Business as Usual

When we invaded Iraq we asked Pres. Bush if he would release the oil reserves to stabilize prices the way his father did when the Gulf War broke out in 1990. He said no. He said that would make us appear weak. So for the last five years we’ve tried to operate rather misguidedly under the presumption of “Business as Usual.” The problem is that as prices have gone up we have shifted the difference onto credit cards. The shell game that we used to think we were good at has gotten more and more difficult as we’ve done “0%” balance transfers from Peter to Paul and vice versa, all the while the paycheck we’ve used to finance the whole thing has gotten more and more watered down. This has happened despite whatever raises we’ve gotten, and those have been shrinking as well.

What should we have done? We should have realized that this is not the President Bush that we grew up with in the 1980s. Not opening the reserves was a signal that higher prices were coming and quicker than we thought. We hollered when the gas hit $2. We moaned when it hit $3 and now that it is at $4 most of us are cussing. Those of you who don’t suffer from acute potty mouth, you’re cussing too. You’re feeling the same stuff the rest of us are. You’re just more elegant about how you express it. We know what you really mean when you say “Fiddle Faddle!” And if you’re a Galactica nerd, you’re saying “FRAK!” But seriously we should have started shortening vacations, combining and consolidating trips, eating out less, all the stuff the budget nerds tell you you need to do.

Would being more mindful of our spending have hurt the economy? Not in the sense you might be thinking and certainly not in the manner it is now. A reduction then would have clued the business community of what was coming. I doubt it would have stopped any of these price hikes in fuel. The people who could have stopped this do not listen.

The Illusion of Making Ends Meet

Making Ends Meet is basically a neurotic shell game whereby the consumer tries to balance positively their income to their expenses and can be likened to trying to cinch a belt of a fixed length around an ever expanding mid-section. You try sucking in your gut and holding your breath and straining and tightening such abdominal muscles as you still have and every now and then you get the two ends together and buckled but then you can’t breathe so most days you hold the belt together with plastic. This method worked okay when it was first introduced but then somehow, instead of trying to shrink back to where everything fit comfortably, eventually people became proud of their plastic. They started looking down their noses at others for not having their kind of plastic and comparing different colors and issuers of plastic. Eventually the plastic started wearing out and instead of seeing they had a problem they started trying to use new plastic to hold old plastic together. Over the years people have come up with temporary fixes, duct tape, elastic, velcro, rope, chains, safety pins, bigger clothes to cover up the problem but these things only go so far. The only answer is to take action to get yourself and your finances down to a size that fits well within the belt that you have. When you start working towards that you’ll find yourself getting angry at various people and institutions, including yourself. The anger has to come and go. That is the process of emotions. There’s no way to go back and undo the damage that over-indulgence and over-extension has done in people’s lives. There’s no way to bring back anyone who has committed suicide over finances, or anything else for that matter. What we have to do is change our futures by not continuing the bad habits of the past.

Economic Theory

They say it’s recession when it’s happening to someone else and depression when it’s happening to you. I think that’s too exclusivist. It creates an atmosphere of us against them and fosters more class warfare. Here’s how I view it:

It’s recession when they’re using a condom.
It’s depression when they’re giving it bareback.

That’s what’s happening in the world. Some folks like it. Other folks don’t.

Becoming Self-employed

I need to calculate the cost of pursuing my web business full time. Insurance is going to be expensive. I figure if I have enough work coming in I might be able to leave the paper in 2009. I’m not sure which insurance plans I will be eligible for. This is a huge step. It’s not that I am frustrated with my job. I’ve already gone through that and things are pretty much okay right now. Then why am I looking to work from home? One strong reason is the $2.85 I paid a the gas pump last night. I live in a part of town where everything I need is within walking distance of my house. That doesn’t mean that I would walk everywhere. However I can get to the grocery store, book store, gas station, hospital and a few restaurants in about 4 minutes. That doesn’t mean I won’t drive. It does mean that the daily 26 miles I am on the road will be greatly reduced. Insurance is a bit part of this. I would most likely need to beef up my homeowner’s plan in addition to finding a suitable health plan. My thoughts right now do not take into consideration any program that the government might come up with in the future. I am basing all research on the idea that there is no universal health plan in place. I will also have to put aside extra money towards retirement. I will be losing a lot from my company in the way of pension and I will have to convert my 401(k) money into an IRA. I may wait an additional year since I have a loan out from my 401(k) right now and that won’t be paid off until 2010.

It’s Decided. The Bush Rebate Goes to the Bank.

I’m sorry. I just can’t do what they want. This isn’t helping keep us from a recession or depression or whatever it is we are headed towards. If I take this money and use it to buy an iPod or camera or whatever I will just be following along with the rest of the mind-numbed who had a choice but took the easy route. I am going to look for a $500 CD and try depositing it on that for a year if possible. I really think that would be the best use of the money. This way I am “buying” something with it…just not a trinket. I’ve got iTunes on the laptop and an MP3 player. That needs to suffice for now. Maybe by this time next year they will have improved the iPod Touch even more. A camcorder would help since I plan to use one in my business. But that needs to be purchased with proceeds from the business not from this government funnymoney. Yeah it’s all coming out of my collective pool (Read: Casserole Dish) of funds. But the money from the government wasn’t budgeted for and shouldn’t be indiscriminately tossed about.

Interest Rate Slip

I’ve noticed that the rate on one of my accounts has dropped a little. I don’t know whether or not that has to do with the FED dropping rates a little or not. I like earning a bit more from my online bank account than the standard bank but I don’t think I want to go back to the post-Carter days of 14 percent interest or even the post-Reagan days of 8 percent. Whatever the banker is paying for the use of your money he’s charging more for the use of his. That drop of about a half percent also doesn’t tell us anything about how the economy is doing. If we could see some relief at the gas pump it might but with prices bottoming out at around $3 a gallon over the Winter we’ll probably see a floor of $3.89 or so by July. By floor I mean a lowest average price nationwide. We know that California will be up over $4 by then with their premium price much higher. I am glad I am choosing to not travel this year.

Living out the dream

If the dream begins with the question “What do you want to be when you grow up?” It ends with the statement “I shoulda, I coulda, I woulda.”

We all live out two lives. There is the life we pictured ourselves having when we were young and then there is the life we actually live. The difference between these two is affected by a number of different things. A large part of living out or not living out your dream has to do with preparation but that’s not all your fault. Preparation takes the form of physical, mental, linguistic, financial, social and spiritual and it needs to begin very early in life. Parents begin the preparation. Parents and schools continue it. You finish it. Some parents shirk their responsibilities in this area and leave the task solely up to the schools…usually the public school system. The extent to which it is entirely the job of the schools to teach these lessons is a subject of ongoing debate. The results show how all this works out. We exit the school system retarded in a number of critical areas for everything life is about to throw at us. My apologies for borrowing a word some consider sacred to a certain concept but that is the best word for what many young adults face. Our financial development is retarded. We reach adulthood not understanding that you cannot consume more than you have produced. No one teaches us that whatever isn’t earning you money is costing you money. Instead of that we’re encouraged by advertisers and credit peddlers to borrow sums we cannot pay back. And that corruption goes all the way to the top. Right now the American president is proposing sending everyone a check to spur economic growth. And there are rumors that they really want us to buy stuff with it rather than save it. I’m suggesting that everyone put it to the best use they can, starting with savings and working outward from there. Since we aren’t prepared for dealing with money growing up we have to take the time to learn about it on our own. More people are starting to understand this and learn the things they have needed to learn thanks to authors like Robert T. Kiyosaki of the Rich Dad/Poor Dad fame. I really wish I could have sat out a year after high school and before college to just study money. That would have helped me a lot over the last 27 years. I mean I didn’t want to be a banker, but I have only begun to understand why my finances have gone the way they have.

There were several things I thought I wanted to be when I grew up. When I was in kindergarten the teacher brought out a bunch of little posterboard dolls and asked us what we wanted to be. This was in the late 1960s. There were no male nurses, female cops, or postpersons. There wasn’t even an astronaut in the pile. And after the moon that is what I thought I wanted to be. Well I didn’t prepare myself. And so the astronaut thing is out. Best case I will be able to retire in 11 years and become an astronomer. I have a lot of work to do towards that end and most of it doesn’t have anything to do with astronomy. Is the fact that I am not doing what I set out to do 39 years ago anyone’s fault? Yeah. Mine, mostly. Some of it my parents. Some of it the schools. Things could have been done/happened differently all around. And that is not unique to me. I don’t know anyone who set out from age 6 and worked towards a goal and achieved it at 25. We make decisions. There are distractions. At best we end up headed back towards whatever it is we set out seeking. So if there is anything that you wanted to do more than anything in this world when you were 8, go do it. Don’t let the fact that you’re 58 stop you. If you wanted to be a scientist and you’re a journalist, become a science writer. If you can’t be exactly what it is you wanted, then figure out a way to at least be able to rub up against it. Fix the plane if you can’t fly it. Design a better breathing apparatus for firefighters. Improve the shoulderpads and shinguards for football and soccer players. No it’s not the same. But at least it allows you to touch with your passion and your abilities the thing you have always been passionate about.

Shopping Math: I should have listened to Mom

I have started doing the math concerning stuff in the grocery store. Tonight I noticed that the single pack of 72 of an item costs more than two packs of 36 because the packs of 36 are on sale. I suspect most people are thinking big package, economy pack and so forth. Well in a lot of places that is the case. In this situation I was able to spend $1.64 less for the same amount of product. I noticed a similar thing when buying adult low-strength aspirin. It was actually cheaper to buy the bottle of 200 rather than 300. I’d like to find someone in charge of setting prices and find out why they price things like that.

MoneyMagic

Whether it is your first or fifth, a lot of work goes into getting Mortgages. You can do all the shopping around yourself and save a lot of money or you can hire someone to find you the best deal. Even if you choose this last option the more you know about mortgages the better off you will be. Mortgage search services like MoneyMagic are becoming more and more popular. They provide in-depth explanations of each type of loan product and free financing advice. You’ll be able to read guides for the mortgage types. You may find it better for your situation to break a loan up into two at different rates. Going in to see a loan officer understanding what your needs are can make things much easier in a month or two when it is time to begin paying the note. Use the mortgage calculator on the MoneyMagic website and request a free quote. Check them out at earth.co.uk

Direct Student Loans

When I was applying for student loans and other forms of financial aid, we had very few options. There were grants and loans but not much was explained to us about how each was funded. We knew we didn’t have to pay back the Pell Grant and the scholarship funds and that we would have to pay back the student loans but that was always 6 months after graduation. The three options available to you as an undergraduate or as a graduate are Federal loans, including both Stafford and PLUS loans, private loans and consolidation loans. Direct Student Loans explains each type of loan, helps you determine what you are eligible for and has the necessary applications available online. There are FAQ pages for consolidation loans so that you can understand why consolidation is important and what it entails. Most students graduate with several loans so consolidation is usually the best route to take. Directstudentloans dot com is a part of the Student Loan Network and is dedicated to helping you make the best decisions so that the process of applying for aid as easy as possible. You can also subscribe to Financial Aid News for information on financial aid as well as notices about scholarships and grants.