M’hijito has been driving a decrepit wreck ever since some teenaged brat crashed into his parked Camry in San Francisco, totaling that beautiful car and two other vehicles. The amount her insurance company paid him came nowhere near enough to buy a comparable car, and so he ended up replacing it with a sporty-looking but aged four-banger convertible with a leaky roof and shredding plastic seat covers.
Although the car runs, we suspect that at any time it’s going to fall apart like the Minister’s One-Hoss Shay. Wind whistles in through the splits and cracks in the roof and around nonfunctioning side windows, which is just as well, because the natural blow-dryer effect helps to dry out the rainwater that seeps in with every light sprinkle.
Recently one of his dad’s partners surfaced with a 2002 Honda Civic that he’d like to unload. It belonged to the man’s son, who has gone off to fight in the Middle East. Despite a a fender-bender in its past, it appears to be in good condition, and the guy is willing to sell it for $5,000. With only 64,000 miles on the odometer, that’s a bargain: the Kelly Blue Book private seller price is over $8,200. And it gets a cheering 30 miles per gallon!
In his heart of hearts, M’hijito craves a Toyota pick-up, the better to fulfill the labor-intensive role of the Happy Homeowner. These babies, however, are pretty pricey even in older models. And they are so beloved by their owners that a decent used Tacoma rarely comes on the market.
The little Civic is such a bargain and such an improvement on the clunk he’s driving around, he’s about decided to buy it. It seems like a smart move. He can always borrow my Sienna when he wants to tote things around or if he wants to go on a road trip or camping expedition. I’d love to drive a 30 m.p.g vehicle for a few days!
At Costco last weekend, M’hijito and I came across some lovely ripe figs, packaged (as usual) in lifetime-supply quantities. He suggested we split a flat of the things. And then he described this wonderful little treat:
You need
Ripe whole figs
As many slices of bacon as figs
Honey
Feta or other goat cheese
Wrap each fig with a slice of bacon. Fry gently until the bacon is cooked to your taste. Arrange on a plate and drizzle with honey. Garnish with goat cheese.
I tried this for an after-church brunch Sunday morning. Awe-inspiringly delicious!
Because I had no toothpicks and the little metal skewers in the drawer seemed likely to scratch the pan’s nonstick surface, I used cotton string to tie the bacon onto the figs. If you use toothpicks, remember to remove them before serving, so no one gets poked!
This Sunday’s New York Times Magazine ran a letter to the editor by Economics Professor John Lunn and Accountancy Assistant Professor Martha LaBarge, both of Hope College, Michigan. The letter comments on Paul Krugman’s article in the September 6, 2009 edition, “How Did Economists Get It So Wrong?”
In their letter, they note that historically, some “bubbles” never led to recessions, and they add this interesting remark:
The market system works well most of the time. Perhaps a key factor affecting whether a shock to the system or even “irrational exuberance” leads to a serious recession is the level of buffer stocks held by households and firms. When savings exist and debt levels are not inordinately high, the economy adjusts to a shock.But when debt levels are high and savings low, the bursting of bubbles in houses and equities can turn into a severe recession. (My emphasis)
How much more dead on target can you get?
This is exactly what I’ve been trying to say for lo! these many months: living within your means, refraining from purchasing objects and services that you don’t really need, and staying out of debt not only do not harm the economy, as steady long-term habits they actually benefit the economy.
A major contributing factor to the late (we hope), great deprecession was that far too many Americans took on far more debt than they could repay. Innocent of the potential consequences of the many questionable loans that were offered, people were led to pay more than properties were worth through loans whose ballooning payments they couldn’t hope to cover even if they had not lost their jobs. Not only that, but they were up to their schnozzes in credit-card debt and car loans.
Had the average man and woman on the street taken a more realistic view of their lifestyles, had they been spending no more than they earned, had they restricted borrowing to instruments whose terms and balances they could reasonably handle and to lenders that do not charge usurious rates, had they been setting aside adequate funds in savings, even the run-up and collapse in housing prices might not have pushed the economy into a recession as profound as the one we’ve been experiencing.
This brings me back to my basic thesis: Frugal living is not just the responsible thing to do. Frugal living is patriotic.
An outfit called MonaVie, which markets exotic berry juice purported to fight aging, peel off pounds, and do wondrous unspecified things for your health, is suing Lazy Man and Money for daring to write a review questioning its product and its sales strategy. The claim the company makes is that merely typing the MonaVie company name and putting it in the post tags infringes MonaVie’s trademark.
This is clear and present intimidation and a blatant attempt on the part of a corporation, MonaVie, to harass an independent writer for exercising rights of free speech guaranteed by the U.S. Constitution and, in the bargain, to cast a chill on every American’s right to comment honestly and frankly on products and on the marketing strategies used to promote them. It is not, by the way, against the law to mention a product’s name in a published work, and a strong argument can be made that placing a product name in a post’s metadata in no way infringes upon the trademark. In fact, the argument that it does so is laughable—we can be sure the first judge who sees this action will laugh it right out of court.
Here’s what we need to do, my friends, to protest this outrageous infringement on our rights as U.S. citizens and as writers.
Then, assuming you have a blog or website, as Brip-Blap and The Consumerist suggest, fearlessly link to all of these articles. Let them sue us one and all!
Never fear: it is not illegal to utter a brand name. MonaVie is not G-d, and even if it were, it’s still not illegal to utter the word “God.” At least, not in America. If you’re concerned that the company’s absurd claim about metadata might, by some wild stretch of the imagination, have validity, simply refrain from using the name in your title, in your post tags, and in your SEO plug-in.
Feel free to copy and paste this entire post to your site. Funny about Money hereby relinquishes all copyright to this post (“You need to know about this one: Corporation harasses blogger”) and releases it to the public domain. Splog away, everyone!
The county finally got around to sending this year’s property tax bill, only a month or so late. They’re so close on the deadline that I’ll have to transfer the money out of savings instantly and ship off a check this weekend; otherwise I’ll be delinquent.
The tab: $2,058.86. Now…yes, I do realize that compared to property taxes in certain Midwestern and Eastern Seaboard states, this is as nothing. (But let’s remember: the educational system and other accouterments of a civil society are also as nothing here.) Compared to last year’s tab, it’s exactly $20 less.
That’s surprising. SDXB’s tax bill, which is rock bottom because his part of Sun City was never gerrymandered into a school district, rose by fifty bucks this year.
Everyone’s bill was jacked up, despite the large cut in property valuation occasioned by the busted real estate bubble, because our cash-strapped “no tax-and-spend” state legislators revived a defunct state property tax. So even though our valuations are in the sub-basement, where they belong, our taxes are just as high as they were at the height of the bubble.
We won’t comment on what they buy. Oh, what the heck…yes, we will: vast layoffs of state workers, grade school classes with 50 kids in them, reduced forces of emergency workers, closed museums, reduced library hours…all manifestations of a Killed Beast.
I’m grateful to get a bill that’s no higher than last year’s. Next year, it should drop considerably, because of various political promises to undo this, that, and the other device to raise funds. But by then, property values will have risen closer to normal, providing another reason to raise the tax bill.
Don’t mind paying taxes if we get some value received…but just now, that doesn’t seem to be happening. My two thousand bucks could keep a state worker on the payroll a good month (maybe more). Taken together, everyone on this block could keep her working a year or 18 months. So…let’s see that happen, boys!
The economy appears to be improving. Last week the Dow edged a little closer toward 10,000—on Thursday it reached 9,850 before falling off to 9,784; then sedately rose to 9,820 on Friday. Our collective net worth, we’re told, has jumped some $2 trillion. Not so many people are being laid off, or at least so we gather from the slight drop in first-time unemployment claims. In some states, a few folks are getting jobs: the government estimates the stimulus has created 139,700 jobs in California, 72,500 in New York, 36,000 in hard-hit Michigan. In Arizona, among the states that have taken the brunt of the real estate collapse, home prices moved up for the first time in two years, with the median cost for a home rising about $3,000, while rates on 30-year mortgages dropped nationwide to 5.04 percent. Maybe Bernanke’s right that the recession is over.
Boy. Two trillion bucks burning a hole in your pocket! What will you do with it? Do you expect to push the economy ever higher by spending some of that newfound money?
Do you think that as the economy improves, you’ll be spending more and saving less? Will Americans go back to their habit, so good for business and for the banking industry, of charging up more on credit cards and mortgages than they can afford?
Over at Get Rich Slowly, J.D. continues to ruminate about what he calls the “third stage of personal finance,” which has to do with personal values and long-term planning about money. It’s an interesting, if still inchoate, train of thought.
What portion of our income we spend, what portion we save, and how much debt we incur has to do as much with our concept of a “comfortable” lifestyle as it does with our circumstances. What, for you, is an acceptable way of life?
For example, CNN Money’s retirement guide posits that a 65-year-old with $500,000 in savings can withdraw $43,000 a year from savings until the age of 90. It suggests that if the same person continued to work until age 70 and maxed out her retirement savings, she could draw down $72,000 a year until age 90. And that doesn’t even count Social Security benefits!
Leaving aside the question of what the hypothetical retiree will do if she lives beyond 90, when she suddenly will be left penniless, this scenario raises a serious lifestyle question: Do you want to stay in the traces until you’re 70 years old? And secondarily, do you really need $72,000 a year plus about another $20,000 in Social Security—some $92,000 p/a—to be happy?
To my mind, the “third stage” of personal finances entails settling on what standard of living suffices for you and your family and deciding how long and how hard you will work to maintain that standard. SDXB, for example, decided when he was in his forties that he would jump off the treadmill. He made a conscious decision to live frugally and to cobble together a living from a variety of part-time sources specifically so that he would not have to trudge to an office every day.
He lives comfortably. He has no debt. He owns his house free and clear, and when he wants to buy a car, he pays for it in cash. He spent the entire summer traveling around the country and is about to take off for another few weeks. He dresses well (buying much of his casual clothing from thrift stores), has an active social life, and takes care of his health.
He accomplishes this because he distinguishes clearly between needs and wants. And when you come right down to it, one’s real needs can be fairly modest. I doubt if he spends much more than $24,000 a year.
His lifestyle, though, is a bit straitened for my taste. Even though I could live much, much more cheaply if I moved to Sun City, where he’s bought a house, I don’t want to live in Sun City. I like having young people around me, and I’m not especially frightened by the cultural diversity of a central-city neighborhood. Although the workload and costs of my present home are a little high, I like my house and want to stay here. And as for shopping in thrift stores, I simply haven’t the patience to plow through tons of old clothing in search of a few prizes. On the other hand, Costco’s $20 jeans do me just fine.
Clearly, to support my basic lifestyle I will need to spend more than he does. That is, I have a baseline set of expenditures below which I probably can’t drop without having to go hungry, let the landscaping die for lack of water, and get rid of the dog. Or…sell my home, move to Sun City, and pocket $30,000 to be used to help support me in bumhood. Accordingly, I have a baseline set of frugal values that I can’t or won’t violate, which entail living within my means and not running up debt.
The $43,000 that CNN’s hypothetical retiree plans to draw down from savings at the age of 65 is more than my net income. Add Social Security to it and subtract about 20 percent for taxes, and you come up with significantly more than I live on now. And in fact, even though my savings have not yet quite come back up to 500 grand, by the time I’ve cobbled together Social Security, a light part-time job, and a more modest drawdown from savings, I may actually net more than the Great Desert University is paying me. So, in theory, if more than enough comes in to support my baseline expenditures, I could adjust my baseline frugal values upward, into the somewhat less frugal range.
The recession has fostered a fresh vision of commonsense values among many Americans. As we’ve seen our jobs vanish and the equity in our homes melt away, we’ve come to realize that debt is a form of slavery—it forces us to keep working at jobs we hate, when we might take lower-paid but more enjoyable work or even be free to live without a day job. We’ve discovered that buying only what we need makes our lives simpler and easier to manage; that bigger or more is not necessarily better. Many have come to realize, too, that a frugal lifestyle is in many ways a green lifestyle: living smaller and lighter not only saves money, it’s socially and environmentally responsible.
That said, there’s a lot of pent-up demand. Except for the brief bump-up from the Cash for Clunkers program, people haven’t bought cars in two years. Growing families may need to move from two-bedroom apartments to larger digs; shrinking families or divorcing couples need to move to smaller places; unemployed workers following jobs to new cities need to sell or default on their homes and find new places to live. As the economy improves, there’s bound to be some spending to take up the slack.
But will we whip out our credit cards? Will we furnish the living room with a gigantic new digital TV screen? Will we head for the Armani rack the next time we allow ourselves to go into a department store? Will we reinstate the premium cable and that cell service that gave us half-a-dozen bell-and-whistle-laden phones? Will we borrow against the reviving equity in our homes to buy another boat?
My own plan is to continue living light on the land. If income rises, as appears possible, anything extra will go directly into savings, the better to support my baseline, third-stage personal finance value of never having to work another day job.
What about you? When things get better, what will you spend the loot on? Or…will you spend it at all?
M’hijito has been driving a decrepit wreck ever since some teenaged brat crashed into his parked Camry in San Francisco, totaling that beautiful car and two other vehicles. The amount her insurance company paid him came nowhere near enough to buy a comparable car, and so he ended up replacing it with a sporty-looking but aged four-banger convertible with a leaky roof and shredding plastic seat covers.
