Personal Finance Update

Well, obviously I haven't blogged here much for a while, although it's interesting that the site gets a small but fairly consistent number of hits even in the absence of new content, more so than my other blog so what do you know about that? Anyway, I've been thinking of trying to get some more content up here, but don't want to make any promises I might not be willing to keep!

I thought I'd give a little update on our family financial situation. The big important news is that DW is working more consistently now. She has a job as a para at an organization that works with kids with severe communications difficulties, and although the pay isn't great she's working a good number of hours, 25-28 most weeks. Then she's still working at Sylvan learning center 4 hours a week, as well as teaching Hebrew school. So there's some more income there.

What this means is that we're more or less breaking even every month, so we are no longer consistently digging into reserves to make the nut every month. That is good news. The ability to pay down debt hasn't really magically appeared, though.

I consolidated my student loan with the Department of Education because there's supposedly a new provision that if you work in the non-profit sector your loan will be forgiven after 10 years. I had to give an income statement to qualify for it and because of DW's increased income our payments actually went up, which threw our budgetary balance off a bit. Unfortunately it's 10 years from the refinance and not from graduation so it's almost like starting from scratch, and who knows if this provision will even exist in 10 years?

We still owe a touch under $6K on my card, which is 19% interest, and almost $9K on DW's, which is at about 10%. Getting them down has been tough; mine was a little under 5 at one point but then my car needed almost $800 in repairs so there went that. We also owe about $10K on DW's car (dumbest purchase ever made, next to the house) and of course there's my ridiculous $60K student loan, which I prefer not to think about. We pay $400 on my card, $200 on DW's card, $340 on the car and $500 on the student loan every month, meaning that, as ever, debt service adds up to about 1/4 of our monthly income.

Given that we're at the break even point and can't expect any more income we really need to find some place to cut expenses if we want to dig out any faster. (Plus, DK1 still needs braces.) The likely candidates for excision seem to be cable TV and my old frenemy, the Sunday New York Times.

I was intrigued by this story in the Times about watching TV without cable - not rooftop antennae, but rather streaming either from your internet connection or through a device such as a Boxee. There's a small initial investment involved but after that it's essentially free unless you up for some premium content (like baseball), but even then it's a lot less than cable.

My man Phil P. is a tech guru and he tried to dissuade me, saying that cable was more predictable in terms of both content and technology, but that $50 we're spending every month is looking mighty enticing. We never had cable before we moved to Wichita and DW would be just as happy to be rid of it, believe you me. She thinks I'm watching too much TV, and most of what I want to watch (Colbert, for instance) I can watch on-line anyway. So it might take me a couple of months to work out the technical arrangements to a level of comfort, but I think that's the way we're going to go.

As for the Times, the land subscription gives me full access to their website, which is good, and if I call them to cancel they'll just offer me a discount for a couple of months, which is what they always do when I get to this point. And I do love it, it's like the only thing in my life that reminds me of my connection to New York. Still, it's $32 per month, which is a lot.

I did raise my payment on the car by $40 a month in the hopes of saving myself a little interest on the back end.

On the plus side, our housing situation is stable, the people who own it aren't going to be back for an extra year, which means we could be here for 4 or 5 years, or longer than we lived in the house in Illinois. (This is probably a topic for another day but I am not eager to get back into the homeowning thing after our experience there, not that I have the credit to now but if I can live in a nice house for rent and have someone else make the repairs why would I do otherwise?) I'm enjoying my work and of course the longer we stay here the more I meet people in town and the more interesting things I get involved in. I'm blogging for a political site now and that's gratifying. But I sure do wish we could work off this debt and get on the upside for a change. That's got to be more important than the Sunday Times, right?

National Thrift Week

Did you know there was such a thing as National Thrift Week? Neither did I, but here's a story about it from Education Week. And guess what? It's this week.

National Thrift Week had a 50-year run in our history before being dispensed with in the 1960s. It began on Jan. 17, 1916—the birthday of Benjamin Franklin, the “American Apostle of Thrift”—and soon spread to more than 300 communities. Everyone from the YMCA to the Jewish Welfare Board to the National Education Association sponsored the event. Indeed, educators, partnering with financial institutions and businesses, played a key role in promoting thrift during the week.

They apparently had essay and poster contests, and states sponsored savings accounts for kids at community banks.

Three bullet points in favor of thrift from the article:

• Thrift builds good character, through delay of gratification,
• Thrift encourages generosity, and
• Thrift encourages a wise use of resources.
  

Nowadays we're as likely as not to hear that thrift is a threat to the economy, because so much of our economy is dependent on consumer spending. That's an argument for another day, but here it can suffice to say that spending beyond one's means does no one any good, save the banks and credit card companies who can charge interest and fees on our largesse.

Here are a couple more webpages on the subject: bringbackthriftweek.org, and the same group's Facebook page.

(h/t Michelle Weiss Persons)

A couple of quick and easy meals

Bean and brats (from Vegetarian Times, which I pick up once in a while): Slice a package of veggie brats (I guess you could use meat, there's not dairy in the recipe, but I never have) and brown them on both sides, then put them aside. Fry some onion, then put in a can of diced tomatoes and a (rinsed and drained) can of white beans, a little water and some salt, pepper, and molasses. Heat through, put the brats back in and cook the sauce down for a few minutes before serving. Goes well with rice.

Usually when I have to get a meal on the table fast I do something simple with pasta, but I can't tell you how sick I am of pasta right now. So on Tuesday, when I literally had 20 minutes to put dinner on the table, this is what I made: tofu - drained, broiled 3 mins each side, then coated with a paste of miso and 1 tbls each of wine and mirin, then broiled again. Green beans, boiled for 3-4 minutes, then tossed with a small amount of soy sauce and tbls toasted sesame seeds. Rice. We love anything oriental-ish, and this made a rather stahm mid-week meal a little more special.

Cheap Jews

On Tablet, an interview with Lauren Weber, author of book, In Cheap We Trust: The Story of a Misunderstood American Virtue. Sample:

There’s something paradoxical about the connection between Jews and money. There are stereotypes about Jews being tightfisted, but also about Jews being gaudy.

The stereotype combines both admiration and resentment, and that’s a particularly American combination. On the one hand Jews were called miserly, on the other hand they were called ostentatious. Jews would be closed out of certain resorts because they were vulgar. In the book, I talk about this stereotype of the Jew living in a hovel that was secretly opulent inside. You’re damned if you do, damned if you don’t.

One of the greatest challenges of being a Jew interested in frugality and simplicity is the (almost exclusively internal) challenge of the "cheap Jew" stereotype. Jews will make poor decisions about money because they don't want to appear cheap.

I wonder if Scottish people have this problem?

A neighborhood ride

On Sunday afternoon I went on a bike ride along the Gypsum Creek bike path with John B of the Cycling in Wichita blog. He organizes these monthly bike rides to check out various trails around town, and the Sunday ride picked up pretty close to my house and the stars aligned - meaning DW let me go - so I went. John's description of the ride is here, and his earlier review of the path is here.

I don't have too much to add to what he says except to emphasize that the weather was not cooperative. Earlier in the day I thought the ride might get cancelled; it remained quite blustery, and although the temperature climbed into the 60s, the strong head winds on certain parts of the path made cycling quite exertive, if that's a word. I rode in first gear most of the way, especially on the way back (which I rode alone, as John continued on to his home on the west side) and had to stop a couple times to rest. Of course, it was also my first major ride of the spring, probably around 10 miles round trip, so that probably had something to do with it as well.

The path is pleasant enough initially, the part along the creek, although further on it goes through some pretty decrepit areas of town -- Planeview and then the abandoned Joyland amusement park, which strikes me as a good place to do a photo shoot for a band but not a place you want to spend much time in alone. On the way back there were 3 stray dogs on the path there and that was disconcerting, although in the end they didn't engage me.

While I'm on the subject, John did a nice job before the municipal elections of reaching out to the candidates to ask their positions on bike infrastructure. He also had a longer think piece around the same time in which he made the point that bike infrastructure is a privilege, not a right.

Speaking for myself, this blog's implicit assumption is not to presume that the city and other governments owe cyclists anything in the way of infrastructure. Sure: I keep harping on wanting to see one or two genuine, right-through-the-middle-of Wichita, east-to-west bike paths or dedicated bike-lanes, that request isn't exactly on the Founding Fathers' list of self-evident truths. Or, at least it's not on the Kansas version of that list.

Well, I've less polite than John, and I do think that cyclists have the right to expect the infrastructure that we pay for through our taxes to accommodate us. Wichita sees biking as a recreational activity and that's why what we get is meandering bike paths; I see bikes as transportation and want to get from here to there. The twain don't meet.

But opening the streets up more to bikers is not necessarily an expensive proposition. In fact, a little bit of a public education campaign ("Share the roads"), a painted line on some of the major thoroughfares; these things don't cost much - less than a dedicated bike path along a creek, and a lot less than the repairs on streets that are necessitated by the car culture, and a hell of a lot less than a new access to K-96.

In other words, there's a lot of low hanging fruit here - it wouldn't take much expense to make Wichita a significantly more bike friendly place than it is right now.

Another reason to love Obama

The story is worth reading too.

Don't get guilted into overspending now!

Conflicting signals are being sent by the Mainstream Media on the subject of thrift and frugality in the current economic crisis. Take for example Newsweek, which is one I happen to read. One week it carried had a story by a fellow whose parents were so frugal that they could have written the Tightwad Gazette:

In today's cratering economy, my parents are looking pretty smart all of a sudden. President Obama talks a lot about personal sacrifice, and we all need to look for ways to cut costs these days. Maybe he ought to consider Bill and Joyce Tuttle as the nation's first thrift czars, because when it comes to pinching pennies and saving for the future, my parents are extreme.

They dry their clothes outside, don't have cable TV and heat their (self-built) home with wood they chopped. Although the author acknowledges that the model is a tough one to replicate, the conclusion is admiring:

But there are still valuable lessons to be gleaned from their example, which boils down to this: the people who have been living the thrifty life all along, doing the right thing—crazy stuff like buying houses they can afford and saving up money for things they want to buy—are the smart ones now. And they'll be the ones who adjust most easily to a leaner time.

and the very next week there was a story whose title says it all: Stop Saving Now!

For our $14 trillion economy to recover and thrive, hoarders must open their wallets and become consumers, and businesses must once again be willing to roll the dice. Nobody is advocating a return to the debt-fueled days of 4,000-square-foot second homes, $1,000 handbags and $6 specialty coffees. But in our economy, in which 70 percent of activity is derived from consumers, we do need our neighbors to spend. Otherwise we fall into what economist John Maynard Keynes called the "paradox of thrift." If everyone saves during a slack period, economic activity will decrease, thus making everyone poorer. We also need to start investing again—not necessarily in the stock of Citigroup or in condos in Miami. But rather to build skills, to create the new companies that are so vital to growth, and to fund the discovery and development of new technologies.

The copious qualifiers notwithstanding, it is hard to believe that he's not talking about designer handbags and speciality coffee. After all, if one still has a job they're not likely not to be spending on food and other daily necessities - albeit perhaps at a lower level than before. What has suffered in this economy is precisely the credit-fueled consumerism of large-screen TVs and stainless steel kitchen appliances.

If you really want to see what the problem is, check out this posting from Nate Silver:

Per-family household debt increased by about 130% in real dollars between 1989 and 2007, from roughly $42,000 per family in 1989 to $97,000 eighteen years later. Most of that increase has come during the past six or seven years -- household debt increased by 52% between 2001 and 2007 alone.

(snip)

All of his wasn't that much of a problem so long as the value of the housing stock was appreciating at 10 or 15% per year, keeping pace with the additional debt that households were assuming. But of course, it stopped doing so about 2-3 years ago. Translation: look out below. When people talk about the destruction of the household balance sheet, this is what they're referring to (or at least what they ought to be referring to).

In other words, the paradox of thrift notwithstanding, the growth in the economy and the reliance of it on consumer spending was built on an unsustainable bubble in the value of one particular asset - housing. The decline in those values -and the resultant tightening of consumer credit - means we couldn't return that economy right now even if we wanted to.

Which we shouldn't. It bears repeating that building an economy on handbags and Starbucks and large screen TVs doesn't do a single darn thing "to build skills, to create the new companies that are so vital to growth, and to fund the discovery and development of new technologies." That kind of activity is above the paygrade of most consumers anyway. For now, the best thing that we (the consumers) can do is to pay down debt, increase savings, and continue to sensibly buy those things we need to our daily lives - not foregoing them, but not buying more (in quantity or in designer label "quality") than we need.

That's the way to get our own "toxic assets" off our balance sheets. When, in the future, the economy and the credit markets return to some measure of normalcy, we will then be in a much better position to invest and spend planfully and wisely than we will be if we allow ourselves to be guilted into over-spending now.

So go ahead, hang your clothes outside. Drive your car till it dies. Pay cash for what you buy. You have my permission.