Monday, December 6, 2010

Scam Tax E-mails

Notification: Your Federal Tax Payment has been Rejected.

Status of your Tax Payment is Declined.

Those are the ominous opening words of the latest e-mail scam I received. Or rather, they would be ominous if in December I was still trying to make a tax payment. In November I also received similar supposedly official notices, from which I can only conclude that these are meant to catch people who do their taxes at the last minute in October, when the standard IRS-allowed filing delay is about to expire. It’s not a payment delay, by the way. It’s a filing delay. Your payment is due April 15. You can take until October 15 to file your return once you execute a simple form asking for more time.

There is invisible code in every line of this scam e-mail, so it’s dangerous to do anything more than delete it as fast as possible.

I pity the fool who believes this scam e-mail. Trust me on this: the IRS does not decline payments. The IRS cheerfully takes your money, and if there is something squirrelly about the situation, has two defaults. Either the IRS sends you a polite note asking what the money was for, or the IRS sends you a letter saying you owe more. The IRS loves money and any money you offer is accepted. Even if you make out the check wrong, the IRS will still cash it.

This whole scam setup raises the question, who is the scammer expecting to fall for this? Someone in deep trouble with the IRS, of course. Would that person be doing e-mail? E-mail more and more is trending old---Baby Boomer age---whereas younger people don’t bother with it. They text or tweet or just don’t write anything. Very old people hardly use computers, though. Most are proud and happy to be computer-free. A few do, and perhaps they are credulous enough to believe such scams. What about people whose grasp of American laws, and IRS behavior, is weak? Ah, there’s a likely subset. The ignorant are the true targets here.

Basically, this scam capitalizes on panic. If your situation with the IRS is already causing you deep fear, or you view the IRS as a confusing and unyielding monolith (pretty accurate view), this scam might touch you on a nerve. Do I have to warn you that it is a scam? I sure hope not. Fake bank notices, fake PayPal notices, fake eBay notices, and so on are cluttering up Inboxes everywhere. Although your Internet service provider may filter most spam, you still have the responsibility of recognizing improper and misleading communications. The IRS is moving toward requiring all taxpayers to e-file, but currently the IRS does not e-mail. It still communicates by snail mail. In duplicate. Don’t expect e-mails from this agency anytime soon.

Here’s a hint. Finish and file your taxes by April 15. Then these scammers won’t have a chance to catch you in a weak moment.

Thursday, October 14, 2010

Dumb Employers Demand the Unlikely

Dumb, dumb, dumb. We've got a terrible unemployment situation in this country, huge numbers of very well-educated and experienced workers fruitlessly looking for jobs, and now Christopher S. Rugaber of the AP reports that "Employer Demands Mean Some Jobs Go Unfilled."

Rugaber explains that companies want new hires to do the jobs that several people did before, so instead of hiring people who have some of these skills, they are holding out for people who have skills in multiple areas. These people are a rarity. After all, previously, employees were encouraged to specialize and were punished for having too many areas of expertise--punished by not getting hired. Now, the reverse is happening, and companies would rather not hire unless they can find what HR pros call "purple squirrels." Rare indeed.

I suppose it looks good for the company's bottom line to show no hiring costs other than endless interviewing. To me, it's very obvious that these companies are being incredibly stupid. They might as well declare bankruptcy now, because they can't build a business or maintain a competitive edge by refusing to bring in fresh blood.

Imagine if a big publisher like Random House said, "We want to start an epublishing arm, but we are only willing to hire someone who has done it before AND ALSO has run a conventional publishing company." The pool of people who have been directly involved with running an epublishing venture is growing, but it's still a very small number of people, most of them scrappy outsiders, because this is a brand new part of publishing. The pool of people who have run a conventional publishing company may be larger, but it's also a small pool, mostly preppy insiders, because those people tend to retire and write books. Now do the Venn diagram for these two, and you get, oh, maybe ten or twenty people, tops, who have the dual expertise. I am probably erring on the generous side; it's more likely to be five people, max. Why? Because epublishing is a new field combining with an old field in a new way that is changing by the minute. And your company intends to wait it out until the "perfect person" is found? Dumb. Many companies are not this foolish, and that's why college students who are excellent bloggers get hired by major media firms on graduation. Media firms can't afford to wait for someone who goes and gets an M.S. in Blogging, and they know it. Apparently, many other American companies do not understand what they are losing every day by not hiring.

As much as companies might think that the answer to their fiscal issues is to hire (and of course routinely overwork) people with super skills in disparate but predefined areas, that is not how business grows. Companies that would rather wait to find their perfect employee will lose out to companies willing to take the "risk" of the imperfect new employee. Since it's a speed game in the marketplace, and whoever gets there first often wins the bulk of the industry business, that could be a costly mistake.

Just sayin'. Dumb.

Sunday, October 3, 2010

A Few Social Security Tips, Just for Fun

Not that you are old enough to qualify for Social Security, but let’s talk about it anyway. Don’t believe you have understood everything you pick up from idle chatter or even from various official and unofficial websites. When it’s nearing time to file for Social Security, go in and talk to a human. Otherwise, you may misinterpret what you are entitled to, and then be disappointed at how little your monthly payment is. I know somebody who thought that if claiming benefits was delayed a few months, the payments could rise 8% a month. Not so. We have many false ideas about Social Security. It pays to do some investigating.

Of course there will be Social Security when you retire. Who would dare to vote it down? As people often say, Social Security is the third rail of American politics; messing with it is the easiest way to commit political suicide. Millions of people have looked forward all their lives to receiving it. They do not intend to be disappointed. I include myself. Sure, people bring it up as something to be tinkered with. There even are a few diehards who still talk about putting it all in the stock market, despite the stock market’s recent dramatic dips. Right. Ain’t gonna happen.

On the other hand, Social Security payments are not a lot of money. The average woman gets just $11,000 a year, which is less than $1,000 a month. Try paying for all your living expenses on that, and footing some medical costs, too. Cat food will start looking more likely as a grocery item. The average man can expect higher payments, nearer $14,000 a year. Still not a princely sum.

If you want your Social Security checks to be larger, what can you do about it right now regardless of your age? Earn more money. Social Security is indexed to your lifetime earnings. It also is essential to earn for 35 years, because if you don’t, any zero-earning years will be averaged in. Ouch. That will lower benefits substantially. To overcome a history of some zero-earning years---very likely for women who take time out to raise children or care for elderly parents, or for the few men who do the same---consider taking part-time jobs or not claiming business expenses against income if you run a small home business. More income will result in more Social Security tax paid this year, true, but also in a larger Social Security check for years to come.

Even without working more, many women (and some men) have the option of switching from their own benefits to drawing on those of their spouses, or ex-spouses from long-term marriages. The catch is that the spouse must be old enough to qualify for Social Security. Thus, if a woman is older than her husband, she’ll have to use her own benefits first, and then when her husband reaches retirement age she can draw on his. Or if a husband is older than his wife but wants to draw on her benefits, he’ll have to wait until she hits retirement age. Why bother switching from one set of benefits to another? Simple dollars and cents. In most cases, men have earned more than women, and so a husband’s Social Security benefits will be larger than a wife’s.

What about taking benefits early, at age 62? Try to avoid this. The loss of up to 30% of your lifetime income from Social Security is not worth it unless you have good reason to believe you won’t live past age 73. It takes approximately 11 years for the advantage of getting benefits early to become the disadvantage of getting a lower rate the rest of your life. Thus for men, with their far lower life expectancy, taking benefits early may make sense; their average life expectancy is only 75. For women, who are likelier to live to 85 or beyond, taking Social Security early is a mistake. Even if they switch to a husband’s higher benefits, if women take Social Security early, they don’t receive full benefits. Who among us is average? Do we want to risk playing the odds?

By the way, Social Security is not tax-free income unless you have no other income. A lot of people remember the old system and don’t understand the new one. Years ago, the Social Security Administration construed all of the payments issued in the first years of retirement as the return of previously taxed dollars you contributed in the past. Thus in the first couple of years of receiving Social Security, regardless of other income, most or all of the Social Security payments received were not taxable. If people died in the first years after drawing on Social Security, they might never have had any Social Security income that was taxable. However, the government changed to a prorating system a while back, in part no doubt because of longer life expectancies. Under this system, a small percentage of each year’s Social Security income is considered nontaxable, i.e., the return of your own already taxed contributions. It takes about 17 years to earn that out, thus giving a person with other taxable income a bit of a break. This is significant because if you have income other than Social Security, some of it may be taxable. There’s a cute little ratio by which your Social Security income is compared to your other income. offers a chart and an explanation. The IRS also has an explanation. Neither explanation is particularly complicated; it is the whole rigmarole of taking half your Social Security, adding your other taxable to income to it, comparing it to a base amount dependent on your marital status, and then subtracting the excess amount over the base that I find confusing. That determines the amount that is federally taxable. (At the state level, formulas are completely different and vary widely.) Again, if you have no other income, all your Social Security is likely to be tax free. I say likely because every description hedges on this. There are mitigating circumstances, but most explanations do not cover them. Frankly, I can’t imagine what they would be.

Clear as mud? I thought so. Maybe you have decades to go before you contemplate Social Security. Maybe you think it will be dismantled (over my dead body) by the time you’re ready for retirement. Maybe all these rules will change between now and when you are eligible to file for Social Security benefits. Whatever your situation, Social Security does affect you in the form of a tax on your earnings, and a potential lifetime pension. So pay attention. You are in the program whether you like it or not.

Sunday, August 15, 2010

Enough About Chelsea’s Wedding

Okay, it is safe to rant now? Chelsea Clinton is safely married, and we can all relax. We didn’t get a last-minute invite to the Wedding of the Year (must’ve been a slow social year), so now we can go back to being middle class and getting scolded for every choice we make. Instead of talking about Chelsea, whose family is rich and does not need to think about setting a modest budget for a wedding, let’s talk about us.

I got married a long time ago but I paid for all the expenses myself out of current income. Did overtime, saved my extra pay, wrote a lot of checks, and paid for the honeymoon out of salary as the bills came in and the paychecks did, too. No wedding debt, and though no day is perfect, the wedding went off well. Best of all, we’re still happily married. I ended up with a fancier wedding than originally planned, because there were so many relatives to please, or not please, as the case may be. (And the flowers cost a fortune.) For most people, a big formal wedding is a once-in-a lifetime event. Sure, if you get married a second or third time, maybe that ceremony will be even more meaningful. Maybe not. Or maybe you’ll celebrate your long-lasting marriage by redoing it all as mature adults and repeating the vows. Regardless, a wedding is a major rite of passage, and people go all out to celebrate it.

I don’t know if I should give Brett Arends of the Wall Street Journal credit for at least trying to write a sensible article about Chelsea Clinton’s expensive wedding, or just jump all over him for how ridiculous his article is. His basic problem seems to be that he knows the cost of everything and the value of nothing. My favorite line is, “But if your money earns, say, 4% a year above inflation, every dollar you save at age 20 will grow to about $6 by the time you retire. So that $17,500 will grow to about $100,000.” The $17,500 figure is the median cost of a wedding in America this year. It sounds as if we’re really missing out on a lot of financial growth by daring to spend big money on a wedding.

Here’s the problem with that kind of thinking: What investment reliably earns you 4% above inflation? In what dreamtime is he living? I’ve had a SEP IRA for almost a decade now, index funds, non-index funds, it doesn’t matter. That sick puppy of a stock market account has never yet made me a dollar. Never. Forget about a dollar over inflation. And 4% over? I’m hysterical with laughter. Wall Street mavens might make this kind of money by playing the market. Ordinary people who have other things to do with their lives besides follow the stock market do not make the profits he confidently claims that a wedding will do us out of.

In my book, paying for a wedding is a sure thing, unless there’s some question about whether either the groom or the bride will show up. You organize the affair, get the best of everything you can afford, pay back old social obligations, have a good time, and have a lovely set of memories, often captured on film, to remember. This frankly will be a lot more fun in our old age than the knowledge that there might be an extra few dollars in the bank account. Because it’s only going to be a few dollars, folks. A pitiful few.

So please, plan the biggest wedding you can afford. Invite everybody you know. (Don’t do a destination wedding unless all your pals are rich, because no one will come and all the invitees will hate you.) Enjoy your big day. I hope Chelsea enjoyed hers.

Thursday, July 22, 2010

Should We Stop Buying Clothes?

My friend James likes to send me (and a circle of his friends and relatives) whatever NY Times articles strike his fancy. We keep telling James to launch his own blog, but he dithers. This is the blog post that James should have written.

Apparently, there is a movement afoot to get people—mostly women—to swear off unnecessary clothing purchases. This Times article details just how small the movement is at the moment—under two hundred people have signed the pledge—which ought to tell us something about how unpopular saying no to buying more clothes really is.

My friend James virtuously says:

I have a simple rule for clothing, and most other stuff: I have a set number of items and if anything new comes in something has to go out. As for the number of items, I just decided one day that, “That's enough.” I don't need anything more.

I am haunted by the Fredrick Pohl story "The Midas Plague."

I haven’t read that story, but I have my own story to relate, about how noxious it is to be in close quarters with men who save money on shirt laundering or uniform cleaning by re-wearing clothes they have sweated in. My god, these men stank. If this is you, stop immediately. Want a date or a promotion? Wash yourself, and wash your clothes, too.

My vote therefore is for people to own enough clothing to have more than a week’s supply, if they leave their homes to go to work. If they work at home and have access to daily laundry, they can have three days’ supply, although this hardly gives much leeway; they’d have to do laundry three times a week. If they live alone, it would be more efficient of resources to own more clothes and do one big batch of laundry once a week.

Who does laundry, you laugh. Okay, so you send all your clothes to the dry cleaners, who mostly still imbue them with poisonous chemicals. I have personally seen people picking up hundreds of dollars worth of dry cleaning. If that’s you, you might want to think about the deleterious effect of the chemicals on the planet and your health, and the deleterious effect of the cleaning costs on your wallet.

Still, I do recommend that if you refuse to learn to iron (it’s easy enough), or if you are in an image-sensitive profession, or if you simply do not have time to do laundry properly, you have professionals clean and iron your clothing. An ambassador I once worked with wore an impressively ironed silk shirt, even though his embassy was basically decrepit. Now he’s the president of his country.

Most of us are pretty good at keeping clean and pressed. What too many Americans do is shop for excess clothing. It’s not necessary, except if you work in the fashion or movie industry—in which case, you should be getting designer duds at super insider discounts, not buying retail. In New York City, you’re considered a sucker if you buy at retail. The city is filled with suckers buying 5th Avenue merchandise. Only some of those shoppers are rich. For most of us, it’s not a good idea to buy on 5th Avenue—or its mall equivalent. That’s the heart of the problem, of course. A preponderance of Americans tries to spend as if they are rich.

That’s what this movement is all about, reining in people who have no business wasting their discretionary income on clothes, more clothes, and still more clothes. By now, those of you who have been reading this blog for a while know that I am totally anti-cluttering. Owning too many clothes is just another form of cluttering.

Somewhere in between the complete insanity of people who own closet after closet of clothing, and the insensitivity of people who always show up in the same shirt, sanity lies. As I have said before, it is especially important that women, who for the first time in history have substantial discretionary income and plenty of ability to use it to influence our culture and our institutions directly, stop wasting their money on trivial crap. We can be so much bigger than this, if we only let ourselves. The endless search for the next “perfect pair of black pants” is a tragic waste on all counts.

Tuesday, July 13, 2010

It's Not Small Change

The latest AARP Bulletin--my vote for Most Depressing Magazine in America because it's always full of bad news about helpless and naive elderly people being ripped off and pushed around--the latest AARP Bulletin claims that the average American family today has over $15,788 in credit card debt.

Huh? Last time I checked, it was around $9,000, and rising about $1,000 per year. Not good, and the trend was terrible, but way different from 15k. Since then, we've entered the Great Recession, which in theory would have made the trend lower. Except for people who lost jobs and then had to live on their credit cards. Something must have changed to get the whopping 15k figure.

I Googled the concept. quotes Federal Reserve stats of $5,100, but says stats are hard to come by as there is no official national way of measuring.

Credit has the same $15,788 as the AARP. Here's how they got that figure:

"Calculated by dividing the total revolving debt in the U.S. ($852.6 billion as of March 2010 data, as listed in the Federal Reserve's May 2010 report on consumer credit) by the estimated number of households carrying credit card debt (54 million)."

I'm not feeling the believability factor here, especially since in the last two years we've gone from a nation of spenders to a nation of savers, in a big way. Our savings rate is over 3%, up from levels variously calculated at zero or even less. You can see from the spike that the savings rate went way, way up in early 2009, after the market tanked and while we were still receiving bad economic news on a seemingly daily basis. People socked away 5% then. Unfortunately, we appear to be saving less now. Still, where does the $15,788 come from?

I checked out my old pal, Suze Orman, who doesn't serve up the current estimate for household credit card debt but does say the total we now owe is over $900 billion. Yikes. That's over $16,666 in debt per household. Unless more households are in debt.

Sometimes these numbers are like the total fifths of whiskey I supposedly consume per year. Since I don't drink, somebody else must be doing more than their share. I'm guessing that some households are deeply in credit card debt (that's an easy guess, isn't it?), while others are happily without any.

The big question is, which are you? The statistical person with about $5,100 in credit card debt--enough to make you a bit uncomfortable but not terribly alarmed, or the construct household with $15,788--which after all is $7,894 per adult in a two-person family, not exactly chump change--who is beginning to feel seriously pinched?

And what can you do about it today? Because you know this debt thing is a big, ugly weight that's only likely to get bigger, unless you change something about how you spend money. That's all. You make a change, and the situation changes. As we can see from that teeny tiny chart from the Department of Commerce, when there's a will, the financial picture can change quite dramatically in a hurry. I wonder if today is the day you make a change?

Friday, June 18, 2010

Blog Your Own Damn Way Out of Debt

On the radio, they tell me that if I owe at least $10,000 in credit card debt, I “qualify for a free help program.” It's an obvious come-on from a debt consolidator who wants me to take out a huge loan and get further into debt. Now, Woman’s Day Magazine on their site is searching for someone in debt who will write blog posts about her misery. She’ll get paid $50 for every post she writes spilling her guts to the world about her bad financial habits. This information brought to you courtesy of Laura Rowley’s Money and Happiness blog. She promises to provide tips and advice to help the woman chosen for this lucky experiment.

Too bad I don’t qualify for either offer. No, wait. Good for me. I’m not in debt.

How about you? Are you willing to go on television on some cable show or be profiled repeatedly on the same blog as you daily or weekly or monthly reveal every stupid money mistake you make? Didn’t think so. By definition, people who make these kinds of deals are desperate. They have given up, so they seize upon the idea of laying their problems at someone else’s feet.

Blogging about being in debt is a fine idea, though, and here’s why. The Internet is public. Most people in debt are keeping it a secret, and the shame is almost as overwhelming as the debt itself. Yes, it is traditional in this country (and many others, no doubt) to keep our money situation as very private business, even more private than our sex lives. But does this make us happy? How many people do we know who are deeply in debt but still trying to live a lie, to keep up with the image of prosperity they have been faking through the foolish use of credit? More than you might think. Years ago I read a warning to be an alert driver; it claimed that 10 percent of people driving at any time are drunk, drugged, high, sobbing hysterically, or otherwise seriously impaired. (We can now add texting and using their cell phones instead of paying attention to the road.) Bottom line, what we see is not the truth. Many people we know who act as if they have plenty of money, who spend with a large hand, are secretly in debt and frantic to get out from under. But their sense of amour propre continues to compel them to fake it.

Maybe blogging, even if no one reads your blog because you never tell anyone about it, can help you get control of your financial situation. You don’t need to take out a debt consolidation loan, or become the paid show dog of some multimillion dollar company, to blog your own damn way out of debt. Start by creating your blog, which as you know is free. Then consider topics, such as: How It Started, or How it Snowballed, or What I Hate the Most about Being in Debt.

Blogging is like thinking out loud. If you aren’t ready to tell friends (the real ones) and relatives (the nontoxic ones) that you are in debt, tell the world anonymously through your blog. Your words could help you see your life in a new light, and possibly, you’ll find your way out of debt.

Wednesday, June 2, 2010

It Helps If You Have a Job

We all want financial stability and comfort, but those are hard to achieve without a job that pays well enough and offers a reasonable likelihood of employment next week, next month, or even next year.

My favorite book about job hunting ever, bar none, is called Hardball Job Hunting Tactics, written by Dick Wright, and published in 1983. It apparently wasn’t a big favorite with people who buy books, because I don’t see that it’s in print today, although it is available from various resellers used. That’s probably because Hardball Job Hunting Tactics is written for the kind of person who doesn’t read books. Among the pieces of advice Wright gives is what to do about getting a reference from your former boss--when your final official act on that job was to punch him out. Also, how to describe your time on the prison detail mowing the center strips of state highways as a landscaping job on your resume. And more. Not really aimed at the reading set, as you can see, although the tips in the book could have been a good guide for a job counselor, social worker, or probation officer, or any other person trying to help someone down on his luck through his own folly. It’s one of the most honest job-hunting books I’ve ever read, taking real situations that are negative and showing how to make the best of them. In that respect, the book’s advice is relevant to us all. Perhaps in the Internet age, some of Wright’s suggested tactics wouldn’t work, but plenty are still relevant to the job-seeking process today. If you have screwed up in just about every way possible on the job, I recommend you check out a copy of Hardball Job Hunting Tactics
In contrast to Wright’s book is Harvey Mackay’s latest, Use Your Head to Get Your Foot in the Door. The subtitle is Job Search Secrets No One Else Will Tell You. I like Mackay, and I’ve read previous books by him and thought they were pretty good. That’s why I picked up this one, even though he is no young whippersnapper. In fact, all the testimonials at the beginning of his new book are from People Who Are Very Old. Norman Vincent Peale, for crying out loud. But Mackay is not wasting anyone’s time by dishing out old-fashioned advice. Instead, he is completely up to date about how employment and job hunting have changed in the twenty-first century. He makes no bones about how the onus is now 100 percent on the shoulders of the individual, and likely to remain so. Sure, companies make the traditional noises they always have, but today, those noises are often ominous warnings of layoffs to come. Mackay’s book covers the dark side, losing your job or not getting a promotion, and the other side, looking for work. Bottom line, Mackay advises what others have been saying for a while now: it’s all up to you. You can’t just sit in a corner and pay no attention. And if you did, and find yourself on the sidewalk, it’s time to network, because according to Mackay, networking is the serious way to find a job today.

Networking well requires the ability to make impersonal-yet-personal contact with people with whom you have little in common, whom you hardly know. That’s the truth of it. For Mackay, who is at heart a salesman, networking does not feel insincere. He has nothing but admiration for job seekers who go to heroic lengths to investigate any possible job leads and work any possible career contacts. His interview with a young woman in her twenties shows just how much effort she put into making connection after connection until she finally found the right fit for her. This type of person is likely to ace interviews and get job offers.

Mackay does not underplay the amount of work it takes to find a place to work. Winning job-seekers do significant prior background research on potential hirers. We’ve all heard about doing that, but how many of us have penetrated beyond the company’s bland website to contacts with people who can tell us something about what’s really going on there? You might ask why we should know so much about a company. Here’s why (true story): Say you’ve received a job offer and you move your family at your own expense from out of state in order to take the job. And then, a month in, you learn that your new employer is embroiled in a multimillion dollar lawsuit. If the company loses, it’ll go under. Wouldn’t it be better to know about the lawsuit before you accept the offer? Yes.

Mackay also cites the stories of successful job hunters who refuse to take no for an answer, and in so doing are impressive enough to get a foot in the door. I know a young woman who has an aggressive, sales-oriented personality. She has no fear of talking to strangers and trying to convince them to do business with her company, whatever that company might be. She wants to build sales and gain new clients. Is it any surprise that she has no trouble finding employment?

But what about the rest of us, the ones who are not sales-oriented? The shy ones, the awkward ones, the ones who cannot fake sincerity? The sad truth is that except in high-level technical and professional jobs, and low-level manual and service labor jobs, personality is what gets us hired. That’s it. If they like you, they hire you. We do not all have to be salespeople as such. But we do need to be able to sell ourselves, our valuable and appealing qualities, to the right people, and know how to pass with the people who will never “get” us. That’s a major hurdle for most of us. Mackay does not give specific ideas to transform our personalities (even temporarily) into the successful sales type, but he does give very detailed advice on how to weather intense job interviews with their trick questions, how to negotiate, and many other valuable pieces of information. Still, like a lot of confident people, it does not occur to him that throwing ourselves over the personality hurdle is the biggest obstacle to success. We can see the truth of what he’s describing, but we can’t see ourselves in that picture.

What can help the rest of us, the insecure ones, the ones with difficult personalities, the people with obvious strikes against us like age, gender, race, infirmities, weird tics, and so on? Maybe not this book’s advice directly, but some of the clues and the sources Mackay hands out. He generously includes descriptions of other books that tackle in depth some of the issues that hold many of us back. And for those Baby Boomers looking for work (again!) he included a link I am happy to pass on, to the MetLife Study of the New Realities of the Job Market for Aging Baby Boomers. Its official title is “Buddy Can You Spare a Job?” This study is an eye-opener that could save many of us, regardless of age, from negative job-hunting experiences. It might even be as valuable in determining your personal strengths and weaknesses as an employee as Wright’s Hardball Job Hunting Tactics. Still my favorite.

Monday, May 17, 2010

Penny Pinching or Profligacy?

I don’t want to constantly rag on the NY Times or the Washington Post, but they are two of the nation’s most widely read and influential newspapers. (Even though printed newspapers are a dying breed, they still are read by many people, especially online.) Here’s yet another article about personal finance, whose headline says one thing but whose body says another. Since headline writers are a different group from reporters or columnists (although I suppose with newspapers collapsing, those jobs might be collapsing, too), the writer of this article on personal finance probably is not at fault for the misdirection of its title. The headline says, “Penny-Pinching Is Fine, but It Won’t Save the Profligate,” but the article by Alina Tugend mostly talks about small economies and how little difference they make in our financial bottom line. Nothing about the profligate as a group.

Yet the profligate in our society are the leaders whom we follow into hell. They’re the ones who started installing home theaters in their houses, so we all had to have them, too. Now they’ve got “outdoor rooms” instead of decks or patios, so vast numbers of us think we have to somehow take the indoors (no bugs) outdoors (bugs). No way. About the only advantage I can see to fancy outdoor cooking setups is that they appear to be mostly used by husbands. Which might mean that the wives don’t have to spend the whole party inside anymore. Or not, because who makes potato salad on a barbecue?

Tugend interviewed a couple of experts and cobbled together a mishmash of advice. Although the experts talked about making big money-saving choices, she focused more on smaller changes, the less painful cuts, if you will. Then she trotted out the old cliché about eating out less making a huge difference, as if it’s a major revelation. I’ve got news for her and for America: Grandma isn’t in the kitchen anymore, and neither is Mom. Constant eating out (or taking out, or ordering in) is now a common way of life for most Americans, so we might as well move on to the next item where we can be penny pinchers. Only in the case of dire financial crisis will we change this new paradigm. Tugend may be eating out a little less, but she’s still eating out. The handwriting has long been on the wall for the rest of America. Every crossroads has as many pizza places as it has gas stations. Don’t expect this to change.

What about the other big item one of her experts cites? Don’t carry a cellphone? Even Tugend knows this is ridiculous. More and more people are giving up landlines in favor of cellphones. It makes sense if you don’t know where you’ll be living next year because you’ve lost your job and may lose your home. At least your phone number won’t change when you’re living in the shelter. Why doesn’t Tugend challenge her expert and engage in a dialogue about the unrealistic expectations inherent in such advice? Because this is an article about penny pinching, I guess, and a sad little waste of space it is. I’m still waiting to hear about the profligate.

Why skim the surface of a tough issue? That's my real objection to this kind of article. Oh, it satisfies all the rules we learned in journalism school in our reporting classes. But it only touches the highlights, and it fools us, by dipping into the reporter's personal choices, into thinking that the message has significance. It doesn't, because it's a mixed message that blandly ignores our realities.

Perhaps I should check out a selection of some dumb online articles on personal finance, instead of ragging on the poor old NYTimes and its hardworking reporter who at least called two experts before she wrote this article. I should give equal opportunity to the banality of the web. I promise I will in future.

Friday, May 14, 2010

One Final Word About Clutter

One more post about clutter and then I’m on to other topics. Decluttering requires constant vigilance, but it is easy if we keep our decluttering muscles limber. Gail Blanke’s book Throw Out Fifty Things is a nice guide to room-by-room decluttering, and she of course includes lots of stories about other people and their clutter issues. This is fun reading for those of us who want to be assured that we aren’t as bad as the Collyer brothers—at least, not yet. Blanke has a good website and some helpful video on it, to encourage us to take the plunge and declutter.

Of course her advice is simplistic; it has to be. Most serious clutterers have very complicated mental justifications for their continued ownership of anything, and no book is long enough to present the opposing arguments for each and every retained possession. I read in a comments skein on Salon about someone whose mother insisted there was still edible food in her basement—which was flooded with three feet of water. Yuck.

The majority of us are not so far gone yet, so the issue is to keep from clogging up our surroundings. Here’s where we ought to honor our brains more than we do. Our memories of the people we have loved, the places we have been, and every other experience in our lives are in our minds. Souvenirs may jog some memories, but if we lost everything in a fire we would still have those memories. Some people do lose everything, but when they talk about what stings the most it is not piles of expired food or stacks of newspapers that they mourn. It is not receipts, broken toys, and old clothing. It is not even familiar furniture and beautiful accessories, though certainly people spare a sigh for them. It is family photos. Family photos are all we need. These days we can scan them all and put them on CD or DVD and toss extra copies into our safe deposit boxes at the bank, post them on the Internet, archive them on the net also, and of course e-mail them to family members. Once we have safeguarded those photos, we can breathe easy. The rest of what we currently own can join the choir invisible if need be.

I don’t know what you’re keeping, so I won’t tell you what to get rid of. I’ve started my own list of fifty things I have thrown out, courtesy of Gail Blanke’s encouragement. Like her, I am not counting multiples; if I toss a dozen pairs of socks, they count as one item. It may not seem quite fair, and it may not be entirely helpful to people who think that their issue is that they have hundreds of one particular item that need culling. Blanke’s concept is that we all have excess stuff in many categories (and rooms), and attaining the fifty-tossed goal means checking everything out, going from room to room and drawer to drawer if need be. She believes that we gather momentum as we go, and that’s why the goal of tossing fifty items is such a high number. I agree.

So, start your own list, and remember that “throwing out” means removing it from your household. You can recycle, pass on to friends, give to charity, sell, or whatever.

My one caveat about recycling/giving to charity/selling at a yard sale is that if the condition of the item is not good enough for you to use it today, it’s not good enough for anyone else, either. No one needs your stained, broken, and worn-out possessions, so do us all a favor and deposit them in the proper places: textile and metal recycling or the like, or the trash. Yes, the trash. Landfills already have machines that can extract everything of value that you may toss in the trash, so don’t worry too much about not being able to directly recycle every single thing you’re done with. As I’ve said before, the universe will take care of this; it’s not your responsibility.

Good luck!

Thursday, May 13, 2010

Deciding Not to Clutter

How do we keep from becoming clutterers/hoarders? Call it a disease or call it a bad habit, cluttering is a threat to many of us because of the increasing volume of our possessions. We must be diligent in removing any excess we have. As I said in my last post, only when we’ve divested, detoxed, and learned how to avoid our acquiring triggers can we face who we want to be and how we want to live.

If we don’t want to slide into becoming clutterers (and then hoarders), we have to make decisions about the things we keep. We can’t keep acquiring without deciding. That’s the basic. Every item we already own must constantly be subjected to a test: Is this useful to me today? Today, does this bicycle work? Today, will I eat off this chipped plate? Today, is this silver tray adding beauty to my world?

Beauty has as much right to be in our lives as utility. I have a silver tray sitting in my foyer, and that’s where we put our outgoing mail. Since I was a child watching movies, I’ve wanted a silver tray to hold my mail, and friends gave me one. Every time I see that tray, it delights me. Don’t be afraid to keep your own version of my silver tray. Just remember I’m talking about one tray, not fifty.

Ah, multiples. If one tray is good, surely two are better? No. I bought another silver tray at a thrift store. Now I have two trays, almost exactly alike. The sad truth is that I have little or no use for that second tray, and every time I look at it I am reminded that it is an extra I don’t need. Maybe once or twice a year, for a party, I’ll find something to put on it. Is it worth keeping for years under those conditions, especially since it has no personal associations? No. Even though a tray hardly takes up any space physically, it does take up psychic space, and I am responsible for keeping this additional possession in good condition, for displaying, storing, and using it. It’s a burden. It is clutter. I could declare that I am a collector of silver trays, but that would be pointless. These trays are manufactured in the millions, and they all look the same, and a stack of silver trays is neither more beautiful nor more functional than just the one I use every day for mail. Substitute any other possession for my second silver tray and subject it to the same test. Do you use it daily? Does it add beauty or merely a burden of upkeep to your life? Do you have space for it in your home?

Some of us imagine that by saying we collect certain items, we are free from making any decisions about them, but this is not true. Collections should have upper limits, and proper collections are well maintained and displayed. If something new comes in, something old should go out. True collectors constantly cull their treasures and keep only the best. Most of us collect items of mass manufacture, so by definition it is impossible to own them all. We can’t own every coffee mug that was ever made, and why should we? By keeping up with the quality of our collections and removing the least attractive or least functional items, we can ensure that they don’t turn into an ocean of clutter. Yes, Star Trek fans, I am talking to you.

A third type of clutter is junk. Junk mail, old wrappers and cartons, stuff that doesn’t work, and so on. We don’t need to spend a lot of time thinking about these possessions. We simply have to decide to get rid of them. Strangely, a lot of us don’t, not even our junk mail. My mother used to ruthlessly rip junk mail in half the moment she recognized what it was. Today, you may want to send all your junk mail through a shredder, but the concept is the same: ditch it fast. Have the shredder set up right next to where you open your mail. There even are special junk mail shredders that can handle unopened junk mail if opening it is an issue. As for the rest of the junk, with all the recycling available today, few of us have any excuse for stockpiling empty cartons, dead batteries, broken appliances, or any other category of of useless possession. If you don’t have curbside pickup for everything, there’s probably some place nearby where you can take the rest of your junk. Just load up and head out. And don’t visit any thrift stores or yard sales on the way home.

You say it’s not that simple, that you must think about this. That’s the road to cluttering, which leads to hoarding. We can let go of our unneeded possessions and trust in the universe to deal with them. We are not responsible for their ultimate destination. My second silver tray can go back to a thrift shop. It’s shined up now, so perhaps the charity can get a couple more dollars for it the next time around.

Monday, May 10, 2010

Attaining Our True Desires versus Hoarding

In a perfect world, we would not fritter away our time or our money acquiring possessions that don’t help us attain our true desires. Cluttering, and its advanced stage, hoarding, is the act of burying our true hopes and needs under junk. The junk may look pretty and be neatly organized, or it may look trashy and be thrown helter-skelter throughout our living areas, or it may be secreted away in rented storage spaces or garages or attics. How we maintain the stuff is hardly meaningful. What counts is why it is there.

I could go into a long diversion and discuss our stated intentions of honoring the value of the work put into crafting these items, or of the sentimental value of retaining every possession once owned by a beloved relative, or of the possibility that these objects might one day prove of practical use to us. But what’s the point? We’re completely fooling ourselves if we play this game. The reality is that if our lives are scary or empty or too difficult to face, retreating into a passionate relationship with possessions is one method of temporary escape. Some people hide behind alcohol, drugs, food, or sex with strangers. More and more Americans hide behind massive quantities of possessions, because they are legal, cheap, and easy to acquire. The very act of obtaining them gives us a measurable high. That’s right; researchers have proven that a part of the brain lights up when we get new stuff. Unfortunately, that pleasure area of our brain does not stay lit, and we have to keep replicating the experience to get the same high. It’s exactly like drug addiction.

Meanwhile, what we truly want in life is buried somewhere under the rubble. That’s why it’s important to talk about what we want our lives to be, and not about the clutter itself. Sensitive therapists and decluttering experts ask us what we want our home to look like, how we want to feel when we walk into our bedroom, for instance, or our kitchen. They want to know what we see ourselves doing in an ideal life. They want to draw us out of hiding, and empower us to have the courage to live authentic lives, and free ourselves from the cycle of addiction.

How do we identify our true desires so we can acquire what we most want in life? We ask ourselves what we want. What would make us happy? We make lists, if need be, of all the things we want to do before we die, of all the places we want to visit, or people we want to meet, or accomplishments we want to achieve. Then we consider, logically, which ones we can do, and how to do them. It’s that simple and that scary. Instead of living in a haze of confusion brought about by constantly collecting new possessions, we face the reality of who we are right now, and who we want to be tomorrow. Of course it’s frightening. Buying a new blouse or a new chair or trash picking an old bookcase or yard sailing a completely unnecessary lamp might be a lot easier. But we’ve already discovered that things themselves do not bring us lasting satisfaction.

Sometimes we need to fine tune our dreams. If we dream of travel, we need to pick a place to visit, and research how we could get there and what we would do there and every other detail. A trip to Paris is not that expensive compared to a weekly trip to the mall or the discount store. If we want an education or to live somewhere different or to learn the piano or even to start dating, listing these goals and breaking them into their component parts makes accomplishing them easier. Everyone has goals, although some of us will deny it until pressed. None of us wants to wake up tomorrow without a sense of purpose.

Cluttering our lives with possessions obscures our true desires, and that’s why cluttering usually has to stop before we can achieve those desires. People in the throes of addiction have to go through rehab. They have to stop the addictive behavior and then get the toxins out of their system. Then they have to learn their triggers and practice substitute behaviors that will help them to cope with the stress that previously has sent them to their drug of choice. No one expects an alcoholic to get sober while living in a bar, and clutterers can’t continue to live in their messes and hope to get their heads straight at the same time. It might seem possible that a clutterer could simply lock the door and walk away from a mess and start a new life. But that doesn’t happen. Clutterers need to deal with their stuff and get it off their backs.

If you think you aren’t quite a clutterer or hoarder yet, but are headed in that direction with your collection of this or your collection of that, now is the time to ask yourself if your collections are helping you attain your true desires. If not, it’s time to be diligent in shedding the excess.

More about reducing clutter next time.

Tuesday, May 4, 2010

Too Much Stuff

I promised in my last post that I would not merely rant against hoarding, and so here is where I delve into the dilemmas we all face about possessions, things, stuff. It’s a two-part issue. There are many decisions we make when we acquire things, and many other decisions we make when we choose to keep things. Even no decision at all is a decision.

First let’s talk about acquiring possessions. Acquiring new possessions may be the biggest threat we face, yet it is behavior that our culture pushes on us. Our economy runs on the consumer model. Since at least the end of World War II, manufacturers have deliberately created objects that are not meant to last a lifetime. This is called planned obsolescence: the parts are manufactured to fail. When companies progressed to using mostly plastic parts, they converted to parts that barely function at all, that break easily and cannot be repaired even with Crazy Glue. In the past, there were many repair shops in our country. Now there are very few, because it is cheaper to buy a brand new television than to have one repaired. To push us to make the transition from keeping objects to tossing them in favor of brand new ones, manufacturers constantly add upgrades; each new television has some new feature that supposedly makes it superior to the old one. Advertising is relentless, and it has crept into every corner of our world. It’s no wonder that after being exposed to hundreds of messages telling us to buy something new, we want to.

“New” is constantly touted as the optimum of our culture. Fashions in clothing have always been the ultimate in planned obsolescence; there is a new fashion every season of the year. Clothing designers collude to use the same colors and fabrics at the same time, and to make them as different as possible from what came before. The effect is to make whatever you own and wear now look “so last year.” Women and men who get caught up in this are forced by their learned hypersensitivity to newness to constantly update their wardrobes.

Of course personal issues enter into this acquiring spiral. We want to be perceived as on the cutting edge of technology, not old-fashioned. We want to be seen as fashionable, not dowdy. Not buying new means being out of step with the rest of our culture. Everybody else has a cell phone, so why don’t you? Elderly people are the only cohort that consistently opts out of this frenzy. No computers, cell phones, or even telephone answering machine technology for them. There are exceptions, but since most elderly people also are living on limited incomes with little or no hope of increase, they are wise not to be wrapped up in ceaseless acquisition. The truth is they can’t afford it.

Meanwhile, the rest of us do have laptops and cell phones, but what about that old desktop computer, and that old pager? They’re sitting somewhere in our homes, usually gathering dust. Along with the broken televisions and last year’s clothing. But do we get rid of them? No. They still work, or they could be fixed, or they still fit or…something.

That’s part two of the hoarding problem. As much as we are victims of advertising hype and the peer pressure in our culture that pushes us to keep acquiring new possessions, there’s a part of our brain that knows arbitrarily abandoning old possessions is wrong and unnatural. That blouse is perfectly good, and it cost half a day’s pay; why throw it out because something else is fashionable this year? There’s nothing wrong with that television that a halfway competent mechanic couldn’t fix. And surely there’s some reason to keep that old pager, which still works, even though nobody sends pages anymore? These are reasonable arguments. Unfortunately, the new possessions crowd out the old. That’s because there’s a gap between our good intentions and our actions. We’re busy. We throw the old pager in a drawer and forget it rather than decide what to do with it next.

We also keep possessions because of sentiment. Mothers typically keep some souvenirs from their children’s babyhood. Maybe a rattle or tiny booties or even a few toys in anticipation of becoming a grandparent. Where mothers begin to cross the line is when they keep every toy the child had from infancy on, and every piece of crayon artwork and every spelling homework paper, and so on. (Turning these items into endless scrapbooks is just moving the clutter from one shelf to another, unless 99% of the collected items are tossed in the process.)

The clutter problem starts with our natural outrage at the waste implied in tossing out something that still might have some value. That television was fine until the moment it stopped working. It originally cost $400. We want it to be fixed, but that is not our reality today. The pager is outdated technology; it’s hopeless, but it still works. How frustrating is that? What about the stuffed animal collection that was so cute when the baby was three years old? The baby is a strapping teenager now and those toys could make some little child happy, but can we bear to part with them?

If we do not throw out stuff, move it along, we run the risk of letting the mere trappings of our lives turn into piled-up trash, or totems. If our rooms contained every item we wore or played with or worked on in or ate from in our entire lives, we wouldn’t be able to move. We must live in the present without being constricted by the past. To do that, we must engage in a constant winnowing process, sending off and throwing out items that no longer are useful to us. Even when we wish they still were. Sorry about that, old faithful television.

In most homes, there are some items that need to be chucked, but we just haven’t gotten around to dealing with them yet. In the home of a clutterer/hoarder, the total number of these items keeps increasing, often exponentially and with no relation to rational thinking. Hoarders not only keep everything from the past, imbuing every item with sentimental totemic value, but they also keep bringing in new possessions. This kind of acquiring does not seem to be a response to the overmarketing of Americans. It’s related to a sense of not having enough. Hoarders frequently report feeling safer and more comfortable with all their excess possessions packed around them. They literally use physical objects to protect them from the world. Some trash pick, but the majority simply overbuy. Hundreds of garments, hundreds of food items, hundreds of containers in which they imagine they will one day sort their excess possessions.

How do we keep from becoming clutterer/hoarders? How do we avoid falling ill with their disease? We already know that the entire force of our culture is pressing us to keep acquiring. The logical response is two pronged: one, we need to identify our true desires so we can acquire what we most want in life, not what ads tell us we should want; and two, we need to be diligent in divesting ourselves of any excess we have.

More in my next post.

Friday, April 30, 2010

Hoarding is Ruining Our Country

Yes, hoarding is ruining our country, because it diverts wealth that all of us have into objects the hoarder renders useless. Not very long ago, most people even in this rich country did not own many possessions. If you visit the governor’s mansion in Williamsburg, Virginia, the furnishing are sparse. If you check out Biltmore in North Carolina, built by the wealthy Vanderbilts, furnishings are opulent but there is lots of empty floor space. If you watch televisions shows that depict the homes of current celebrities, you will see that they may have many possessions, but they also have generous space for all of them. Why is it that, today, in ordinary American houses everywhere, excess possessions are jammed into every available space, often on top of each other and spilling across areas where people need to walk?

Everyone, including me, is very kind to hoarders to their faces, because we can see how completely oversensitive they are to reality. They can’t face it and they don’t thank us for telling the truth about how they live. But they want even more from us: They want us to ignore the sheer waste of their behavior. A lot of that waste is monetary. Hoarders usually claim they merely have a sorting problem. If they admit there is any problem at all, they claim they’ve just gotten overwhelmed. If they invite in normal people to help them, it is not to remove the clutter: it is to sort the clutter. They don’t want to part with any of their excess possessions. They just want the enormous piles of clutter to somehow miraculously fit into the inadequate space they have.

A scary television show, “Buried Alive,” visits the homes of extreme hoarders and shows them getting therapy over a period of time and trying to reduce their piles. I hope they succeed. Alas, these are not isolated instances. Serious cluttering-into-hoarding is a growing disease in our country. How many people do you know who waste money by keeping possessions in storage, for instance? Who trash pick? Who are addicted to home shopping television or eBay auctions or flea markets? Some people joke that a yard sale is when you put out all your junk and other people take it back to their homes. So true. How many ugly clothes, badly designed toys, now many completely unnecessary and useless decorative items make the trudge from one household to another each year? I know some people find this an entertaining and inexpensive method of shopping, but why go looking for useless junk?

Why not put your money to work for you? Sure, we've had a tough time recently with the stock market, but historically, the middle and lower classes have not been involved in the stock market and instead found their wealth in other ways. One way is to save money, just save it, whether in a cookie jar or a bank account. Another way is to make investments in people: Help a relative or friend, give money and time to charity, and so on. A third is to nourish a small business; a major reason most of them fail is undercapitalization. You could lend someone money, all tied up legally with a written agreement, or micro-lend through the Internet and earn interest while helping build a capitalist enterprise, whether in this country or elsewhere. You also could do what Americans did 100 years ago: restore broken items to usefulness, and sell or donate them. Finally, you could spend your money on improving yourself: on more education, on recreation that refreshes your soul and restores your body, on maintenance of your home, and much, much more. The possibilities are endless.

Interestingly, a lot of hoarders claim that they plan to fix broken items and then sell them or give them away. But they don't; instead, they stockpile them. People who compulsively shop for clothing don't even try to rationalize their need for hundreds of purses. This is wasteful behavior, and in some cases it is the financial ruination of a family. Unfortunately, no approach to cure hoarding has been found to work on a lasting basis. People who overbuy or overcollect slowly slip into trashing up their homes, renting storage units, even buying additional houses just to hold their excess possessions. They alienate their relatives and friends, and end up alone with their hoard.

What I dislike most about hoarding, aside from the sheer disgusting, unsanitary aspect of it (and make no mistake, most hoarders are creating toxic conditions--imagine all that formaldehyde outgassing in a cramped home, plus all the mold being created), is the waste. Americans are the richest people in the history of mankind, and we are throwing away our wealth on useless trifles and trash, or on excess volumes of useful items that we then turn into trash. That's why I say hoarding is ruining our country.

So far, this might sound like just another antihoarding rant. But we can do something about our hoarding tendencies. That's the subject of my next post.

Monday, April 19, 2010

The Financial Tuneup

A tuneup is an expensive trip to the mechanic that is supposed to keep your car in tiptop shape. I’ve never been sure if a tuneup made sense. Today’s cars probably don’t need them, given their newer technology. But what about a financial tuneup? In March, the NY Times ran a cute article called “Thirty-One Steps to a Financial Tuneup.” But who wants to do anything in March? Now that we’re chastened by tax returns and hoping to do better as this year progresses, perhaps this is a good time to consider the list.

The truth is, this is a boring list. Many of the items on the list would take hours of research and they result in no joy, only second-guessing. Insurance, for instance. It’s a good idea to review your insurance, consolidate it, get better rates if you have improved your health, get a volume discount by having your house and your car insured by the same company, and more. But from personal experience last year, I know that doing this takes hours and hours and hours. You’re comparing apples and oranges. This company has a different deductible from this one; this one offers umbrella insurance and this one doesn’t. This one won’t cover any water damage, and this one will. And on and on and on. When you finally make your choice, you worry that you made the wrong one. It's your own little self-induced nightmare. How many of us want to start this kind of project?

Possibly the most interesting part of this checklist is the comments readers made about each item. People recount their own experiences, and since these are not the bland, one-size-fits-all of the initial advice, they give clues to your own personal situation that the checklist does not.

In case you don’t feel like following the link, here’s the NY Times’ list:

1. Save 1% more from your paycheck
2. Reconsider your investments
3. Rebalance your investments
4. Find a better bank
5. Make an extra mortgage payment
6. Open a home equity line of credit
7. Increase your student loan payment
8. Seek a lower-interest credit card
9. Set an automated payment toward your debt
10. Read the rules on your rewards card
11. Cash in your rewards
12. Find a better-earning rewards card
13. Check your credit reports for free
14. Consider a financial planner
15. Pare part of your budget
16. Read your tax return
17. Enroll in a flexible spending account
18. Reread your will
19. Automate your giving
20. Walk a loved one through your affairs
21. Ask your cable company for a better deal
22. Ask your wireless company for a better deal
23. Ask your landline company for a better deal
24. Spend your gift cards
25. Check your life insurance coverage
26. Buy a disability policy
27. Consider renter's insurance
28. Raise your auto and home insurance deductibles
29. Do a home inventory
30. Read your home insurance policy
31. Shop for new home and auto policies

Nothing wrong with working your way through this checklist, but in my case, and I suspect for many of you, some of these items just aren’t relevant. Gift cards? Don’t have any. Rewards credit cards? Don’t have any of those, either. Save 1% more of my paycheck? What paycheck? And that item about opening a line of credit for just-in-case cash is way out of date; banks have been closing these and refusing to open new ones lately. An extra mortgage payment in a year is your vacation. Do you want to skip taking a vacation just to end your mortgage a little sooner? I didn't think so.

Still, I admit that I love checklists, even ones that don't fit me very well. If there's even one action I carry out because I've read this list, the author, Ron Lieber, has helped me. Maybe it's worth following the link and checking out in detail.

A Note

Cross posting my WordPress blog entry about money.

Thursday, April 15, 2010

Tax Day

It's April 15th, and for many people, this is a desperate day. If you have delayed or put it off or couldn't spare the time or couldn't find the documents, today is the day when you have to act.

Either you file your Form 1040 tax return today or you file a Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return. Form 4868 gives you until October 15th, no questions asked, to file your return. There is no penalty for filing within that extended period. Oh, but there is a catch. If you are going to owe taxes, you have to pay them with your application today. Otherwise, you'll pay interest on what is owed and a penalty for late paying, too. The good news is you can file for an extension via the Internet. But you should do it before midnight.

Or, you could just dig in and finish your taxes today.

I know the feeling of being in this final big hurry. One year I was so late getting our tax return together that my husband had to drive to another state to mail it--and he was the last one the police let into the line before they closed the mail drop. I also remember as a kid going in the car with my mother as she drove all the way into DC from the Maryland suburbs to drop the family tax return at the mailbox in front of the main post office near Union Station. Versions of these scenes will occur today. If you are the one heading out late tonight, my condolences.

Maybe next year you could make life easier on yourself and get your taxes finished sooner. There are volunteer sites across the nation where you can take all your tax questions in addition to getting your return prepared free of charge. Free e-file, too. These volunteer sites are not for everyone. If you run a small business and have inventory or employees, you need to look to a paid tax preparer. But if you have a job like delivering pizzas, where you are paid as an independent contractor, you can probably find a free tax preparing site that will handle your return. Even if you have a complicated tax situation, chances are that these sites can help you.

But don't wait until the last minute. That's self-induced stress you don't need. I won't pretend that income taxes are simple; they are not. Every year, the Federal tax rules get tinkered with, resulting in more confusion for us all. Often, state tax laws change, too. Before I do my tax preparer volunteering each year, I train in the new rules and then pass an exam, but I still struggle to remember all the changes.

It's a whole lot easier learning about these new rules in January than it is trying to learn them on the evening of April 15th. Desperation is not the proper mood in which to do taxes. If you handle yours early in the tax season, you'll be relaxed because you have plenty of time. This results in fewer errors. Many people do not realize that they can file their returns without mailing any payment until April 15th. The tax voucher, Form 1040-V, makes separating the return filing and the payment mailing easy. And of course you may pay by credit card these days.

On a day like today when you're down to the wire, it's easy to promise yourself that you won't let this happen next year. You'll get organized by March 15th instead, or maybe even February 15th. I hope you do, because if there's anything we volunteer tax preparers dislike, it's desperate, impatient people who have boxed themselves into a corner and now want that to be someone else's fault. We can't help you if you still haven't found all your documents. Or if you don't know the answers to the standard questions. Or if you have put this off as long as possible and now want us to hurry up and perform a miracle.

Nobody likes paying taxes; we get it. But since taxes are as inevitable as death, why kick and scream and procrastinate? The good news/bad news is that we get a do-over next year. We can aspire to handling our obligations better in 2011. Meanwhile, in only a few hours, the madness of tax day 2010 will be over.

Tuesday, April 6, 2010

Insurance Woes, the Happy Ending

[See my post of March 12 for the back story.]

My friend’s claim was paid by Access America. He’s jubilant, and he ascribes the quick settlement to the power of blogging. I am glad that Access America paid attention to my blog post about the hazards of trip insurance, and offered to cut through the red tape involved in settling this claim.

Now I must point out that despite my friend’s happy ending, we each of us still have the responsibility to investigate in advance any insurance we buy. No more buying a pig in a poke. As the Romans said, “let the buyer beware.”

One of the pleasures of blogging is its potentially infinite reach, but sometimes we wonder if anyone is paying attention. This time, someone was, and we have a happy ending.

Wednesday, March 17, 2010

A Financial Fast

My friend rails against another debt-reduction plan, Michelle Singletary’s 21-day financial fast, which she details in her book, The Power to Prosper. Although I have not read the book, her excerpt from it in the Washington Post was interesting and made sense to me. Lots of us tend to throw money away daily without noticing where its going. So I checked out what people thought on Amazon about the book. A lot of readers were turned off by Singletary’s specifically Christian religious tone. She originated the program and beta-tested it, if you will, within her own church circle. Some readers could not get past this, and so for them all the rest of the sound advice in the book was dead. You can check out the book for yourself, but meanwhile, what can we take away from the idea of a 21-day financial fast?

First, three weeks is short enough that most of us can commit to it. Singletary calls this a fast, and she is right to position it like the jump start for a diet. It’s not the way we can live every day, but if we are sick of excess, a fast is a good counter. What is the purpose of the fast? It’s to make people stop their automatic behavior and examine it piece by piece.

Second, we need new ideas about how to become more mindful of and able to control spending. As a nation we spend too much and we all know it. Unfortunately, marketers are working very hard to come up with new ways to entice us to spend more than we should. Their success is our financial failure. We have to fight back, and personal finance experts provide us with useful tools in this battle.

Third, good financial advice holds true whatever the source. I’ve read sensible personal finance books by fundamentalist Christians before (usually by southern white guys). Although their concepts for a woman’s financial role in a household are not mine, and I personally do not believe in tithing (since I more than tithe to federal and local government through my taxes), any new ideas about how to handle personal finance issues are welcome and can be adapted to individual circumstances. After all, plenty of women head their own households with no man around, so who cares if a particular book says the man should be the boss? The details of how to manage finances are the important part here.

What is Michelle Singletary’s plan? Go on a money fast. Three solid weeks without spending on anything but utter necessities. And no splitting hairs about what is a necessity and what is a luxury. Of course no using a credit card during the three weeks. But more important, no casual, random expenditures on a daily basis. That’s it. Sure, there are more details, but that’s the nut of the plan.

People who tried this regimen have discovered that in a mere three weeks they saved an enormous amount of cash. Several hundred dollars that otherwise would routinely slip away from them on idle pleasures. Sounds like a good experiment, you say.

But my friend refuses to admit it. To some people there is comfort in the daily expenditure of cash. They like it; it makes them feel as if they are functioning adults in the real world. All of us can remember being children and having no control over buying anything. Either we had no money or our parents controlled our every purchase, or both. Childhood was an endless round of negotiations. Being able to spend money without consulting anyone else feels tremendously empowering. That’s why even the idea of following a budget can resonate as another version of a parent saying no to us. For some of us, wanting to feel like “the boss of me” is what trips us up when we are tempted to buy something we don’t need.

Then there are those of us who cannot imagine going through three weeks without needing to buy something unanticipated. But that’s the whole point of the financial fast, to get us to see what we spend our money on. To make us think about every transaction and weigh how necessary each purchase is. And to consider what it does for us and what it does against us.

I welcome this entry in the effort to help Americans gain control of their finances. I just wish so many of us were not already on the financial fast called unemployment.

Friday, March 12, 2010

Trip Insurance Woes

Now I know why MetLife has those ads that say, “Get MetLife. It Pays.” Because other insurers do not.

A friend of mine was planning to fly to Europe and had to bump the date of his tickets because a close relative died. He'd bought trip insurance since it was such an expensive set of flights. His carrier was Delta Airlines, which told him that he must deal with its insurer, Access America. Access America won’t accept the funeral home’s letter. Access America won’t accept the dead person’s death certificate. Access America has demanded the dead person’s medical records. Huh? If my friend comes up with those, no doubt Access America will be demanding the dead person’s high school report cards. Or a permission slip signed by the dead person’s dead parent. People must sit around at Access America and vie with each other to come up with more and more difficult “proofs” that make it impossible for any claimant to get paid. This is so mean and rotten that it is almost surreal.

It makes me ashamed to be an American when companies like Access America can get away with crap like this. Ashamed to be a fellow human, too. How low is our society, that we allow companies like this to stay in business and keep preying on people?

I have proof that Access America has been pulling this for decades. Over 20 years ago, my mother took a Saga Holidays tour of Europe, and one of her suitcases was stolen. Saga bumped her to Access America, which refused to pay for the lost suitcase or its contents. How? By demanding more and more receipts—and only the originals would do—for items that Mom had bought many years before. Mom called. Mom wrote. Finally, Mom gave up.

And that’s what these companies depend on. They wear you out with more and more ludicrous and unfair demands. (Just like the health insurance companies, come to think of it.) They won’t give up until somebody bigger comes along and threatens to squash them like the bugs they are.

My friend has already gone online and found long lists of complaints about Access America. You can read them here. From these sad stories it appears that Access America sells insurance it has little or no intention of ever making good on. And Delta Airlines enables Access America. It can be hard to protect yourself against companies like Access America because it is a reinsurer, like AIG. You might sign up unknowingly with some other company, like Delta Airlines, only to discover after the fact that you have been tossed to the wolves.

I told my friend to go to AARP’s columnist, or to try local action lines, and of course to write a letter to the president of Delta Airlines. I guess contracting with an insurance company that does not pay on claims is Delta’s way of cutting costs. It’s worth telling the president of Delta that we want decent treatment. Otherwise, why not pick some other airline?

Can anything be done about companies like Access America? The insurance lobby in Washington is large and well-funded. (Of course it is, because they aren't paying claims.) Insurance is usually regulated on a state-by-state basis, but if regulation went to the Federal level, no doubt there would be less regulation rather than more. Any way you figure it, we the customers lose.

The moral of the story? If you want insurance for anything, first find a trustworthy insurer. Don't sign up for it blindly as an afterthought without knowing who the insurer is. And if you find yourself caught like this, persevere. Keep fighting until you wear the enemy out. With every insurer there is a moment when it starts to cost the company too much money to keep denying your claim. You just have to keep on until that moment is reached. Hopefully, you'll live that long.

Edited to add: My good friend Ron Fradkin, very experienced in the insurance industry, advises that anyone who has a problem with an insurer contact the state insurance department. State insurance departments have the power to fine noncompliant insurers, even on a daily basis; thus they'll get you quick action. This does vary by state, but it's excellent advice. Don't give up!

Monday, March 8, 2010

Buy a House When You Can Afford One, Not Before

I just read yet another article about tightened lending standards, and how they could mean potential home buyers would have to come up with 10% as a down payment. The article went on to describe ways to circumvent the new standard.

Are people crazy? Sure, it’s a great time to buy, if you have several hundred thousand dollars in the bank that you will never need for anything else. Otherwise, this is a very risky time to buy, despite it being a buyer’s market and the rates being low, and hype, hype, hype.

If you can’t afford even a down payment for a house, why are you trying to buy a house?

For stability, right? So no landlord can toss you out on your ear. But a bank can do it, too, if you can’t pay your mortgage. People are being foreclosed on all across the country. What makes you think that you can beat the odds if you don’t have enough cash to begin with?

Trust me, I’ve been there. Before we bought our first house, we didn’t have the 10% down payment, either. So we put our furniture in cheap storage and went to live with relatives for a year. Five people had to share one bathroom and two people had to sleep in a basement, but at the end of the year we had our down payment. We thought we had it made. A year later, we were already in debt because of unanticipated but necessary purchases for the new house. The lawn has to be mowed whether you have the cash for a mower or not. And garbage cans really are not optional. You get the idea: Owning a house is more expensive than apartment living. Great big duh.

If you can’t even afford a down payment for a house, why do you think you can manage the day-to-day carrying costs of owning a house?

And then someone lost a job. There was no money to pay the mortgage until a new job was found. When the new job was found, it did not pay anywhere near as much as the old job. Welcome to the new reality for American workers.

If you can’t even afford a down payment for a house, and you don’t have the extra cash for the carrying costs, and then you lose your job, you will lose the house or go deeply into debt, or both.

Put your planned mortgage payment, plus 30% more, into a savings account and attempt to live on what remains. If you can’t, then you can’t afford to buy a house, down payment or no down payment. When employment was stable and lifelong, you could buy a house you could barely afford and gamble that it would become affordable as your income went up. Today, that’s a sucker bet.

Wednesday, March 3, 2010

Not Buying It

Judith Levine’s Not Buying It made a splash a few years ago. It appears in a trade paperback edition suitable for book club discussions, including questions at the end of the book. I happen to be in a book club and we read this book. Well, some of us did. Others sneered at it for not being interesting; some members like a meaty story, and the tale of one year in a New York City freelance writer’s life during which she and her husband undertook to not buy luxuries simply did not appeal. Others did not finish the book because from the title they had expected it to be funny. “Not buying it” taken to mean that the narrator will comment humorously on some aspect of our culture. But an utter lack of humor characterizes this book.

What does Levine attempt to show in her diary-entry style posts from a year of trying not to purchase anything but necessities? First, she is honest about her own frailties, about the arguments with her husband over whether wine is a necessity or not, and about how queasy she felt being out and about with friends and not able to spend money. This is a peculiarly acute situation in New York City because little in that town is free. Oh, sure, you could stroll through Central Park or other parks, but everywhere else you are expected to pony up in order to rent a place to sit down. I distinctly remember how unequal I felt going out to lunch with a college friend years ago when she had a job and I did not. I was living on a shoestring, and the ordinary amount she could afford to spend on a hamburger was above my budget. Levine’s personal and professional life in the city was fraught with decisions about spending, or more often, not spending on social entertainment. She even got into an argument with a friend about seeing a movie.

Her half year in the Vermont countryside was easier, because the buy-in to a homemade meal is easier when everybody has a house and a car, and driving over for dinner isn’t a big deal. But she still managed to wring some angst out of petty issues such as her SmartWool socks. They may be wonderful socks; one of our book club members swears by them. But Levine’s obsession with trivial possessions really annoyed me.

Here’s why. She is an influential writer. She has the ability to put her ideas out to a mass market while synthesizing the thoughts of major scholars and thinkers. She is not rich, but compared to all the women who have ever lived, she has vast amounts of disposable income, and enviable personal freedom. And until her year of Not Buying It, she frittered it away on garbage. On trendy new fashions. On expensive trifles. On acquiring too many possessions. Her saga might resonate with other women who have found themselves casually slipping into poor financial habits, daily feeding their amour propre with retail therapy when they could be using their money, and thus their influence, more mindfully. But to me—someone who has known relatively hard times, albeit briefly—reading about a person who is profligate about money is offensive. This woman has been wasting her life and her power.

She seems to get it during the course of the year. She seems to reconnect with the political activism of her youth. And to want to live more purposefully. All to the good. But her book was not well received in our group. We’ve made much harder choices about buying or not buying than she does in her essentially frivolous year of attempting to be non-frivolous. And I don’t think the poverty that forces people to make draconian decisions about spending is likely to show us our authentic selves, as Levine suggests but also does not agree with. Our desperate selves, maybe.

And here’s another funny thing. Levine reports that as a collateral event, her nearly $8,000 of apparently permanent credit card debt was paid off early in the year. She’d carried this debt, adding to it and subtracting from it in the typical manner, for who knows how long. In a year of not buying, and without any overt intention of doing so, she easily eliminated her debt. Where is the “Well, duh?” here? Doesn’t Levine understand that there’s a cause and effect when it comes to random spending? I found this wonderfully naïve for someone who is such a successful elite writer. Almost as naïve as Barbara Ehrenreich was when she bought clothes for her Nickel and Dimed adventure. Levine buys fashionable shoes that Parisians won’t disdain, which is a whole different level from Payless or Nine West.

So, yes, some of my reaction to this book was simply scorn at the upper-middle-class artiste follies of the author. But at least she presented them for what they were, and this made for a very big difference in tone from the typical personal finance book. Levine is not prescribing; she’s describing. Toward the end there’s a bit of preaching about getting involved in civic causes. But basically what happens is that for a year the author had to live as people of lesser means do all the time, making compromises, having to deny themselves luxuries, feeling awkward in financially unequal social situations, and more. It seems to have had a salutary effect on her. Perhaps her story will help others to see their own relationships with commerce in a new and different light. One hopes. I find it extremely frustrating that a newly empowered class, women, wastes that power. Even if only the power to control themselves.

Thursday, February 25, 2010

The Wealth Watchers Idea

Here’s yet another personal finance plan, Wealth Watchers, by Alice Wood. Refreshingly, she does not come by her interest in personal finance from a background of having totally screwed up with credit cards and being addicted to shopping as therapy—or has she? She actually did endure a period of being in financial hot water, but it was the result of a brain injury that suddenly made it hard for her to keep track of every aspect of her life, finances being just one. Her solution was to take the well-known Weight Watchers point system and use it to plan daily spending.

I’ve encountered this concept only once before, in a television show about lottery winners. One lucky man now lived the high life in a mansion filled with very expensive furnishings, and all the rest. But he said that he knows exactly how much money he can afford to spend each day, and he never spends more than that amount. He lives off the interest he earns on his fortune instead of using up the principal. Unlike most lottery winners, he still has most of his winnings. He can reasonably foresee a comfortable financial future.

Alice Wood’s idea is the same as the lottery winner’s. You calculate how much you can spend per day and not go into credit card or other debt. When you reach the limit, you stop spending. This method has one beautiful aspect to it that I really like. It’s perfect for people who are perpetually foggy about what income is coming in and what they owe. It’s also perfect for people who are prey to impulse or bulk buys. Even if they are the type to rob Peter to pay Paul, to spend next week’s allotted cash on this week’s purchases, at least this method shows them how much total they can safely spend. People’s brains do work differently from each other. It’s nearly impossible to get certain types to pay constant attention to the big picture. Others are lost in endless minutiae. What Alice Wood has come up with is not a budget style per se. She has figured out a routine. The only hard part is the prep work, which requires you to learn what your carrying costs are by keeping track of them. Then you can break down your budget to fixed, semi-fixed, and discretionary expenses.

How do you separate your fixed expenses from your semi-fixed expenses? The fixed are the bills that must be paid and cannot be adjusted. These include

• Rent or mortgage
• Car payment

Here is where I disagree with Wood, because she includes several other items in fixed expenses that I don’t consider fixed. The next group, semi-fixed expenses, is my list. On it are items that can be modified by our actions:

• Car/Home/Life insurance
• Electric/Gas/Heat/Phone/Internet/Cable
• Day care/Private school/College
• Savings/Tithing/Charity
• Taxes/Medical
• Food

Wood does not include food as any kind of fixed expense, probably because it can fluctuate wildly depending on your style. But, like utilities that can be reduced by taking a cheaper Internet or cable package or turning the thermostat down, food costs can be modified via more or less eating out, buying of takeout, or home cooking. Every item of semi-fixed expenses is negotiable, but they are fixed to the degree that you have to have them. You must eat, but you can decide to spend less on food. You must insure your car, but you can find less expensive car insurance, or drop the collision on an older car. You can buy a premium cable package or just basic. You can skip going to doctors, although I don’t advise that, but you can decide to go to an immediate care clinic rather than an emergency room and that can drastically affect your medical costs.

A couple of items don’t fit these lists. You can choose to save, tithe, or give to charity; savings perhaps doesn’t belong in fixed as Wood has it, or in semi-fixed as I do. But it is not a necessity of life. And you may question whether taxes belong in the fixed or the semi-fixed list. We each choose the amount of our income tax withholding. Thus we can have more or less in our paychecks, and more or less in our refunds. Or no refunds at all. We also can choose the level of medical insurance we buy, if we have medical insurance. That’s why these ordinary expenses of life are semi-fixed. We can fiddle with them.

The bottom line of the Wealth Watchers program is that after all the fixed and semi-fixed expenses are tallied up and subtracted from your income, what’s left is your discretionary income. If you have included semi-annual expenses in your calculations (such as dentist visits), you can arrive at a daily figure you can safely spend on the items that are not fixed or semi-fixed.

Don’t imagine that it is easy to decide what you should spend on most of these expenses. Fierce arguments break out in many houses over how much should be spent on cable or telephones. People debate whether wine is a necessity of life and thus in a basic food category, or whether it is a luxury and thus firmly in discretionary. For Wood, food is all discretionary, but most of us are more comfortable with a baseline we expect to spend on food, thus making that figure semi-fixed. But we still argue over what is a food necessity versus a luxury.

To be frank, I think that Wood underestimates the difficulty of arriving at the safe daily spending amount. A book that is superior to all others in this regard is Make Your Paycheck Last, by Harold Moe. But Wood’s idea is something that one person in a family can do the work to compute and then others in the family can live by without concerning themselves with the big picture. It’s also possible to have a paid financial advisor calculate it all. Then the finance-impaired (or just bored) individual can still adjust spending to a safe level without going mad trying to figure out what that level is. And let’s be realistic; many people fall into this category. They don’t want to think about money. They just want to know if they can safely spend $20 or $2,000 today. Alice Wood’s book gives a good road map for making it possible.

Friday, February 19, 2010

With Great Power Comes Great Responsibility

I just read a scathing indictment of the Abrahamic head of household concept, by implication condemning the Washington Post personal finance guru Michelle Singletary’s fundamentalist Christian way of living. This straight-faced roundup of objectionable paternalistic policies aggravated me—as it was supposed to—but it also amused me. It describes the tyranny of the head of household in great detail. But it does not describe the weight of responsibility that lies on that head.

If you get to make all the decisions, then all the decisions and their outcomes are your fault. With great power comes great responsibility. Modern American men mostly are not under the illusion that women don’t look at them with critical eyes. Far the contrary. They know we are quite capable of analyzing and judging them, and finding them lacking. While I admit there are still plenty of stupid chauvinists around who genuinely believe that women are the mental and moral equivalent of dogs, most men know better. And even if a man is able to totally discount the opinions of his wife and daughters, the condemnation and hatred in his son’s eyes will eventually penetrate his thick skull.

As much as unilateral power over a household sounds appealing, there is terror involved. Men are tormented by their need to measure up to great expectations. Can I get it right? Can I keep my manhood—my job, my leadership role, whatever—and thus my reason for being the head of household? Can I make the right decisions? Can my decisions earn my family’s love? Can I make the world conform to what I need?

Most of the answers will be mixed, and that’s the number one reason to let the decision-making be mixed in a household, too. Whoever you are, you will not always pick the right electrician, or the right career, or the right words to say to your rebellious teenager. It’s a whole lot easier to sleep if your decisions are thoroughly mutual with your spouse. It’s fine to present a unilateral front to the world or to your relatives, but it is better to be a genuine team.

I shudder just as much as you do when employers talk all misty-eyed about teams, because work teams are usually the breeding ground of mediocrity, lack of responsibility, and in-fighting. But a family team has a reason to pull together and to make decisions and take actions that mutually benefit. In many families, if three or four people didn’t work, they couldn’t live in a comfortable home. Would it be better if just one, the father, did all the work, and the rest of the family stayed home and prettied up the place to his directions? No. Would it be better if the father ordered the others to work and to give him their paychecks? Of course not. They would have no incentive to keep working or to improve their job prospects. Or to stay in this household.

Incentive is the other half of the power situation. If one person holds all the power, the other’s incentive is naturally to resist. I can think of no clearer example than the typical situation with nursing home roommates. These are usually women who previously were in charge of their own households. Often women who have been solely in charge for years because they’ve been long widowed. That is the typical life expectancy of the American woman: widowed at 55, dead at 85 or so. These women move into nursing homes and immediately start bickering with their roommates because both of them are used to being the boss of their surroundings. Until and unless they reach a mutually satisfying rapprochement, they continue to fight. The blinds should be open. The blinds should be shut. The blinds should be up. The blinds should be down. The windows should be open. And on and on and on. You would think that at that time of life people would not be fighting for power and control. But they do. It’s a natural instinct.

So getting back to our Abrahamic household, the big problem is that if dad holds life and death power over everyone in it, they will struggle and resist that power. If law and custom won’t aid them, then their struggle simply goes underground, into sly manipulations. Who has not heard about seemingly obedient wives who secretly buy things and then hide them from their husbands? And why do you think that women have had the reputation since ancient times of being poisoners? Because poisoning is an undercover method of seizing power without giving the appearance of doing so.

Life is so much easier if we split up the power and the responsibility. Then men don’t die young from stress-induced heart attacks, and women don’t grow old resenting the men who had power over them. When we share the burdens of living, they truly are lighter. And there are fewer complaints along the way, too. If you pick the restaurant, then you get blamed if the food or service isn’t good. If the decision is mutually arrived at, you don’t. It’s that simple. Choose to share. It’s not only right; it’s the best way to negotiate the bumpy terrain of life.