Coffee heat rising

One door closes; another opens

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pvccDrove up to Paradise Valley Community College this afternoon, by way of turning in a mountain of paperwork to HR.

What a pretty campus! Even though the weather is daunting—40 mph winds, blowing dust, threatening clouds—the place is architecturally coherent and pulled together, clean and well maintained…every building is full of light and pretty much absent tenants who look miserable. Over at the department, the head secretary was up on a ladder installing strands of party lights.

—What’s the occasion? say I.
—Graduation, say the assembled staff.

Graduation?

Takes a minute for this to soak in: for heaven’s sake! They’re fêting students who are graduating this spring!

This would require them to treat their students like human beings. How quaint!

You know what? I think I’m going to like working at a college that treats students like human beings. One of our research assistants has been given a weeks-long runaround as she has tried to get an answer to one simple question: can she file her graduation papers in the second summer session, or do they have to be filed in the first session? Whether she keeps her nicely paid assistantship through the first half of the summer depends on the answer. And no. one. will. tell. her! When I asked Her Deanship if she would please cut the red tape and find out on her end, she referred us right back to the same merry-go-round. How can I count the ways I’d rather work where they don’t deal with students that way?

Door-to-door, the drive from the college to my house took exactly 15 minutes this afternoon. Instead of passing through a concrete canyon built of 30-foot-high concrete walls, the freeway goes through scenic hills with a view of the mountains to the north. No train…but no dreary hour-long commute, either. Parking is free and close to offices and classrooms.

So, as it develops, leaving what looks like a plum job (but is only so because no one in the Dean’s office is paying the slightest bit of attention to us, leaving us unmolested to do our work) will not be the end of the world, after all. It will be an opening to a whole new world.

I can’t wait!

Train: Less than awesome. Blue Funk: Amazing

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Some scientist recently opined that the function of weeping, apparently a behavior unique to humans (or almost so), is to recruit sympathy. So what does it mean when you’re walking down an empty street with no one around but a dog, crying aloud? Who, really, do you imagine will empathize with you?

Well, no one. No news there, eh?

I hate frustration.In my weird little psyche, frustration seems to go hand-in-hand with depression. Today it took just one tiny jab of frustration to tip me into the Slough of Despond, where I’ve spent the entire damn day trying to swim out of the quicksand. It also triggers hot flashes. Note that, young things: when you reach about 52, every idle whim that’s countermanded brings on the sweats and chills.

So this morning I’m really looking forward to another trip on the train to My Beloved Employer’s shabby-looking campus. I figure I’ll read another 50 pages of detective-novel proofs, and my teeth will not be set on edge by the time I reach my destination.

Two or three miles of driving brings me to the park-n-ride. I hike from there to the “station” (I’d call it a “stop”) and order up a day pass. This takes several steps. Come to the step to pay, and up pops a message that says “bank cards not accepted.” By that, they mean no debit cards, no credit cards. Well of course I expected to pay with Visa, which workedjust fineyesterday. I don’t have $2.50 in cash with me, because, strangely enough, I don’t carry cash, having had my purse stolen once too often. After trying several machines, all of which flash the same f***-you message, I give up, trudge back to my car, and make the miserable drive to Tempe, enhanced greatly by having to drive across the city’s single most congested surface street to get to the hideous freeway.

I was mildly annoyed by this all day, while plodding through scholarship on 14th-century Spanish warlords (well, that’s what we’d call them today, if they resided in, say, Afghanistan). Nasty specimens of humanity, those.

A woman looking to hire one of my RAs calls and gives me the third degree about the guy.
—Are you really sure he’s not a rabid nut case who will make everyone in the office crazy?
—Yeah, I’m really sure. {Argh.O lucky man, having the privilege of working for the likes of you.}

Back on the freeway, homeward bound: traffic comes to a dead stop about halfway there. So I have to get off at 24th Street, dodging a sonuvabitch who cuts me off and keeps cutting me off all the way up to Thomas Road. Good thing for him I don’t carry a revolver in the car.

Long, miserable drive across the city.

During this drive I ruminate on a remark that emanated, yesterday, from my ex-husband, a man whom I occasionally (in moments of sentimentality) regret having left. I’d called him—the guy is a corporate lawyer—to find out if I could shelter income from my freelance escapades by forming a corporation that would hold income and pay my sidekick, leaving my share of the money untouched as corporate capitalization until I reach 66. Would this keep Social Security from confiscating my SS benefits in proportion to the amount I earn that exceeds a piddling $14,000 a year between ages 64 and 66?

He thinks so.

Then I needed to have him explain one of the niceties of my astonishingly complex 2008 income tax statement, so I could fill out Paradise Valley Community College’s W-4 form correctly.

Do you ever feel that you’re speaking with someone who thinks he’s talking to someone like you who is not actually you? Sometimes I think the man is talking to a ghostly sister of mine, a woman who really isn’t me at all. After 25 years of marriage, he never seemed to get to know me. He got to know a ghost-sister, maybe, but whoever he thinks I am, she’s not me.

The instant he hears I’m signing up to teach freshman comp, he goes (pompous as Hell), “Ho ho ho! Well, you’ll find that sometimes you’re better off in a job that’s not so prestigious.”

You understand: I am so slow on the uptake that it takes a full day for me to register an insult. Not until I’m plodding through the miserable homeward-bound surface-street traffic do I start to think…
W…
T…
F…????

“Prestigious”? He thinks I think the jobs I’ve held all these endless underpaid overworked years have been “prestigious”? Does he think I taught four-and-four in an untenurable position, working 60, 70, 80 hours a week for freaking prestige?

Could he possibly think—really, seriously?—that I imagined hacking away as a freelance journalist was somehow prestigious? Does he imagine that I saw myself as magically endowed with some elevated status working as an assistant editor on a crass city magazine, best titled The Chamber of Commerce J, where I was expected to work six and seven days every week, with at least one overnighter a month, for $12,000 a year at a time when $24,000 was on the low side of middling pay?

Is it possible—really, seriously?—that he doesn’t remember I took that shitty job because he was canned from a senior partnership at one of the “most prestigious” law firms in the American Southwest just a few weeks after we moved into a house that tripled our mortgage payments? That while he sat stunned in the living room I had to go out and find a job to keep food on our table? Did he really think that I left my six-year-old son in daycare for fu*king prestige? That I had a taxicab pick my child up at school and drive him to the care place because I wasn’t allowed to leave the office long enough to pick him up from school, because I so loved the fu*king prestige?????

Could it be—really, seriously?—that he never noticed why I came to develop such a strong distaste for teaching freshman comp that I said I’d rather go on welfare than ever do that again? Does he not recall the trips to Mexico when I had to haul along a suitcase full of student papers, the days and nights of our “vacations” when all I could do was grade papers? Papers in Guaymas. Papers in Hermosillo. Papers in Tucson. Papers in San Francisco. Papers in Colorado. Papers in Washington, D.C. Papers in Atlanta. Papers in New York City. He thinks I don’t relish doing that again because it’s beneath my patrician little standards?

Possibly I fly too far off the handle, to suspect he understands what he’s saying and contrives to be insulting on purpose. It’s as though he makes a set of assumptions about you, but those assumptions are so far off base that in fact he thinks he’s talking to someone who is not the person he is talking to.

On the other hand, he’s alarmingly smart and capable of great subtlety. He certainly could be doing it on purpose.

Who is this man? And why did I waste 25 years of my life with him?

Sometimes I feel like about 90 percent of my life has been an utter waste.

Debt-to-Income Ratio: Frugalist begs to differ

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So the Financial Wizard par Excellence is arguing that M’hijito, who earns a salary that is exactly at the median income for bankruptcy purposes, should be able to shoulder a great deal more of the Investment House mortgage than he agreed to. Our agreement was that he would cover one-third of it (having contributed a third of the down payment) and I would carry the other two-thirds. When we sell the chateau sometime in the future at an outrageous profit, we’re to divide our incalculable riches accordingly.

Fact is, he’s carrying more like 40 percent of it.

FW trots out the debt-to-income ratio to support his position:

The total debt-to-income, or back-end ratio, shows how much of your gross income would go toward all of your debt obligations, including mortgage, car loans, child support and alimony, credit card bills, student loans and condominium fees. In general, your total monthly debt obligation should not exceed 36 percent of your gross income. To calculate your debt-to-income ratio, multiply your annual salary by 0.36, then divide by 12 (months). The answer is your maximum allowable debt-to-income ratio.

Hm. Let’s think about that.

My gross income is $62,500. In theory, then, I should be able to tolerate a debt load of $1,875. A person with the state’s median gross income should be able to afford a total debt of $1,301.91.

And…uhm…what does such a debtor eat? Guess he doesn’t have to worry about dieting, eh?

My net monthly income is $3,000—actually, it’s more like $2,864 with the twice-a-month furloughs. The cost of operating my house and paying regularly recurring bills such as long-term care insurance and utilities comes to about $840 a month. In the winter it’s a little less, but one ignores the high summer bills at one’s peril. My house is paid off, so I have to self-escrow the costs of homeowner’s insurance and property tax, which when combined with the car insurance bill average out to around $350 a month. The combined cost of all other expenses—food, household goods, gasoline, car repairs, home repairs, pool chemicals, yard items, veterinary bills, medical and dental copays, and on and on and on—comes to about $1,200. I do charge these things on AMEX by way of collecting a couple hundred dollars in kickbacks once a year, but I pay the charge card bill in full every month.

I live pretty frugally: don’t travel, don’t subscribe to cable or cell services, rarely eat out, don’t buy many clothes (and none that have to be dry-cleaned), wash my own car, clean my own house, grow some of my own food, abstain from expensive hobbies, don’t even go to movies.The only debt I have is the $170 bill for the Renovation Loan (soon to be paid off) and my $800/month share of the house mortgage, for a total of $970. I presently put $400 a month in savings toward survival after the coming layoff. So…

  $840 monthly set expenses
  1200 all other living & unexpected expenses
     170 Reno Loan (second mortgage)
     800 Investment House mortgage
     350 tax & insuranceself-escrow
     400 emergency savings
$3,760

Tha’s funneh. Seems to come to more than I’m bringing home! Cut emergency savings to a more ordinary $200 a month, and we still exceed my net income by $696 a month.

Okay, I admit it: the $800/month is a drawdown from savings. So $3,760 – 200 – 800 = $2,760.

That’s right: a debt of a grandiose $170 a month brings my outgo to within $104 of my income…and that’s without any major bills: no pipes explode, no veterinarian proposes surgery, no dentist cries out for some expensive procedure, and the car’s transmission continues to run flawlessly.

If $1,875 of my income were committed to debt service, I would have a munificent $1,125 left to live on. But it costs $2,760 for me to live rather modestly (some would say “ascetically”) in a small middle-class urban tract house.

Is there any question why most people are up to their schnozzes in revolving debt? If my debt-to-income ratio were maxed, the only way I could possibly get by would be to live on the cuff!

Allow me to propose a different debt-to-income ratio, one that is based on net income, not gross.

Obviously, the amount of debt a person or family can afford is a function of the amount of money the household brings home, not a never-never-figure whose total is effectively meaningless. What matters, when calculating what you can afford, is how much you have in your pocket, not how much you putatively “earn.”

If you hope to live within your means and your net is, say, $3,000 a month, you need to subtract your known living expenses plus a little for emergency savings from your take-home pay. What remains is the amount you can pay toward debt. Let’s say I were not facing unemployment in a few months, so I put aside a more normal $200/month toward the emergency fund: my regular needs would come to $2,410 less the second mortgage payment: $2,240 (i.e., $2,410 -$170). This would leave $590 a month ($3,000-$2,410) available to pay toward debt. That is 19 percent of my net income.

On a “good” salary in my region, I can afford to commit about 20 percent of net to debt payment. Spend much more than that, and presto-changeo! My lenders get rich on the interest I owe now and forever, world without end, amen.

Take-home pay is typically about 60 percent of gross pay. So a person with Arizona’s $43,400 median income brings home about $26,040, or $2,170 a month.

That would make a reasonable debt load right around $435 a month (20% of $2,170). Yes. For your mortgage or rent, your student debt, your revolving credit-card debt, whatever you owe Mom or Uncle Ernie…

By this guideline, M’hijito, who has no other debt, is already contributing $165 a month more than he can afford to our combined real estate venture.

Figured traditionally, the debt-to-income ratio suggests he should be able to afford $1,301 a month, leaving him with a miserly $869 a month to live on!

Here’s what I think: the standard debt-to-income ratio calculation is utterly unrealistic and unfair to consumers. First, a number like 36 percent way too large. Second, figuring the amount of debt a person can carry according to his or her gross income works a complete disconnect from reality! No one lives on gross income. We live on our net income! Because net, not gross, is what we have available to spend, net income is the figure that should be used to calculate a tolerable debt load.

The take-home message: Figure the amount you can pay toward loans of any and all kinds according to your net income, not according to your gross. Obviously, if you want to spend no more than you earn, you need to keep the debt load low enough that it plus your total other spending and saving needs come to no more than your take-home pay.

debt-to-income ratio = (net pay – spending needs – saving needs) ÷ net pay

The decimal fraction you get from this formula is the fraction of your net pay you can afford to spend on debt.

How hard is this?

Well, of course, real hard: who do you know who’s paying $435 a month to keep a roof over his head? And how many own their cars free and clear? Not many, I’ll bet, who don’t have a roommate, a spouse, or a life partner.

Few exercises demonstrate more clearly that good financial health (at least on the household level) entails getting out of debt and staying out of debt. It means pinching pennies as tight as you can, creating more than one income stream to maximize net pay, and doggedly snowflaking down revolving debt first and then finally mortgage debt. Quite a challenge, this “getting real” business.
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Riding the train for fun and profit

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dollarMy first official commute to the Great Desert University on the new light-rail trains was a great success!

The ride was quiet, comfortable, and uneventful. People-watching was reasonably good: a young mother with a cute baby, giggling teenagers, rangy young men, goofy high-school boys, spiffy office workers, and one brightly dressed mental case who carried on a flamboyant conversation with herself.

Commute time was about the same as the horrid drive to Tempe: about 40 or 45 minutes. Only instead of having to spend three-quarters of an hourdodging homicidal maniacs andstaring at thousands of tailpipes snaking endlessly through dreary concrete ditches, I got to sit back and read a book.

More specifically: page proofs. I spent the entire time proofreading a detective novel for the Poisoned Pen Press, a highly entertaining enterprise. Got through about a quarter of a short project for which I’ll probably charge around $200. At that rate, I earned $50 while I was commuting to work.

Uncle Scrooge would love it.

Scrooge McCool
Scrooge McCool

Photo: Wikipedia Commons

Real Estate: Looking up?

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Sandy and Bill Goodheart, the Realtors who for years have dominated my part of town (Bill Goodheart actually built a fair amount of the neighborhood), send out a sporadic real estate newsletter to their clients. For many a moon, the news has been pretty glum. This month, though, they report some indications that real estate in the hard-hit Phoenix area may be starting to look up.

Here’s the good news:

We believe the market has bottomed out. In just the last ten weeks, we have gone from a 10.4-month supply of listed homes for sale to a 7.5-month supply. This has been accomplished by a 6% reduction in the number of homes for sale and a 30% increase in the number of homes sold…

We feel prices are stabilizing, although at a much lower price than last year. This new, lower floor will last for all of 2009, then we can expect an average 3-5% increase for the next several years.

This cheer is based on fairly scant evidence: in the past four months, Realtors in our area made only nine sales. Average sales price was $247,000, and it took an average of 156 days (over five months!) to sell. While this comes under the heading of “the bad news”—it represents a 12 percent drop in prices over the past year—it’s better than the overall market, which has dropped 35 to 40 percent.

Dave’s Used Car Lot, Marina, and Weed Arboretum sold for $247,500. That’s $15,500 more than I paid for my house five years ago, and $77,500 more than the speculator paid to buy the arboretum from the bottom-feeder who bought it out of bankruptcy. That place is two square feet larger than mine, on an identical lot with a similar size and quality pool, freshly out of foreclosure, and not renovated as nicely as mine. The people two doors down from Dave are asking $300,000 for the best model in the tract. It’s potentially a nice house (given a few tens of thousands of dollars in fix-up), but they’re original owners and the house is advertised as “lovingly cared for,” meaning everything in it still dates back to 1971.

In the past, the Goodhearts‘ observations have been pretty accurate. About 18 months or two years before the bubble peaked, they sent out a letter advising their clients to sell and move into rentals, then buy new real estate at what they expected would be greatly depressed prices.

They predicted the bust that much in advance, and in fact, Mr. B*** (the predatory landlord) made a nice little killing by following their advice: he sold his rentals in the neighborhood at the top of the market. Their timing was a little off—they jumped the gun by a few months—but their assessment of the market and where it was going was right on.

Their prognostication for the future:

Our best advice is to wait if you can, because time is now on your side. Ideally, when we have a 3-6 month supply, that is considered a balanced market and is the better time to sell. We do not see prices going up this year.

Define “up,” though: in terms of a traditional increase, absent the bubble, the increase on houses that have not been in foreclosure has been unimpressive but not unacceptable. A house similar to mine sold for $280,000. Assuming that five years ago it was worth about what I paid for mine, a 3 percent annual increase would have put its value at $268,950. So if you think of what it ought to be worth instead of what it might have been worth, its value has increased by a little more than 4% a year.

The rapid drop in inventory is a positive sign. Around here, a three-month supply is considered about normal. If this trend continues, we may begin to approach sanity somewhere near the end of the year. After that, we should begin to see prices rise at a stately but respectable rate.

DIY Deodorant

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Moving on from the Great Desert University to ever so much more important topics, check out this recipe for homemade deodorant. Came across the link at Over the Cubicle Wall, a site whose proprietor seems to be a person after my own heart, via Frugal Scholar‘s blogroll.

Like the whole DIY destinker idea. I’m allergic to most commercial deodorants. Have been known to use plain baking soda, but it’s messy and gritty. A friend has tried one of those crystals; they’re said to work pretty well, but they also are messy: you have to get it wet and then it gets you wet.

Right now I’m using Tom’s, a reasonably benign brand you can get at Sprouts and Whole Foods. Sometimes other items in the Tom’s line appear in mainline stores (spotted the toothpaste in Target the other day!), but more often you have to seek them at New-Agey and health-foodish retailers. And the deodorant is really hard to find.

OMG! Cassie the Corgi just threw a rope toy, spinning end-over-end, about four feet over her head and caught it on the down-sweep. Now she’s throwing the thing at me. I guess she wants me to get up, eh?

This dog is bar none the smartest animal I’ve ever had around me. She actually has learned to pitch a ball into my waiting hands.

And so, off to the playing fields. Happy Easter Egg to everyone!
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