Coffee heat rising

The Worst Financial Mistake You Didn’t Make

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Recently I was asked to describe the three worst financial mistakes I ever made. Well, that was easy… But later, it occurred to me that a more interesting question might have been “what was the worst financial mistake you didn’t make.”

Have you ever been tempted to do some damnfool thing and then later realized that you were smarter or luckier than you thought? What’s the worst mistake you could have made, almost made, but then didn’t make? And why didn’t you make it?

If you’re a blogger, please join the conversation with a post and link back to Funny. If you don’t have a site, please leave your story in the comments section.

To get the ball rolling, here’s this:

The worst financial mistake I didn’t make was to quit my job about a year ago. By the end of 2007, I was utterly fed up with the difficult personnel problem embodied inMy Bartleby. I had decided that if I could not get the Great Desert University to RIF her position by the time of the next performance evaluations (which occurred in spring 2008), I would take the earliest of all possible early retirements. It was her or me: either she left, or I did.

Luckily for me, after she went to visit her out-of-town son over Christmas break, she came back resolved to quit.

What serendipity!

The factotums in the Dean’s Office had already decided that we would RIF her job, and so at least I had the support of my betters in my little project. But really: she could have protested, she could have claimed I was unfair to her (I’d been hounding the poor woman for months, building a case to show not only that we no longer needed the services she’d been hired to perform, but that her editing skills were not up to snuff), she could have engaged all sorts of bureaucratic machinery to delay dismissal. We were required to give her several weeks of notice, and although our HR rep said in these cases the worker is normally told to go home and collect her money, Bartleby—you can be sure!—would have preferred not.

If she’d put up a fight and made my life even more miserable than it was, or if she’d managed to evade dismissal, I very certainly would have quit. I was determined to bring an end to the whole unhappy business.

{LOL!} Having a son of my own, I can hear the male voice, embued with common sense. He would have said one of two things:

MOM! If you’re that unhappy, why don’t you just retire?

or, knowing Bartleby’s nature as he must have,

MOM! Don’t give that bitch the satisfaction! Quit before she can fire you.

Whatever he said, it was the right thing. Bless him.

If I’d retired last spring, I would have been just getting by on the proceeds of my savings and a minuscule Social Security benefit. When the economy crashed and $200,000 of retirement savings disappeared, I would have been flat out of luck.

Don’t know how God felt about Bartleby, but She was on my side that time!

Moments of Fame

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Green Panda Treehouse hosts this week’s Carnival of Personal Finance, where Funny’s rumination on the “Slow Money” idea appears. I enjoyed Pimp Your Finances’s rant about the widespread allegation that responsible savers are trashing the economy. Living Almost Large questions the long-term effect on the economy of excessive and almost universal student loans. And there’s a good essay at the Personal Finance Playbook on price-to-rent ratios, something of interest to some of us who might not have planned on having to rent out a house.

Funny’s reminiscence about nearly buying a bed & breakfast appears in this week’s Carnival of Personal Development, hosted by Health Money Success. The round-up is getting quite large. I liked this: Jacob Duchaine gives us 10 steps for getting a girlfriend. Wonder if they’ll work to get a boyfriend, too? Beyond Bounds has a nice post on “living the jobless life.” I like it!

Feels Like Home hosts this week’s Make It from Scratch Carnival; my scheme to soften laundry with hair conditioner made the cut here. And whoa! Right at the top of this carnival is Praiseworthy Things’s guide to making almond milk. In my misspent youth, I used to make that. PT’s looks better: she uses better tools and she takes her time. As a bonus, she also tells how to use the leftover almond meal to make bird suet. Wifely Steps has an interesting and beautiful-looking recipe for sautéed bitter gourd, a Filipino dish. Uh oh…chocolate addicts had better avert their eyes: 5-Minute Chocolate Mug Cake from Lighter Side. You make it in a mug, cook it in the microwave, and from the photo, it looks highly edible. At Recession Depression Therapy, Neighbor Nancy offers some encouragement and the basics about canning. If you’re gardening a lot or you have fruit trees, canning is a great way to make the most of your excellent produce. I could cite every post in this carnival: it’s full of neat ideas and fun things to do. Be sure to visit!

Speaking of Make It from Scratch, Funny will host next week, so be sure to submit your best ideas at using this handy carnival form.

Frugality, savings, and the causes of doom

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Okay, I know that writing about the same thing other bloggers are posting is a form of mob journalism, much to be avoided. But what the heck… Pimp Your Finances is riding one of my favorite hobbyhorses, the argument that saving and frugality are harming the economy. We cheapskates are to be blamed for the fall of civilization as we know it.

No. ‘Fraid not.

As I was harmonizing with PYF’s rant, it occurred to me that there’s a subtle difference between saving and frugality.

Saving means setting some money aside for future use. Generally savings go into bank accounts or into other financial instruments with higher risk and higher potential return.

Frugality means living within your means: spending less (or at least no more) than you earn.

Most people who are frugal are in a position to save money; obviously, if you manage to spend less than you earn, you can take that unspent money and invest it somewhere. But some people who are profligate—who have run up revolving debt or have bought more house than anyone in their right mind could possibly claim to need—also are able to save money, if only through mandatory 401(k) or retirement fund contributions.

My Journey to Millions added a comment to PYF’s post noting that savings do not get locked in a vault somewhere. Banks loan out depositors’ savings (or so they’re supposed to do) to individuals and businesses, and that’s a large cog in the wheel that is our economy. When banks refuse to lend, as they’ve been doing in the present crunch, the economy grinds to a halt. Thus saving not only is not bad for the economy, it’s crucial to any nation’s economic health.

What short-sighted critics are saying is that frugality—which they equate with miserliness—is wrecking the economy. These are the ninnies who suggest that if we would just all hurry to the mall and max out our credit cards on junk we don’t need, everything would be just fine.

Here’s the hitch in this thinking:

When the bank owns your car, your house, your furniture, your clothes, and the dinner you sit down to at a restaurant, you’re renting your whole life and you have nothing. Although you may look affluent, the truth is you’re living in poverty. Living on the cuff creates the illusion of wealth, but it’s only an illusion.

It’s like living in the Land of Oz. Behind the lights and mirrors, our late, great “prosperity” was phony. With everyone spending until their income went mostly to service debt, no one had a REAL nickel or dime to rub together.

When everyone spends and saves responsibly, from the average person on Main Street to the A.I.G.’s of this world, then the economy will be healthy. The economy is healthy when most consumers, businesses, and lenders are financially healthy.

There’s no “paradox of frugality” here. None at all. Just a fake wizard in an Emerald City.

Single-handedly rescuing the economy

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Yesterday M’hijito and I went out and spent enough to bring the entire global economy back to life. Well…at least to revive the value of Lowe’s stock.

The Investment House that I so recently was fretting about has needed decent window coverings since we bought it. The previous owner, who rented the place out, had installed cheesy plastic miniblinds in all the windows. In the south-facing front windows, they not only do nothing to block the heat from the summer sun, they seem to assist it in radiating into the house.

M’hijito has long wanted wood blinds, set inside the casements. We checked out the faux wood and found the price is about the same, so we ordered up some real ones that roughly match the color of the salvaged French doors that now form the visual and design centerpiece of the front rooms.

They should look pretty nice, and I think they’ll help a bit with insulating the windows (we really can’t afford to replace the windows with double-paned numbers; certainly not in a style that wouldn’t compromise the house’s historic character). Since we installed a high-efficiency air conditioner and packed the attic with insulation, we’re hoping this will help to drop the gents’ power bills into the almost-reasonable range this summer. Hope so: the price was bracing.

Could we stop at dropping 8 1/2 bills on the decor? Hell, no!

dcp_2420From the window-covering department, it was off to the nursery, where M’hijito unburdened himself of a nice slab of his annual bonus and I continued to get rid of my tax refund. He bought more stuff for his elaborate vegetable garden project, and I found this incredible echeverria with blossoms that look like gold lilies-of-the-valley.

Naturally, I had to have a pot for it. Right? A crackle-glazed pot from China. Of course.

And naturally oneecheverriacalls for anotherecheverria, so of course I had to buy an elegant but less floral hen & chick. And it needed a pot, too. Naturally. And some dirt to fill the pots.

None of these were especially expensive, but they add up.

March is a dangerous time for the gardening Arizonan. The temptation to buy plants is well-nigh overwhelming, partly because the weather beckons you outdoors and partly because any plants you’ve already got are rewarding you with astonishing frenzies of bloom. Check out this thing, which apparently is a freesia:

dcp_2402

Do I recall planting it? Nooo…. It must have been one of those extraneous bulbs that I stuck in every pot and flowerbed I could think of. A few weeks ago I found it sprouting in a dried-out pot I’d stashed in the pot shelves behind the shed on the side of the house. Dragged it into the backyard where it could get some water, and voilà! Who’d’ve thunk it?

The atmosphere is so heavily perfumed with citrus and jasmine that in the evenings you can smell it inside the house with the doors and windows closed. The lime has so many blossoms it looks like it’s been snowed on. The roses have run amok. The cassia are still covered with brilliant yellow flowers. And it is not possible to resist gardening.

Future bumper crop of limes
Future bumper crop of limes

Think I’ll name that gorgeous echeverria Michelle Obama… The other one can be Barack.
😉

What’s that light at the end of the tunnel?

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Earlier this week I spoke with Audra, the loan origination officer at the credit union who helped us refinance the so-called Investment {snark!} House at a very favorable rate. Called her because I’m beginning to feel a little frantic about the drop in value in that neighborhood, and because M’Hijito, who presently occupies the place with a roommate, has expressed interest in going to graduate school in another city.

Our Realtor came up with an estimate of the house’s current price, which I will not repeat here because M’Hijito reads this blog now and again. If he knew what the guy said, he’d keel right over and we’d be sending him to Bottimer’s Funeral Home instead of graduate school. Realtor Dude thinks we could rent it for about $300 a month less than the mortgage payments, which would be OK, I think, because that amount would post as a loss on our income tax. So I expect we would survive. At any rate, these are among those factoids that grow horns at night and flutter out of the Night Closet to haunt your moments of insomnia.

Audra said their appraisers’ experience is showing that homeowners who can hang onto a property for a while should not worry about comparables based on large numbers of nearby foreclosures. That in fact is exactly the situation: the bank-owned house directly behind ours is on the market for a handful of peanuts, and a house on the corner has been in foreclosure twice since we bought our place. La Maya and La Bethulia bought a doll of a house for their nieces a block away and paid under $200,000 for it. Audra reported that when a cluster of foreclosures occurs, property valuations based on comparables start to creep back up about nine months after the last foreclosure sale closes.

She added that she’s confident centrally located real estate, especially houses located fairly close to the new light-rail line, will increase in value. She believes the house will recover its value within five years, although she agreed it’s unlikely our losses in the stock market will recover in that time frame. She thinks real estate, especially in-town real estate in reasonably healthy neighborhoods, will recover faster than we pessimists expect.

Wait, she said, about nine months before believing any Realtor’s estimate of the house’s value.

Hope she’s right! It’s true that the value of my house, which cost about the same as the Investment House, is still higher than what I paid for it. Despite the foreclosure of the house across the street, we’ve had many fewer repossessions here than in M’Hijito’s neighborhood.

Meanwhile, though, she said that the credit union did not yet have guidelines for how to deal with the economic recovery legislation, but that she would call when she finds out anything. And she advised that if either of us loses our job, we should call her immediately and the credit union will make temporary changes in the loan terms so that we can hang onto the house.

Well… Since the kid is running a bit late in his graduate school applications and so probably can’t start a credible program in the fall, nine months would just about work out: we’ll have a better grasp of where we stand, and if he wants to go to Tucson, by then maybe unemployment will have dropped enough that people can afford to come up with the security deposits and rent payments we’ll need to extract. It’s an awfully cute house in a very convenient neighborhood, and so I expect we’d do OK renting it.
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Speaking of the foreclosure of Dave’s Used Car Lot, Marina, and Weed Arboretum, yesterday a Sears delivery truck pulled up in front of the place. What should be trundled out but a VAST, expensive-looking, stainless-steel side-by-side refrigerator.

This I take as proof positive that the new owners intend to live there and not rent the place out to another Biker Boob. BB’s absentee landlord tricked that house out with the cheapest, chintziest appliances he could get his hands on, as most of the the real estate “investors” around here do.

The former junk-heap is still vacant, but the owners are keeping it maintained—nary a weed in sight, and all the trees and ornamentals are green and happy.

More on unemployment insurance ripoffs

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Remember that I mentioned the Unemployment Insurance representative told us, during the 90-minute chivaree in which all us furloughed Great Desert University employees were to sign up for the Shared Work program, that we should be careful of the various “fees and penalties” Chase Bank was likely to charge against the required debit card we would be given? Well, the guy wasn’t kidding.

CNN runs an article today detailing exactly how many gouges the banks are digging out of Americans’ unemployment benefits: 40 cents for the privilege of asking how much remains in your balance; 50 cents if they deny your card; 35 cents to access your account by phone. According to this report, ripoffs range from around 40 cents to as much as $3 per transaction.

These, we may note, are being coughed up to the very institutions whose executives are using the taxpayers’ TARP money to frolic in fancy resorts and fly around the country in private jets.

Oh, yeah, speaking of gouges: you get to pay income taxes on your unemployment insurance, too.

Talk about a Nation of Sheep. I can’t believe we’re not at the barricades!

The William E. Morris Institute, a nonprofit that represents low-income people in court pro bono, is spearheading a class-action suit against Arizona’s Department of Economic Services, which administers Unemployment Insurance disbursements here (after a fashion). The complaint is that DES isn’t processing claims fast enough—or, in some cases, at all. That’s not surprising, given the agency’s antediluvian operations.

It’s good to hear that someone, somewhere, is trying to put these clowns’ feet to the fire. What’s amazing, to my mind, is that we don’t have riots in the streets. But I guess as long as we can afford our cable bill, we can keep sucking on our pacifier. What, us worry?