I was posting on LiveJournal about our economic mess and the poor homeowners stuck with impossible mortgages, and then I had a thought: Who needs granite countertops if you don’t cook?
I watch a lot of home improvement shows. I’m not sure why. I never used to and in the past I would scoff loudly that they were a waste of time specifically designed to move useless product. I happen to believe that the entire decorating industry exists to decoy women’s energy into useless endeavor. Spend months or years decorating your house instead of earning a college degree or a promotion, or starting a new business, honey. No.
But I keep seeing house hunters traipsing through homes that are perfectly adequate, complaining that there are no granite countertops. And sometimes I look at those people and I just know that all they do is order takeout. They don’t cook. They don’t need a professional stove, a stainless steel refrigerator, or a two-drawer dishwasher. Because all their dishes are plastic takeout containers. And they toss their cutlery in the trash.
What people keep looking for in homes is status. Flash, if you will. And I admit that when I went house hunting four years ago, I was doing my version of the same. I had lived in a modest, completely unpretentious house for 15 years. Now I wanted something that had grace and charm. That was expansive. A house whose hallways weren’t cramped. With bedrooms big enough so that if you fell out of the bed, you wouldn’t hit the dresser. Or the wall. Now I have it, but I also have 26 more years to go on a big mortgage. If I’d stayed in my old house, I would have been done with the mortgage in another 11 years. About when I’d probably want to sign up for Social Security payments. Did I make a mistake? Only time will tell, but I surely have taken a risk I did not need to take. Nobody was forcing me to leave my old house. Only my sense that my time there was over was pushing me out. And I am glad I sold up. I feel as if I was reborn when I moved into my current home. A new me has emerged, and the gracious, spacious, sunny and private new house has a lot to do with it. However, all it will take is a job loss and several years of unemployment or underemployment, and I will lose this house. And then have to move on to another, lesser version of a new me. I’ll cross that bridge when I come to it, but I am not ignoring the threat. But I’m typical of many Americans. I take risks.
The conventional rule has always been to buy as much house as you can afford. But somehow, the definition of what we can afford has splintered, because tons of us have managed to buy houses that we quite obviously cannot afford. People have bought houses they couldn’t even make the first payment on. I couldn’t afford our previous house as soon as a layoff occurred. It took years to re-climb the pay scale enough to afford the house again, years in which credit card debt fueled our extremely modest lifestyle. I’ve often thought that we should have just given up the dream of home ownership, sold the house, and gone to live in a relative’s basement. But, like so many other Americans, we didn’t. We wanted to be homeowners so badly that we were willing to sacrifice many other aspects of quality of life. And looking back at it, that’s a crazy risk.
Another crazy risk was paving our driveway recently, and thus putting a lot of debt on a credit card. It gives me a fellow feeling with other Americans who are crushed by debt. It makes me very careful with our money. And, irrationally, I believe that being careful is the answer, even though logically the solution to lack of money is always to obtain more of it. Get another job. Get a better job. Prod a family member to get a job. Sell something, etc. But this is a terrible economy in which to be looking for a job. The only bright spot is the thought of all those arrogant Wall Street guys also looking. Maybe they’ll have to sell their posh homes with all the granite countertops.
But I still don’t want one. Granite’s a bitch to take care of. It’s pretty, but we have the darkest kitchens ever now, full of dark granite, dark hardwoods, and basically non-code, hot, dark task lighting. A working kitchen should be bright and filled with light, so you don’t chop off a finger. But in a time of excess, it’s a status symbol to have a dysfunctional kitchen with appliances fit for a professional chef and all the rest looking like a boudoir. A beautiful showplace with a huge countertop for all the takeout containers. Count me out.
Wednesday, October 8, 2008
Saturday, October 4, 2008
Savings Accounts, Part Trois: Staying Safe in an Unsafe Financial World
We all know that the finance side of the American economy is in meltdown right now, so let’s not talk about that any more until it reaches some stability. Let’s talk about our personal savings, which we don’t want to see vanish through either a stock market that stays down forever or inflation that wipes out the value of those savings.
An entire generation of Americans has been persuaded to put its personal retirement savings, usually as 401 (k)s or IRAs, into the stock market. Which did not feel very good in 2001 when the stock market took a serious tumble after the tech meltdown. And it doesn’t feel very good today, either, with major investment companies failing and banks going under, too. But down markets don’t usually last. Given time, our stocks will recover. Or at least, they should. The one aspect that bothers me is that for the first time ever, foreign investors, the very people whose fickle confidence has been responsible for major financial collapses in many developing nations, are not confident in America. These foreign investors are waiting for the fire sale; they aren’t treating this dramatic mess as just a minor blip. I believe this is a genuine and scary sign that the US is on its way out as a major economic power. The power issue doesn’t bother me as much as the fact that we could become helpless pawns in the same games of economic opportunism that messed up many another country’s economy and plunged it into runaway inflation. And inflation will destroy the value of our savings and of our 401(k) and IRA accounts.
Maybe. As I’ve said before, if the mortgage stays the same and the dollar amount we have in savings stays the same, then we haven’t lost anything as long as we pay the mortgage with those dollars. The same thing with paying any other fixed obligation incurred before inflation. The principal doesn’t rise, so dollars that are worth less will still pay off the same dollars of debt. The problem is going to be when we try to live on assets from a 401(k) or a pension (we should be so lucky to have one) that add up to a fixed dollar amount when the price of everything has gone up via inflation. Then, we’ve got trouble. Some retirement payouts are indexed to inflation; others are not. And therein lies the potential to be faced with eating cat food in our old age or not buying needed medicines, because our income dollar amounts have not increased to match inflation.
Which leads us back to the stock market and all the risks it entails, because it is about the only game in town that can offer profits that hedge against inflation. Yes, there are TIPS, the US Treasury Inflation-Protected Securities. But buying TIPS is complicated and yearly recordkeeping regarding their earnings is required. Unless you are a financial expert, you’re pretty much stuck using a broker to buy TIPS, and that means more fees as well as exposing yourself to the persuasion of a broker to do something not in your long-term financial best interests. And as far as I know, TIPS cannot be part of a retirement account. (If you know something different, please comment.) Thus anyone contributing to income tax deferred 401(k) or IRAs is not able to sock that money into TIPS. Another reason why our contributions to retirement are mostly at risk.
There’s also the bond market, and most of our 401(k) portfolios do include some bonds. But unless we buy bonds at a discount on the face value, they don’t pay much. And their value never goes up. They do not protect us against inflation. Although bonds are the first call on a bankrupt company, ahead of preferred stock, they’re still a risk. In the current meltdown, even bondholders could take some unpleasant payoffs if the money just isn’t there anymore. And that’s one reason why our government is bailing out some of these big financial institutions. Everything is intricately connected to everything else.
I recommend that we save more in conventional savings accounts and CDs. Why? The common reasoning goes that savings banks only pay a puny rate of interest and thus will not grow our money. Putting our money in savings banks will ensure that our savings do not keep up with inflation. And so on, and so forth. But all along, I have had my doubts about this line of thought. The thing is, a savings account at an FDIC insured bank is safe. How long would my savings have to sit in a bank to be seriously affected by inflation? Is it the length of time I save or just being exposed to inflation at a certain moment? In other words, if I keep money in ultraconservative, fully federally insured savings accounts until a time when inflation starts happening in a big way, and then switch my money instantly to stocks, wouldn’t I get the best of both worlds? Long-term safety, and short-term gain? And isn’t that what owning a house for decades and then selling it in an up market achieves?
Not so long ago, our current president was touting privatizing Social Security and wanting to put all that money in the stock market, too. That would have been a disaster, especially considering what has been happening with the investment business lately. Each of us could then go broke in two different ways. And I doubt that there would be a federal bailout for the poor suckers whose Social Security benefits were wiped out by investing in BearStearns or Lehman, for instance. This is an idea that is quite dead at the moment. If someone revives it, point to 2008 as a good reason not to go for it.
So what’s the bottom line here? The usual, of course: Live within your income and make a point of saving. If you can. Save even if it means denying yourself something that you want today. Then maybe you will have money for things you actually need tomorrow. Put some of those savings into utterly secure accounts such as FDIC insured CDs with short terms or conventional savings accounts, not retirement accounts. The bottom can’t drop out of those, nor will you have to pay an IRS 10% penalty tax to get at your money before age 59 ½. Make sure that some of your money is available with no penalties at any time. As always, visit a half-dozen savings banks (including online banks) to get competitive quotes on terms and rates.
An entire generation of Americans has been persuaded to put its personal retirement savings, usually as 401 (k)s or IRAs, into the stock market. Which did not feel very good in 2001 when the stock market took a serious tumble after the tech meltdown. And it doesn’t feel very good today, either, with major investment companies failing and banks going under, too. But down markets don’t usually last. Given time, our stocks will recover. Or at least, they should. The one aspect that bothers me is that for the first time ever, foreign investors, the very people whose fickle confidence has been responsible for major financial collapses in many developing nations, are not confident in America. These foreign investors are waiting for the fire sale; they aren’t treating this dramatic mess as just a minor blip. I believe this is a genuine and scary sign that the US is on its way out as a major economic power. The power issue doesn’t bother me as much as the fact that we could become helpless pawns in the same games of economic opportunism that messed up many another country’s economy and plunged it into runaway inflation. And inflation will destroy the value of our savings and of our 401(k) and IRA accounts.
Maybe. As I’ve said before, if the mortgage stays the same and the dollar amount we have in savings stays the same, then we haven’t lost anything as long as we pay the mortgage with those dollars. The same thing with paying any other fixed obligation incurred before inflation. The principal doesn’t rise, so dollars that are worth less will still pay off the same dollars of debt. The problem is going to be when we try to live on assets from a 401(k) or a pension (we should be so lucky to have one) that add up to a fixed dollar amount when the price of everything has gone up via inflation. Then, we’ve got trouble. Some retirement payouts are indexed to inflation; others are not. And therein lies the potential to be faced with eating cat food in our old age or not buying needed medicines, because our income dollar amounts have not increased to match inflation.
Which leads us back to the stock market and all the risks it entails, because it is about the only game in town that can offer profits that hedge against inflation. Yes, there are TIPS, the US Treasury Inflation-Protected Securities. But buying TIPS is complicated and yearly recordkeeping regarding their earnings is required. Unless you are a financial expert, you’re pretty much stuck using a broker to buy TIPS, and that means more fees as well as exposing yourself to the persuasion of a broker to do something not in your long-term financial best interests. And as far as I know, TIPS cannot be part of a retirement account. (If you know something different, please comment.) Thus anyone contributing to income tax deferred 401(k) or IRAs is not able to sock that money into TIPS. Another reason why our contributions to retirement are mostly at risk.
There’s also the bond market, and most of our 401(k) portfolios do include some bonds. But unless we buy bonds at a discount on the face value, they don’t pay much. And their value never goes up. They do not protect us against inflation. Although bonds are the first call on a bankrupt company, ahead of preferred stock, they’re still a risk. In the current meltdown, even bondholders could take some unpleasant payoffs if the money just isn’t there anymore. And that’s one reason why our government is bailing out some of these big financial institutions. Everything is intricately connected to everything else.
I recommend that we save more in conventional savings accounts and CDs. Why? The common reasoning goes that savings banks only pay a puny rate of interest and thus will not grow our money. Putting our money in savings banks will ensure that our savings do not keep up with inflation. And so on, and so forth. But all along, I have had my doubts about this line of thought. The thing is, a savings account at an FDIC insured bank is safe. How long would my savings have to sit in a bank to be seriously affected by inflation? Is it the length of time I save or just being exposed to inflation at a certain moment? In other words, if I keep money in ultraconservative, fully federally insured savings accounts until a time when inflation starts happening in a big way, and then switch my money instantly to stocks, wouldn’t I get the best of both worlds? Long-term safety, and short-term gain? And isn’t that what owning a house for decades and then selling it in an up market achieves?
Not so long ago, our current president was touting privatizing Social Security and wanting to put all that money in the stock market, too. That would have been a disaster, especially considering what has been happening with the investment business lately. Each of us could then go broke in two different ways. And I doubt that there would be a federal bailout for the poor suckers whose Social Security benefits were wiped out by investing in BearStearns or Lehman, for instance. This is an idea that is quite dead at the moment. If someone revives it, point to 2008 as a good reason not to go for it.
So what’s the bottom line here? The usual, of course: Live within your income and make a point of saving. If you can. Save even if it means denying yourself something that you want today. Then maybe you will have money for things you actually need tomorrow. Put some of those savings into utterly secure accounts such as FDIC insured CDs with short terms or conventional savings accounts, not retirement accounts. The bottom can’t drop out of those, nor will you have to pay an IRS 10% penalty tax to get at your money before age 59 ½. Make sure that some of your money is available with no penalties at any time. As always, visit a half-dozen savings banks (including online banks) to get competitive quotes on terms and rates.
Friday, September 26, 2008
Class Warfare: Who Gets the Bailout?
The rich and the middle class and the poor are not friends; they are enemies. (To the rich, everybody else is the poor, by the way.) The rich do not care about the fate of the poor. Soaking the poor, grinding the poor down into greater poverty, is the time-honored method of getting rich. But there are consequences to such indifferent venality, as the aristocrats guillotined during the French Revolution may have realized.
The recent real estate bubble was a direct consequence of investors fleeing the uncertain stock market after 9/11 for a safer venue. Land always exists, after all. But the sudden fashion for investing in real estate and the availability of this new investment money created pressure to use the money creatively. And that embroiled too many ordinary citizens in what amounted to a giant Ponzi scheme. Yes, as with any scam, the mark has to agree knowingly to some kind of cheat. And people did, signing up for mortgage payments they knew they could not afford. The scam they thought they were running was to dip into increasing equity in their new homes as the market continued to rise crazily. Meanwhile, the biggest investment companies were selling each other a different scam, consisting of complicated bets on whether this would happen. Swaps of risks, at high earnings. When the bubble burst, everybody had to lose.
That of course is the reason that people are saying no bailout at the top of the financial pyramid will work unless there is a bailout at the bottom. If foreclosures continue, the value of the complex securities bolstering the big financials will continue to drop because no one knows what they are worth in today’s market. If foreclosures stop, the market will stabilize.
My own personal suggestion is that every mortgage in or nearing foreclosure should be renegotiated to a 50- or 60-year term. Anything to get the monthly bite down to what is affordable. It’s not as if the length of a mortgage really matters, since 80% of people sell their houses long before they pay off their mortgages. (The total dollar indebtedness hardly matters, either, since in a stable housing market, prices normally rise. Thus even a house that has lost 25% of its value in today’s market will eventually regain that value.)
What is important is that we provide a way for ordinary people to stay in their houses, living from paycheck to paycheck as usual. The middle class must be able to keep up with their payments. All their payments, including home equity loans and credit card bills. The US economy depends on the pressured middle class to keep paying and paying, at high rates of interest. It’s not an ideal economy, but as long as people don’t go too far into debt, it works.
What the housing catastrophe has proved is just how devastating a significant middle class loss can be to the highest levels of the economy. Increasingly in the past several decades, anti-regulatory laws have enabled the rich to make amazing financial gains at the expense of the middle class. The rich have brushed off concerns about the financial burdens of the poor (remember, that’s how they think of the middle class). Now the rich are hurting because their own investments are tied up in the companies that are foundering. And these companies are foundering directly because of the foreclosure crisis affecting our middle class. Ironic, isn’t it? Maybe the rich are not so immune from consequences after all. And maybe we don’t have to guillotine them to punish them for their vicious greed. They can take the fall that the rest of us are taking.
So count me as anti-bailout unless the rest of us get a bailout, too.
The recent real estate bubble was a direct consequence of investors fleeing the uncertain stock market after 9/11 for a safer venue. Land always exists, after all. But the sudden fashion for investing in real estate and the availability of this new investment money created pressure to use the money creatively. And that embroiled too many ordinary citizens in what amounted to a giant Ponzi scheme. Yes, as with any scam, the mark has to agree knowingly to some kind of cheat. And people did, signing up for mortgage payments they knew they could not afford. The scam they thought they were running was to dip into increasing equity in their new homes as the market continued to rise crazily. Meanwhile, the biggest investment companies were selling each other a different scam, consisting of complicated bets on whether this would happen. Swaps of risks, at high earnings. When the bubble burst, everybody had to lose.
That of course is the reason that people are saying no bailout at the top of the financial pyramid will work unless there is a bailout at the bottom. If foreclosures continue, the value of the complex securities bolstering the big financials will continue to drop because no one knows what they are worth in today’s market. If foreclosures stop, the market will stabilize.
My own personal suggestion is that every mortgage in or nearing foreclosure should be renegotiated to a 50- or 60-year term. Anything to get the monthly bite down to what is affordable. It’s not as if the length of a mortgage really matters, since 80% of people sell their houses long before they pay off their mortgages. (The total dollar indebtedness hardly matters, either, since in a stable housing market, prices normally rise. Thus even a house that has lost 25% of its value in today’s market will eventually regain that value.)
What is important is that we provide a way for ordinary people to stay in their houses, living from paycheck to paycheck as usual. The middle class must be able to keep up with their payments. All their payments, including home equity loans and credit card bills. The US economy depends on the pressured middle class to keep paying and paying, at high rates of interest. It’s not an ideal economy, but as long as people don’t go too far into debt, it works.
What the housing catastrophe has proved is just how devastating a significant middle class loss can be to the highest levels of the economy. Increasingly in the past several decades, anti-regulatory laws have enabled the rich to make amazing financial gains at the expense of the middle class. The rich have brushed off concerns about the financial burdens of the poor (remember, that’s how they think of the middle class). Now the rich are hurting because their own investments are tied up in the companies that are foundering. And these companies are foundering directly because of the foreclosure crisis affecting our middle class. Ironic, isn’t it? Maybe the rich are not so immune from consequences after all. And maybe we don’t have to guillotine them to punish them for their vicious greed. They can take the fall that the rest of us are taking.
So count me as anti-bailout unless the rest of us get a bailout, too.
Wednesday, September 17, 2008
A Lesson in Pricing
Wall Street is a mess right now. The biggest, oldest investment banks in America are tumbling like dominoes. The world’s largest insurance company is in deep trouble. And looking at your 401(k) at this moment is an act of self-torture.
The New York Times had a very interesting article describing this entire situation, “On Wall Street as on Main Street, a Problem of Denial,” by Joe Nocera. I’m intrigued by the idea that these big institutions have been in the same denial as individual homeowners, thinking their property is worth more than it is. Market determines worth. It’s a hard lesson right now for some people.
Yet only a few years ago, we sold our house for a fabulous profit because of the rising market. Not because our house had suddenly become wonderful. It was an ordinary home with no architectural distinction, and it had some flaws. But suddenly, in that crazy rising market, it was worth twice what we had paid for it 15 years before. Did we object to the absurdity of that high dollar amount? Of course not. We took the money.
Right now another modest suburban home is for sale a couple of doors down from my relatives. It is priced to sell, as the phrase goes, but there have been no takers. Even though the price has been lowered several times, the house is lingering on the market as so many houses are across the country. But it should be noted that the price they started with was way, way beyond what that level of house was valued at only a few years ago. It’s a fair price for the market that no longer exists. Until the price is reduced to meet the market as it exists now, the house isn’t going to sell. Even though they have dropped the price more than $60,000, that impressive dollar figure is only a reduction of 15% in price. We expect 15% and more off when an item is on sale in a store. Why not expect a house to be similarly discounted? This house still has not been reduced to the price level of what those houses were worth five to eight years ago. Depending on how far the market has fallen, the owners may still be out of luck even though they aren’t in denial. But as long as they have owned that house throughout this entire bubble, they haven’t lost any money; they’ve simply lost expected profit.
According to the Times article, the big investment firms have been and may still be in denial. They aren’t longtime owners of specific dollars the way a homeowner can be the longtime owner of a property; their money gets shifted around constantly. So they are looking at real losses. Except that the values they have assigned to their now tumbling assets have always been arbitrary. And right now, retaining the old pricing is a form of denial. They simply haven’t been willing to admit that they need to discount until the stated price of their holdings reaches the current market value. Because they’re talking in billions of dollars, we ordinary mortals find it hard to grasp that the percentage is the issue here, not the dollar figure. But the house near my relatives tells the true story.
Who knew that these big companies could get as silly and stubborn as we individual homeowners? It’s a lesson in scale. Also in pricing.
The New York Times had a very interesting article describing this entire situation, “On Wall Street as on Main Street, a Problem of Denial,” by Joe Nocera. I’m intrigued by the idea that these big institutions have been in the same denial as individual homeowners, thinking their property is worth more than it is. Market determines worth. It’s a hard lesson right now for some people.
Yet only a few years ago, we sold our house for a fabulous profit because of the rising market. Not because our house had suddenly become wonderful. It was an ordinary home with no architectural distinction, and it had some flaws. But suddenly, in that crazy rising market, it was worth twice what we had paid for it 15 years before. Did we object to the absurdity of that high dollar amount? Of course not. We took the money.
Right now another modest suburban home is for sale a couple of doors down from my relatives. It is priced to sell, as the phrase goes, but there have been no takers. Even though the price has been lowered several times, the house is lingering on the market as so many houses are across the country. But it should be noted that the price they started with was way, way beyond what that level of house was valued at only a few years ago. It’s a fair price for the market that no longer exists. Until the price is reduced to meet the market as it exists now, the house isn’t going to sell. Even though they have dropped the price more than $60,000, that impressive dollar figure is only a reduction of 15% in price. We expect 15% and more off when an item is on sale in a store. Why not expect a house to be similarly discounted? This house still has not been reduced to the price level of what those houses were worth five to eight years ago. Depending on how far the market has fallen, the owners may still be out of luck even though they aren’t in denial. But as long as they have owned that house throughout this entire bubble, they haven’t lost any money; they’ve simply lost expected profit.
According to the Times article, the big investment firms have been and may still be in denial. They aren’t longtime owners of specific dollars the way a homeowner can be the longtime owner of a property; their money gets shifted around constantly. So they are looking at real losses. Except that the values they have assigned to their now tumbling assets have always been arbitrary. And right now, retaining the old pricing is a form of denial. They simply haven’t been willing to admit that they need to discount until the stated price of their holdings reaches the current market value. Because they’re talking in billions of dollars, we ordinary mortals find it hard to grasp that the percentage is the issue here, not the dollar figure. But the house near my relatives tells the true story.
Who knew that these big companies could get as silly and stubborn as we individual homeowners? It’s a lesson in scale. Also in pricing.
Monday, September 8, 2008
Financial Instability Sucks
Recently someone chastised me for talking negatively about my financial situation. The person cited how good it is compared to that of other people. That got me to thinking about why I was carrying on so.
These are scary times for our economy. People keep losing good jobs, and never finding good ones again. Whole categories of work have gone from our shores forever. Age discrimination is real, and so is degree creep, both of which are helping to keep me and many other people out of employment. Not to mention other forms of bias. I have hit the wall on serious employment, like many people whose employers have been merged, shut down, and downsized (I’ve experienced all three). My employment resume is too old and too cold for a regular job. And my freelance work is too odd and unusual (romances? personal finance? comic books?) to be attractive to a conventional employer. Plus I live way out in the boondocks where there aren’t many good jobs anyway. In fact, I feel pretty darn sorry for myself. Sure, I can change where I live, and I can go back to school again, but these efforts are expensive and they might not be enough in today’s tough employment scene. I’ve been a freelancer for many years, but so far have never made big bucks at it. The fact that I make any money at all as a freelance writer puts me miles ahead of many other writers I know, but that is cold comfort when I’m feeling worried.
Still, ten years ago, my life really sucked. Bad things were happening, and I owed enormous amounts of money. It was a terrible time. But why am I so down in the mouth right now? All of those ills are over. Our income is higher. I only owe one credit card the price of paving the driveway, and that can be paid off at any time because we have savings. Everybody is healthy and happy. What’s the problem? Is having that one credit card bill enough to send me into a funk? Is that how fragile I feel?
And why do I feel fragile? Because I feel helpless.
Aha.
If these were good times for employment, I could solve a real money problem or even an imaginary one by getting an additional job. But they aren’t good times, and with gas prices so high, the cost of the easily-come-by bad job in a discount store is too close to the net pay. So it won’t solve my problem whether my financial issue is real or imaginary. The next few years may prove that all my fears are for naught, but I don’t know that now, do I? And it makes me fretful and even whiny. And that’s how I feel based only on worrying. Imagine how bad people feel who have something concrete to worry about, such as high credit card bills, college loans, impossible mortgage payments, declining health, and more. No wonder these are negative times in our country. People are stressed and the result is a “the glass is half-empty” attitude. When actually, my glass is half-full, and probably yours is, too.
I don’t know the answer to turning my attitude around, but counting my blessings is certainly a start. If you’re feeling down and out, maybe you should do the same. Because the truth is, things could be worse. We might as well try to enjoy today.
These are scary times for our economy. People keep losing good jobs, and never finding good ones again. Whole categories of work have gone from our shores forever. Age discrimination is real, and so is degree creep, both of which are helping to keep me and many other people out of employment. Not to mention other forms of bias. I have hit the wall on serious employment, like many people whose employers have been merged, shut down, and downsized (I’ve experienced all three). My employment resume is too old and too cold for a regular job. And my freelance work is too odd and unusual (romances? personal finance? comic books?) to be attractive to a conventional employer. Plus I live way out in the boondocks where there aren’t many good jobs anyway. In fact, I feel pretty darn sorry for myself. Sure, I can change where I live, and I can go back to school again, but these efforts are expensive and they might not be enough in today’s tough employment scene. I’ve been a freelancer for many years, but so far have never made big bucks at it. The fact that I make any money at all as a freelance writer puts me miles ahead of many other writers I know, but that is cold comfort when I’m feeling worried.
Still, ten years ago, my life really sucked. Bad things were happening, and I owed enormous amounts of money. It was a terrible time. But why am I so down in the mouth right now? All of those ills are over. Our income is higher. I only owe one credit card the price of paving the driveway, and that can be paid off at any time because we have savings. Everybody is healthy and happy. What’s the problem? Is having that one credit card bill enough to send me into a funk? Is that how fragile I feel?
And why do I feel fragile? Because I feel helpless.
Aha.
If these were good times for employment, I could solve a real money problem or even an imaginary one by getting an additional job. But they aren’t good times, and with gas prices so high, the cost of the easily-come-by bad job in a discount store is too close to the net pay. So it won’t solve my problem whether my financial issue is real or imaginary. The next few years may prove that all my fears are for naught, but I don’t know that now, do I? And it makes me fretful and even whiny. And that’s how I feel based only on worrying. Imagine how bad people feel who have something concrete to worry about, such as high credit card bills, college loans, impossible mortgage payments, declining health, and more. No wonder these are negative times in our country. People are stressed and the result is a “the glass is half-empty” attitude. When actually, my glass is half-full, and probably yours is, too.
I don’t know the answer to turning my attitude around, but counting my blessings is certainly a start. If you’re feeling down and out, maybe you should do the same. Because the truth is, things could be worse. We might as well try to enjoy today.
Monday, August 25, 2008
Big Mistake?
People make financial mistakes and they don’t want to admit them. It took me a long time to realize that. You’d think that living with my mistakes in the past would have made me own up to them. But no. It took a lot of thinking to even get to the point of admitting that I had made any mistakes.
So today I’m going short-circuit that self-delusional impulse, and admit that maybe I made a mistake a couple of months ago by financing my new driveway with a wire transfer from a credit card. Oh, not because we’re having trouble making the payments, or even making large enough payments to clear the balance before our 3% paid-in-advance fee period runs out. But because this month when I opened my bill I was absolutely horrified to see that the check we mailed on the 1st was credited on the 10th. Thus making our payment late. There was a late fee of $39, but more horrifying was the finance charge of $106.31 which was tacked onto the bill. By supposedly missing a payment due date, the terms of our loan had been breached and the credit card company could now charge us 11.74% as long as there was a balance outstanding.
Of course I called the company and had the late fee and the finance charge removed. And the CSR said she would send the case to another department to petition that the original terms be reinstated, so no more interest would accrue. She said that nine times out of ten, such petitions are approved.
So I should be relaxed now, right? But I’m not, because another bill we mailed the same day—actually, our mortgage payment—was credited the 6th, a full four days before the credit card company claimed to have received the payment. And so now I’m wondering if the credit card company is playing games. Has the company deliberately been ignoring opening its mail? Has it created labyrinthine processing structures just to trap the unwary? Hoping that most people won’t bother to call and protest? In recent years credit card companies have been shortening the number of days between when the bill is received and when it is due. I’m absolutely positive that this is a deliberate effort to entangle customers in late fees, as well as give the company an excuse to hike the finance charge rate. Are the companies now pretending that it takes the US Mail nine days to get a payment from West Virginia to Delaware?
There is legislation in Congress that attempts to set a generous 25 days for paying credit card bills. Maybe it’ll pass, but that might not solve the problem. After all, many credit card companies take up to 10 days after the monthly closing date on an account just to mail the bill. Another processing slowdown that in this electronic age I can’t help but think is deliberate.
Meanwhile, how do I feel about all this? Not so good. I’m seriously considering the online payment option if it turns out to be free. Or even an electronic check via the phone, which my state mandates must be a free service. But credit card companies play games with those, too. They’ll take the phone payment and credit the account a couple of days later, which makes no sense technically but lets them charge a couple more days’ interest on accounts that run a balance. I’m also thinking about just paying off the balance of this loan the next time one of my CDs comes up for renewal. Who needs this kind of roller coaster ride? Even though the plan was good on the face of it, living under it makes me uneasy. It’s beginning to engender that “I’m trapped” feeling that I lived with for so long when I had huge balances on all my credit cards and no way to pay them off. Been there, done that. Don’t want to go back.
So let me be an example to us all. We’ve had two months’ ride on this borrowed money at 3%, which was good. Now we probably will have that same rate for the next 11 months. But it’s not up to us anymore; it’s totally up to the credit card company. They have little incentive except to keep me as a customer. They’ll make a lot more money off me if they refuse to go back to the original agreement. That is, until I balance transfer the debt to another card with low terms, which I will do if I have to. But I hate to have my thoughts tangled up with these strategies. It’s a drag. My next CD renewal comes up in late October. Check back to learn if I go for paying off this debt so I can breathe freely again.
So today I’m going short-circuit that self-delusional impulse, and admit that maybe I made a mistake a couple of months ago by financing my new driveway with a wire transfer from a credit card. Oh, not because we’re having trouble making the payments, or even making large enough payments to clear the balance before our 3% paid-in-advance fee period runs out. But because this month when I opened my bill I was absolutely horrified to see that the check we mailed on the 1st was credited on the 10th. Thus making our payment late. There was a late fee of $39, but more horrifying was the finance charge of $106.31 which was tacked onto the bill. By supposedly missing a payment due date, the terms of our loan had been breached and the credit card company could now charge us 11.74% as long as there was a balance outstanding.
Of course I called the company and had the late fee and the finance charge removed. And the CSR said she would send the case to another department to petition that the original terms be reinstated, so no more interest would accrue. She said that nine times out of ten, such petitions are approved.
So I should be relaxed now, right? But I’m not, because another bill we mailed the same day—actually, our mortgage payment—was credited the 6th, a full four days before the credit card company claimed to have received the payment. And so now I’m wondering if the credit card company is playing games. Has the company deliberately been ignoring opening its mail? Has it created labyrinthine processing structures just to trap the unwary? Hoping that most people won’t bother to call and protest? In recent years credit card companies have been shortening the number of days between when the bill is received and when it is due. I’m absolutely positive that this is a deliberate effort to entangle customers in late fees, as well as give the company an excuse to hike the finance charge rate. Are the companies now pretending that it takes the US Mail nine days to get a payment from West Virginia to Delaware?
There is legislation in Congress that attempts to set a generous 25 days for paying credit card bills. Maybe it’ll pass, but that might not solve the problem. After all, many credit card companies take up to 10 days after the monthly closing date on an account just to mail the bill. Another processing slowdown that in this electronic age I can’t help but think is deliberate.
Meanwhile, how do I feel about all this? Not so good. I’m seriously considering the online payment option if it turns out to be free. Or even an electronic check via the phone, which my state mandates must be a free service. But credit card companies play games with those, too. They’ll take the phone payment and credit the account a couple of days later, which makes no sense technically but lets them charge a couple more days’ interest on accounts that run a balance. I’m also thinking about just paying off the balance of this loan the next time one of my CDs comes up for renewal. Who needs this kind of roller coaster ride? Even though the plan was good on the face of it, living under it makes me uneasy. It’s beginning to engender that “I’m trapped” feeling that I lived with for so long when I had huge balances on all my credit cards and no way to pay them off. Been there, done that. Don’t want to go back.
So let me be an example to us all. We’ve had two months’ ride on this borrowed money at 3%, which was good. Now we probably will have that same rate for the next 11 months. But it’s not up to us anymore; it’s totally up to the credit card company. They have little incentive except to keep me as a customer. They’ll make a lot more money off me if they refuse to go back to the original agreement. That is, until I balance transfer the debt to another card with low terms, which I will do if I have to. But I hate to have my thoughts tangled up with these strategies. It’s a drag. My next CD renewal comes up in late October. Check back to learn if I go for paying off this debt so I can breathe freely again.
Thursday, August 21, 2008
Cars versus Alternative Transportation
In my previous post, I ranted against Alan S. Blinder’s foolish ideas about giving up old cars. But I didn’t talk about his casual suggestion that people would simply choose other forms of transportation. Now I want to address that, because he ought to know better. His idea is nonsense.
People don’t drive beat up old cars for the fun of it. They drive them because they need transportation. A TV news show I just watched claimed that 50% of us live outside the cities. In the countryside and suburbia, where buses don’t run. As for trains, nearly every new commuter rail proposal gets fought to a standstill for years on end, while existing rail is often at capacity. Our governments don’t want us to use public transportation. If they did, they’d provide very cheap and very convenient transportation everywhere. There still is no public transportation within five miles of the house I bought 20 years ago in Maryland, and there is absolutely no plan to provide any, even though more and more homes have been built up to and in that neighborhood. The government runs the zoning, and could have forbidden the construction of those homes. But it did not. By area, most of the US is not densely populated cities. Some people believe we all should live in cities, and that would solve the transportation problem. But the fact is that some of us don’t want to, and aren’t going to.
I just visited Denver, where the city runs free buses on one mile of a downtown street. The buses are always packed. But that was only on one street, on a pedestrian mall, downtown. The light rail system hardly serves the poorer parts of the city, where people could use a fast, pleasant, and clean alternative to noisy, stinky buses. Or to driving old clunkers. There was plenty of car traffic in the city. The light rail only serves the richer suburbs. People who live there could park in the rail garages and lots, and go into downtown Denver and see a baseball game at Coors Field without having to drive in and park. They could easily attend a concert or other downtown function. This is good. But why does the light rail only serve the fancier suburbs? Because if it served the poorer ones first, the more affluent people would never use this means of transportation? I have a sinking feeling that is the ugly truth. Thinking back on it, I realize that WMATA built the Washington, DC Metro system using the same method: It built the system to the most affluent suburbs first, and only now is finally getting around to hooking up the people most likely to be desperate for public transportation, who otherwise would have to drive old clunkers or take three buses to get anywhere. Or walk.
Walking to work is overrated. It’s fine in a nice, safe city neighborhood in the daytime. It’s not so much fun at night in a creepy neighborhood. Or where there aren’t any sidewalks. Or when the weather is bad. Or when you have to walk for miles because there are no alternatives, not even a taxi. And it takes a lot of time to walk, and few Americans have an extra two hours every day to give to walking.
What about bicycling to work? Most of us don’t want to bicycle in the rain, nor do we have the ability to ride a bicycle on an icy road. Maybe Lance Armstrong can, but he’s got a bicycle that costs more than a car. In some cities, buses are becoming more welcoming to people who want to board with a bicycle. But buses aren’t set up to handle more than a few bikes at a time, if that. And lots of businesses don’t look kindly on employees who show up with bikes. And let’s be candid. Working up a sweat on a bicycle out in the open can make people stink, get them dirty, and even stress their immune systems. Not to mention get them killed by trucks or buses.
Compare this with India, where the burgeoning, computer-assisted outsourcing business has led employers to make rational decisions. They employ many men and women who cannot afford cars. They want these employees to show up on time. And they certainly don’t want the women to be attacked on their way to or from work because they’re CSRs doing the night shift to mirror our daytime. The answer? The company provides free, safe, transportation. Indian companies run company buses that loop through to where all the employees live. Even better, by creating these bus schedules, the company has to promise not to overwork employees. Workers have to be let go to take their company buses home. It’s a win-win situation. Absenteeism is low, overwork is kept to a limit, and hundreds of potential commuters aren’t driving to work and jamming the already overcrowded roads.
But this is America, and we insist that workers find their own way to work—and also that they stay longer and longer hours, which is another reason why public transportation wouldn’t be convenient even if it existed. If employees are forced to stay and stay at the office, then bus and train schedules can’t be limited to classic commuting hours. Which makes the system more costly and inefficient to run. Carpooling can’t happen under these circumstances, either, because it depends on workers who share a ride leaving at the same time. Maybe the traders on the stock market floor actually get to go home at a regular hour once the market closes. And government workers often are allowed to keep regular hours, but not always. With less factory work in this country, fewer and fewer workers leave their jobs at the same time.
Even in New York City, the one city in the US whose public transportation system works, plenty of people own cars. The subways run all night. There are buses and express buses. There are commuter trains. There are taxis and car services. Still, many people have cars. It’s expensive to garage them and inconvenient to move them constantly for street cleaning or risk a fine or a tow. And lots of cars get stolen. But people have cars anyway. They own cars because the automobile is the best invention ever for getting people where they want to go, at their convenience, in comfort, safely, and regardless of their physical abilities. We’re not giving up our cars.
People don’t drive beat up old cars for the fun of it. They drive them because they need transportation. A TV news show I just watched claimed that 50% of us live outside the cities. In the countryside and suburbia, where buses don’t run. As for trains, nearly every new commuter rail proposal gets fought to a standstill for years on end, while existing rail is often at capacity. Our governments don’t want us to use public transportation. If they did, they’d provide very cheap and very convenient transportation everywhere. There still is no public transportation within five miles of the house I bought 20 years ago in Maryland, and there is absolutely no plan to provide any, even though more and more homes have been built up to and in that neighborhood. The government runs the zoning, and could have forbidden the construction of those homes. But it did not. By area, most of the US is not densely populated cities. Some people believe we all should live in cities, and that would solve the transportation problem. But the fact is that some of us don’t want to, and aren’t going to.
I just visited Denver, where the city runs free buses on one mile of a downtown street. The buses are always packed. But that was only on one street, on a pedestrian mall, downtown. The light rail system hardly serves the poorer parts of the city, where people could use a fast, pleasant, and clean alternative to noisy, stinky buses. Or to driving old clunkers. There was plenty of car traffic in the city. The light rail only serves the richer suburbs. People who live there could park in the rail garages and lots, and go into downtown Denver and see a baseball game at Coors Field without having to drive in and park. They could easily attend a concert or other downtown function. This is good. But why does the light rail only serve the fancier suburbs? Because if it served the poorer ones first, the more affluent people would never use this means of transportation? I have a sinking feeling that is the ugly truth. Thinking back on it, I realize that WMATA built the Washington, DC Metro system using the same method: It built the system to the most affluent suburbs first, and only now is finally getting around to hooking up the people most likely to be desperate for public transportation, who otherwise would have to drive old clunkers or take three buses to get anywhere. Or walk.
Walking to work is overrated. It’s fine in a nice, safe city neighborhood in the daytime. It’s not so much fun at night in a creepy neighborhood. Or where there aren’t any sidewalks. Or when the weather is bad. Or when you have to walk for miles because there are no alternatives, not even a taxi. And it takes a lot of time to walk, and few Americans have an extra two hours every day to give to walking.
What about bicycling to work? Most of us don’t want to bicycle in the rain, nor do we have the ability to ride a bicycle on an icy road. Maybe Lance Armstrong can, but he’s got a bicycle that costs more than a car. In some cities, buses are becoming more welcoming to people who want to board with a bicycle. But buses aren’t set up to handle more than a few bikes at a time, if that. And lots of businesses don’t look kindly on employees who show up with bikes. And let’s be candid. Working up a sweat on a bicycle out in the open can make people stink, get them dirty, and even stress their immune systems. Not to mention get them killed by trucks or buses.
Compare this with India, where the burgeoning, computer-assisted outsourcing business has led employers to make rational decisions. They employ many men and women who cannot afford cars. They want these employees to show up on time. And they certainly don’t want the women to be attacked on their way to or from work because they’re CSRs doing the night shift to mirror our daytime. The answer? The company provides free, safe, transportation. Indian companies run company buses that loop through to where all the employees live. Even better, by creating these bus schedules, the company has to promise not to overwork employees. Workers have to be let go to take their company buses home. It’s a win-win situation. Absenteeism is low, overwork is kept to a limit, and hundreds of potential commuters aren’t driving to work and jamming the already overcrowded roads.
But this is America, and we insist that workers find their own way to work—and also that they stay longer and longer hours, which is another reason why public transportation wouldn’t be convenient even if it existed. If employees are forced to stay and stay at the office, then bus and train schedules can’t be limited to classic commuting hours. Which makes the system more costly and inefficient to run. Carpooling can’t happen under these circumstances, either, because it depends on workers who share a ride leaving at the same time. Maybe the traders on the stock market floor actually get to go home at a regular hour once the market closes. And government workers often are allowed to keep regular hours, but not always. With less factory work in this country, fewer and fewer workers leave their jobs at the same time.
Even in New York City, the one city in the US whose public transportation system works, plenty of people own cars. The subways run all night. There are buses and express buses. There are commuter trains. There are taxis and car services. Still, many people have cars. It’s expensive to garage them and inconvenient to move them constantly for street cleaning or risk a fine or a tow. And lots of cars get stolen. But people have cars anyway. They own cars because the automobile is the best invention ever for getting people where they want to go, at their convenience, in comfort, safely, and regardless of their physical abilities. We’re not giving up our cars.
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