Showing posts with label Financial Responsibility. Show all posts
Showing posts with label Financial Responsibility. Show all posts

Thursday, May 19, 2016

Neal Gabler on America's Declining Standard of Living

For the May issue of the Atlantic Neal Gabler, a writer, university lecturer, and erstwhile movie reviewer, wrote The Secret Shame of Middle-Class Americans, a piece about how he has struggled with his finances in silence due both to his family’s personal choices and the declining standard of living for middle-class Americans. This is an interesting piece, more for what it says about the author than the people with whom he’s trying to equate himself.

Gabler’s tale is another reiteration of Aesop’s fable, The Ant and the Grasshopper, padded with statistics for more effect. The problem with this piece is that Gabler wrote it, and he’s hardly the spokesperson for the down and out in America. Even if he’s shedding light on a real trend, his motivation is to gain sympathy for himself while placing himself over the unwashed in the social hierarchy.

The fact is, it is hard out there for many, many Americans these days. The statistics Gabler cites are true. The standard of living for lower income, working class and middle class Americans has definitely gone down in the past decades. While the cost of items we’ve grown to think of as non-negotiable - like housing, education, and healthcare - has sharply risen. Many more people are living on the edge of bankruptcy. As the article points out, 47 percent of respondents to one survey said that they would have to borrow or sell something to come up with $400 to pay for an emergency expense or would not be able to come up with it at all.

$400 is not that much money. There are so many things that cost at least $400 to repair or replace. This winter my refrigerator died, my washing machine died, and my laptop more or less collapsed. Each of these problems cost at least $400 to resolve. A car repair, an unexpected tax bill, or a medical emergency will easily run up into that kind of money as well, and most of us are vulnerable to those kinds of issues since we drive, pay taxes, and have bodies that break down.

The bump in prosperity the United States experienced in the middle of the twentieth century got people out of the habit of behaving in the kinds of pragmatic, cooperative, and self-denying ways that our ancestors had to live in order to survive, as well. And, unlike previous generations, the Boomers haven’t saved much and are looking winter straight in the face at this point. It’s coming.

Gabler, however, seems to have managed to either purchase or achieve most of his life goals. As a writer, he works a job of his choice in a financially unpredictable field, getting paid sporadically rather than steadily. He lived in New York City, a very expensive part of the country. His wife quit her job and stayed home with their two daughters when they were younger. They purchased a house in the Hamptons before they sold off their co-op apartment in NYC. They sent their daughters to private school and then chose to use savings and an inheritance to send them to Stanford, Harvard Medical School, Emory, and the University of Texas. (The UT degree was a master’s in social work, so the ROI on that investment will be calculated in negative numbers.) They also paid for one daughter’s wedding.

Essentially Gabler had caviar taste on a tuna budget. He wanted certain things for himself and his family - a career as a writer/professor, posh schools, owning property in a high status zip code - and he got them. He mentions them all in this article so that we know that, while he doesn’t have any money, he is still not among the great unwashed and uneducated. He chose to invest in the finer things because he has taste and refinement. This money wasn’t blown on a drug habit, cruises to the Bahamas, or an unhealthy obsession with cars.

The problem is, he still couldn’t afford these things and have a retirement that’s something other than a lead slug. And it’s retirement time.

Historically, Americans didn’t make these types of choices because they didn’t have the option. Easy credit wasn’t available, so people could spend only until they ran out of money. As a result they didn’t get all new carpeting in their condo. Instead they made their own rag rugs and called it good enough. People didn’t have designer weddings. They got married by a minister in the living room of their parents’ home, and they sat down to a homemade dinner afterward. My great-grandmother insisted that all of her children go to college because it was the only way she could see them not following in her own path of subsistence farming/seasonal work in the pickle factory. All of them did a year at County Normal and then went off to work. It was an entry level option into a better paid field instead of status signalling to everyone she knew how smart they - and, by extension, she - were.

It’s okay to be proud of the intelligence and accomplishments of your kids. It’s fine to invest your money in them. There’s nothing wrong in wanting to live in a safe area with good schools or to work a job that’s better suited for your temperament than sales, accounting, or customer service. The problem is, you can’t make those decisions when you don’t have the money to pay for them and then lump yourself in with Americans who sell their plasma to pay bills because they can’t find any work that pays over $12 an hour. There are quite a lot of those people living in America today, and they don’t feel solidarity with guys who send their daughter to Harvard Med.

Neither do I.

Thursday, August 21, 2014

Piece of Advice #113: Stock up

One of the things that I was grateful I had done when we found out my husband was being laid off was to have fully stocked my pantry. Between that and the freezer we could have eaten for a couple of months, at least, although thankfully it didn't come to that. It was still a huge load off my mind when I was calculating expenses that we would have enough food to eat, no matter how long unemployment took to kick in. And it took a long time. I don't know how families without any savings do it.

Yesterday I also restocked my freezer with meat and fish from the coop, enough to make it through at least several months. I've purchased a half a pig as well from my local farmer who puts them out in his fields to fatten them up for fall. I'm splitting it with a friend since we both have smaller families. Last December we got a quarter hog's worth of meat, and it filled my freezer up. Meat is so expensive right now that buying it in bulk, even free range as I prefer, often costs less than what's in the grocery store. You do have to be organized in how you use it, though, because more than six months in the freezer is bad for most meats.

Many staples last in storage indefinitely, though. Beans, rice, split peas, lentils, wheat berries (if you own a grinder) all can last for years without spoilage. My pantry also has sugar, honey, and agave nectar, condiments, spaghetti and other noodles, canned fruits and vegetables, an embarrassing amount of tea leaves, as well as oils and spices and medicinal herbs. I have perhaps 40 gallons of water in storage as well. I put 3 drops of bleach in each container to keep it from molding. I've never had to use much of it, but the bleach will quickly evaporate once uncapped and then it will be safe to drink.

Other things I keep about in case of emergency: batteries, flashlights, extra blankets, a battery operated shortwave radio, a crank radio/lantern, camping gear, and a complete medical kit (with surgical tools and a number of spare bandages). I also have ibuprofen, Tylenol, and aspirin, elderberry elixir, as well as an additional stock of any medicines we regularly use.

The medical supplies could easily come in handy during an extended electrical blackout, blizzard situation, or epidemic. This has been on my mind be cause of the uncontrolled Ebola outbreak in West Africa. While I don't believe the disease would spread nearly as fast in a first world country with a complete infrastructure and advanced medical care available, I do think we will see cases in the U.S. before long, given the entirely insufficient attempts to limit travel to and from West Africa or quarantine asymptomatic people who have recently been there.

Fortunately Ebola is not an airborne disease, but influenzas are and all we'd need to bring the world basically to an at least temporary stop is one virulent and highly infections avian or swine flu. No matter how prepared cities and hospitals feel they are for an epidemic, the fact remains that as a society we don't know how to deal with mass illness or large amounts of infectious medical waste. Even professional cleaners used to disinfecting don't know enough about the sterilization required in such an emergency, and although medical supplies are generally not in shortage, that could change rapidly if there is enough sudden demand.

You can't always control your circumstances, but long term planning for a number of eventualities can make challenges easier to manage when they do arise. Stock up now.

Friday, September 10, 2010

Piece of Advice #68: Keep your wedding in perspective

This one is for the brides-to-be, as requested by PuffsPlus.

A wedding shouldn't be an excuse for a woman to get her narcissism on.  Weddings are ceremonies by which a community witnesses the formation of another stable family unit and, having witnessed it, ideally will exert some help or pressure to keep it in functioning order.  A wedding was not for the bride or for the groom, it was for the community and an exercise in reaffirming community customs and beliefs.

At least that's what they once were.

Now they are expensive parties, hugely overpriced blowouts organized and choreographed around the main event, the bride.  Everyone else fades into the background - it's Bridezilla's day.  It's been a winding road to this point, of course.  The day was always important for brides because marriage holds more protections and perks for women than it does for men.  That's why historically women have wanted - have dreamed - about getting married and men generally have had to be pressured - gently or with the pressure of a metal barrel - into it.  It's normal for a young woman to look forward to her wedding day and anticipate saying her vows and celebrating with her loved ones, surrounded by the beauty of the occasion.  I had a wedding.  It was a lovely wedding in the gorgeous Polish Catholic church I attended, and other than being hot, tired, and somewhat nervous, I had a great time.  It's a bit of a blur, actually.  What I remember most is wishing that I had more time to spend with all of the people who had traveled so far to see me get married.

The problems I have with weddings as they currently are celebrated are:

  1. They rarely longer serve any cultural purpose in that they aren't there to transmit culture or values forward.  How can they when all the participants know going in that there is a 50% chance this will end in divorce?  With the meaning behind the wedding gone, what we're left with is a fancy party that requires an extensive consultation of etiquette no one knows anymore. And
  2. They are so overpriced.  On average an American couple spends $19,581 to celebrate that magical day.  Let me write that out: nineteen thousand, five hundred and eighty-one dollars.  Just shy of $20K for a one-day party.  Wow.  Again, there's a one in two shot this won't even last.  
If you went to to the courthouse and threw a barbeque for all your nearest and dearest, you'd have, say $19,000 left to put down as a down payment on a house or pay off 19K worth of student loans or other debt.  Or you could put it into savings or investments.

I don't want to be a hypocrite; after all, I've admitted I had a nice wedding.  But for me it was a celebration of my religious beliefs, and I did not bear the expense.  It was important for my parents and my husband's parents to be there and for it to be an occasion of note and in a church.  These are things that have to be factored in.  If I'd have had to pay for it, it would have been much humbler and with fewer stressful details.  I certainly would not have gone into debt or more debt to pull off a big production.  My grandparents married in their minister's front room and they were married over 50 years.  I think that is a valid way to celebrate.

We have a secular, highly consumer-oriented society.  Keep that in mind when you plan your wedding and ask yourself who benefits from the decisions you are making about how to celebrate it.  And if you do get married, count yourself lucky.  Not so many women will because it's a very risky venture for men these days with even fewer benefits than there were traditionally, so if you accomplish it keep the vows you are planning to take.  Be grateful.  Oh, and treat him right.  With any luck, if you picked a good one, he will do the same.

Saturday, September 4, 2010

Once More with Feeling: Debt = Slavery

Augustine DeCathage gave me a heads up on a post he wrote this afternoon since it concerned the potential consequences and complications of ignoring that Debt = Slavery.

The New York Times put up an article yesterday entitled, "How Debt Can Destroy a Budding Relationship."  An excerpt:
Nobody likes unpleasant surprises, but when Allison Brooke Eastman’s fiancĂ© found out four months ago just how high her debt was, he had a particularly strong reaction: he broke off the engagement within three days. Ms. Eastman said she had told him early on in their relationship that she had over $100,000 of debt. But, she said, even she didn’t know what the true balance was; like a car buyer who focuses on only the monthly payment, she wrote 12 checks a year for about $1,100 each, the minimum possible. She didn’t focus on the bottom line, she said, because it was so profoundly depressing.
But as the couple got closer to their wedding day, she took out all the paperwork and it became clear that her total debt was actually about $170,000. “He accused me of lying,” said Ms. Eastman, 31, a San Francisco X-ray technician and part-time photographer who had run up much of the balance studying for a bachelor’s degree in photography. “But if I was lying, I was lying to myself, not to him. I didn’t really want to know the full amount.”
First of all, pray excuse me while I go get a paper bag and breathe in it to relieve the anxiety of imagining being an X-ray technician with $170,000 in student loan debt.

Okay, I'm back.

Seriously?  $170,000.  In student loan debt.  For a degree in photography?  What is in the water, clueless sauce?  It was depressing to run those numbers?  I'd say.  Honestly, I feel bad for her because while it was unbelievably stupid to sign up casually for that kind of debt, the bank(s) that loaned her that amount and the school that encouraged her to apply for the loans should be held should be held complicit.  They conned her.  No one should extend that much in loans to a person so young with no assets.  Unless you're going to Hogwarts and majoring in Magical Muggle Money Spellcraft, you will be saddled with those loans forever.  FOR-EV-ER.  Even the aspiring ER doc the NYT goes on to interview in the same piece will be enslaved.
Ms. Tidwell feels no guilt about the $250,000 in debt she will probably run up, including some from a master’s degree program she completed in London, where she and Mr. Kogler met. “I didn’t acquire it because I go out and shop a lot,” she said. “It’s because I’m doing something that I’ll love for the rest of my life.”
While I appreciate the special knowledge my doctors have used in treating me over the years costs a lot of money to obtain, racking up 250K at the point at which the nation is skipping over the doorframe into socialized medicine seems - well, a trifle unconsidered.  I have a doctor in the family; my father-in-law.  He is getting out of the medical profession after a long and well remunerated career before the government via Obamacare can begin shafting him two ways: by lowering what he can collect for services rendered and taxing him up the wazoo for any money he does manage to make.  Already what doctors get paid for Medicare and Medicaid patients often doesn't cover their costs.

The pesky problem about not getting remunerated for the actual costs of services is that that means that you're working for free or even paying other people for you to do your job.  People tend not to sign on for that.  For the time being I'd hesitate before taking on loans to learn a medical trade.

Let's all say it together: Debt equal slavery.  You can't predict the future.  My mother got a degree in nursing, then slipped a disc her first year on the floor when a patient she was helping to the bathroom went dead weight on her.  She never worked on the floor again.  You may not be able to pay them, but those loans will still be there and they will affect which jobs you can take, where you work, when you can have children and how you can take care of them, or even - as in the first example - if you will be able to marry.  It's much less risky to pay as you go, even if it takes you a long, long time to finish school.

Thursday, August 12, 2010

Piece of Advice #64: Don't go to college

Did that get your attention?  Good.  Because higher education is a huge racket in this country.  We are creating whole generations of debt slaves one student loan at a time.

I'll get this out of the way - I went to college.  6 years of college, in fact.  And, for the most part, it was a good experience.  I had some boring, pointless, agenda driven classes, but I also was required to take courses outside of my area of interest which proved to be both interesting and educational.  Economics, political science, and sociology would fall into this category.  When I graduated from college with my BA, there was a recession going on, and I had a hard time finding a decent job, so eventually I went back to school and got my Masters in Library Science, and this helped me get a job that paid at least a living wage. I'm grateful to have this degree and the subsequent experience in my skill set for future use or in case of  emergency.

I am not against college or women going to college, but before you even think about going to college, you need to run the numbers.  Look up what the average wage a graduate with your degree can expect to make both starting out and over a lifetime, then see if the industry you're planning to enter is planning to or has already outsourced all the jobs in your field to, say, India (accounting, IT).  Or if your career requires you to continuously update your education while not continuously updating your salary (teaching).

Many college students take on student loan debt without blinking at the numbers, but those numbers will be staring back at you for a lifetime if your field does not pay generously.  Student loans cannot be discharged in bankruptcy court either.   They are yours forever.  Here's a real life example: a young woman goes to a good private college and over the course of four years racks up $70,000 in student loan debt.  She graduates with a degree in education and finds she can't get a job unless she moves out of state and takes a job paying $25,000 a year.  The cost of living is higher in her new state, though.  How long will it take her to pay back $70K on her current salary? Answer: a lifetime.  And because she is a teacher, she is required to take more courses in order to keep the same low paying job, courses she cannot afford to take because the coursework she originally took to get this job was so expensive and the job she landed pays so little.  This real life example's job just cut back on wages and benefits too, and finding she could not live on what remained, she quit her job, moved back in with her parents, and is now looking for something else.  She'll have to keep paying on the $70K, though.  The company store always gets paid.

Remember that.  The company store always gets paid.

When I went to college, it was not so catastrophically expensive as it is now.  My parents paid for my undergrad, and I got a scholarship for graduate school, so I got through it all with minimal debt.  If I had been more financially strapped, I would have done two years at community college and then two years at a local state school.  This is a viable option, but I still would advise you to proceed only if you can pay for it out of pocket now and if you are going into a job-laden field that pays.  Think nursing.  Think occupational therapy.  If you graduate from college with more than $10,000 in student loans, you have signed off your twenties and now work for the company store getting whatever work you can get to keep the store happy.  Big debt will affect your ability to marry, to have kids, to decide whether or not to stay home with them, to buy a house or take a different job if you find you don't like the jobs in the field your degree is in.

If you want to go, go.  But pay as you go, and choose wisely.  Higher education is a trap for many.  They get out and learn the jobs that are available don't pay and aren't interesting or fulfilling, but the loans still need to be paid back.  It's quite a comedown after four years of being encouraged to follow your dreams and find a career that fits your needs.

Wednesday, July 28, 2010

Piece of Advice #59: Opt out of consumerism

A very simple experiment: take your credit card statement from one year ago, run through the charges, and see if you can remember what items you purchased for the money you spent.  Then ask yourself if any of those purchases added even a teeny bit to your happiness today.  I'd be willing to bet whatever sum of money you still owe from that month's credit revolution, that it hasn't.

Stuff won't make you happy.

Yes, spending money can be fun.  It can be an entertaining way to while away the hours or give yourself a momentary boost, but outside of the temporary buying high, it will not add anything to your contentment in life.

Additionally, the little upgrades we all crave - the newer car, the bigger house, the better wardrobe - will not affect your happiness either, because human beings tend toward dissatisfaction, a trait advertising manipulates to amazing effect.  Let's say you want a new purse, and you do the smart thing and save your money over time and buy it when you can afford it.  You will have that initial excitement of the purchase and the satisfied feeling of having something of value, but in a week or two, after you've carried it around with you and slammed it in your car door or spilled a drink on it - or your friend gets an even nicer one - it'll just be another something you own, and you will find that your real happiness has not changed a bit.  Because we are or aren't happy - independently of what we own.

My ancestry is, in significant part, Scottish and Dutch, so thriftiness comes naturally to me.  I think about what I'm buying and whether or not it will end up in a closet a year from now, and in the Goodwill bin in two.  I buy used if possible.  I never go to the mall.  I do have a weakness for two things: books and fabric.  The extraneous book and fabric stashes in my basement will testify, however, that they have not made me any happier when I gave into temptation and splurged.  I now have piles of books and fabric I feel I must read or use because I spent good money to own them.

You can make yourself unhappy by comparing your stuff to the better stuff others have, so it's best to not go there.  Also realize that you don't know how financially healthy your conspicuously consumptive friends are.  All that glitters is not gold.  It's better to live in a small house you can afford and be able to sleep at night than to be drowning in debt to impress your friends and neighbors.

Recently I reminded myself of the above advice.  One of my little daydreams is to someday own an older farmhouse with a little land.  Something charming with a porch swing and a barn and garden space.  My sister found a house like this nearby where she lives, and we drove out to see it.  It was lovely.  The house was a brick Victorian surrounded by mature walnut trees and neatly trimmed lawn.  There was a garden and a tire swing and a big red barn.  It reminded me of my grandparents' house and, oh, I could see myself there puttering around the lawn, putting in a flower garden in summer and adding a log to the woodstove in winter.  It had a pantry I'd kill for.  I made up a whole little story about the life I could live there and how great it would be.  Then we did the math, and even given dropping home prices, it was still out of our reach without a sudden inheritance.  I had to take out a figurative eraser and rub out the little story I'd mentally written.  The end.

But, you know, the thing is, no matter how great that story was, it was still just a story.  The things that irritate me about my house  now - the toy clutter, the dirty dishes, the dog hair, the stuff that breaks and needs repair - would all be present at my new house.  The background image would be different, and the joys and annoyances would change a bit, but my overall happiness is dependent on me - on whether I can be satisfied and grateful with what I have now.  And I can.  So I don't need a new house.

Our society runs on product consumption, and the messages thrown at you say you will be happier, thinner, richer, sexier, if you buy, buy, buy - but if you skip the retail therapy and opt out of keeping up with the Joneses, you might find you are just as happy.  Your finances will be easier to manage as well.