Tuesday, January 18, 2011
About Debt
I like to read Michelle Singletary’s column in the Washington Post because she is not a financial professional so much as she is a financial synthesizer, as I am. She researches all the current information from various public sources about personal finance, and then she opines about it based on her personal beliefs. Like me. We don’t always agree, but most of the time I think she has her head screwed on right. She is anti-debt, perhaps rabidly so, because that’s how she was raised. In this current economic crisis, that attitude comes across as sheer prescience. How did she know the economy would tank? She didn’t. She grew up knowing how to squeeze a penny and stay out of the clutches of creditors. The heretofore comfortable middle class has a more benign view of credit than does Singletary, whose grandmother, a low-paid nursing aide, managed to support a family through persistent thrift. The grandmother knew that the kind of credit she could obtain would likely come at a huge price, a price she was unwilling and probably unable to pay. By contrast, for many of us, credit has been easy and relatively cheap for many years. And then, just like the frog being slowly boiled, it got a little more complicated, and a little more, and now we’re in severe danger. The frog could have hopped out of the pot when the water was cool, but didn’t sense the danger, and that’s exactly what has happened with the majority of Americans who have become overwhelmed by debt. Yes, there are many contributory factors. But Michelle Singletary’s grandmother knew that debt itself was peonage---like unto slavery---and she wasn’t signing on for it. Too bad so many of us closed our eyes to the danger for so long.
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.
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.
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. About.com 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.
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. About.com 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.
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.
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. Money-zine.com 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 cards.com 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?
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. Money-zine.com 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 cards.com 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?
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