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Personal Finance

Decomplicate Me!

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Ohhhhhh gawd one more piece of paper to have to figure out, act on, and file is gonna break my achin’ back! Yesterday afternoon I was trying to figure out how to organize the usual complicated mess before handing it over to The Accountant from Nirvana, who offers to take on the migrainish bookkeeping. Obviously, the less mess for her to have to plow through, the fewer hours it will take her to beat it back. Hence: decomplication.

So much paper comes pouring into my house that often I just can’t keep up with it. It piles up like dust on the Plains until finally I’m forced to deal with it, and that dealing can take the better part of an entire day. Yesterday, I thought if only i could find a way to cut the number of transactions and the number of pieces of paper i have to screw with, maybe it wouldn’t take half my lifetime to keep this shit under control…

One spring that feeds the flood of papers is the charge cards. Specifically, the AMEX card. Costco’s American Express card is one of America’s premier kick-back cards: almost every charge racks up a few pennies or a few dollars toward the annual “rebate,” which in my case goes directly into savings. Because I charge everything on the AMEX card and then pay it off at the end of each month, some years that kickback has amounted to three or four hundred dollars. To make that happen, though, entails snowflurries of charge slips, each of which has to be entered in Quickbooks.

Most of these small charges, some as small as a couple of bucks, occur at a limited number of retailers: Costco, Safeway, Costco gas, AJ’s (a local purveyor of fancy groceries and the best coffee beans in town).

What if…? What if I were to buy cash cards at the places where most of my charges take place? You can buy cash cards at Costco with which to purchase gasoline and groceries. Ditto Safeway: give yourself a gift card. Same at the local upscale AJ’s. A person could pay for these things with the richly endowed AMEX card, thereby preserving the coveted kickback.

Wouldn’t it make sense to buy gift cards or cash cards to cover purchases at the most-frequented retailers, thereby consolidating 87 gerjillion receipts into three or four?

If said person then paid for purchases under about $50 with cash, wouldn’t that also get rid of a lot of ditzy little receipts to keep track of?

Then how much would be left to charge on credit cards, track, and organize monthly payments for?

Hm.

Averaging charges in various categories over seven months, I discovered that typically I’ve been spending about $55 a month at AJ’s, $300 at Costco on groceries and household goods, $95 on Costco gasoline, $120 at Safeway, and around $160 on small sundries. On average, large planned or unplanned bills can come to as much as $370 in any given month.

What if the only things that went on the charge card were gift or cash cards and large bills? And all the little stuff were paid in cash?

This would hugely change the budgeting scheme. Instead of $1100 a month to be charged on the card and paid off at the end of each month, things would look like this:

CashBudget

Biggest drawback: it would require me to traipse to the credit union once a month and get actual cash, of all things…

On the first day of each budget cycle:

1. Drive to the credit union; withdraw $160
2. Drive to Costco: Buy $395 Costco cash card ($95 for gasoline; $300 for in-store purchases).
3. Drive to Safeway, get $120 Safeway cash card.
4. Drive to AJ’s, get $55 AJ’s card.

Manage funds accordingly.

This would consolidate all the charges for groceries, cleaning goods, personal care products, and household stuff into three charges — Costco, Safeway, and AJ’s. Gasoline and some clothing would also be comprised in the Costco card. There would be no reason to itemize every single stupid little charge in these categories; instead, all that would be noted is the cost of an estimated month’s worth of charges, to be paid with a cash card.   Same would be true of the ditzy little bills, 50 bucks and under, that would be paid for in cash.

The only bills requiring serious itemization would be bigger-ticket items such as major car repair bills, gifts, dental visits, and the like.

Right there, dozens of scraps of paper, direct to the trash! Or at least not stashed in a file folder or envelope to be inflicted on the (expensive!) accountant.

Today, speaking of major bills, I have to leave my car at the shop for a brake job, so I won’t be driving around buying cash cards and extracting cash from the credit union. But tomorrow…

 

You Get What You Pay For

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Have you seen Mrs. Accountability’s latest post, the one contemplating the glories (or not) of Fiverr? It’s pretty interesting.

She’d mentioned that site over the phone a while back, shortly after the episode with the friend of the “who needs enemies” variety. So naturally, I shot right over there to see what it’s about.

What you find when you arrive at Fiverr is a list of offers of services and small products for five bucks a pop. Some of these (like graphic design) actually could command a decent rate, and some (like images a computer program can toss off in 10 seconds) ought not to. Based in Israel, Fiverr is an international enterprise, and presumably many of its vendors are living in countries where $5 will buy a week’s worth of food.

A similar program (presumably owned by the same outfit, given the identical site design) is called “Twenty Fiverr”; people who think they’re worth more offer the same kind of services and products for twenty-five bucks instead of five. Here’s a guy, for example, who promises to provide seven “quality” articles in less than 24 hours, using a program that generates pap-filled, verbose, redundancy-laced, and vacuous squibs, and he’ll do it for a bargain $25.

I have a lot of beefs with this model.

First, as a self-employed skilled worker who has nothing to sell but skill, experience, and time, I highly resent being undercut by people who are willing to work, it seems, for little more than an ego trip. This is something that for years has kept rates down for writers and for graphic artists, especially those who do business within the publishing industry. Publishers know that some people who can construct a basic article will do it for less than minimum wage — some will do it for nothing — just for the joy of seeing their names in print. The result usually has to be completely rewritten, but that’s what the assistant or associate editor is for. At both of the magazines where I worked full-time, a large part of my job entailed sitting down at a computer and, starting at Word 1, rewriting articles by freelance “writers” from beginning to end.

Many magazines have two or three contract pay scales. Unemployed or moonlighting journalists who actually do know how to research and construct a competent article are paid a living wage. Everyone else gets crumbs. Some publishers simply will not pay a living wage to anyone, because they know plenty of amateurs will do the job (or something like the job) for next to nothing.

It’s the intellectual equivalent of off-shoring. In the case of Fiverr and Twenty Fiverr, it probably is literal off-shoring, too. As an individual buyer of services and products, my sense is that those of us who resent corporate off-shoring of American jobs have no business doing the same to American contract workers. Buy American. And pay something more than slave wages, if you expect to see your country’s standard of living remain above the Third World level.

When one person does a job, even a poor job, for less than fair pay, that person drives down pay for five, ten, or twenty other people for whom work is a living, not a hobby. In my book, that’s wrong.

Second, you really do get what you pay for.

Let’s take a look at the “high quality” article that squib-generator built, using a set of key words relating to weight loss. Here’s its  lead:

Weight loss is a confusing topic. There are so many different people and articles telling you so many different things, it can be quite difficult to wrap your head around them all. This article will aim to lay down the essential and necessary basics of weight loss in hopes to clear the fog that surround it.

Does that make you want to keep reading, as a lead should? It makes me want to run away…but let’s stand our ground and take a hard look at the thing.

“Weight  loss is a confusing topic.” No, it’s not. Weight loss is a process, not a topic. In any event, as statements go this one adds nothing. Right off, we know we’re dealing with a writer who is either a moron or an amateur. Or, in this case, a machine. Even machines can beat around the bush.

“So many different people…so many different things.” Nice use of redundancy to pad space! Is it likely that a person would say “many identical people telling you many identical things”? If the inserting opposite term creates an absurdity, then the adjective in question — “different,” in this instance — is probably  redundant. Here, it is redundant to the power of two.

“Difficult to wrap your head around them…” I should say so, unless your head is made of Silly Putty.  Our electronic author first coins a cliché and then turns it into a grotesque image. Note that it injects another cliché (“to clear the fog”) in the following sentence.

Cliché is the least of the next sentence’s offenses, though. First, instead of telling us anything significant or intriguing, the electronic author vows to try to give us a few fundamental pointers on the mind-numbing topic of weight loss, with no promise — only “hopes” — that whatever follows will enlighten us. This kind of pap a lead does not make. Then it ends with a faulty idiom (“in hopes to clear”: a native speaker would write “in hopes of clearing”) and a grammatical error (“the fog that surround”: subject-verb agreement).

Come to think of it, the entire article is replete with grammatical, punctuation, logical, and idiomatic errors:

• “Easier” used as an adverb (Electro-author meant “more easily”).
• “Change subtle habits that will increase the amount of walking one has to do”: if the habits increase the amount of walking you do, why would you want to change them? Possibly Electro-author meant “develop” or “build”?
• No comma after “but” used as an introductory word (some people think it’s bad form to use a conjunction to begin a sentence, but that rule doesn’t apply much in journalistic writing).
• Lettuce that’s “more green”…heeeee!

Writing style is, to put it kindly, nonexistent:

• Neither the second nor the third section shows any sign of paragraph transition.
• Verb mood jumps from declarative to imperative in paragraph 5, for no discernible reason.
• Complex ideas are touched upon and sometimes given a cursory example, then dropped with no clue to how the advice might be interpreted or used.
• The final paragraph regurgitates the first one, adding nothing except another hilariously grotesque image: “too many hands in the soup.” Careful not to choke on those knucklebones!

At Twenty Fiverr you get seven such “quality” articles for $25…not a bad price, to make yourself look like a moron to whomever reads one of the things.

My momma always used to say that you get what you pay for. But it wasn’t until I moved into the first house I bought by my little self, as a single woman, that I truly came to appreciate that old saw.

The house had washer and dryer connections, and it must be said that one of the chores I hated most in life was schlepping my laundry to a coin-op laundromat. First order of business was to install a new washer and dryer.

Being the naturally submissive type, though, and hooked up with a very dominant gentleman, I allowed myself to be persuaded to buy a low-end Monkey Ward washer and dryer. The two machines looked good at the outset: extra large, nothing fancy but evidently serviceable.

The dryer lasted about a year. Soon as it went off warranty, it crapped right out. Annoyed (and by then wise to the fact that boyfriend was pushing me into doing things I knew better than to do), I had to go buy a new one at Sears.

The second model was far from top of the line — it was a mid-range Kenmore, well liked by Consumer Reports. Twenty years later, it’s still out there in the garage running well. From the day I tossed the first load of wet laundry into it, the thing worked better than the Monkey Ward cheapo ever did, and it still works.

By purchasing a piece of junk first, I caused myself to pay significantly more than it would have cost to have just ponied up a reasonable price for a reasonably good product in the first place!

If I’d replaced the junk with another cut-rate product, I’d probably be on my fifth or sixth dryer by now, to the tune of four or five times what a single decent appliance cost.

The personal finance message? Bully for you if you can get a generous  mark-down on a good product that started out at a fair price. The blade cuts two ways: paying a lot more doesn’t always buy a lot better quality. Paying a fair price — not the lowest though not necessarily the highest, either — is likely to get you services that do the job well and products that work and hold up over time.

 

 

Life Looks Brighter at One in the Morning

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So, the money situation is looking a lot better. Just paid a couple of AMEX bills. Have a stack of incoming checks to scan and deposit electronically, with two more editorial jobs in progress.

One of those jobs has GOT to get finished tomorrow, and another, quite the tangle, will need to be dealt with within the week.

Yesterday I met with the financial adviser to discuss how I’m going to get through next year without teaching f2f courses. It actually looks surprisingly doable.

For 2013, The Copyeditor’s Desk has enough to carry me through if it doesn’t earn a dime. The amount I’ll have to draw down from retirement savings next year represents 3% of the total, so principal should continue to grow next year. Barring any more radical stupidity from our elected representatives.

OK. That one’s not a foregone conclusion. But we can hope.

For the 2014 plan, I’ve made the assumption that Copyeditor’s Desk will earn nothing. This is highly unlikely, but why not plan for the worst, eh?

If nothing — zero point zero-zero dollars — comes in from the S-corporation in 2014, I’ll have to make a 5% drawdown from savings. That’s actually an overestimate, because I’m assuming a 20% tax, which the financial guru says is far too high.

When I reach the point in my dotage that I can no longer teach even one online course and I can’t earn anything by editing, I will need a 5.39% drawdown to live in the ascetic style to which I have become accustomed. That figure will drop to 3.46% if and when the mortgage on the Downtown House goes away.

Financial Guru believes 5.39% is within a safe range, the upper end of which he pegs at 6%. Once M’jito is either able to take over the mortgage or walks away from it, the amount I’ll need to live on will drop to a level that will preserve capital until I topple over into the grave.

I hope.

Meanwhile, SDXB’s axiom that money happens continues to prove true. A fair amount  of money is happening in connection with the jewelry endeavor — I just sold another piece, a rather ingenious idea requested by a customer. Will show you that whenever I’m up for fiddling with the camera and iPhoto.

His claim that one needs a great deal less to live in Bumhood than one expects also appears to be true. My savings amounts to about half the $1 million I believe one needs to sustain a middle-class lifestyle in retirement. However, I seem to be getting by on a drawdown that should preserve capital into advanced old age, without feeling unduly deprived. The keys appear to be…

• Pay off your mortgage before you quit working
• Pay off your car, too.
• Get out of all revolving debt and stay out of it — never charge anything that you can’t pay for that month.
• Develop a side gig that can be used to bring in pin money. It would especially good if said p/t gig could earn a little more than bare pin money.

This morning I ordered a vast pile of beads and supplies from Fire Mountain. The wholesale deal meant a $48 savings at checkout, significantly less than the amount I’d added up in Excel, even after the shipping charge. I think this purchase will make about a half-dozen lariats, one of which is already sold.

Welp, now that some of the banking & bookkeeping is done, a paper is graded, many hundreds of beads have been ordered, and the dog has been played with, I’m going back to bed.

Later!

Turning Freshman Comp into Personal Finance 101

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{Cackle!} Tina came up with a great idea for the transformation my English 102 sections will have to make, come next spring: give them, as their overarching writing theme, personal finance.

How obvious is that, anyway?

Old-timers here know that, to avoid having to read their ungodly clichéd recycled high-school senior English papers (“Why Marijuana Should Be Legalized”…“True Beauty Is Inner Beauty”…“The Drinking Age Should Be Lowered to 18”…gaaaaahhhhh!), I’ve taken to providing defined subjects for my stoonts to write about. Last year I went further than that: I actually assigned specific topics for each and every paper, requiring me to dream up several hundred reasonably focused essay themes.

Although that approach has some advantages, it was a time-consuming pain in the butt, and it had the disadvantage of not giving them a chance to learn how to frame and focus a workable essay topic. This semester I came up with a new theme—Public Education in America—and established four broad subjects within that theme. Each classmate will be assigned one of those topics to cover for all of the required papers, but they’ll have to come up with their own specific theses. Because it’s a new idea, and because it’s a TRULY gigantic pain in the ass to build a course around a preset theme, I applied both to my Eng. 101 and my Eng. 102 classes.

That’s fine for the nonce, but my 101 students tend to follow me into 102. So come spring, I’ll need a new theme for the 102 sections.

Personal finance. Great idea, isn’t it? How often have we PF bloggers bemoaned the presumed financial ignorance of our young pups? IMHO, it remains to be seen if that’s real, since the Millenials are now being called “the cheapest generation.” Frankly, I think a lot of the kids who show up in the community colleges are pretty savvy financially. Most of them are working their way through, and when asked “what on earth are you doing here?” they’ll often say they’re at the junior college to get the gen-ed requirements and prereqs for their major out of the way before they move on to a more expensive four-year school. The state universities here—especially the Great Desert University—have jacked up tuition so high that any freshman or sophomore with an ounce of common sense has been driven away.

More’s the pity for GDU: now the kids with common sense are in my classes! And since they’re intensely interested in issues like student debt, controlling the costs of college and setting themselves up as young adults, I think they’ll turn on to the PF topic.

So…what say you? They’ll need at least four broad subtopics to begin with. One of them, obviously, could be “Debt and the Modern Student” or some such thing. Within the broad theme of personal finance, what specific subjects can I ask them to write about? Check out the format for this approach at the course website. They get four topics on which to write (and are assigned to groups to give each other some moral support and to present discussion panels on their topics). These are listed in the right-hand sidebar, with a bunch of links intended as kick-off points for research. All of the 102 essays are source-based (i.e., research papers). What topics would you like the next generation to study about personal finance?

Is That Light a Will o’ the Wisp? Or a Train at the End of the Tunnel?

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Real estate is definitely starting to wake up around here, thanks to the influx of Canadian and Chinese investors. Everyone thinks the market is improving and will continue to rise. In Phoenix, the inventory of houses for sale has dropped by 42.1% and the median price has risen by 34.5%, with both indicators trending positive at the end of March. Unemployment here appears to be dropping; in January it fell .3 percentage points to 8.7%—not great, but better than a continuing rise. Last night the instructor of my new real estate class remarked that the people who will be taking the licensing exam at the end of this spring or early next fall will be in an excellent position to start working.

Moi, I remain skeptical. My mother got a real estate license in southern California, back when I was in high school. She never made a penny at it. However…she didn’t work at it full time, and she knew little about marketing or business practices. Though I don’t know much, I sure know more about it than she did. And of course, she had my father and so didn’t have to earn a living; I’m pushed by an element of desperation.

Exactly how desperate that element is remains to be seen.

Last night I was noodling with the numbers and realized that if I were to take a 4% drawdown now, rather than continuing to put off drawing down retirement savings until I really can’t work anymore, I could live in reasonable comfort. Actually, there are several ways I could bring enough money into the house to restore something like a middle-class lifestyle. Each has its problems. But it could be done.

One is to draw down 4% from savings.

Because of the mortgage on the downtown house, I’d still have to teach. But not much. The amount I’d need to come up with annually, above and beyond the drawdown plus Social Security, would be $4,400. That’s 1.85 courses per year, a huge improvement on 3 +3 + 1. Since the online magazine writing course is now well established and drawing enough students to make every semester, it would mean I’d never have to go into a physical classroom again. And I’d never have to read another barfiferous fresman comp essay again.

Drawback: it wouldn’t improve my financial situation. I’d still have to pinch pennies and often would run unnervingly in the red.

A second strategy is to take a drawdown but continue to teach composition courses.

I compared my last GDU paycheck, in the fall of 2009, with what I’m making now. One regular month’s net pay came to $3,170. Today, my infinitely pared-back, rock-bottom expenses come to $3044 a month. So if I could somehow bring monthly  net income back to where it was in 2009, I could cover my living costs and pay my share of the mortgage. A drawdown of 4% added to Social Security would give me $2,674 a month, a $496 monthly shortfall, or $5,952 a year.

To make up the shortfall, I’d have to teach 3.1 sections a year—much better than three a semester plus one in the summer.

This scheme—start taking a 4% drawdown now (not later) and make up the difference by teaching (but teaching a lot less)—presents some major drawbacks.

1. I would have to teach. And I don’t want to. Nor will I be able to do so for the rest of my life, unless I drop dead soon.
2. I’d have to marshal every penny in savings. It would leave me nothing to buy a new car, and keeping my 12-year-old vehicle running is starting to cost more than I can afford.
3. It would do nothing to improve my penurious  lifestyle. I’m sick of pinching pennies.

If I taught 2 & 2, I’d net an average $3,314 a month. That would at least give a little wriggle room, but it doesn’t erase the problem that I need a newer vehicle.

Another possibility is to earn a rather small amount in another job—something in the real estate industry is what I have in mind—continue to teach while I can, and not take a drawdown.

As we noted the other day, my friend JS says he earns $200,000 a year selling real estate. That’s in the present supposedly peakèd market! Now, he’s been at it for 10 years, he has an MBA, and he’s a very fine marketer. However, a tiny fraction of that, just $30,000, would suffice to support me, if I kept on teaching—not unfeasible given that I’ve managed to reduce teaching to a minimal workload. Let’s assume I netted $15,000 after taxes and expenses:

That’s teaching three sections a semester (one of which is the online magazine writing course, a piece of cake), and nothing in the summer.

The result is more than I earned at the Great Desert University. It would be a bitch of a lot of work, at least until I could develop a business to the point where I could drop the teaching. But it would return my income to its former glory.

There’s a third alternative: take a 4% drawdown, net 15 grand in working in a real estate office, and don’t teach:

This would provide a monthly net of $3,924, significantly more than GDU was paying me. If I continued to keep an iron grip on spending, it would be enough to buy a car, which I’d have to do anyway if I were hauling prospects around to look at real estate.

And finally, a fourth possibility: continue to teach two sections a semester (only one of which would be in the classroom) while taking a drawdown and hustling a net 15 grand in the proposed other endeavor.

In this scenario, I would net $4,564 a month, more than I’ve ever earned in my entire life. It would be a lot of work. However, two sections a semester would be relatively easy, since only one would be a composition course (work for the online course is now minimal, since I have that down to a template).

The disadvantage to pulling down savings now is huge: it could mean I will outlive my savings. Women in my family have lived into their mid-90s…and they were freaking Christian Scientists! They never saw a doctor in their lives. Given decent medical care (assuming I can get it), I might live longer than that. With inflation forcing me to take larger cuts of savings, I certainly could deplete my savings before I die. And that is a real nasty prospect, given what we know of elder care in this country. One needs a large chunk of money at the end of life to avoid dying in hideous squalor, suffering, and  neglect.

The disadvantages of teaching while trying to build a new career are large, too. I figure I’ll have to hang onto two or three sections while I’m getting started, in order to guarantee enough income to pay my bills. But if the real estate plan starts to fly, then I would want to quit teaching. The question is, would teaching in that first year or two or three be such a distraction that I couldn’t make the real estate idea work?

It certainly could be. Even though I’m not putting many hours into it now, even a few hours a week could be quite a hindrance. I may need all my energy and attention to build a new business.

None of the four schemes is ideal. What would have been ideal would have been to have kept my GDU job until I was 70, by which time I would have accrued enough in savings to support me and my son would be in a position either to sell the downtown house, as planned, or at least take on most or all of the mortgage payment.

Knowing that “ideal” will never happen again, I need to figure out how to make a choice among four less than perfect strategies to keep a roof over my head, food on my table, and wheels under my feet.