I remember when Chernobyl happened, and also remember receiving the news that milk (human and bovine) and other products in North America were contaminated by the radioactivity that blew over this continent in the weeks and months following the event. Although (thank God) we were not as hideously affected as the people who lived near the plant (if hundreds of miles away can be called “near”), I can recall responding with the same fatalism: there’s nothing we can do about it, so why should we worry?
Debt and savings are directly linked. Every dollar you have to pay toward debt is a dollar you can’t put into savings.
Making your money work for you—investing plenty of savings in instruments that will pay returns that one day will support you—is key to building financial freedom. The only way you can get off the day job treadmill is to get out of debt and stay out of debt. In that respect, debt really is slavery: for those of us who are not wealthy at the outset, indebtedness means we must keep working to pay our bills. At the same time, debt sucks our savings away from us, keeping us trapped on the treadmill of never-ending labor.
My argument is that you don’t have to be rich to be free. Instead, you need to build a comfortable lifestyle that does not require large amounts of cash flow, you need to be out of debt, and you need to establish several sources income (dividends from savings; side jobs) to help you build wealth.
The truth is, too many Americans literally are saddled with debt. The consequences of this have become obvious since the crash of the housing market: something between a fifth and a quarter of Americans owe more on their mortgages than their homes are worth. This issue has become so aggravated that many people who can in theory afford to continue making payments are choosing to simply walk away, rather than continue to throw good money after bad.
So: obviously, the best course of action is to avoid debt. When buying a house, select one whose cost is low enough that you can pay it off in 15 years or less. And in day-to-day life, never charge more on a credit card than you can pay with your current month’s income.
All of which is easier said than done.
If you’re already in debt, step one on the road to financial freedom is to unload all revolving debt. Get rid of any department store and credit card debt—if it’s not mortgage debt, pay it offnow. Any number of personal finance gurus provide lots of advice on how to get quit of debt. Dave Ramsey is probably the most popular, with his “snowball” approach to pay-off. I’m partial to “snowflaking,” proposed on the now dormant blog, I’ve Paid for This Twice Already. PT’s strategy sets a certain monthly payoff amount that exceeds the minimum required payment, and then she adds every bit of “found money” and every windfall, no matter how small. These “snowflakes” are paid against the debt immediately, as they happen.
In fact, getting out of debt is not so complicated that you have to subscribe to a guru’s system. All you need are will power, a goal, and consistent, regular payments against principal. The strategy goes like this:
1.Quit charging. Even if it means you have to parcel out your paycheck in cash secreted in envelopes to cover budget items, do not put anything on a charge card that has a balance due.
2.Pay substantially more than the minimum due against all charge-card and car loan balances. If possible, consolidate credit-card debt onto one card and pay that down as fast as you can.
3. To accomplish this:
a)Live frugally. Economize tightly until you can get rid of the debt. b) Develop a second income stream and devote all of it to paying off debt.
The immediate goal, of course, is to get rid of noxious debt that cuts your buying power. Every penny you pay in interest for something you bought on time reduces the value of your dollar. So, if you’re paying some bank 21 percent for the privilege of buying things on its card, every dollar you spend on the merchandise is actually worth only 79 cents. That’s how much credit-card debt shrinks your standard of living!
But the long-term goal is freedom: financial freedom. Once you’re rid of revolving debt, you can work toward buying your shelter free and clear. And when you have that, you’re more than halfway to the exit from the day job.
After you’ve succeeded in paying off credit-card debt, it’s time to shift strategies. Now you have a newfound cash flow: the chunk of cash that was going to pay creditors is coming to rest in your bank account!
Hawai’i beckons. But resist the call.
Instead of diddling away your new real income, continue to live below your means. When using credit cards, never charge more than you can pay at the end of the current month’s billing cycle. If you find you can’t control spending on cards, then pay for everything in cash. This strategy will maximize your actual income. Instead of holding your salary less what you owe to lenders, your bank account will contain…yes! Your salary. Your whole net salary.
By living below your means—a habit you’ve already developed while paying off the cards—you will accrue money to put into savings. Take all the money you were spending on servicing debt and stash it in mutual funds. Some should be in a stock fund, some in a bond fund, and some in cash (i.e., the money market, CDs, or treasuries). This creates a kind of hedge: as a general rule, when stocks are up, bonds go down; when stocks go down, bonds rise. Because you earn more in the stock market, over time, than you do in the bond market, it’s a good idea to have somewhat more than half your investments in stock funds. To avoid being ripped off by fees, choose a low-overhead mutual fund issuer such as Vanguard or Fidelity. Arrange for dividends to be reinvested, and at the same time send in a set amount to each fund every month.
Do this above and beyond any 401(k) or 403(b) plan your employer offers. If your employer matches your retirement contributions, do not neglect to participate in the job’s plan. Even if there is no match, a 401(k) or 403(b) may allow you to contribute more pre-tax dollars than you can put into a regular IRA. Check. Also find out if you can put money into a Roth IRA, and if so, how much. Roths are preferable to regular IRAs because, even though you fund them with after-tax dollars, you don’t have to pay taxes on their earnings and you can pass the money to your children without having the government take the lion’s share.
In any event, the point is to get yourself into as many savings schemes as you can. If your employer offers a savings or a pension plan, by all means enroll in it. But also save and invest on your own. Your employer’s plan should never be your only investment.
At this point, you have laid the three building blocks for financial independence:
1. Live below your means. 2. Develop more than one income stream. 3. Save and invest all funds not needed to cover living expenses.
You now have only one remaining challenge: Get a roof over your head that costs you close to nothing. Once you have that, financial freedom is within your grasp.
Chant choir performed at tonight’s evensong service. It’s a monthly event in which a professional musician performs for about an hour before a high-church service that is almost all chanted. This evening was amazing.
Our director, Scott Youngs, performed a spectacular organ recital. The church has a world-class organ, and in fact the building itself was designed to accommodate it. In addition to his manifest talents as a music scholar and teacher, Scott is a gifted organist. He played pieces by Langlais (with whom, it develops, he studied in Paris), Bach, and Brahms. Absolutely magnificent music, and performed magnificently.
Afterward, eleven of us sang for the hour-long evensong service, mostly Latin chant. It amazes me that I can do that; it certainly would not happen without Scott’s tutelage, and the presence of several professional and near-professional-level singers on the choir.
Check out what Revanche is up to over at A Gai Shan Life. She’s engineered a double giveaway contest: in a single event, she’s offering chances at a free year-long subscription to PearBudgetand a chance at 500 free full color (!) business cards from Uprinting.
PearBudget is an online budgeting program, described by its proprietors as simpler and more convenient to use than Quicken. If you’re new to budgeting or it’s a task you truly hate loathe and despise, the freebie online test run is an easy way to get started on a simple, workable budget.
Online business card printing is kinda cool. Tina managed to score a box of freebies for The Copyeditor’s Desk from one of the online companies. The design was just fine, printing was excellent, and the cards were very serviceable—and infinitely better than running them off on an HP desktop printer. I’d like to get some for FaM.
What a beautiful few days we’ve had! Incredible weather in the 60s and 70s, peace and quiet, and now an unexpected holiday (the State of Arizona, because of the legislature’s deep and abiding resentment at being forced to approve Martin Luther King Day, took President’s Day away from its employees, but the County abides no such scantily veiled bigotry). The young classmates and I don’t have to reconvene until Wednesday, o mirabilis!
Now that the racket of the three-ring circus that is the COBRA, Social Security, and Medicare bureaucracies has died down for a while, I’ve finally had a chance to relax, unwind, catch my breath, and think a few thoughts.
And here is what I think:
• My face is beginning to show my age. This is not surprising, since I was born in the early Pleistocene.
• My face is showing the effects of too much ultraviolet light. Also not surprising: born in an early Pleistocene desert, I grew up in one of the harshest deserts on the planet during a time when sunshine was supposed to be good for you (can anyone else remember the phrase “a healthy tan”?), and then I spent my entire adulthood in one of the most biologically diverse deserts on the planet. I am, in short, a creature of the sun.
• I am fat.
• I am boring as Hell. This is probably because…
• I am stuck in a rut.
There’s gotta be some changes made.
First, I need to get out from in front of the computer and put my body in motion. More exercise…lots more exercise! In addition to meeting La Maya whenever we can get together on weekday mornings for an hour’s walk, I need to walk the dog at least a mile a day, and I must get off my fanny and onto the mountain! There’s a very fine mountain with several quarter-mile vertical hikes just to the north of my house. Need to go there and do that. Ideally, every day; as a practical matter, no less than three times a week.
I have a gaudy pink beach cruiser of a bicycle. It sits in the garage while its tires decompose in the heat. I need to get on the bicycle every day and explore my neighborhood and nearby enclaves.
I have a perfectly fine, athletic little sheep dog. I need to let her take me for a run every day. Not a walk: a run.
At the age of 65, dear friend Garnett Beckman (scroll down that page!) started hiking Phonix’s North Mountain Park several times a week. Just retired from a lifetime of teaching, she decided that no grass would grow under her feet. She was 84 the last time I walked to the bottom of the Grand Canyon with her. And yes, I’m afraid she did get out before I did. She’s 102 now. She still has all her marbles, and she’s still going strong.
Role model! Listen: can you hear that voice saying, “What are you waiting for, dear?” That would be, yes, Garnett.
A close second: I need to lose about ten or fifteen pounds. It should come naturally if I manage to drag myself away from the endlessly fascinating Internet and start walking. But I also need to eat better. I eat too much pasta, too many sugary treats, too few green and orange veggies. And, let’s face it: I drink wayyy too much for an old lady: two beers a day, down from half a bottle of wine. A day.
Yesh. Sixteen years of working at ASU earned me a mighty fine drinking habit. If it’s any excuse (it’s not), I’m not alone: hardly any of my friends and former colleagues arrive home from a day at that place without craving a drink or two or three. Some of them crave a lot more booze than I can ingest, and that is plenty. One recently lapsed from AA; the others…don’t ask.
I must stop drinking. Really stop drinking. Not reduce drinking. Knock it off.
After a day of gallivanting with M’hito, in which we visited many venues and spent not very much money, I came home not even faintly interested in a drink. Clearly, one thing that will help is to fill my days with something other than counting shekels and clicking on Web sites until my eyes glaze over. I think more exercise and an organized diet program will help a lot.
Other strategies: Use the neat new refrigerator-door-sized glass bottles to make sun tea. Prepare a lot of ginger-pinapple drinks and frescas. Have plenty of pleasing things on hand to drink other than wine, beer, or whiskey.
In the horrible face department: it’s time to get serious about maintenance. Tomorrow it’s off to Costco to buy some “mineral” makeup. Not that I expect any miracles, certainly not on sagging jowls and hide as convoluted as the surface of Mars, but I’m beginning to suspect L’Oréal liquid foundation is a bit passé. Time to try something new, develop a few fresh techniques.
And it doesn’t take much reading of Une femme d’un certain age to get the clue that it’s time to update the wardrobe. I’m starting with red and red. I’m also going to follow Frugal Scholar‘s and SDXB’s advice to shop in thrift stores by way of upgrading the wardrobe. At the very least, I must have some new tops to disguise the Costco jeans. New tops, new sweaters, new jackets, new vests, new skirts, new dresses, new whatever else that comes along. I have got to start dressing better!
New (to me) clothes, fresh make-up, more exercise, better food: these should jump-start the project to get a life. Who knows? Maybe once a little momentum builds up, I’ll have the nerve to do what Mary has done; drop it all and embark on a whole new existence.
Deflected from writing a post this afternoon by the startling news from Alabama: denied tenure, a junior faculty member tried to take out her department and succeeded in killing three colleagues.
What a tragedy for everyone, the maddened assistant professor as well as those whose lives she ended, and all their families.
Considering how much commitment, work, and struggle go into attaining a Ph.D., how much more struggle, work, abuse, frustration, and sometimes downright misery a junior faculty member goes through, and how much rides on a single tenure decision—often made by committees not all of whose members may operate with the purest of motives—it’s surprising this kind of thing doesn’t happen more often. In fact, the fear that it could does surface every now and again.
Some years ago my department on the West campus of Arizona State University decided to dismiss a tenure-track assistant professor after the chronic frustration of working at that august institution had driven him quite insane. One of my students, a police officer, had let it slip in front of another student that she had arrested this guy for beating up a young boy; I reported this to the dean. The dean and the campus cops confirmed its accuracy, but no action was taken. Only after he threatened to cut off a colleague’s head and pee down the hole—giving said colleague an excuse to decline to come into campus even to meet his classes—did our administrators finally feel moved to get rid of him.
The chair of the department went to the man’s house, accompanied by a phalanx of armed police officers, to give him the news and to tell him he was not to come back to the campus. Before he left on this mission, however, the chair called some but not all of the faculty members and warned them to stay away from campus that day. Strangely, he didn’t tell everyone. It was obvious as day that if our disaffected colleague walked into the second-floor office suite carrying a street-sweeper, he wasn’t going to distinguish between those who merely annoyed him and those who drove him to distraction. But some of us were left to take our chances.
Jayzus! Imagine having a Ph.D. in neurobiology from Harvard University and then being denied tenure by a public school in a state like Alabama…probably the only state in the Union that’s more backward about education than Arizona. How crushing!
For those who don’t know what this implies: it’s extremely difficult to land a tenure-track job at a university in the best of times; during times of recession, almost impossible. To hang onto the job and build anything resembling a career in academia, you have to fight your way to tenure, usually on a three- to seven-year deadline. Tenure decisions require you to jump through many flaming hoops, and too many times the decisions are anything but fair. If you fail to obtain tenure, your job at that institution is over and your chances of landing another tenure-track job are nil. Should you stay in the academy at all after that, you’ll likely end up teaching five sections a semester in some junior college, with no research agenda and no chance of ever having a research agenda. Effectively, tenure denial ends the career for which you spent 10 to 15 years preparing.
So, all the while a junior faculty member is working toward tenure, he or she is under soul-wracking pressure. It is, even for the best of us, a difficult time. It’s not surprising that some people crack. Given the pervasive violence and madness in our culture, I guess we’re lucky events like today’s are rare.
