Friday, July 31, 2009

A Good Time to Save for the Future

A friend just lost a job, and the spouse’s work hours also got cut to almost nothing. They worked at the same company. This is not exactly the best plan, to double up in such a manner, but initially, the one spouse used the job connections to bring the other spouse on board. So you can understand why they both worked at the same place.

Now what happens to them? I don’t know. They’re really hurting from the psychological blow, and they had just spent big money on a home improvement, thinking that their jobs were fine. They’ll have a couple of months of severance as a cushion, but then what? Can they find new jobs in this economy? Will they get rehired if their former employer’s situation improves? I hope they have family who can help. I think they do.

What about you? And me? I’m doing as much work as I can find. So far, my spouse has a job and we have no financial issues. But just in case, we’re selling some items to build up savings for our next vacation. (I know, it sounds obscene to talk of a vacation in the same breath as a double job loss. But our situations are different--today, at least.) Still, we are being cautious. Instead of charging the trip and planning to pay it off with future income, we’ll put the money in the bank in advance. And if between now and then we do lose our main source of income, well, at least our savings will be that much greater for having built them up.

Are we that perfect on all fronts? Of course not. We just bought a new mattress set and a car warranty insurance policy. Those put us thousands in the hole, even though both purchases are for the express purpose of being able to sleep better at night. They could take a year or more to pay off. Thus it would be nice to continue to have income so we can do exactly that. But if we don’t, will we be okay? Yes. Will we still have our current income a year from now? There’s no way of knowing.

Life’s like that. For a while now I have been aware that our current personal situation of financial peace is likely to be temporary. There will be a family crisis. Or we will have a crisis. Or both. Is there any way to avoid these possibilities? Nope.

So meanwhile, we save a large chunk of money regularly, and then we spend the rest. We are cautious about it, of course. We learned how not to fritter money away in a very hard school. Someone else is spending our national average for eating out or buying fast food meals. Someone else is buying our share of the national average for clothing, and shoes, and cars, just as for decades, someone else has been spending our share of the national average of liquor, cigarettes, and drugs. Are we alone in being savers and careful spenders? No. Plenty of Americans are saving these days. It’s fascinating that the U.S. has gone from a 0% savings rate to 7% in a mere matter of months. People are saving like crazy. They aren’t spending. That makes the economy bad, but it keeps them sleeping at night. Until a job loss, that is.

I like sleeping at night. Which is why I push myself to keep working hard every day, trying to create future income and bring in current revenue, too. I’m not going to let the future take care of itself. My spouse is the same way. That’s why, when we take our vacation, we will feel entitled to it; we’ll have earned it.

What are the rest of you doing? Every day I ask myself if I can or should do more. Are you asking yourself the same question? If there is anything you can do, from turning clutter into cash, to reducing waste and improving the comfort of your home, why not think about taking action? Not all contributions to your happy life need be in cash, after all. And if you create more peace, pleasure, and health through careful management of your current resources, you won’t necessarily need so much cash as you might imagine. Today is a good time to save for the future. Whatever the future turns out to be.

Monday, July 20, 2009

Collectors and Collections

A recent article about baby boomers who grew up playing with certain toys and now as adults feel entitled to expensive toys of a similar nature reminded me of the sad demise of each generation’s hobbies. Just as today’s middle-agers collected Star Trek toys as kids, so today’s nonagenarians as children collected first day airmail covers from all over the world. Back then, the airlines were beginning to establish the routes that exist today, and sometimes, such flights were fraught with dangers. Some of my mom’s airmail covers have scorch marks because the plane went down and most of the mail on it burned.

At one time, about when my mother was middle-aged, those airmail covers were worth a lot of money. The kids who had collected them or yearned for them were middle-aged themselves, and some of them had money to buy their childhood desires at last. I remember my mother selling a few Graf Zeppelin first day covers for hundreds of dollars. And I remember how angry she was that she needed the money and had to break up her collection. Now, at nearly 95, she is too far gone into the twilight of dementia to care. But the people who might have bought the rest of her collection with great enthusiasm are mostly dead. Or at the disposal point in their own lives.

Which got me thinking about my comic books. When people come to my house and see them, they always comment on how valuable my comics must be. I put them straight: I don’t have old Marvel comics. I have Superman DC comics, and most of them are in so-so shape. I read them over and over, or I bought them from other kids, or they were subscription copies that were mailed folded. In other words, these comics are pretty near worthless as collectibles. The good thing about it is that I can enjoy them with a clear conscience instead of feeling that I ought to sell them for big bucks right now.

My mother, who did not like parting with her Graf Zeppelin covers, did not sell her collection when it was worth the most money. She loved her collection and did not want to sell it for ten cents on the dollar to a dealer. And back then, that would have been her most likely option. Now, despite eBay, the value of airmail covers and stamps in general has plummeted. EBay and other online options make it easy for buyers to find sellers and for sellers to compete with each other. This forces prices down if there is more supply than demand. You can buy dozens of such covers for under $100, easily. And stamps, too. And old paper money. And old coins not made of precious metals.

In other words, collectibles have a bust and boom cycle based largely on who cares about them. True, some kids who have seen the recent Spider-Man movies might become deep fans and want the first issue of the comic in which he originally appeared, Amazing Fantasy 15. That comic, which sold on newsstands in 1962 for twelve cents, is currently worth many thousands of dollars. But the majority of the fans who care about that specific comic and want to own it are the ones who were kids when it came out, and who are nearing or at retirement age now. And most of them can only afford to buy an expensive comic (between $500 and $250,000 depending on condition) while they are still working.

So...what does this mean for you and your collectibles? Probably the same thing: that your generation will always value them, but once your generation starts retiring or dying off, the value will plummet because the demand versus the supply will slacken. If you want to get the most money from your collectibles, you have to sell them while they are still valuable.

Yes, it is true that some items will still have residual value as rarities, but remember that online auctions make rarity less likely. Any mass-produced collectible could be competing with thousands more just like it. I once knew a girl who kept the historic issue of Sports Illustrated that had Sammy Sosa on the cover because he broke the record for home runs. But millions of copies were printed, and millions of people kept that issue, thus making the eventual value of it very low indeed. If there are many sellers, it becomes a buyer’s market and prices go down.

There is a time in everyone’s life when they acquire, and rightly so. And there is a time when they should be letting go of things. If you have a large collection of Star Trek or Star Wars memorabilia, this could be the right time to sell most of it. And by the way, don’t be swayed by dealers who want you to part with whole sets. Keep and display just one representative item if that’s what you want to do. But don’t imagine that your collection will send your children to college, because it won’t. Most collections are of items that were produced in the millions. China and silver, too, as so many people have discovered, although with precious metals there is always the option of selling them by weight, with no regard to the artistry of the piece itself. Original works of art are a different story, since they are unique, but they too suffer the vagaries of fashion. If the artist or style of art is hot, you may get an enormous price for yours. If not, the final figure might be disappointing.

Another sad fact about selling collectibles is that unless you personally have the time and energy to sell your collectibles on an auction site, you will only receive the wholesale, dealer’s price for them. Depending on the market, that price could be as little as 10% of the current retail price. Yes, only 10%. If dealers in your kind of collectible all offer you around the same percentage, you know you won’t get a better cut no matter how many more dealers you contact. For many collectibles, 25-33% of the current retail value is considered very good. The cut is different with auction houses, but the principle is the same. The moment you decide not to be the retailer yourself, you lose the majority of the profit on the item because you have to assign it to the middleman who actually makes the sale.

People who resell their used books that are not collectibles already know this. The resale prices they get are extremely low. For a book that originally cost $5.99 at a bookstore, and might have been discounted 10% but then been subject to sales tax, the 17 cents a used bookstore will offer for it is about 3% of the original cost. Three percent! It might make more sense to give the book to a charity and claim the thrift store price as a tax deduction. It is bound to be higher than 17 cents per book. Can you do better on an auction site trying to sell a mass-produced book? No, not if you take into account your time and trouble to market each one individually.

Am I back to exploding the eBay myth? Yes. Although I know people who make good money selling collectibles on this or other auction sites, they are retired and have no other responsibilities. And eBay’s new rules have sent some of them scurrying to collectibles shows to sell their items directly to the public. But that’s a major devotion of time and personal effort. If the object is to get cash no matter how much time it takes, fine. But for most of us, that is not the preferred situation.

Much as we love our possessions, eventually, they must all be disposed of. The ideal is that they go to good homes, to people who will cherish them, either relatives or friends, or even strangers. The next best scenario is that they sell for huge prices, thus justifying the collector’s effort in originally obtaining and then storing them carefully for many years. But the sad reality for most of us is that the items we or our relatives prized simply go to the first dealer who offers a fair price. Or to the junk dealer. Or to the dumpster, if their value is not recognized or has been lost to the vagaries of time. This is what makes the television show, Antiques Roadshow so interesting. At any moment, some odd item that has been taking up space in an attic will be identified as worth a lot of money. Which the owner will not be able to sell it for, alas.

Tuesday, July 7, 2009

Stop Whining about Getting Organized

I don’t know about you, but I am tired of all the whining. People are whining everywhere, about everything. Legitimate beefs, such as lack of a job, lack of a home, lack of a spouse, lack of health care. And stupid complaints, which can be lumped as one big general whine about lacking a mommy to tidy up their messy lives for them.

Have I been overdosing on Clean House, the TV show that finds people who like to buy and hold onto cubic tons of worthless possessions, which they seem to throw up in the air and let lie where they drop, and then live amongst like pigs? Probably. I can (just barely) understand buying too much stuff. I will never understand tossing it about like a burglar and then sitting in the same room with it for years, never cleaning it up.

But it’s not just these crazy people who are addicted to buying and to lazing about who are getting on my nerves. It’s the other people, the smarter people, if you will. Only they don’t act smart. They keep telling me that all they need to do is get organized. They feel overwhelmed, they say. They are looking for a system that will finally help them address their messes. And even more annoying, they keep finding such systems, and claiming that everything will now change. But of course it doesn’t.

Just yesterday I read a NYTimes piece by Ron Lieber about how he had taken a financial health day and finished many of his undone financial tasks. He finally spent some serious time on a long laundry list of unfinished money-related chores. He even claims, as you can read if you follow the link, that he saved a couple of thousand dollars by this day of attention to his finances. But to my mind, he missed the boat completely.

Here’s where I’ll probably start sounding like Suze Orman. Her most potent message has always been to protect you and your loved ones from catastrophe. And this NYTimes reporter freely mentions that he does not have a will even though he has a very young child. He gives himself props for finally (during his day of financial attention) investigating a few lawyer choices to make a will. But he does not finish the day as a man who has a will. He finishes it by rewarding himself with more stuff. He uses up a gift card and buys (overpriced) socks. Great move, Ron. What if you die tomorrow, and your kid’s guardianship has to be determined by a court? Everything gets messy. For the same $15, Lieber could have bought a will via the Internet that would have assigned the guardianship of his child. A simple trip to his bank, and it would be notarized. Done. The kid is safe. But no, the man goes shopping for socks, even though the most important task of his financial day remains undone.

Of course I understand that a will is a complex document, but covering the basics should not be put off because you haven’t got a trust yet, or you’re not sure how to include your spouse’s interests, or whatever picky little details you’re indecisive about. Lieber can always write another will, after lengthy consultation with a high-priced attorney. But in his drive for perfection, he leaves the critical task undone, that of protecting his child.

And that’s the same as what happens with all the whiners who claim that if they could just find the right system to organize their stuff (and of course, the time to do it), all their issues would be resolved. No, they won’t be. It’s not organizing the chaos of your life that is important, it is separating the important from the unimportant. And then doing what is important.

Too many people don’t get this. Their lives feel empty so they fill their physical spaces with clutter, or they act out with addictions and crazy behavior. Which does not get the basic job done, of dealing with the important issues. So stop whining, will you? Look around and identify your most important tasks, the ones that affect the core of your life. And then do them.

Friday, July 3, 2009

The U.S. Debt is No Big Deal

I checked out someone’s blog today and ran across the idea of looking at the U.S. debt clock, which increases as fast as a clock moves in a cartoon. We’re supposed to be scared by this. But it’s all hooey.

The national debt is up. So what? Millions of people have lost jobs, and as a result, are paying no or lower taxes. Some businesses have shut, and are paying no taxes. Others are suffering very low sales, let alone profits, and as a result are paying very little in taxes, too. But when this whole foreclosure-fueled mess clears up, there will be more employment, thus more individuals paying higher taxes. And there will be increased consumerism, thus more companies paying higher taxes.

Isn’t this just going to get worse and worse? No. Why I am so confident? The stock market crumble is based on phony values of cheesy financial instruments finally falling apart. That means that certain of these instruments can eventually be determined to have zero value. It’s paper money; it gets assigned a value.

But the real estate bubble that popped has a big silver lining. “Real estate” is called that because it is based on land, on buildings, on items you can see and touch that have intrinsic value. And guess what? Even as we speak, the millions of people who have some extra money saved up are nosing around the many houses and condos and businesses for sale, looking for bargains. They will eventually buy all the real estate that isn’t totally cursed (such as, with a stream running through the basement and a freeway easement through the front yard). Even bad real estate will eventually be sold, too. Haven’t you ever driven or walked through a city where even the meanest little crooked lot has a building on it...with a business on the first floor and apartments upstairs? Of course you have. Even condemned, tumbledown houses get purchased, to be cleared away for new building.

Yes, overpriced real estate will eventually sell at bargain prices, and someone will take a financial loss on it. But as stupid as the banks have been about going ahead with foreclosures when they should have compromised (it always profits them more to keep the homeowner in the home), the foreclosed houses are selling. Some are even selling like hotcakes. Eventually, this new money in flow will get to individuals who used to have jobs, and they will work again. And then they can go shopping again. Maybe we won’t all be able to spend like drunken sailors anymore. But spending will increase. And then jobs will increase again. And then the tax money will pour into the U.S. government, and the national debt can be brought down.

So here’s the reality: All this country needs for the national debt to get paid down very quickly is more people with good jobs and more businesses making a profit. If we earn more money, we pay more taxes. Thus the national debt gets wiped out. End of story.

Wednesday, July 1, 2009

Limping Along when You Have No Money

Somebody I know does not earn enough money. Period. The ordinary expenses of month-to-month living add up to more than this person earns. Every single unexpected expense is a crisis. It’s a heck of a way to live. Been there, done that. I hope I never have to experience it firsthand again, but life is uncertain. I might be in this same fix myself . Again.

What did I learn from that experience that might help my friend, or might help you? Make the credit card payments on time. Always keep an eye out for a lower finance charge rate. Dispute immediately any erroneous or late charges; the company will usually remove or reduce them if you are an on-time payer. Keep extremely organized about what bills are coming in and what money is expected and on what day, so nothing is wasted and no bill due dates are missed. Ask for discounts whenever you buy anything; most store personnel are authorized to give you a 10 percent discount without a fuss, and some managers will do more. Always look for ways to cut unnecessary expenses, and be ruthless about your own personal extravagances. Your purpose is survival, after all.

Sell stuff you don’t need. If you have the time, be creative about finding ways to sell it. If not, just sell it and use the money to keep going. Buy stuff you need at yard sales or discount stores. But never go around such stores with a shopping cart. Trust me, you don’t need that much stuff, and it’s just too easy to toss in yet another bargain item if you’re pushing a huge cart. Never go shopping aimlessly; stay away from malls and other retail (or etail) establishments whose only purpose is to get you to spend. Of course go shopping for essentials with a list, and stick to the list. As for mall walking, find a new place to get some exercise, so you don’t expose yourself to constant retail temptation. The same goes for etail: Get an adblocker on your computer, so you don’t get distracted by all the temping ads on your favorite sites. Focus on not letting good marketing separate you from your money.

Maintain what you own. Wind up the garden hose and put it in its proper place. Mow the lawn promptly. Wash your windows. Change the oil on your car on schedule, and wash the car, too. That includes vacuuming the inside. Remove that pizza stain from your shirt. Iron your clothes. Change the sheets. Keep your living space clean and uncluttered. Establish a regular housecleaning routine and stick with it, or just make a point of checking on certain dirt indicators and dealing with them promptly. It’s depressing to be broke, look like a slob, and live in a dump. So don’t turn yourself or your space into a mess. Treat your possessions and yourself with respect.

Get more money. No, I’m not kidding. Find another job, a part-time thing, a fill-in for a few hours, do some freelance, or whatever. Being careful with your money, not buying what you don’t need, selling things you don’t need, and maintaining what you have all will help. But they will not solve the basic problem, that you do not earn enough money. The only solution to that is to earn more. Yes, for some people, being foreclosed and having to move to a much smaller place, plus having to sell off their stuff and then not being able to pay for expensive schools, clubs, or pampering services has meant that they in effect earn more. But until and unless you make such a drastic lifestyle change, one that reduces your day-to-day living expenses radically, the only real answer is to earn more money. You won’t do it sitting in front of a television or listening to an iPod or even wandering the net looking for entertainment. You have to make connections with other humans. Get out there and try. An amazing number of people simply don’t have the courage to ask others for work. Don’t be one of those people. Keep asking until you find the work that will finally allow you to live in dignity and with peace of mind.