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Personal Finance

Layoff Plans: Use savings or start Social Security?

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The other day I realized that in theory I have enough in savings, should the legislature’s proposed destruction of the Great Desert University and the resulting layoff occur, to get by for about a year if I use the money I’ve saved to pay off the Renovation Loan to live on instead of paying the loan.

It’s an interesting and reassuring idea. But let’s consider: would it be better to use savings to live on before I reach full retirement age, when (assuming Obama doesn’t reduce everyone’s payments) I will be eligible for $1,472 a month ($17,664 a year)? Or should I, instead, take the amount for which I’m presently eligible, $1,156 ($13,872 a year), use it for living expenses until I’m 66 (full retirement age), and then raid my savings to pay it back so that I can reset my payments to the full $1,472?

I have $21,000 saved to pay off the loan’s principal, which is a 30-year fixed-rate affair with a tiny monthly payment. If it were added to my total retirement savings, it would add about $840 (at 4%) to $1,050 (at 5%) a year to my annual drawdown.

Which route would reduce my total retirement savings the least?

Let’s say I’m laid off in February. That would leave 27 months until I reach full retirement age.

If I take Social Security today, my benefit would be $1,156 a month, which is $13,872 a year.

So, if I do start taking Social Security in March 2009, I draw down $1,156 x 27 months, or $31,212. This is the amount I would have to withdraw from retirement savings to reset my Social Security payments to $1,472 at age 66, if I start taking Social Security right away.

If I do not start taking Social Security in March, but instead live for a year on the savings pot and then start drawing Social Security, at that time I have 15 months until I’m 66. Let’s assume I would still get the $1,156 I’m entitled to now, even though in fact it would be somewhat more:

$1,156 x 15 months = $17,350. This is the amount I would have towithdraw from retirement savings to reset my Social Security payments to $1,472 at age 66 if I defer taking Social Security for a year.

However, by this point I’ve already spent down $21,000 of savings: $21,000 + $17,350 = $38,340. This strategy—using savings to defer taking Social Security for a year—ends up costing me $7,128 more than starting Social Security right away!

If I kept the $21,000 and the $7,128 amount is folded into my retirement savings, I can draw down 4% or at most 5% a year: this would add $285 to $356 a year to my total retirement income from savings.

But…it’s not that simple: I’m presently paying $2,040 a year on the Renovation Loan. If I don’t prepay the principal, that goes on for another 29 years, costing me $59,160 (should I live that long). Well, $59,160 is quite a lot to pay toward a $21,000 loan, eh?

Still, I have to think about what’s in my pocket to pay for groceries. Besides, let’s get real: I’m not going to live another 29 years!

In terms of what I have to live on, irrespective of the actual cost of the loan, the full-retirement benefit is $3,792 more than the annual age 63 benefit. That’s $1,752 a year more than the annual cost of the loan. Meanwhile, if I hang on to my $21,000 and roll it into my retirement savings, it generates an extra $840 to $1,050 a year, for a total of $2,592 to $2,802 more than the loan costs.

Evidently, if these figures are correct, it would be better not to pay off the Renovation Loan but instead to start collecting Social Security right away.

In fact, if I delayed taking Social Security a year, the amount I would collect then would be larger and so the amount I’d have to pay back to the system would be larger, putting me at an even larger disadvantage if I’ve used up the $21,000 of savings.

Clearly, my best course of action is to keep my $21,000, retain the debt, and start collecting Social Security right away. Then pay back the amount I’ve collected by age 66, reset Social Security to the full retirement age amount, and draw down 4% or 5% of the $21,000 as part of my total retirement savings drawdown, for a total income from savings of about $18,600 to $23,300 a year.

This would create a maximum passive income at age 66 of $40,660. Not adjusted for inflation. I could live on that…assuming taxes haven’t reached the astronomical level by then.

2008 Financial Strategies: What worked and what didn’t work

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As the year winds down, this is a good time to take stock of the various events, schemes, and impulses that drive our personal finance strategies, to consider which ones worked and which failed, and to think about how we can use experience to plan next year’s financial direction.

We all had our ups and downs. As we know, it feels like the “downs” took the race. But as I look back over my 2008 personal finance adventures, I see that quite a few ideas and strategies were successful. Like everyone, I took some big hits; some of those were beyond my control, or effectively so.

My Best 2008 Financial Strategies

Bar none, building a second income stream was the smartest move I made this year. At the start of the spring 2008 semester, I agreed to teach two sections of Writing for the Professions, a.k.a. “freshman comp for juniors and seniors.” When, hours before classes were slated to begin, I learned that both sections were double-enrolled and I was actually taking on the equivalent of four sections—the workload of a full-time lecturer—I threatened to walk; backed into a corner, the dean agreed to pay me for four sections.

It was a horrible job, but the pay was as much as I hoped to earn on the side during the entire year. And because the Great Desert University canned all its part-time faculty in the fall semester, the serendipitous overload meant that I made my 2008 side-income goal in spite of the faltering economy.

Starting a side business independent of GDU seems to have been a wise move, too. Between The Copyeditor’s Desk and my own freelance work, I have made an extra $1,000 to $1,200 a month since late last summer. If I’m laid off and so forced to begin taking Social Security now instead of waiting until full retirement age, this will be about as much as I will be allowed to earn. The two income streams—editorial work and Social Security—may (with luck) cover my expenses until I can draw the full amount of Social Security income and forestall having to draw down my sadly depleted savings.

Stashing all my post-tax side income into savings instead of using it to pay down the $23,000 owing on the second mortgage I took out to renovate the Investment House seems to have been a wise move. At the outset, I was uncertain whether I would stay in my own house, given the skyrocketing crime in the depressed apartment complexes across 19th Avenue, the unholy mess across the street from me, and the growing presence of undesirable renters. If I sold, the loan would be paid from the proceeds, and I might be better off with the cash in hand from the side jobs. As the economy began to collapse in earnest and more and more credible-sounding layoff rumors circulated, I was glad I had the 23 grand to double as an emergency fund.

Moving the savings from the side jobs out of stocks and into the money market. As it started to appear likely that I would need the cash to live on, I yanked the side-job money out of Vanguard’s Wellington and Windsor II funds, which were just beginning to stumble, and put it where I figured it would be at least moderately safe. Since then, Vanguard’s funds have followed the rest of the stock market into the tank. At least I managed to hang onto that much of my savings.

Restructuring my monthly budget to put biweekly paychecks into a “pool” account from which contributions are shifted to “piggy-bank” accounts containing enough to cover monthly expenses. This strategy has trumped the wacky disjunct between biweekly pay (which allows the university to keep a chunk of its employees’ pay in its coffers, earning interest on unpaid salaries while the flunkies try to figure out how to stay solvent) and the reality of monthly billing cycles. Over time, it has the effect of accruing part of the two so-called “extra” paychecks (which are not “extra” but simply represent six months’ worth of unpaid salary disbursed out of synch) in the pool, padding the emergency fund a bit.

Continuing to set aside the $200 a month I was saving toward the Investment House Renovation Loan self-escrow account, even after enough was stashed to repay the debt.This effectively doubles my monthly after-tax savings and has restored my savings account to its former, pre-disastrous-expenses glory. That also helps plump up the emergency cushion to fall back on in the event of unemployment.

Taking time to think through how I would survive after a layoff and to build a proposed post-layoff budget. As rumors of impending layoffs intensified, the Bush economy slid into its catastrophic collapse. It became clear I will not be able to use what little remains of my life savings to support myself in retirement; not for a long time, anyway. The prospect that I might soon be out of a salary forced me to figure how I could get by on a fraction of full Social Security—$1,040 a month, as opposed to the $2,094 I would get by waiting until full retirement age—plus whatever I could scrounge by freelancing and taking on part-time teaching jobs at the community colleges.

Although it would be very difficult, it appears possible that I could get by for a year or two without having to sell my home. After that, I can raid savings to return the amount I’ve drawn from Social Security to the government, which will reset my SS payments to the full retirement figure. That should keep me going until the market improves enough to revive my savings. The benefit of this exercise is that I now feel fairly confident that I will survive the recession, come what may.

My Worst 2008 Financial Strategies

Leaving savings in the stock market as it became increasingly evident that the Bush “recession” is no ordinary recession but indeed will probably devolve into a depression. My savings are conservatively invested, about a third in stocks, a third in bonds, and a third in the money market. Bonds, as it developed, provided little or no protection in the crash, and although Vanguard’s Prime Money Market fund has not broken the buck, we’ve seen that losses in the money market can happen.

If I’d had a crystal ball, I would have yanked every penny out of the market and stuck it all in laddered CDs. Lacking any such tool, though, I followed conventional wisdom and stayed the course. This, we can now see, was probably a mistake.

Jumping the gun on refinancing the Investment House. M’hijito and I got a much improved interest rate on the mortgage refinance we took out earlier this year for the house the two of us are copurchasing. However, had we waited a few months, we might have landed a 4.5% rate.

Maybe not, too: at this point we’re upside down on that house, and it’s questionable whether the credit union would give us a loan against what the property is now worth.

The problem with the refinance is that to get the 5.3% rate we obtained, we had to take a 30/15 loan. At the time, we figured the market would turn around before 15 years passed; in the event that we had not sold the house by then, we would have no trouble refinancing the remaining principal.

I no longer think that’s true. IMHO, the real estate market will not recover for another eight to ten years. By that, I mean we will not break even on the sale of that house anytime in the next decade. If I’m right about this, we may not be able to sell the house for a profit after 15 years. This will force us to refinance or to take a bath on the sale. And if by then mortgage rates are in the double digits, as they have been historically, we may not be able to negotiate a monthly payment that would be covered by rental income. Thus the 30/15 mortgage terms could lock my son into the house at a time of his life when he’s likely to marry or find better job opportunities in other parts of the country.

I failed to contest the county’s property tax valuation. This resulted in a breathtaking tax increase on a house whose value is less than the county claims. The reasons for my lapse were a) the county’s statement is well-nigh incomprehensible and I had no way of assessing whether it was anything like accurate, nor could I tell what its effect on my taxes were going to be (tax statements arrive several months after the property revaluation statements); and b) the window for protesting lasts only a couple of weeks after the valuation statements are mailed, so that by the time you realize what those statements mean, it’s too late for you to do anything about them. Clearly, I should have protested as a knee-jerk reaction, even though I had no idea what the statement implied.

All in all…

I’m way worse off financially than I was at this time last year, that’s for sure. So, I expect, are most Americans.

On the other hand, so far I still have a job. I’ve managed to salvage some of my savings—enough to pay off the small loan against my house, if push comes to shove. Our little editorial business has a couple of regular clients, and we’re working on landing some more. At this point, every week that passes without a layoff puts me in a better position to survive without a salary.

My plan… 

• …starts with continuing to stash as much as possible into savings.
• That dovetails with cutting back on spending so that I’ll be accustomed to living on less, should I find myself unemployed. As long as I’m still working, savings from the spending cutbacks will go straight to the emergency fund.
• Instead of trading in my 10-year-old vehicle this year, as I would normally do, I’ll drive that car until it falls apart like the minister’s one-hoss shay.
• This spring and summer I’ll continue to try to build Copyeditor’s Desk income; if that doesn’t pan out, in the fall I’ll sign up to teach composition at the community colleges. 
• And finally: Funny about Money is doing surprisingly well, considering that I don’t work very hard at it. The site’s page rank is 4, and its most trafficked post has a page rank of 2. I will try to focus Funny more sharply and develop its readership more broadly, and if it continues to draw readers, I’ll consider monetizing it.

Why keep your pay statements, and how

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Recently My Dollar Plan told the story of a family member whose employer, in her early years on the job, neglected to withhold her retirement contributions. Fifteen years on, the accounting department noticed. In the discussion that ensued, she offered to contribute the unpaid amount but was told all would be fine, not to worry. Now, after thirty years in the salt mine, she retires, thinking indeed all is fine. But noooo…now they tell her that her retirement fund is not funded adequately to support her in her dotage.

This is big. Not just for the poor soul who’s looking at a lengthy struggle over this and the possibility of an impoverished retirement, but for all of us. The trend to outsource payroll to companies for whom employees are just so many numbers—or, if living entities at all, sheep to be sheared—distances workers from employers who have to look them in the eye. So does the increasing use of electronic systems that function more or less unobserved by human beings. The potential for error is much higher, and the potential for errors never to be noticed grows by the day.

A year or so ago, the Great Desert University turned over its payroll (and just about everything else having to do with sheepherding personnel management) to PeopleSoft. A huge fiasco ensued. Supposedly by the turn of the year everything was straightened out, and on the surface things have appeared to be running smoothly ever since.

Then we had the last round of layoffs. A number of the most recent cannees had worked in maintenance and support jobs for decades.

One benefit of working for Our Great State is that your sick leave hours accrue separately from vacation hours. Over the years, if you’re lucky enough to stay healthy or you come to work when you’re ill, a lot of sick leave hours pile up. After you reach 500 hours, the state will pay you 30 percent of your hourly pay rate as severance pay when you leave employment. Stash 1,000 hours, and that rate jumps to 50 percent of hourly pay. As you can imagine, this adds up nicely. At the moment, for example, if GDU lays me off today, OGS will owe me $16,500.

When the most recent RIFed workers applied to HR for payment reflecting their accrued unused sick leave hours, they were told they had none. PeopleSoft had no record of their sick leave balances. None.

Well. Of course, in the absence of their entire archive of back pay stubs, there’s no way for any of the laid-off workers to prove how much sick leave they earned, how much they had used, and how much remained for the state to pay.

This is why it’s crucial to keep copies of every pay stub or statement you get. If your pay statements are posted online instead of being delivered to you in hard copy, print them out and keep them in a fire-proof file cabinet. You should also be able to copy them to disk as PDFs, a good back-up, especially if you have electronic storage space somewhere other than at your house.

Keep these permanently. Never throw them away.

Not only that, but you should check every paycheck carefully for accuracy and completeness. During the Great PeopleSoft Fiasco, I received eight paychecks whose gross or net income figures were wrong. Twice, PeopleSoft failed to withhold my contribution to my retirement fund, and three times it failed to make GDU’s contribution. When accounting for my vacation hours disappeared, I was informed that—after 15 years of working for this fine institution—I was ineligible for vacation time. When, after weeks of squawking on my part, they decided to fix this, they got the figures wrong time after time after time. They got my sick leave figures wrong, they got my federal withholding wrong. And finally, come January, they got my W-2 wrong, too.

How do I know? Because when I realized what a mess they were making of things, I started keeping track of each item on my paycheck in an Excel spreadsheet:121008payrollerrorsThese figures, of which you see only a small part, came in mighty handy every time I had to send yet another written complaint to HR and to the Dean’s office over the mess PeopleSoft was making of my pay.

I knew the W-2 was wrong and that the error was in my favor, but not being an accountant, I couldn’t prove it and had no idea how to identify the errors. On the advice of my lawyer, I decided to let it go; it’s the employer’s responsibility to get the tax withholding right, and I was assured that I would have no liability if an IRS audit (which GDU and PeopleSoft richly deserved) showed irregularities in the W-2.

But…the discovery that the university was blithely distributing W-2’s that PeopleSoft knew to be in error (we actually were told this, and told we should calculate the correct figures ourselves!) led me to realize I’d better do more in Quicken than just enter my net pay. Starting on January 1, I began to enter a split entry for each paycheck, showing the gross payment less each deduction:121008splitentry

This, of course, is a gigantic pain in the buns that adds extra work time to my bookkeeping. However, I suspect it will be worth it.

For one thing, I discovered another error in a paycheck, which PeopleSoft never could account for. And for another, my annual Quicken category report will print out totals for each of the items shown in the split entry, making it easy for my tax lawyer to compare the actual income, deduction, and withholding figures with whatever appears on next January’s W-2.

Those are short-term issues. But the long-term issues could add up to something much more significant.

If Dollar Plan’s relative and GDU’s RIFed workers had kept records like these, they’d have a potent weapon in their fight with their employers. That would make it well worth the extra time and effort it takes to review your paycheck carefully and keep a running record of everything that has to do with it.

Monthly budget updated; enforced “retirement” planned for

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Well, I’m managing to stay on budget, despite a $300 reduction this month. Last week’s $223 hit from the vet will be covered by the monthly savings fund, which is fairly flush now that the Renovation Loan Payoff is fully funded and the money I was embargoing for that can go elsewhere. Right this instant I’m $26 in the black—just about the price of a gas tank refill. And I just may be able to squeak by without having to buy more gas until after this week’s mini-budget cycle ends, on the 13th.

120708budget

Along about the middle of last month, I decided that I’d better start getting used to living on less than I’ve been accustomed to, just in case the rumored Christmas layoffs actually happen. So I cut my weekly allowance from $375 to $300, just to see if I could do it. In November, that worked fine: came in $2.29 in the black at the end of the third week (because I’d had an unexpected bill of $225 the previous week) and $75.19 at the end of the fourth week, for a $349 underrun of November’s$1,500 budget. This month I’ve budgeted $1,200, and it remains to be seen how that will go.

Actually, it’s going better than it looks. Tomorrow I will return a $50 space heater to Lowe’s, having found a much better model at Costco. That will put this week’s budget enough in the black to handily afford a tank of gas. And then some.

The Board of Regents met on Thursday and Friday. We are told this was the Fateful Meeting in which Our Beloved Leader was to faze his plan to declare a financial emergency past the citizen bosses. If layoffs are going to come down soon, they should be announced by the 15th. So, I figure if I still have a job by the end of this month, I’m probably good through the end of June, when my contract runs out.

One way or another, the exercise of trying to live on a reduced budget should serve me well. If I escape the predicted layoffs this time and find I can live on less without much pain, then I’ll continue to do so and bank the extra $300 a month in the emergency fund, the better to have something to fall back on if future rounds of layoffs catch me in their net. At that rate, in five months I will have set aside the equivalent of one full paycheck.

Since December of 2007, I’ve lost over $100,000 from my retirement nest egg (that I know of: I still haven’t seen my 403(b) statements). A 4 percent drawdown from what remains will generate $18,748 a year, of which $9,600 goes toward servicing a mortgage, leaving $8,878 to supplement Social Security of $12,480, for a projected post-layoff gross income of $21,258 a year. I probably wouldn’t owe much tax on that, and so we could think of that as pretty close to net.

My net income right now is about $39,700.

If I earn the highest amount allowed before Social Security starts to penalize you ($13,500), I could bring my total gross to $34,758. State and federal income taxes would take about 20 percent of that, leaving me with about $27,800 to live on: an $11,900 cut in net income!

If I succeed in reducing my budget by $3,600 a year, that will supplement the $6,888 I can cut out of the regular monthly savings set-asides I’m making now plus the $170/month I’ll recover from no longer having to pay the loan, for a total cut in spending of $10,488. So…that will cut my living standard by a de facto $1,412 a year.

And I probably can live with that. Elsewhere, I’ve estimated that the minimum annual net I’ll need for bare survival is about $25,980. It’s going to be a challenge, and it will mean that I will have to teach miserable composition courses and generate income from freelance editing until I’m 66, when I can turn back the amount I will have collected from Social Security to the feds and reset my SS payments to the “full” amount, which is about $25,128 a year.

Assuming I don’t lose an awful lot more in the market, though, these desperate straits will only last for 29 months, until I reach age 66 and am eligible for so-called “full” Social Security entitlement. At that time, I can go back and raid my savings again to repay the $30,160 I will have collected between ages 63 1/2 and 66, which will permit me to reset my Social Security payments to the “full” amount of about $2,094 a month. This will give me a $16,408 drawdown from my reduced savings plus a $25,128 annual Social Security income, for a total gross of $41,536. Suck 28 percent out of that, and you have a net of $29,905, still not a comfortable income by any means (especially given that Medicare will cost nine or ten times what I’m paying for health insurance now), but livable. There’s some chance, though, that my tax rate may not be quite that high, since Social Security is taxed with byzantine complexity—the only way to know what it will be is to have my tax lawyer figure it out, which I ain’t a-gunna pay for until the time comes. Butof course, there’s also a chance that taxes will actually be higher in two or three years, given the bailouts and other extravaganzas our nation is financing.

Time will tell.

Long-term care insurance

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Metlife sends a notice inviting me to designate someone who can be alerted if a payment on my long-term care insurance is missed. Good thought: obviously, if you get into a predicament where you need long-term care, you may not be competent to pay your bills. I have the premium, which comes to about $75 a month, paid electronically, and so its unlikely the bill will go unpaid unless M’hijito has to take over my affairs and changes things around.

This policy, which I originally bought from TIAA-CREF but was sold to Metlife, will not cover the exorbitant cost of nursing-home or nursing care 100%. However, it does cover enough that my Social Security and (if my mutual funds ever recover) a 4% drawdown from savings will take up the slack. Because my house is paid for, if the utilities are turned off the house will cost nothing while I’m incarcerated in a nursing home. Well, that’s not so: it will cost the property tax and Gerardo’s bill to come around and clean up the desert landscaping once every month or two.

The cost of nursing care in this country is just astonishing, and because much of it is delivered by minimum-wage workers laboring in extremely difficult conditions, it behooves you to get yourself into the highest-quality nursing home available. And of course, the higher the quality, the higher the cost. By 2004, the average annual cost of nursing home care was over $70,000. This amount increases at about 6% a year; the annual cost is now said to hover around $76,500. In the Phoenix area, if I get sick this year it will cost me about $76,200 to get myself cared for.

Home nursing care, which sounds ever so much more desirable if you’re lucky enough to find someone competent, honest, and caring to do the job, runs about $43,885 a year nationwide and $45,800 in the Phoenix metropolitan area. Assisted living would cost me around $29,700, significantly less than the nationwide average of $33,100.

Is there any question about why some old folks ship out on luxury liners in their sunset years?

Neither Medicare nor health insurance will cover nursing care, at least not for any length of time. In theory Medicare will cover 100 days following an acute illness, but you have to show signs of recovery to get even that much coverage—and of course if your problem is acute senility, “recovery” is not in the picture. When my mother was dying of cancer, we found that Medicare and Blue Cross did everything they could to get her off their rolls, to the extent that my husband, who was a lawyer, and I spent so much of our time and energy fighting bureaucrats that I was left with almost no time to spend with my mother in her last weeks. SDXB had to arrange to have his mother divorce his father when the old man was dying of Parkinson’s, in order to force the VA to cover the his care and avoid pauperizing her.

Medicaid will cover nursing home care, but only after you have utterly pauperized yourself. You must be left penniless, meaning you have had to sell your home, your car, and expendall other assets on medical and nursing home bills. In Arizona, if you’ve made the mistake of gifting your children, as is allowed under federal law, with a few thousand inheritance-tax-free bucks over the two years prior to your falling ill, you can be disqualified from this state’s equivalent of Medicaid on the theory that you must have been trying to cheat the system.

So as you can see, if you’re “lucky” enough to make it to advanced old age, you’d better have long-term care insurance. Fourteen percent of people over 71 suffer from dementia, and that doesn’t count strokes, broken hips, chronic heart failure, Parkinson’s disease, or any of the multitude of other causes that put the elderly out of commission.

The problems with long-term care insurance are a) there are lots of shysters out there selling products that will not provide adequate care; b) premiums are high and must include a provision to adjust upward for the skyrocketing cost of care; and c) the older you are when you buy a policy, the pricier the premiums will be.

In general, you should plan to buy long-term care insurance in your early fifties. Obviously, if you purchase a policy when you’re too young, you’ll pay premiums over a long period when your chance of needing the coverage is almost nil. If you wait until you’re too old, you may be disqualified from buying a policy or pay an exorbitant premium.

You need to investigate any insurance company carefully before buying a long-term policy from it. Be sure it is financially sound and highly rated by Moody’s and A.M. Best. In addition, it’s important to fully understand what you’re buying. Most states have an agency on aging or an insurance commission. These agencies can provide you with information on what to look for and what to avoid in long-term care coverage. AARP also offers a lot of valuable information, but you should be aware that this organization is in the business of selling long-term care insurance.

It’s never too early to look into this issue. And if your parents are baby-boomers, now is the time to find out whether they’re covered and to urge them to get coverage if they’re not. Ten million baby boomers are expected to develop Alzheimer’s disease, and as we’ve noted, that’s not the only ailment that can render an elder helpless. The cost and anguish entailed in having to care for an adult who is fully disabled by senility or other illness are devastating—you should not assume that you will be able to care for your parents in your home, especially since you and your spouse will probably have to work to keep a roof over your heads and you will be trying to deal with raising children at the same time.

My insurance covers nursing home care and in-home care. It also will pay a relative or friend a small stipend to care for me at home, and pay to have the person trained in caregiving. As I look at the budget items I can cut if I’m laid off in the next few weeks, one of the items I do not consider to be an option is the long-term care insurance.

Turning what you love to do into a second income stream

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Well, no: not THAT what you love to do!

My late friend Jerri, about whose shopping hobby you read recently, had an incredible eye for clothing. She owned racks and racks of really cute clothing, much of it designer-label and most of it purchased on sale. She absolutely loved to shop, and she was very good at it.

Right now I have on a beautiful silk shirt that her daughter gave me. It’s a couple of sizes too large—Jerri was a bit portly in her old age—but worn over a coordinating shirt, it works to create an awesome, arty-looking tunic. The effect is really nifty.

If I had known that Jerri could do this—find amazingly cute clothing in stores where I never shop at prices I never manage to extract from retailers—I would cheerfully have paid her to help me shop.

I’m no good at shopping. When I go into a clothing store, what I see is a jillion square feet of look-alike clothing that
a. doesn’t fit me;
b. by and large is ugly;
c. looks like it was designed for or by a teenaged hooker; and
d. is hugely overpriced.
It’s a real struggle to force myself to paw through rack after rack after endless rack of this stuff searching for something that fits, that looks OK on me, and that I can afford. To me, shopping isn’t fun; it’s a pain in the tuchus.

Jerri’s shape was even less like a 17-year-old babe’s than mine is, and she managed to find a boutique’s worth of clothing that looked good on her. Two or three sizes smaller, and it all would have looked good on me, too. She had a real skill. IMHO, it was a salable skill.

I know I’m far from the only woman who views shopping for clothes as an unpleasant chore—several of my friends have expressed the same sentiment, including one with a real flair for style. It seems to me that Jerri could have made herself a nice sidestream income by hiring out as…what? A shopping coach! She could have indulged her joy in shopping by selling her time as a shopping consultant to women who don’t enjoy searching for that one thing that works among the acres of chaff. Because she had a wonderful and funny personality, she could make a shopping trudge into a fun outing. I’ll bet she could have found enough women who would have paid her to help them buy clothing to supplement her Walmart salary pretty handsomely.

On the other hand…

Some years ago a friend of mine was left penniless during a divorce. Literally, for two or three weeks she ate nothing but zucchini out of a backyard garden, while she used the few dollars she had to feed her two small children. She let the dog run loose to forage out of the neighbors’ garbage cans. She took a miserable job waiting tables, an occupation for which she was decidedly not suited—this was in the days when coffeeshop owners felt free to order their waitresses to wear skimpy costumes and bone-crushing shoes (sex sells hamburgers, too), and so you can imagine what the job was like.

This friend had studied photography on the college level for several years and had quite a gift for it. She had an acquaintance who owned a major portrait studio in the city. I asked her why she didn’t try to get a job there or at least see if this person could help her get in with some other studio.

She said she didn’t want to spoil something that she loved to do by having to make a living at it. Since she didn’t last long at waitressing, apparently she felt strongly enough about this that she was willing to go hungry rather than turn a pleasurable pursuit to profit.

What say you? Given that it’s a good idea to establish more than one stream of income, is turning a hobby into an income-generating occupation out of bounds? Would you convert your favorite pastime into paying work?[polldaddy poll=1169792]