Will Stamps Have To Go Up Again?
America's Postal Service pared $10 billion from its budget, but still managed to lose nearly $4 billion in the fiscal year ending September30th. It's already eliminated 40,000 of its more than 700,000 employees. How much more do you think most families can afford to pay for a first class stamp?
This year's loss was a billion dollars more than last year's -- and that's despite the cut in total employees.
Yet, to manage with that reduced staff, some postal employees are being ordered to work overtime. How financially sound is that?
These latest reported losses are despite a first class postage increase in May.
Meanwhile, firms like UPS are forecasting their business will be up slightly in the coming season.
But would an increase in business necessarily be a good thing for the U.S. Postal Service? Or do you think they -- and all of us -- might be losing money on every additional letter they deliver?
What do you see as the future for home mail delivery in America?
CNN: Postal Service Losing Money
Meanwhile, Bloomberg reports today that:
UPS Projects Holiday Volume ‘Up Slightly’ From 2008
They also forecast that:
...Dec. 21 will be the busiest day, with volume of 22 million shipments, Atlanta-based UPS said today. That would match UPS’s record 2007 forecast. The world’s largest package-delivery company doesn’t report results after releasing its estimates....
>> How much more do you think most families can afford to pay for a first class stamp? <<
Perhaps the question should be, not how much for a first class stamp, but how much per month for postal services.
Traditionally, paying bills required writing and mailing a check. Personal correspondance with friends and family was cards and letters sent by First Class Mail.
Today, many, perhaps even most, people pay most of their bills using an online Bill Pay service, free, and saving a postage stamp with each bill so paid. Much casual correspondance with friends and family is done with e-mail or even by telephone that is significantly cheaper than it once was.
Moreover, while today's 44 cents may seem quite high to those of us old enough to remember the 3 or 4 cent first class stamp, I wonder what the comparison is if converted to inflation adjusted pricing.
>> Yet, to manage with that reduced staff, some postal employees are being ordered to work overtime. How financially sound is that? <<
That may depend on at least a couple of questions
Are these employees salaried "exempt" employees who do not receive overtime? Or are they union wage workers who do?
How does the overtime premium (typically half again the wage) compare to the cost of the benefit package that might be paid to an additional straight time worker? Health care, holidays, vacation, sick leave, pension credits, etc. These things add up, but if you are already paying them to an existing worker, time and a half for overtime could actually be less costly.
Best regards, 4merCL
Moreover, while today's 44 cents may seem quite high to those of us old enough to remember the 3 or 4 cent first class stamp, I wonder what the comparison is if converted to inflation adjusted pricing
Interesting...but how long would it take to get Congress even to consider ordering the semi-autonomous postal service to change its ways?
Very best wishes,
- John
I got a message from the post office just the other day: priority mail cost will increase in January, but first-class postage will not.
>> Interesting...but how long would it take to get Congress even to consider ordering the semi-autonomous postal service to change its ways? <<
I'm sorry. I don't understand your comment.
Nothing that I said was intended to suggest either Congressional action or, for that matter, a particular change in the operations of the postal service.
I was simply suggesting a different perspective in viewing the customer experience.
IOW, whether stamps go up by a couple of cents a year is not a major issue for folks who may use only a couple of stamps or fewer per month.
>> I think the days of letter delivery are numbered. Electronic means are going to take over. There will always be a need for parcel delivery though. Can US postal compete with DHL, UPS etc? <<
I did not mean to suggest the extinction of first class mail, but rather that, at a much reduced usage per capita, or per household, a few cents rise in the postage rate would not be a big issue.
As for competing in the parcel delivery realm, USPS has in interesting business model in its well advertised "If it fits, it ships." That is, it has a series of standardized boxes each of which ships anywhere in the country for a flat rate. I've not really done a study of how those rates stack up agains the weight and distance rating done by the other parcel companies.
>> On a similar note, I've always found it strange that most banks allow online bill paying for free, but some still charge a hefty fee for it (I think Wells Fargo charges $6.95 / month). <<
A graphic demonstration of the adage that "you can fool some of the people....."
Frank -
> some [banks] still charge a hefty fee for [on line bill paying].
One can avoid those charges by going to the payee (credit card company, utility, newspaper, etc.) and using their web site to debit your account electronically. There's no charge for the ACH debit. It also gets you slightly more float and assurance that the payment is credited to your account promptly.
Kurt
>> Maybe I'm just paranoid, but it seems safer to generate online bill paying from one place instead of several. <<
One need not be paranoid to find several good reasons to prefer single point bill paying thru one's own bank.
A good Bill Pay system will show you a list of pending payments, in case you are not certain that you have scheduled one or more. I don't know whether creditor based payment systems provide any scheduled payment display, but logging into a half dozen or so, in order to confirm each would be a PITA.
A good Bill Pay system will allow you to categorize your payees. I can remain safely off of the streets on New Year's Eve, printing out 12 month histories of payments made, in such categories as Healthcare and Charitable Donations, to facilitate the eventual preparation of my tax returns.
Of course, as is implicit in the previous two paragraphs, a good Bill Pay system will allow you to review, in one place, a confirmation of payments made -- and, in conjunction with your checking account history, to verify whether payments made by the Bill Pay service in the form of physical checks -- as might be the case with smaller or local payees that are not able to receive direct electronic (ACH) payments -- have cleared and been deducted from your checking account.
As for the supposed gain of a slight "float" advantage said to exist by authorizing payees to direct debit your checking account...I question it. In an era when interest APYs earned (if any) on checking balances are miniscule, and most of the payments [gas, water, cable, telephone etc] are modest, how much interest could accrue in that "slight" interval? Well, suppose for "safety sake" you scheduled each of your payments, using your own bank's Bill Pay, one business day early. Hypothetically, 3/7ths of such payments might be made on a Friday, thus costing 3 days of "float" vs. a payee direct debit on the actual payment date. This could occur monthly, making 36 days x 3/7 = 15.4 days times the total monthly amount being paid by your payrees' direct debit. Generously cranking in an assumption (obviously not accurate in today's interest rate environment) of an APY of 6% on your "float", results in about 1/4% on your monthly amount. So, how much would your monthly payments be to companies prepared to direct debit on the actual day? A total of as much as $1000 per month? That would equate to an annual "float" cost of $2.50.
On the flip side of the coin would be those payees who are not set up to accept direct ACH payments and credit them accordingly. I find that they [my physicians, my dentist, my paratransit system, even my landlord] are the majority of my monthly payments. My centrally based Bill Pay service mails actual paper checks scheduled to arrive on or before the due date BUT my checking account is not debited until the checks actually clear. That usually means that I get the benefit of a day or more of float -- and, because those payments generally exceed the ones that are done electronically a day or so early -- on balance, I come out ahead.
CORRECTION: When I slipped into "personal" mode in the immediately preceding paragraph, I introduced an error. Actually, my own checking account is non-interest bearing so either way, paying a day or so early, or not being debited until a day or so after the check is received and credited, introduces no "float" issue either way. However, for those whose checking accounts do bear interest I believe the analysis to be on point.
ADDENDUM: To pay homage to the subject of this thread, I should note that nearly each of my payments made thru the Bill Pay service (whether electronically or by old fashioned paper check) allows me to avoid the expense of a first class stamp to mail it. In effect, it is like earning a tax-free return on a non-interest bearing account and, indeed, that dwarfs the amounts in either direction represented by the hypothetical "float" posited by an earlier poster. Ps. And, of course, as postage rates rise, so does my "return" on my checking account.
> Maybe I'm just paranoid, but it seems safer to generate online bill paying from one place instead of several.
If someone manages to hack a payee's info, they get your bank info. But if someone manages to hack your bank's info, they get access to all your accounts at all your payees.
> Then, if there's a problem with more than one payee
Sorry, I don't know what sort of problem you could have with multiple payees. Unless your bank didn't make the payments from your list. Otoh, if a payee fails to submit the debit, or does not do so in a timely manner, you've got a confirmation from the payee that you authorized them to do so.
> I don't know whether creditor based payment systems provide any scheduled payment display, but logging into a half dozen or so, in order to confirm each would be a PITA.
Mine do. Typically I also get an email when the payment is scheduled and when they initiate the debit.
> A good Bill Pay system will allow you to categorize your payees.
The debits show up on my bank statements, so I can still categorize them. Your bank may or may not allow that.
> On the flip side of the coin would be those payees who are not set up to accept direct ACH payments and credit them accordingly.
So far, I haven't found anyone who won't either accept a direct ACH payment or a credit card. Some (state and country taxes), however, do charge a fee so I have to do something else.
> Actually, my own checking account is non-interest bearing
Same here. But I, and I suspect you, don't keep all my money in the checking account. It gets moved there (electronically) from an interest bearing account. But I will agree that the amount of float interest earned is relatively small.
> avoid the expense of a first class stamp to mail it.
Some vendors will do better than that. My local electric utility gives a $0.48/mo. discount if you let them debit your account. The local newspaper gives subscribers an extra ~20% off for either an automatic ACH debit or credit card payment. All that's in addition to the cost of a stamp. Not to mention the cost and hassle of going to the post office for stamps and mailing your bills.
>> So far, I haven't found anyone who won't either accept a direct ACH payment or a credit card. <<
So now you have introduced another payment modality [credit card] that further distributes your payment information. And why? Because some of your creditors cannot accept and account for a direct debit ACH transfer and you have elected not to use your bank's Bill Pay system.
>> The debits show up on my bank statements, so I can still categorize them. <<
First, that sounds like tedious "brute force" hand work. I can select a category and automatically get an itemized statement over my choice of time frames, up to 18 months in the past, together with a total, and I can print this statement out.
Second, given your indication that some of your payments might need to be made by credit card, they will show on your bank statement as payments, not to your ultimate payee, but buried in the monthly total paid to the credit card issuer...and, when it comes time to categorize, you won't be able to do so from your checking account statement but will have to "know a priori" that you need to go to your credit card statement to get the payment detail.
>> Some vendors will do better than that. My local electric utility gives a $0.48/mo. discount if you let them debit your account. The local newspaper gives subscribers an extra ~20% off for either an automatic ACH debit or credit card payment. <<
Not clear whether these discounts are available to you in the case where you receive [either postal or electronic] statements each month and personally schedule ACH or credit card payment for that month, or where you would be giving authorization to accept and automatically pay, with no further action on your part, whatever amount your payees should happen to say that you owe for the month. That latter process would not fly with me, as I would consider loss of the 48 cent discount a worthwhile insurance premium against SNAFUs in which the electric company computer "hiccupped" and overdrafted my checking account with a $7197 debit (for instance) instead of the correct $71.97. I realize that eventually correction could be made, but in the interim I could be SOL with respect to my funds, I could be incurring additional overdraft fees as other items hit my checking account, etc. And, the electric company might decline to "make me whole" with respect to the consequential damages resulting from such an error. Moreover, in any situation where you might have a dispute with respect to one of your bills, your hand is much stronger if you are in a position to withhold payment of the disputed amount than if the payee has a standing authorization to debit the total monthly amount and then you have to try to get the disputed amount refunded.
> So now you have introduced another payment modality [credit card] that further distributes your payment information. And why?
Because paying the bill by credit card avoids the postage cost, the subject of this thread. And along the lines of savings, you may also get cash back or airline miles or a free toaster or something, depending on the card.
> overdrafted my checking account with a $7197 debit
Same potential risk with a paper check or you entering the payment amount for your bank's payment system. If that's a serious concern, have your bank turn off the automatic overdraft "protection".
I'm not trying to persuade you or anyone else to change the way you pay your bills. I'm just pointing that if a bank is charging a fee for paying bills, there are fee free alternatives to that.
>> Same potential risk with a paper check or you entering the payment amount for your bank's payment system. If that's a serious concern, have your bank turn off the automatic overdraft "protection". <<
Hardly the same potential risk. If a creditor has been authorized to direct debit, rather than send a bill and allow me to schedule the payment, then an error of the type I previously described could occur without my knowledge or opportunity to intervene.
By contrast, using a single Bill Pay service [free, BTW] thru my bank, enables me to verify the correct amount, before scheduling for payment -- and to review all pending payments (including the total value of such) AND my current checking account balance ALL on the same screen. There is very minimal risk of getting "blindsided" using that protocol.
I'll not repeat the various advantages of a good Bill Pay service, but I think their value exceed that of the occasional "free toaster" [do banks really give free toasters anymore?].
As for turning off "overdraft protection", that does not solve the problem of erroneous debits by one's creditors. It may avoid certain fees charged by by one's own bank for providing the protection and honoring NSF checks resulting from overcharges by an authorized automatic biller, but you could instead face NSF penalty fees when subsequent payment requests or checks are presented against the unexpectedly depleted account. Also, the payees on the other end of those NSF transactions may have their own penalties and fees when their payments fail to go thru. Some of those can be onerous as, for example, a credit card account presenting behind the erroneous electric company debit -- you can not only get hit with the one-time "late fee" but you could find your credit card interest rate [if you carry a balance] taking a major leap to a so-called "penalty rate" as a result of an error that you had no advance knowledge of nor opportunity to avoid.
>> I'm just pointing that if a bank is charging a fee for paying bills, there are fee free alternatives to that. <<
Indeed there are. They are known as "other banks or credit unions offering free Bill Pay services."
Paying bills electronically is the easiest, fastest, safest and cheapest way to pay. First choice to pay bills should be by credit card. You can use their money for 30 days, interest free and often get cash back bonuses. Second method is auto deduct. It is a simple matter of posting to checking account. I do this with the must pays like electric and gas bills. Third method is to schedule date of payment. I can wait til the last possible day without having to worry about the mail getting there on time. Finally,if your financial institution charges for any electronic transactions like these, find another bank or credit union.
One last note, if you mail a check the firm has all the information on the bottom of the check to pull money from your account - and most do.
Bob
>> Paying bills electronically is the easiest, fastest, safest and cheapest way to pay. <<
I'll agree with you on that statement. As for your subsequent statements about the order of preference among various ways of doing so .... different strokes for different folks!
>> First choice to pay bills should be by credit card. You can use their money for 30 days, interest free and often get cash back bonuses. <<
Perhaps you live sufficiently "higher on the hog" than I do that 30 days "float" outweighs what I see as disadvantages to using a credit card as the primary payment means. Generally speaking, using a credit card means allowing those of your creditors who accept that method of payment to make a [presumably "last minute", otherwise you would not be getting your "float"] charge that you will not see until after the fact. While credit card protocol includes procedures for challenging errors and, hopefully, getting them corrected, why not avoid them [in most cases] by a payment method that puts YOU in between the bill and the payment transaction. Moreover, there may be some of your creditors who will not accept credit card payments...and, therefore, you will need a backup means such as writing checks and mailing them. Moreover, for those payments that are to be made by credit card, you don't really have a good means for previewing and tracking the pending payments.
My own first choice [and it covers almost all cases] is a free Bill Pay service offered by my bank. Since nearly all payments are made thru it, I have a single central location to see both payment history and pending payments. For repeating payments [like cable -- no premium or on demand charges, or flat rate telephone service], I can program them to repeat monthly. For variable amount payments, I can go online at my convenience shortly after receiving the bill and schedule the payment accordingly. I can also generate reports by payee, by category (such as medical expenses), etc., such as one at year end to facilitate tax preparation. While your credit card statements may have the information to generate such reports, I doubt that it gives you the power and flexibility that my Bill Pay service provides me.
>> Second method is auto deduct. It is a simple matter of posting to checking account. I do this with the must pays like electric and gas bills. <<
Are you doing this in parallel with your first choice ctredit card? Having two different payment systems invites the possiblility of something "falling thru the cracks" and the certainty of a degree of PITA in your financial management, budget tracking, etc.
>> Third method is to schedule date of payment. I can wait til the last possible day without having to worry about the mail getting there on time. <<
This is essentially my first, and only choice. While not all of my payees are set up to accept and account for electronic funds transfers, the Bill Pay service cuts and mails checks (they pay the postage) to arrive by the payment due date (which I typically list a business day early for safety) and the Bill Pay service "guarantees" timely delivery of the payments.
>> Finally,if your financial institution charges for any electronic transactions like these, find another bank or credit union. <<
I believe that I said as much in my post.
>> One last note, if you mail a check the firm has all the information on the bottom of the check to pull money from your account - and most do. <<
Yes the check clearing process no longer requires couriers transporting physical checks back to the banks on which they are drawn. It is done, mostly, electronically as you suggest. However, your written and mailed check still has you in the loop between the bill and your payment authorization represented by the check and it does not authorize the payee to pull any amount out of your account other than that for which you have written and signed the check.
I stand firm on my position that I initiate payments and I do not go scattering authorizations to vendors to "help themselves" to however much that they think I should be paying that month.
