way toward dealing with uncertainty. There is something very powerful about having specific goals but not obsessing about them.

2. These goals will change.

It’s a continuing process, and it will change because life changes. But don’t let this knowledge stop you from doing it. You need to start somewhere.

3. Think of these goals as the destination on a trip.

You would never spend a bunch of time and energy worrying about whether you should take a car, train or plane without first deciding where you are going. Yet we spend countless hours researching the merits of one investment over another before we even decide on our goals. Why are you stressing about what stocks to pick if you don’t have goals in mind?

4. Prioritize these goals.

Once you have them all written down, rank each goal in terms of importance and urgency. Sometimes you will have to deal with something that is urgent, like paying off a credit card bill, so you can move on to something really important, like saving for retirement.

5. This is a process.

If you set goals and then forget about them forever, that is a worthless event. This is a process. Since we’ve given ourselves permission to change our assumptions about the future as more information becomes available, we need to do it. Part of the process of planning involves revisiting your goals periodically to see how you are doing and making course corrections when needed.

6. Let go!

As important as it is to regularly review your progress, it’s also very important to let go of the need to obsess over your goals. Define where you want to go, review your goals at set times, and in between, let go of them! Goals for the future are important, but so is living today. Find that balance.

This list may not seem like a big deal, but you would be surprised at the number of people who cannot tell you their goals, let alone break them down into categories or rank their priority. Once you have your goals, you will be able to move on to the next step: making a plan.

Shortcuts: The Perils of Setting Goals

Whether it be swimming with dolphins (an oddly common choice), writing a book, trekking through Nepal or all three, it’s not that the ideas are inherently bad. Rather, it is already too easy to reduce lives to a series of goals that we aim for, reach and then move on.

But goals are good, right? Aren’t we always told they’re the best way to get to where we want to be?

It turns out that that’s not necessarily true, personally and professionally.

I’ll get back to the bucket lists in a bit. But first, let’s look at what some of the research tells us about goals.

“We know goal-setting is a very powerful motivating force,” said Maurice E. Schweitzer, a professor of operations and information management at the Wharton School at the University of Pennsylvania.

“Whether it’s a runner who wants to set a certain time or a salesperson aiming for a number of sales, goals give us meaning, purpose and guidance.”

But, said Professor Schweitzer, who co-wrote a paper in 2009 “Goals Gone Wild,” which appeared in the journal Academy of Management Perspectives, things got a little out of hand.

“The proponents of goals focused on the benefits of the goals, not the harm, and too many businesses went too far, saying ‘Here’s what we want you to accomplish,’ and implicitly saying, ‘We don’t care how you got there.’ ”

And that, he said, can lead to, among other things, unethical behavior.

Lisa D. Ordóñez, a professor of management and organizations at the Eller College of Management at the University of Arizona, described experiments that proved this point. In one, participants were asked to create as many words as possible using letters — sort of like the game Boggle. In one group, the participants were given a goal of nine words, and if met, they would receive some money. In a second group, they were given a goal but no financial incentive. And those in the third group were simply told to try their best.

The students who participated were given a chance to check their words in a dictionary to make sure they were true English words. They threw out the worksheets, and turned in the answer sheet that only stated how many words they had finished.

But the academic researchers running the experiment had a code to match the worksheets with the answer sheets and discovered that both groups that had been given a goal of creating a certain number of words — whether or not money was involved — cheated 8 to 13 percent of the time. Those in the third group rarely did.

“It’s not that goals are bad,” said Professor Ordóñez, who was also a co-author of the “Goals Gone Wild” article. “We’re just saying be careful.”

For example, a lot has been written about tying teachers’ merit pay or jobs to how well their students do on standardized tests. The goal is to find a way to evaluate teachers’ abilities. But this has led to a number of problems, including, in some cases, teachers cheating to raise students’ scores.

“Part of the larger problem is, How do we measure performance?” she said. “We want to put our money where we are better served — I get that. But what we end up measuring is not always the most important thing but the easiest to measure.”

Gary P. Latham, a professor of organizational effectiveness at the University of Toronto, has long studied the positive effects of goals. It’s not that goals are bad, he said, but that problems arise when the values that underlie them and the process to achieve them are skewed.

“If you’re going to be overly reductionist, then you’re behaving stupidly,” he said. “You can have multiple goals for complex behavior.”

Professor Schweitzer agreed that it’s a problem when goals become too narrowly focused.