Coffee heat rising

Financial goals, urban angst

Yesterday afternoon when I got home from work and climbed out of the car, I smelled burning rubber in the garage. Thinking something was wrong with the van–did I drive across two rain-soaked freeways with the handbrake on? is that fan belt flaring up again?–I looked the vehicle over but could find nothing wrong. Then I walked out to the curb to pick up the daily delivery of junk mail and smelled acrid fumes on the air. Lo, to the northwest a plume of black smoke was rising toward the clouds.

It looked like it was coming from the decrepit strip shopping center where Fry’s recently shut down a ghetto grocery store. Neighbors were glad to see that store close. It’s been a public nuisance for years, allowing (illegal) 2:00 a.m. trash pickups that sound like a wrecking yard in action, sheltering derelicts in the oleanders behind the parking lot, and charging inflated prices to the captive audience of low-income apartment dwellers along 19th Avenue who can’t afford a car or whose driver’s licenses have been suspended.

The fire appeared to be close to my friend Shari’s rental house, the place she’s been trying without luck (largely thanks to Fry’s) to sell for the past two years. I jumped on my bicycle and headed over there to check on her property.

Slipping past a fireman whose back was turned as he wrestled a hose onto a fire hydrant, I got onto the street that borders the run-down shopping center. A few houses up the road, one of the neighbors was standing in his carport watching the commotion, which was directly behind his home. I asked him what had happened.

He said that some idiot had tried to commit suicide–at least, that was his take on it. The guy had driven his vehicle up to one of the locked steel loading doors and floored the gas pedal, spinning the tires until he quite literally burned rubber. And then the car exploded! He said he was sure the perp had to be dead.

Charming. Explains the screams that could be heard from my front yard.

My friend’s house seemed to be OK; it backs onto the east side of the shopping center and the cremation occurred on the south side. But I personally am not OK with this. It’s another incident in a string of incidents and circumstances that say it’s time to get out of this area.

I’ve been undecided whether to stay in my house in retirement. It probably costs more than I’ll be able to afford on a reduced income (some months I barely make it on what I’m earning, a good $20,000 more than I’ll have in retirement). But I like the house a lot–I’ve put a ton of work into it, and the backyard is now very pleasant, full of fruit trees and flowering gardens. I love the wonderful swimming pool, my only real indulgence. I like living in a diverse neighborhood and I like being centrally located.

However, the truth is that the middle-class infrastructure has moved to Scottsdale, the East Valley, and the far Northwest Valley, following white flight and the money that fled with it. To buy clothing and upscale food, to go to doctors and talented hair stylists, to take the dog to a top-flight vet, even to shop at an ordinary department store, you have to drive halfway across the planet. The Costco a couple miles down the road is an entirely different store from the one seven or eight miles up the road at the 101 and Cave Creek, and the difference is not to the advantage of shoppers in our neighborhood. And the city is about to spend the next four years ripping up 19th Avenue for our insensate light rail project, an unsightly monstrosity that will bring us festoons of overhead wires, a curb up the middle of the road prohibiting left turns into the few surviving businesses, and traffic funneled through our residential streets as drivers dodge around the traffic jams.

How exactly the endlessly touted light rail is supposed to enhance property values escapes me: it’s no improvement over the bus, because it makes exactly the same stops and moves people at exactly the same milk-run speed, taking two hours to cover a commute I can drive in 30 minutes. It trashes the streetscape and is truly hideous. My guess is we’ll be lucky if our property values don’t drop even further once that thing is in. Certainly four years of chaotic, noisy, dirty construction won’t help values.

So, I guess it’s time to set a new financial goal: Find the money to move someplace quieter and safer by or upon retirement.

But how? Houses are selling here, but only if you set the price low and wait a long, long time. My house is paid off. At my age I’d be crazy to take on a new mortgage. What I can get for this place will not buy a comparable house, free and clear, in a better neighborhood.

And move where? I certainly can’t afford Scottsdale. I don’t at all care for the East Valley, I truly don’t want to live in Sun City, and the West Valley doesn’t turn me on any more than the eastside does. The relatively short commute I have now sets my teeth on edge, and the prospect of driving from Surprise or points west into Tempe fills me with horror. The downtown area suffers from the same issue as North Central: it’s surrounded by blight and devoid of middle-class infrastructure. All that “historic” (read “outrageously overpriced”) housing down there is even more decrepit than what I’m living in: holes in the ground into which to pour money. Newer downtown housing, mostly hard-edged concrete “lofts” that are really nothing other than mid-rise apartments, is priced in the out-of-the-question range.

To accomplish the goal of moving, I guess I need a set of strategies:

Within the next three years:

  • Pay off the Renovation Loan, or set aside an equivalent amount in cash holdings.
  • Find a desirable, affordable place to live.

Explore Prescott and Tucson.
Reconsider Sun City.
Revisit Fountain Hills.

  • Determine how much of a bath I can take on housing and still have enough in savings to live adequately in retirement.
  • Calculate the best timing for putting the house on the market.

Sell before light rail construction begins?
Wait until commuting is no longer an issue?
Rent it until the market improves?

  • Consider putting the house on the market now, since it may take two years to sell.

The conundrum at hand is another case where money issues and stress go hand in hand. To live within my means, I apparently must live in a neighborhood where I don’t feel safe. There has to be a way to resolve this!

Funny’s ten money principles

A major cause of stress in Western societies is money: getting it, spending it, keeping it. Studies have shown that people in Bhutan, Brunei, and Malaysia, hardly centers of conspicuous consumption, rate as happier than people in “developed” countries like, oh, say, the United States. One way get our angst under control is to get our earning, spending, and savings under control. It’s amazing how much calmer you feel when you have a grip on your financial life.

Here are ten principles of sane frugality. Over the next few weeks, we’ll explore these concepts, and Funny about Money will regularly post tips to save you money and make your life simpler.

  1. Make a budget you can live with.
  2. Live within your means.
  3. Pay off debt.
  4. Never pay finance or bank charges.
  5. Build an emergency fund.
  6. Invest.
  7. Buy it second-hand.
  8. Make It from Scratch.
  9. Do it yourself.
  10. Stay out of the herd.

Frugal Crafts Friday: How to make upscale casual jewelry

Do you get the Sundance catalogue? Ever covet the cool, hand-crafty necklaces and earrings? Or, if you’re a guy, ever want to buy one of the things for your lady friend? Maybe you were given pause by the prices.

Here in this month’s catalogue, for example, is a strand of lapis heishi beads with a silver charm dangling from it: $118. The bead earrings sold with it are a bargain $38. A bracelet of manufactured beads and semiprecious stones sells for $188, and lo, here’s a double-strand necklace of labradorite beads for a mere $540. We must hurry out and buy them, no?

No.

These bead necklaces are easy and inexpensive to make, with a minimum of crafting gear. All you need is a small wire cutter, a crimping tool, a stringful of beads, a clasp, and a couple of tiny metal crimps. And a modest budget.

Labradorite beads of the sort pictured in the current Sundance catalogue sell for $9.99 for a 15½-inch strand. For $12, you can buy about 160 lapis heishi beads. Sterling silver charms will set you back somewhere between $6 and $15. For $3 to $5, you can buy a nice silver clasp. A crimp tool costs $10.50, and you probably have a wire cutter in your tool box; if not, you can get one online for $7.25. The cost of bead-stringing wire and crimps is negligible.

Yes.

You can make pricey-looking jewelry items for a tiny fraction of what they cost at upscale outlets. And you get a bonus: making bead jewelry is fun. Like many crafts that busy your hands without overly taxing the brain, it is relaxing and stress-relieving. So you get a double benefit: relief at the cash register, and relief from whatever is making you grind your teeth today.

Here’s how:

1. First, get the materials and gear you’ll need. Beads, wire, crimps, claps, crimping tools, and wire nippers are available online. But for your first adventure, it’s a good idea to go in person to a bead store. Look up “beads” in the Yellow Pages, or Google bead suppliers in your area. Go to a store dedicated to selling beads and bead supplies, not a more general craft store such as JoAnn’s. Craft stores carry some supplies, but the selection and quality are sadly wanting. Also, at most bead supply shops, staffers are happy to show you how to use the tools and parts. About ten minutes of coaching is all the training you need to make Sundance-style necklaces and bracelets.

2. For expensive-looking jewelry, select semi-precious stones such as lapis, coral, turquoise, iolite, aquamarine, tourmaline, and the like. KEEP IT SIMPLE! Note that Sundance necklaces are not embellished with a lot of baroque-looking carved silver beads. Save your money and purchase only a string or two of stone beads in a color you covet. For a classy look, remember: nice but not gaudy.

3. To make a necklace, measure out a length of stringing wire a few inches longer than the strand you plan and nip it off with your wire-cutter. You actually can use dental floss strung like thread on a thin sewing needle, if your beads have holes large enough for a needle to pass through. Personally, I prefer wire because it’s easier to work with and will not break. Assuming you’ve chosen wire, run one end of the wire through a metal crimp (looks like a tiny silver cylinder). Then run the wire through the connecting loop on one of the two parts of your clasp. Poke the end of the wire back through the crimp, forming a wire loop that passes first through the crimp, then through the clasp’s connection, and then back through the crimp. Push the crimp up firmly against the clasp, and use the crimping tool to clench the metal crimp down on the wire. To secure it, turn the crimp 180 degrees and clench again at right angles to your first effort. Nip off the short “tail” up close to the clenched-on crimp, leaving a single strand of wire on which to string beads.

4. Slide beads onto the wire, one at a time, until you reach the desired length. You can add decorative metal beads, contrasting semiprecious stones, or pearls to give variety. I like to put one to five contrasting beads about ¼ of the way down the strand. You also can place one or more charms along the length of the strand or up near the clasp.

5. When the necklace is as long as you like, run the end of the wire through another crimp, then through the loop of the remaining part of the clasp, and then back through the crimp. This is the only “hard” part-and it isn’t very hard. Pull on the “tail” and of the wire and work the crimp, the clasp part, and the beads together so they fit together snugly. Now clench the crimp tightly onto the wire, as you did before. Nip off the spare “tail.”

And voilà! A fancy necklace for about a fifth of what you’d have paid for it in a tony shop!

You can make earrings to go with it-bead suppliers sell earring wires (ten will lighten your wallet by $1.49) and an incredibly handy part called a “headpin.” A headpin is a strip of wire with a decorative or flat head at one end, onto which you can string beads. Then, using a small pair of needle-nose pliers, you bend the free end in a loop through the loop on the wire, and that’s all there is to it: bead earrings.

None of these products look like they came from Tiffany’s. But they certainly can look like they came from Sundance. They’re perfect for wearing with jeans and sportswear. They also can go to the office with certain kinds of business wear. And they make great gifts.

How to bamboozle a buyer

From The Atlantic Monthly comes a précis of a recent study [1] published by Cornell University’s Johnson School reporting that consumers tend to see a precise price, such as $355,756, as a better bargain than one that ends in zero, such as $355,000. When asked which was lower, subjects consistently responded that the precise figure was cheaper than the round number.

Not only that, but at least in real estate, a zero at the end of a listing price works to lower the sale price. If you live in South Florida and list your home at a price ending in at least one zero, your final sale price will be about .72 percent less than that of a house listed at a similar price that doesn’t end in a zero. Three zeros will make it .73 percent lower, and for each additional zero, the price will drop another .39 percent. Doesn’t seem like much, but every little .72 percent counts: for the $355,000 house, that’s $2,556.

The strange psychology of pricing is well known to all of us who shop in stores where prices end in 98 cents. Retailers have long recognized that when confronted with a $15.98 item, buyers think the object costs $15, not $16. So, for that matter, do the sales clerks. Once in a household goods store on the order of Linens & Things, I happened to remark to the sales clerk that thus-and-such a gadget was $16.

“Oh, no!” she exclaimed. “It’s $15.98.”

“That’s the same as $16,” I said.

“No,” she insisted, “it’s $15.98.”

“Well,” I insisted back, “$15.98 is only two pennies less than $16. It’s pretty much the same as $16.”

She actually had to think about it for a moment. Finally she allowed, “Yes, I guess it is.”

What does this mean for the frugalist? Round up! Round up to see the real price. And in the real estate market: pay attention if you’re a buyer. If you’re a seller, for heaven’s sake come up with a price that ends with a digit between 1 and 9.

1Manoj Thomas, Daniel H. Simon, and Vrinda Kadiyali. “Do Consumers Perceive Precise Prices to Be Lower Than Round Prices? Evidence from Laboratory and Market Data.” Johnson School at Cornell University Research Paper No. 09-07, September 2007. January 10, 2007. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1011232.

Five good things you can do for your finances this week

1. Make one day this week a no-purchase day. For a whole day, refrain from buying one thing, not even gas for your car.

2. Hold the Starbucks! Brew your own coffee before you leave the house. Want a sweet roll for breakfast? Buy a few at a bakery, bring them home, and enjoy one with your coffee.

3. Pay $10 toward the principal on a debt. If you don’t have a debt, put in in savings. If you already have a Roth IRA, put it there.

4. Divide your monthly budget into four “cycles” of about one week each. Try keeping within a weekly instead of a monthly budget.

5. Take your lunch to work at least two days this week.

Like the results? Repeat!

How Much Is That Doggie in the Window: The cost of owning a pet

Out of idle curiosity, I ran a Quicken category report for the past 12 years and restricted the categories to one: “Dog.”

According to Quicken, to date I’ve shelled out $8,217 for the privilege of owning a dog—well, for five of those 12 years, two dogs. That doesn’t cover everything. For the first few years of Anna’s residence with me, I didn’t break out every food and toy and miscellaneous expense for the pooch.

And it doesn’t count the leather chair that had to be rebuilt after Anna chewed an arm off it (that was when SDXB started calling her “the thousand-dollar-a-day dog”). Or the carpets that had to be replaced after a long, slow house-training. Or the van I bought to carry her around after she developed a habit of placing her muzzle next to my ear and screaming until my eardrums hurt every time I put her in the car. The Camry I replaced with the gas-guzzling Sienna had at least another five years on it, and it was a great deal more fuel-efficient than the Dog Chariot. If you calculated in the cost of the replacement flooring (all tile) and the larger vehicle and the cost of running said larger vehicle, you’d be looking at, oh, say, another ten grand. That would bring us to something like $18,000 for the pleasure of 12 years of dog company.

Well, it doesn’t match the cost of raising a child. Yet.

But the next time you gaze into two limpid pools of puppy-love eyes, think: this is not a minor undertaking! Bringing a pet into your life is expensive. Vet bills (which can take your breath away-my last bill was $450!) are just barely the half of it. Over time the combined costs can add up to something very, very large.

Would all that money have gone into savings? Probably not. It likely would have been diddled away on living expenses. I do have to say, though, that if I hadn’t had that $450 vet bill, the larder would have been quite a bit fuller in the month I had to pay it. Yes. It would have been nice not to have to go hungry, or to raid retirement savings, to pay for the cost of owning a dog.

Anna is very elderly and frail. She won’t last much longer, alas. It makes me very sad. I can hardly imagine what my life will be like without a furry companion.

Still, when I contemplate the possibility of adopting another dog after she’s gone, I have to ask myself: can I afford another $18,000? Or even $8,217? When I’m 70-something and scraping by on Social Security, will I be able to take care of a dog?

I don’t think so. In fact, the cost of pet ownership is rapidly moving beyond the means of the average middle-class American. At one point, I estimated that a single person would need an annual income of at least $80,000 to own a dog without having to tighten her belt now and then. Possibly a two-earner household could afford an animal more comfortably. But for single middle-class earners, dogs are about on the order of horses: an indulgence for the wealthy.

How much do you spend on your pets? Do you think this is affordable in today’s economy?