What lower prices?

It's not just economists who are insisting the recession is over. As many of you have probably heard, Social Security recipients won't be receiving a cost-of-living adjustment (COLA) this year. This is a first in 35 years.


So what heralded this change? Why, it's simple: Prices are going down. Or so says the equation that determines the COLA.


My only question: Where, exactly, are these lower prices?


Looking through the grocery store, I don't see much of a change. All that packaging that got smaller, while prices remained the same (or worse)? Still small. The prices? Still big.


There are plenty of food sales that make prices seem lower. And if you can catch those sales, you can definitely eat cheaply. But most of these tactics were around during boom times, as well. They just had fewer fans.


So where are these lower prices that made the COLA equation believe that seniors and people with disabilities could get more bang for their buck? Simple: Non-necessities.


Sure, you can get a great deal. If you go shopping, the stores practically roll out a red carpet. Everything's on sale, all the time -- because it has to be. People have finally clamped their wallets shut on a lot of unnecessary spending. They are occasionally lured in by a good sale, but they're wary and ready to bolt if things get too pricey.


Merchandisers aren't the only ones clamboring for people, either. Restaurants are flogging meal specials -- usually in the realm of 2 for $20. It's hard to walk past a bar or club without tripping over a happy hour special. Salons and spas are in on the act, too. Not many people can find room for $60-70 massages (plus tip). So there are introductory offers everywhere. Anything to get you in the door and familiar with their level of service.


So, yeah, there are great opportunities for specials that will stretch your dollar. But -- and here's the acid test -- how many of these places are patronized by senior citizens and other people on restricted budgets?


I'm sure that some seniors and people with disabilities pop into Chili's, Outback and TGIFriday's, but those folks aren't exactly the target audience, are they? People living on truly fixed incomes -- under $20,000 per person per year -- aren't going out to eat much at all. And how many seniors do you know who go to bars and clubs? Meanwhile most SS disability recipients are unable to work more than part-time. (If you earn more than $980 a month, you stop receiving benefits.) That means they're probably not healthy enough to go out a lot either. Trying to work around a disability, I can assure you, takes a lot out of you.


Yes, everyone needs clothes and shoes at some point. But these are people who know how to make do and how to do without. They shop at thrift stores or, at the very least, huge sales -- and they come armed with coupons. There are always cheap shoes to be had at places like Big 5, Target, Wal-mart, or on various store clearance racks.


But what about things you can't avoid? You can be careful about utilities usage -- turn off the lights, use the thermostat less, take quicker showers -- but you can't avoid it completely. And I've yet to hear about those prices lowering. (If anyone does know of a case, please feel free to correct me!)


In some areas, rents have lowered overall. But mostly it's just a proliferation of specials. While this can help minimize rent, you still have to be free of a lease and have good credit. In addition, the better offers are usually from the nicer communities. If you're just going for affordable rent, you won't get much of a break. And all the recent foreclosures mean a lot of renters on the market. It's a mixed bag. Oh, and let's not forget that you have to be able to save up a deposit -- if not first and last month's rent plus deposit. Could you do that on $1,000 a month?


If they're lucky, seniors will have their own homes. Then they are only responsible for insurance and property taxes. Both of those keep increasing, although some people have at least gotten a tax break as their house values plummet. If you rely only on Social Security payments, that could easily account for 1/3 of your income. And you better hope that no events cause you to need your homeowners' insurance. That will just increase your premiums.


Meanwhile, gas prices are back on the rise, assuming you have a car. If you don't, you can get discount fares on buses -- assuming the transit is any good where you are -- but even those costs will go up, especially as gas prices keep increasing.


Groceries can be gotten cheaply, of course, if people shop the right sales and stock up whenever possible. Of course, if you do this by car, it can mean more gas, as you shop at various stores for what you need, and perhaps make multiple trips to truly amass a full pantry. If you have to do it by bus, you're looking at a lot more problems and a lot more physical work. And all those sales are still based on smaller packages and/or higher prices.


And let's not even get into all the doom-and-gloom predictions of runaway inflation -- which would mean we actually get less for our dollar, not more. Even if the dollar does recover, there's absolutely not guarantee that the recovery will last. In fact, it seems that every proclaimed recovery -- in dollars and stocks -- is followed by uncertainty or even reversals. So what if the dollar plunges in the last half of the year? What do seniors do then, besides wait for the next COLA determination?


So, to recap:

• There are lower prices -- but almost exclusively in items that most seniors and people on disability do without. There are food and drink specials, but most of the Social Security population don't make it out to bars and clubs, or even too many restaurants.

• On the other hand, basic costs of living, such as groceries, rent/property taxes, utilities and transportation, keep increasing.
  

• The dollar is fluctuating and a lot of people are predicting inflation -- runaway or otherwise. Any recovery that does happen, may not last.
  

• Seniors and people on Social Security disability are getting more for their money, which is why they don't need any cost-of-living adjustment in the coming year.
  

Can anyone explain this to me? I don't speak bureaucrat.

Everything's amazing and nobody's happy

Many of you have probably already seen this clip -- whether on TV, on Brunette on a Budget, or as it skyrocketed to Digg fame.


But I wanted to show it again to those of you who might of missed its other incarnations. For a couple of reasons.

Reason #1: This is the fourth or fifth time I've watched it (had to sit a couple different people down to be sure they actually watched it) and I'm still giggling maniacally. Reason#2: It is actually excellent food for thought.


Before I get into that, though, I'll go ahead and let you check out the clip.





Okay, are we all on the same page now? Excellent.


The fact is that Mr. CK is absolutely correct. Yes, the economy is terrible. We're living in scary times. But, really, we are living with amazing, mind-blowing innovations that keep getting better all the time.


Whether or not you think we consume too much (we do) and are overly encouraged to live outside our means (we are), you have to admit that these are fascinating times.


We have absolutely awesome technology at our fingertips. And we take most of it for granted.


This was a good nudge for me because Tim and I have been in a funk for a week or so now. You probably noticed I haven't been posting as much as usual. I have a few ideas in my head, but writing anything halfway decent has felt like a painful extraction.


We have some good reasons for being in a funk. The student loan debacle is continuing to be a blow. The last couple of weeks, we haven't been able to make any dent in our credit card debt. And, Tim got the news that he may be bipolar.


That one has been big. It obviously sounds pretty ominous. Really, it's a different form of depression, more prone to cycles. For Tim it mainly shows up in impulsivity -- sometimes he's fine, other times it's all I can do to keep him from storming out the door on a mission -- and sleep -- he'll sleep whenever possible, then will barely get any rest.


But Tim's also dealing with all the feelings that come with a new diagnosis for old symptoms: Why didn't someone see this earlier; why couldn't everyone see I wasn't getting better?


Of course, the answer is that ADD was still a brand new idea -- when he was diagnosed, ADHD wasn't even known about. And when Ritalin didn't work, they just shrugged and got him in a program where, luckily, there was a very patient teacher who taught him to block out all the excess noise that distracted him. That helped to an extent, but he self-medicated through most of his youth, and his parents just kept insisting he was smarter than the grades he was getting. Overall, pretty demoralizing.


So, Tim's caseworker over at the Dept of Vocational Rehab has told us we need to focus on getting him on an even keel. That means finding a psychiatrist (or psychiatric nurse) that Tim is comfortable with. Then we can find out for sure whether he's bipolar. After that, they'll explore medication options.


All that will probably take awhile, which was something of a hit for us. We had been exploring some options that would at least let Tim do some phone work from home. It wouldn't make us rich by any stretch of the imagination, but he was kind of looking forward to earning a paycheck.


In the meantime, we have about 9 weeks left before his unemployment runs out. There is a chance he'll qualify for one more extension, which would give us an extra 13 weeks of breathing room. If that doesn't happen, we can make do, but it will be somewhat tight.


Because of all this, we've been just barely scraping by, physically and emotionally. We're completely sapped by the most basic chores. We're both sleeping more. Essentially, we're just trying to make it through. Like I said, things have been kind of hard.


And so I saw this clip. And I laughed. That, in and of itself, is such a big deal. But it also reminded me that we need to remember the good in and among the bad.


This is a big, scary, uncertain time for us -- and for the nation in general. We don't know what the future holds (other than some psychiatist visits) or when Tim will be able to work again. It's worrying.


But.


We also have an amazing support system. Our families will always welcome us with open arms. They will always do everything they can to help. My mom has and will help us financially, though we hope we can avoid future borrowing. And if it ever became necessary, we could move in with Tim's parents.


Again, that's a worst-case scenario. But we won't ever be homeless. That's a pretty big load off our minds.


More immediately, seeing a psychiatrist will help Tim get some answers. Uncertainty can be hugely unsettling. So, no matter what the answer, just knowing will be a good start to making life easier.


Once he has an official diagnosis, Tim can also start getting properly medicated. As a depressive, I can attest to what a difference the right prescription can make. Life becomes less of a struggle. He may also have fewer swings in mood and behavior, which will make things easier for both of us.


The right medication may also help Tim's stress tolerance. Right now, it's pretty low, and so his skin flares up in reaction to difficulties and uncertainties. If he can tolerate more stress, his skin may calm down more. That could make it easier for him to find sustainable work opportunities.


We're not expecting miracles. We are prepared for the idea that Tim may never work full-time. He'll probably need to be eased into part-time employment. But it would be a measurable improvement. It would give him options.


So, yeah, there's a lot of bad things looming on the horizon. But that's only half of the picture. We have at least as many good possibilities as bad.


Most of us -- myself very much included -- tend to be overwhelmed by worry and uncertainty. We forget all of the modern marvels around us. And that makes the world pretty small. So I say, let's stop and just marvel at a few things that we all take for granted.

• We can get water from a faucet -- no going to the river with some buckets
• We don't have to build our own homes or make our own clothes
• We have machines to take us quickly from one location to another. By and large, walking is a choice in this society
  
• We can contact people simply by punching a few buttons -- either on a keyboard or phone
  
• We can talk to people around the world at near-instant speed
  
• We "post" thoughts on technology that most of us can't begin to understand: Can any of you explain what the web is, exactly, and how we can all access it, leave information on it, etc?
• We can get paid and pay our creditors without touching any money
• We can find information and entertainment practically instantly
  
• And (as a nod to Louis CK) we have made machines that defy gravity. Metal machines.

What about you guys? What stuff have you been struggling with? What small miracles (of technology or society) have you been overlooking?

Are Americans really learning?

There's no question that we are in a recession. The job market is ugly. House values are worse. And it's best to not even mention stocks.


And so many articles are offering up all sorts of evidence that Americans have officially learned their lesson (for now, at least) and are attempting to be frugal and struggle out of debt. I can't count how many articles I've seen on this. Anecdotal evidence swoops in, and suddenly we're all back to the hard-hitting Depression-era.


I'm not convinced.


Before you start yelling, I know that many Americans did finally wake up and smell the $5 coffee. Certainly Americans are suddenly more conscious of their debt and where, exactly, past excesses have landed them. There are many people out there who are severely cutting down: selling off designer items, becoming a one-car household, and even (gasp) planning meals around what's on sale that week.


But, by and large, has America really into this frugality thing? I think that most citizens grasped onto frugality as a life preserver in their sea of debt. Now, though, they're realizing just how far away the shore is. Don't get me wrong, they'll keep holding on to the life preserver as long as necessary. But not a second more.


For example, the business world decried the holiday season as awful. What was so terrible? Well, total holiday retail sales were down 5% for November, 8% in December, compared to last year.


Remember how many people said they were severely cutting back this Christmas? If even the majority of them had followed through on this intent, wouldn't we have seen double-digit declines overall?


It's pretty easy to do, really. I was catching up with a friend today. I asked what he got/gave for Christmas. Originally, they weren't going to get each other anything, since they are in debt. But his wife told him she had her eye on a $90 present for him. So then he had to go out and find things for her. I'm guessing that was a common story in many households.


Of course, some areas did take major hits, mostly the high-end items.



This looks pretty dismal, but remember that all these negatives average out to around 6.5% ((5%+8%)/2) for the total period. So about a quarter of the would-be iPhone buyers opted out. Fewer cell phones and other gadgets got purchased.


But most of us read stories about the phenomenal season for video games and their consoles. November saw a 10% jump in video game sales. And game console numbers weren't exactly bad, either.


And, today, at the mall for the second time in two days, we had to fight to get a parking space. (I needed new shoes.) The mall was full of plenty of folks. Not all of them had bags. In fact, perhaps every 5th set of people had them. But it's hard to use this as a gauge, since people all enter and leave and different times.


What I do know is that the retailers keep hawking the sales. And it seems to at least be getting people to the mall out of curiosity. Whether they succumb to the temptation, I don't know. Only later data will let us figure that out. But they're there, and that's certainly dangerous enough, given how recently people were charging to supreme excess.


Old habits die hard -- cliche but true. If Americans are so wed to this new frugal lifestyle, they would know to avoid temptation. Malls can no longer offer entertainment, just more debt. Deep down, they probably know this. But the sales are just too alluring.


Of course, there's nothing wrong with bargain shopping. The day after Christmas, Tim and I went to the malls to hit some good deals. We got a silver ornament for $3 and got it engraved with our names and anniversary for $19 more. At the same store, we got four silver frames that we can use as future gifts. At 75% off, we spent under $10 for each.


I think we're already seeing the beginnings of frugal burnout. For upwards of 6 months, people have had to scale back severely and suddenly. Holidays made them chafe under the leash of a budget. But after-holiday sales are just the proverbial straw.


My guess is more and more people will start to backslide. Of course, this is normal. But in this economy, they can't afford to.


Time will tell if my predictions are accurate. And what effect it will have on the economy -- retail sales, credit card companies, and bankruptcy rates.


In the meantime, what trends have you noticed? What sales have you hit and what items did you actually buy?

Dear retailers...

This has to stop. Frankly, it's getting embarrassing for everyone involved.


Look, you know, deep in your hearts, that the relationship is over. That you and consumers haven't really been in sync for awhile now. They're pulling away, cutting back. You barely see them anymore. And when they are there, they don't stay long or spend much.


I can only imagine how scary that must be for you, watching them grow more distant with each passing day (and industry collapse).


And in your fear, you try to lure them in with tawdry promises of discounts and sales. But, stores, even if these ploys do work, you know it's just staving off the inevitable. The consumers are using you. They're buying, yeah, but it's mostly sale items. And it's so obvious that everyone is just going through the motions. They come in only because they know you'll give them what they want: cheap stuff. After they got what they came for, they leave and go find another store all too willing to lower its prices for them.


You're deluding yourselves that you can go on like this. Yes, you're maintaining a relationship, but only in the most superficial of senses. I know it, the consumers know it, and it's time you know it.


Meanwhile, how long do you really think you can keep going like this? You know you paid a certain price for that inventory you're flagrantly discounting. How much lower can you go? How many losses can you afford when the consumers aren't sticking around for the regularly priced merchandise?


We all know that, eventually, you have to hit a stopping point. That's becoming increasingly obvious as your cheap come-ons get more and more transparent. Macy's, you know you do this: You sent out an "After Christmas" sale catalog (four days before Christmas, mind you) that was almost identical to your "Last Days Before Christmas" catalog. Same coupons, same morning discounts, same everything.


How long do you think you can keep fooling the consumers into coming back? Eventually, you won't be able to do anything more for them. They'll realize that they've already gotten the best you have to offer. And then they'll move on.


You think you can't survive without these sales-vultures? You were fine before everyone got so power-drunk with credit cards. You'll be okay again. It won't always be pleasant. You will probably have to cut staff. But you can't expect people in foreclosure to go deeper into debt. You'd just be fooling yourself.


I know it's far from your ideal scenario. I know it's not what you want to hear. But it's the truth. And the more you play this degrading charade, the faster consumers will see through it. So stop now, while you still have some dignity left. Don't be that cloying ex who calls every hour of the day, hoping to get back together. No one wants to encourage that kind of behavior. It's annoying and a little creepy.


No, retailers, you're better than that! Play it cool. Let them know you have sale prices sometimes. But they don't have to come. Ya know, whatever. You'll be around, and, hey, if they stop by, great. But you know what you're worth. You know eventually they'll want to come back for some new clothes or the latest shoes they've saved up for. They need you. It's just a matter of keeping your cool. Of not panicking.


And if none of this letter convinced you, then at the very least STOP CLOGGING MY MAILBOX WITH NEW SALES CATALOGS.


Sincerely,

A sales-vulture before sales-vulturing was cool,

Abigail Perry

How I relax (frugally) in this economy

How I relax (frugally) in this economy


I need a massage.


Okay, really, we all need massages.


The fact is, we’re getting pummeled with bleak financial news every time we turn around. It’s disheartening – and I think it’s hurting national morale.


And I just watched an episode of Supernatural that was all about how fear can take control of you. Granted, it was a funny episode, as a normally macho guy turned into a simpering dweeb (with a great, high-pitched girly scream, no less). But the point remains: Terror and foreboding can take over, and run your life.


So, instead of contributing to the angst and dread, I want to focus on how to take back control. And the biggest way to do that is to relax.


Of course, the easiest way to relax would be that massage, but most of us can’t afford massages.


So first thing’s first:

Make sure you can’t afford a massage.

• Be their practice dummy. Massage therapists, like all therapists, have to practice. This means that you may be able to get a $30 massage. Usually, it’s for first-time customers only, but hey it’s still a $30 massage. Some people don’t take advantage of this because they don’t know about it. Others are reluctant to try a student. But in the unlikely event that the massage is sub-par, you can always ask for a supervisor and (politely) voice disappointment. Chances are, they will be eager to make amends.

• Barter. Craigslist is a fascinating read. Especially the barter section. You’ll find some pretty esoteric offers out there. You’ll also find a lot of massage therapists offering up their services in exchange for things. Like a lot of independent contractors, many of them want to trade out for health and dental. But many are also just looking to see what they can get. So think of some things you’re good at – from website-building to resume polishing to basic chores – and offer. The worst they can do is say no. Don’t forget that you may also have things they’re interested in. So look through your clutter and see what might appeal. Perhaps it’s not worth a lot, but maybe a discount on a massage?

• Trade. Okay, so maybe you can’t build them a cool website. But look around your clutter. Do you have something they might want? Perhaps something that will get you at least a discounted massage session? And don’t forget about unused gift cards. Others might have a massage gift card to trade. Or the massage therapist might take your gift card in lieu of payment (or as partial payment).



Next: Take a deep breath and try to remember: This will pass. As advice goes, it’s a little old, sure. But the fact is, it’s the best way to survive with your sanity during these tough times.


When the anxiety starts mounting, you need to try to calm yourself down. You can do this pretty simply. You just have to remember that you’re ahead of the curve.


Think about it: We keep seeing all these stories about how the American family is having to change in the face of the dreadful recession. The stories talk about shopping sales, couponing, budgeting, trimming expenses and tons of other things that you’ve already dealt with. You’re much farther along than most of your countrymen (and women).


If you’re still breathing into a paper bag at this point, then you need to make a list. It can be on paper or in your head – whatever works best for you. List all of the things that you have done to further your goal. Be sure to list each expense you’ve cut as a separate item. After all, each one required a decision on your part, so you need to recognize that. Even if you haven’t madeyou’re your changes yet, you probably still have a lot of things to list.


Off the top of my head, we’ve made plenty of changes:


1. Tim and I are using more coupons
2. We’re stocking up on sales to avoid the shopping as much.
3. We are trying to cook more and eat more leftovers.
4. I’m shopping around for cheaper Internet options.
5. I’m buying less candy to cut down on grocery bills.
6. We’re using the food bank
7. We’re making a conscious effort to make fewer impulse buys.
8. I’m trying out online programs to bring in a little extra money to throw at debts.
9. I checked out my credit report to ensure it was accurate (a higher score gives me better leverage with card companies)
10. We lowered our Blockbuster Online membership to reflect our actual needs, saving $15/month.


So take a moment to breathe deeply. Realize that you’re already doing a lot. Think of it as a budgetary rosary. Going over the changes you’ve already made will help you feel more in control of your financial fate.


And if that’s not enough, make a to-do list. Think of ways that you can do more. Then vow to implement one a week (or a month, or whatever) to make your money go even farther. Whenever the anxiety starts mounting, review all the changes you’ve made so far to get away from debt and live within your means.


Finally, if you still need to relax, create your own spa atmosphere. You can make bath salts pretty easily, especially if you have a crafty hobbies store near you. Most of them sell affordable sea salts, and even some coloring or aromas you can add. Or, you can find discount versions at Ross, Marshalls or Tuesday Morning. You can make an affordable sugar scrub with white sugar and mineral oil. It’s great for exfoliating.


Don’t forget exercise is a great relaxer, too. (And an excellent prelude to the nice long bath.) Exercise will help you burn off some of the stress. It will also raise your endorphins. And if you get out, the natural light will be good for you, especially in the wintertime. Take a long walk or jog and you’ll feel better..


Or rent your favorite comedy, pop some popcorn and have a good laugh.


Just do whatever you need to in order to relax and escape a bit. Whatever it takes to feel more in control.

Who'd have thought being poor was the way to go?

It strikes me, strangely, that Tim and I are pretty recession-proof.


I guess the one benefit of being so far down on the financial food chain is that we don't have far to fall. After all, Tim's unemployment is more or less guaranteed until April. A friend has gotten him an interview with Target as part-time security, which would help him stretch out the funds even longer.


As far as actual careers go, now that he's working with the Dept of Vocational Rehab, I am thinking his odds of getting a job will actually be higher. And, of course, there's a chance that he'll have to get some training/schooling for his work -- so some of the economy may have settled by the time of his actual job hunt.


Meanwhile, my contract work is guaranteed for close to a year, and my disability payments will keep coming until I have done this work for 9 months.


Yes, there is the danger of lowered credit lines; but so far we've steered clear of that.


So the only real recession problems become:

1. Higher food prices. It's just a matter of time before food costs creep back up.
2. Inflation. Our dollars simply won't go as far.
3. Job market. Okay, I do think that with the state on our side, Tim's chances of a job are better. But there is always the chance that the sector he ends up in will be cutting back, or will simply have a lot of other job seekers.

But still, I'm pretty hopeful. Why? Because none of these are huge deals for us.


Higher food prices. We're already shopping stores like Grocery Outlet and supplementing our groceries by going to the food bank. So while food prices have gone up noticeably since even this time last year, I'm still able to pay relatively affordable prices for most items. And Tim and I are trying to cut out foods that are pricey luxuries.


Tim has his cereal. I am a total healthy-cereal convert since discovering Kashi GoLean Crunch. But Tim loves his Reese's Puffs/Fruit Loops/Cocoa Puffs or whatever the cereal of the day is.


And cereal doesn't tend to go on sale for more than a week or two at a time. Often, the sales aren't all that great, either. Save 50 cents on $4 cereal? Hey, savings are savings -- but that's still too much to pay (in my less-than-humble opinion) for something that doesn't even fill him up for two hours.


Add to that the fact that he tends to eat only one cereal for around two months at a time, and it's a huge grocery item. Luckily, we found that at least a couple of the cereals he likes are at Grocery Outlet for $2/box. Currently, he's into Fruit Loops. And one or two of the other cereals are at Sam's Club, for when we can't find a better deal elsewhere.


Beyond cereal, Tim's been reining in his expensive tastes. Generally, when we're shopping, I try to find one or two small treats that are on sale and offer those up. This way, he doesn't feel completely deprived, but we're not spending a ton of money.


GO is especially good for these things. It even has a good selection of expensive cheeses: We got gouda for $3-4 instead of $6-10. If GO doesn't have the cheese he wants, the next-best option is Sam's Club. He felt like he was getting a luxury, but our wallet didn't.


As for me, I have my junk food to cut down on. This week, I only bought candy once -- after two straight days of craving Red Vines. I did, however, snack on some of Tim's Fruit Loops, which means we'll run out sooner. So I have to keep paring down my sweet tooth.


One way I'm going to do this is to stock up on canned fruit next time there's a good sale. Also, I try to keep myself busy when I'm craving sugar. If I'm playing a game online or working on the blog, it's hard to eat. Most of the last week, I was able to stave off candy cravings this way.


Inflation. There's really nothing we can do about this, except to spend more carefully. You use more coupons, scout more sales. It's easier said than done, of course. Working people have time issues; I have fatigue that sometimes makes shopping not an option. But Tim has agreed to start walking, biking or taking the bus up to the stores as needed. This will also help cut down on frozen and junk food, since they would melt on the trip back.


As for the rest of mundane expenses, well we just have to keep scheming. So far the new owners of the building haven't mentioned raising rents. If they do, I have a plan to dissuade them. And Tim and I are both trying to avoid unnecessary spending, whenever we can get away with it. In addition, we're slowly moving to a cash-based system. That will help keep our debt steadily declining.


Job market. Okay, as I said before, I think having the DVR helping us will actually make Tim's job search easier. Not only will Tim have advocacy to back him up, the department (as I understand it) works with at least a few specific employers to keep some more flexible positions available. Additionally, it obviously has in-roads with the state government for jobs.


But there is the possibility that Tim's desired career field -- whatever that ends up being -- will turn out to be chock full of desperate job seekers. In that case, we still have until the end of April before his unemployment checks would run out. And three of Tim's friends work at Target, which means it's plausible he could get a position there while continually applying for a job in his chosen profession.


He's also considering the possibility that, since he has supervisory experience from his last job, he could try to rise through the ranks at Target. Certainly it would be decent career potential, but I did remind him that there is the possibility his skin will start rashing up again. He agreed to not to put all his eggs in that particular basket -- at least before seeing what DVR can do for him.


So, really, we should weather this economic storm pretty well. When you get right down to it, this whole economic "crisis" is only one for people who have something to lose: investments, real estate, jobs.


I'm not saying that life will be easier for the rest of us -- except for those in the collections biz. But I think that, for the vast majority of the working poor, life will continue on more or less unchanged. Food money won't go quite as far. Rent may go up a bit.


But it's also a lot less likely now that they'll get kicked out of their building because someone wants to make it into condos or townhomes. And their jobs aren't much in danger. There will always be a plethora of jobs that don't pay well and have little to no health insurance.


Really, who'd have thought poor was the way to go?

Just a random thought...

As it's Friday, my thoughts naturally turn to garage sales.


I'm wondering, with the economy in the tank and so many families hurting financially (or just plain scared they will be):


Do you think we'll see a much-extended garage sale season?


I think, here in Seattle, at least, we already have. It's not quite the bustle that occurs in the summer, but I still see more signs than I'd expect to.


Perhaps we will all be able to nab some extra yard-sale deals this year, for gifts under the tree, etc.

Fed up with the Fed

Okay, actually it's Paulson, who is Treasury, but I couldn't resist a good headline like that!

I was perusing blogs today, only to learn a couple terrifying facts about the proposed bailout.

1. $700 billion is a number the Treasury picked at random.
2. There are tons of better things we could do with the money.

• $180 billion would repair America's bridges
• $185 billion would fix the nation's rail system
• $150 billion would set each American up with private health insurance

Anyone else notice how we're still not at $700 billion yet?


Of course, the article doesn't say whether the insurance is perpetual or for one-year. But even assuming a single year cost $150 billion, that's just over 4 years' coverage.


This talk is all a little moot, since the Republicans walked out of negotiations tonight. (And you know the world has gone screwy when I start agreeing with the Republicans' concerns!)


But the proposal the Dems worked out was relatively more reasonable (compared to the random $700 billion being requested): $250 billion now, with a potential $100 billion more if Paulson can demonstrate it's necessary.


Still, it's placing a lot of undue stress on the taxpayers for businesses' mistakes. And this alleged urgent need is still kind of hard to see. I know people are still being foreclosed on. But how sure are we that throwing money into corporations will mean those same companies create better mortgages? (And isn't that just enabling/rewarding the people who got in over their heads?)


It seems to me like the free market, though in distress, is taking pretty good care of itself when push comes to shove. Everyone speculated that the government was going to bail out Washington Mutual. When that didn't happen, JP Morgan Chase took over.


Wednesday, Warren Buffett shoved a bunch of money into Goldman Sachs -- netting himself some great terms, but still keeping the company afloat. And there's talk that Goldman Sachs may use the capital to prop up other businesses.


So if the government is so edgy, maybe it can make a plan and keep it in abeyance. Then it's ready if things fall apart.


I'm wondering, though, if maybe the opportunism that got most businesses into this mess (greed to take everyone up on the subprime) will also get them out of it (other businesses will swoop in and buy them up when they're down).


Regardless of how this plays out, I think there is no longer any excuse for every American to have health care. Politicos carp about the cost. But they seem to generally agree to spend more than that on private enterprises.


Wouldn't health care have a better effect on the average taxpayer's bottom line? Think about it:

If every American had private health insurance

• Businesses would no longer have to shoulder the cost of employee health plans. This would free up more capital, which could mean fewer layoffs and maybe even raises.
• Employees wouldn't have to contribute to their own premiums through work. That would free up at least $100 a month for most insured Americans. This money could go toward debt.
• The standard of living would go up, as poor people didn't put off seeing doctors and actually got treated when conditions were still minor and non-life threatening.
• The government would save a ton on Medicare/Medicaid.

I think, in all, this would have a much bigger, more direct effect on the average citizen than to throw some money at banks and rely on the good ole' Trickle Down Theory.

The obligatory "stock market" post

Unless you're living in a soundproofed house without connection to any media, you should have heard about the stock market panic.


Long story short, inasfar as I understand it:

1. Lehman Bros called Chapter 11. The Fed wouldn’t bail them out, so they filed for bankruptcy.
2. Merrill Lynch opted for euthanasia. Lehman left a lot of uncertainty. Merrill Lynch wasn’t ready to gamble. Bank of America bought it up.
3. AIG is saved. Despite putting its foot down with Lehman, the Fed announced it will guarantee up to $85 billion for AIG.
4. WaMu sinking? There are rumors that the government is going to help out this bank, which has been foundering for some time.

According to experts, this is only the beginning. Or the middle, if you see this as an extension of the subprime crisis.


Point is, there's much wailing and gnashing of teeth. People are panicked, anxious, angry, pessimistic -- all sorts of unpleasant adjectives. An MSN Top Stock's blogger even went so far as to refer to the "stock market collapse" which I think is still a tad premature.


That said, this isn’t my area. I didn’t want to do a post about it. But as crisis piled on crisis, I started seeing an underlying theme near and dear to my heart:


We've stopped seeing money as real.

Of course, there are plenty of other factors: too much risk, too many rewards for those risks, greed, myopia, arrogance, etc. But, really, at the base of a lot of these problems lies a common thread: People deal with money as an abstraction.

The art of the abstract

We're all guilty of this, to some degree. More technology meant more convenience – but it also meant that money stopped automatically being equated with cash. Instead, it's theoretical money, bits of information, numbers on a page.

The main thing is money isn’t really money anymore.

Most Americans get a slip of paper each payday. It tells them how much they made, how much they kept and whether it's already in their bank account.


We might withdraw some cash for day-to-day needs, but most of the money remains in our accounts.

And what about those accounts? How real are they?

• Can you point to your account?
• Is it in a physical location?
• Is there a cash-filled cubbyhole with your name on it ?
• When you pay bills, do the bankers bundle up some $20s and run to the post office?

Of course not. The idea is laughable. But if it’s not really anywhere, how do we know that it’s really there?

You could argue that those numbers in your bank buy goods and services. But with checks, debit, credit and EFTs, we still aren’t dealing with actual money. It’s still a game, shifting numbers from one spot to another.

Don’t fence it in

The fact is, this society really can’t handle the limitations of physical money. As it stands now, our money exists everywhere.

• It could be at any one of several bank branches.
• It could be in an ATM (and not even, necessarily, your bank’s ATM).
• It’s always in your debit card, just a PIN number away.
• It could even be online, so that we can pay bills without stamps.

Cash, on the other hand, is only ever in one place. And if that place isn’t in your pocket or wallet, you’re pretty much out of luck.

So, you can know that your money is real – and risk limitations. Or you can take the bank’s word that it’s available. And, of course, the government’s word that you’re safe in the hands of the FIDC.

Out of sight, out of mind

I really think this is a big source of our growing carelessness with money.

How are you supposed to treat money as real when it’s nowhere and everywhere? How do you take money seriously when it’s all just a bunch of numbers?

We know that this is an attitude that lets people get into debt. They think of credit card purchases as something other than real money. They lose track of their spending. It’s just so easy to spend when it’s numbers, not bills.

And when the debt gets bad, those numbers become pesky or depressing or maybe even scary. So they ignore the numbers. Because how much can figures on a piece of paper really hurt you?

Eventually, this cavalier attitude was bound to spread to mortgages – especially in high-priced areas.

Housing in most metropolitan areas is beyond expensive. This means that mortgages are bound to be sky-high. Since those numbers were so ludicrously large, people were able to dismiss them as abstract. (I’ve noticed a strange trend: The bigger the number, the less real it is.)

The numbers were too big to comprehend, and so people didn’t try. They relied on banks to tell them what they qualified for. And that’s what they spent.

I think we all know how most of those stories ended.

So what now?

I’m not sure there is much of an answer. We’re not going to undo decades’ worth of technology so that money can be a more solid concept in people’s minds. But as long as we’re able to transfer huge sums with the click of a mouse or a swirl of a pen, money isn’t going to seem real.

A small start is what many of you are already doing: using cash whenever possible. But this system only makes a small dent. Even people who only use cash throw around an awful lot of big numbers.

Net worth. What does that mean? It certainly doesn’t mean they could cash out tomorrow. Often it includes a house (minus any remaining mortgage) and retirement accounts they aren’t supposed to access for at least another decade or two. But a net worth of $200,000+ sure sounds nice, doesn’t it?

Salary. It sounds impressive to make say, $60,000 a year. But is that really what you get paid? Yes, in a sense. But a more concrete answer is the amount you actually take home in pay. Planning out finances using pre-tax amounts is just budget suicide.

Debt. Some bloggers are tens of thousands of dollars in debt. Tim and I owe $12,000. I can’t even begin to picture what that looks like. To me, $12,000 is pretty abstract. It’s not real money. It’s money we owe. Money that's already spent, which means not actual cash.

Expenses. Can you picture what it would look like – your entire debt as a stack of bills? How about shelter costs? Can you picture paying your rent or mortgage in cash each month?

Fuel. What about gas? If you had to pay cash at the pump, would you be carpooling more? Would you have traded in for a smaller, more gas-efficient model?

In all, it just makes me wonder: If we didn’t have credit to fall back on? Would people be better or worse? (Tim would be worse off: We financed his expensive oral surgery and dentures on a card.)

Would no credit help inflation? Hurt it?

Most importantly, would people have a better sense of fiscal responsibility? Would they be less prone to thoughtless consumerism? Or would innate greed simply find another way to come out?

These are questions I do not know the answers to. But I feel like I should. What about you?

One of those days....

I had hoped to have a post up about the stock market trouble several hours ago. But all yesterday I spent fighting some bug. And today was just hectic and spent what time I did have trying to pare down my wordy, wordy blogger-ness. Which I will not subject you to. So as I trim it down, I present you with a post inspired by another frugal Seattleite, Saving Cent.

Also, be sure to check out Frugal Rhode Island Mama's weekly giveaway of a $10 CVS card.

Forget respect, I'd take a little responsibility!

I decided to try out this BlogHer that everyone's so keen on. So here's a lil post I did especially for those folks. (But I would never deprive you all of my rants. That would be cruel.)

I feel as though I am beating a dead horse -- apologies to PETA -- but I just can't over how many people in this country act like truculent teens.

When you confront a teen about a mistake, chances are that they'll apologize in a half-hearted way (if they bother at all). Then they want you to clean it up for them. Because, after all, they're still just kids, right? If you try to make them understand the gravity of the mistake, they roll their eyes. Exasperation.

Maybe we didn’t push enough, and so they assumed someone would always clean up after them. Or maybe it’s just from living in a society that dips youth in gold and places it on an altar. Maybe it’s that adults now act more like children than ever: Always buying new, flashy toys; playing video games; eating unhealthily.

Whatever the reason, this society is disinterested in owning up to mistakes – particularly if it means making things right. It's so much easier to blame others. Obese? Fast food chains are at fault. Upside down on your mortgage? The lenders gave you too much mortgage.

This sort of thinking is awfully convenient. It allows you to walk away with no guilt. Because it wasn’t your fault to begin with. Unfortunately, it also means you don’t learn from your mistakes.

I know that some folks were duped into adjustable-rate mortgages but, by and large, people just wanted things that were previously out of their grasp. And once it was within reach, they didn’t ask questions, didn’t look critically. They just bought into the advertisers’ hype that they “deserved” these things.

Here’s my final bit of exasperation: “Upside-down on your mortgage.” What does that mean exactly? Well, I know what it means. But why does that situation somehow absolve you of any wrongdoing?

Even with the housing price inflation of the past few years, how “upside-down” can you really be? I would be shocked to find anyone who can answer more than $50,000. My guess is, most people are maybe $10,000-$20,000 short.

So why do they get to walk away from that responsibility? Why do they get to think that if they don’t break even, they have no options other than giving up?

They decided to get a house. There’s always risk with that: disability, prolonged illness, unemployment. With most kinds of investment there is risk. And they accepted that when they signed the papers.

Yes, $10,000 is a lot of money. So is $50,000. But you can pay it back. It will take time. And they will be forced to cut back and do without.

But it’s money they owe. Why do they think they're allowed to opt out because things didn't go according to plan?

If you lose money in the stock market, you can’t walk away. When you lose at a casino, you can’t go ask for a do-over. You accepted the chance of losing at the same moment you accepted the chance of winning.

But in this country people think that they are owed a happy outcome. When the unhappy news comes calling, they have plenty of excuses why they can't be bothered.

• 
  
  They point to children and say, “We have to live somewhere.” Fine, rent. Go for a small apartment.

• 
  
  They say they have too much “stuff” to fit into an apartment. Uh, isn’t that part of what got us into this problem? Sell whatever you can and put the money toward the debt.

• 
  
  They say their kids need to go to college. The kids will have to save on their own: holiday money, babysitting and a part-time job during the school year (full-time in the summers). They may still need to take out loans. It happens.

We need to start convincing people to take responsibility. We owe it to ourselves and to our children to stop this cycle. Teach your kids that debts should be honored and that mistakes do have consequences.

Otherwise our future is not only full of annoying whining, but also pretty bleak.

Damn you, subprime!

Here's why I hate subprime mortgages:

• Not because they were a stupid idea that allowed too many people to get houses they couldn't afford.

• Not because the lenders were being myopic and foolhardy and now have government help.

• Not because the consumers were being myopic and foolhardy and now have government help.

• Not even because the effect of all the mortgage-troubles meant that people aren't paying their cards and now card companies are pulling nasty tricks like randomly raising people's interest rates and/or lowering their limits.

Nope. I hate the subprime because there's an extra way that the rest of America is getting the shaft: rent.

• When people walk away from their homes, what do they do? They rent!

• Even when people sell the home they can't pay for, what do they do? They rent!

• And all those people who want to buy but can't -- because even though they can pay the mortgage, the subprime/Fannie/Freddie crisis means it's really hard to get approved -- what do they do? They rent!

And what do landlords do, when faced with a deluge of would-be renters? They raise rents!


The city of Seattle has lost its mind. Rents everywhere have skyrocketed beyond absurd. (Apologies to anyone in real rent-crazy cities like NYC. I know it sounds like I'm whining. But this is a case of serious sticker shock.)


Yeah, rents have been slowly creeping up ever since I moved to Seattle. And it sped up a bit in the last year or so as the worst of the subprime hit the fan -- to coin a phrase.


We pay $700 for a 648 sq ft apartment in a secure building with underground parking. No washer/dryer in unit. A couple of units in my building rented for $780, and I was shocked. But the last unit went for $870, and there's another on the market at that price.


The last time I seriously checked out apartments, about a year and a half ago, you could find a 1 BR apartment with a washer/dryer in unit for around $750. Maybe $800-850 if you went for a bit of luxury.


I'm seeing a ton of apartments going in the $900s. For a ONE BEDROOM. This is insane. I'm seeing similar prices all throughout the city (except in the southend which is really not an option for reasons of safety, gas money and others).


So what can I do? Well, I can:

• Hope the subprime crisis eases up a bit in the near future, since we've been focusing more on the credit crisis lately.
  

• Hope some of the furor is due to school starting soon. There's a high demand right now.

• Keep an eye out for a decent apartment and nab it, asap. But that means not waiting until rent actually goes higher. Plus, there are restrictions as to when you can give notice.
  

• Prepare for a rent raise with some thought.
  

This last one probably has the best shot at success. The newer apartments have been retooled by the owner:

1. New paint jobs
2. New carpet
3. Tiled backsplashes in the kitchen
4. New counters

That's easily $1500.

Not to mention the following will need to be done if we move:

1. New fridge (our liner is cracked and molding and it's an old model anyway)
2. Patch up some holes the owner made in the bathroom ceiling (long story, involves a dripping pipe)
3. New linoleum in the bathroom
4. New sink in the bathroom (ours actually has rust in a few spots that has gotten progressively worse, but not enough so that it bothers us)
5. Probably new counter, since they'll replace the sink.

That's got to be at least another $1000. So even assuming I've overestimated costs, it'd be a minimum of $2000, probably closer to $2500.


So I plan on writing a polite note pointing outthat our apartment is in very different shape than the units currently renting. And if they insist on raising rents, we will probably move, which means a couple thousand dollars of repairs. Even if they can rent it for $870, it would take them at least one year to recoup the cost of repairs.


Meanwhile, they don't have to hassle with move-in/move-out stuff, deposits, leasing, or troubles with the new tenants. (We're pretty easygoing and don't ask for much.)


Well, this post has calmed me down a little. I am still pretty indignant about the whole rent-scenario. But it seems like I have a few more alternatives than when I started the rant. Even so, let's all think happy thoughts about my rent staying the same, okay?

It's not skimping!

On Monday, I read an interesting little piece on MSN's Top Stocks.


It seems there's a mini-baby boom in the U.S. And now's the time, it seems, to invest in certain stocks: Disney (especially because of the Baby Einstein brand), LeapFrog and Gymboree. These are companies that consultants say will see a lot of business from the boom.


So what on earth does this have to do with frugality?


Well, sure, it's not apparent. But it is about parents. (And if you just groaned, feel free to blame/email my mother for that lovely punning tendency.)


Anyway, here's the line that tripped my miser-alarm: "Parents don't skimp on their children."


Above the high-pitched wail of said alarm, I couldn't think of anything. I just kept rereading those words.


I always thought skimping implied forgoing basic necessities and niceties, usually because of monetary concerns.


Sadly, none of this really should surprise anyone. We're in a credit crisis, which is following on the heels of a subprime crisis. All because of a sense of materialistic entitlement that seems to pervade the country.

• People decided they deserved big houses -- as big as they could get.
• People thought, "I could get a lot more car if I just leased instead of buying."
• People decided they should get the biggest, newest and/or best technology -- even if they had to put it on the card

So we end up with a whole bunch of people who are in danger of becoming homeless -- but have great plasma television sets.


And since the average parent thinks his kid derserves everything, well, it's even easier to go crazy.


Since children learn from example, they will, of course, inherit this attitude about conspicuous consumerism. How could they not? They're given more toys than they can play with (not that my parents were somewhat guilty of that). Then, they're put in front of the TV which handily tells them what they need. And there are always new products to want. Something bigger, better and (it practically goes without saying) more expensive.


And as their parents cave to every little quickly-discarded fad -- from Furbies to Tamagachi and back again -- they learn that they deserve everything they want. And what they want is whatever they see.


But doesn't being a responsible parent also include knowing when to say when? Doesn't it include raising kids who know they don't deserve anything?


So many people, in the midst of the economic woes, are wondering where this attitude came from. People blame lax credit standards, but that, I think, was just a case of opportunism. I honestly don't know when it started. Probably, it's been building since mechanization started easing the physical toil of most people's jobs.


What I do know is that, since credit cards have become so ubiquitous, our country has never been the same.


MP Dunleavey points out that credit changes the way we think about money -- and not for the better. Once you've been in debt, you're likely to end up that way again.


And if you don't believe that, you haven't been paying attention.


Heck, I've only been around for 30 years, but I know we've scraped out of a couple of recessions in just the last decade or so. Things were bad, we became more circumspect -- at least initially. But, instead of really cleaning up our act, we were like grounded teens: Biding our time until it was okay to go back out. Then we just started the process over.

That's why I'm pessimistic about how many Americans will actually make lifelong changes to their spending habits. There are too many defensive people out there, blaming everyone but themselves


In a few cases, people were actually lied to. But more often, they were victims of their own greed. They bought into the hype that they deserved it all.