Saturday, May 30, 2015

Is Life a Treadmill?

Jane!  Stop This Crazy Thing!

A reader recently wrote to say that they liked my blog, but that, Living the life on a treadmill can drain people out and "occasional" splurges can definitely help.

What made me sad is that he viewed his life as a treadmill, and sadly, many folks do as well.  And when life is viewed as a treadmill, then spending money on yourself seems like a good idea, as "you deserve a treat now and then!"   But I think this kind of thinking serves only to perpetuate the treadmill.   For every treat, you have to run another mile or so.   Rather than being closer to getting off, you are just extending the journey.
When I was a young hot-shot lawyer making the six-figure salary, I had to get up every morning at dawn (or before), shave, shower, and dress (including a suit and tie) and then drive off to work in my late-model Japanese sedan (with car phone, no less!), fight traffic into Washington DC, and then arrive at the underground parking garage at the office where I worked.   I would then spend the next ten hours behind a desk, billing like mad and cranking out work.  By the the time I got home at night, it was dark.   We would be "too tired" to make dinner, and send out for a pizza.   Before long, it was time for bed, and then the process repeated, except for brief reprieves on the weekends - and sometimes those were even taken up with work.

Oddly enough, I enjoyed it.  I was an important person doing important work, and it was a bit of a rush to be involved in what seemed like gripping things and issues.   But of course, over time, sitting behind a desk all day and eating bad food started to take a toll on my physique.   And over time, it seemed less and less glamorous.   It started to become a treadmill.

And eventually, I tired of the treadmill.    I was working hard and making a lot of money - for someone else.   Despite all the raises I got, I never seemed to "get ahead" in life.   Each new raise in income seemed to be matched by a raise in spending.   Having "no time" to attend to my personal life, I had a maid, a lawn service, and so on, to tend to the house that I saw only on weekends.   And being "too tired" to cook, we started using restaurants as our kitchen - for lunch of course, at work, and often again at Dinner.

But I started to think that maybe this wasn't the life I wanted to lead.   And the experience of my Father on the "treadmill" was one reason I thought this.   My father was an angry abusive man, who was raised by an even angrier and more abusive father.   So in a way, he was an improvement over his ancestors.   But he clearly felt trapped by marriage and family by his early 40's, and he let us know it in no uncertain terms.

He would berate us for being lazy and indolent - which we were - calling my brother and me, "Prince Tom" and "Prince Robert" with a sneer.   And from his perspective, you could see why.   He got up every morning before dawn to go to work (so we could live on a lake, 20 miles from the city, in a Frank Lloyd Wright style house) while we sat around and smoked pot and had a good time.

He was making the inflation-adjusted equivalent of the "six figure salary" at the time, but had very little saved of his own money, and of course a huge (at the time) mortgage to service.  No matter how hard he worked, it seemed that he never got ahead.   Of course, having four children to raise and put through college probably exacerbated the problem - but college was a lot cheaper back then.

Then, two things happened, in rapid succession, that changed his (and our lives) dramatically.   First, while on a business trip in Canada, he met this nice young woman at a bar at the hotel, who seemed really nice and flirty.  He kidded himself that at age 55 she was interested in him on a personal level.   However, what she really wanted was a "Sugar Daddy" to buy her things, and if Sugar Daddy wouldn't fork over the dough, she might try a little blackmail.

Middle-aged men trapped in career jobs are easy pickings for treasure hunters like that.   Men feel drained of the excitement in life and see their lives slipping away, a little bit at a time (which it is, sadly).   They call it a "mid-life crises" and it often ends in divorce or at the very least, the purchase of a new Corvette.

My Dad avoided both.  Realizing that his paramour would bleed him dry, he fessed up to the malfeasance and faced the consequences.   And sadly, my parents both realized that if they got divorced, their financial situations would go from bad to worse.   Economic necessity is often the glue that holds a relationship together, which is why our divorce rate skyrocketed in the 70's and 80's and has declined since the 1990's.   Divorce is an expensive luxury - and wasteful.

But then the other shoe dropped.   The company he was running was facing financial troubles - as were most other small manufacturers in the early 1980's.    Brutal competition from larger US companies, as well as overseas, along with high union labor rates and restrictive work rules, plus outdated and worn out machinery and factory infrastructure meant that the company was doomed to fail.   His boss, who owned the company, unexpectedly died.   When the bosses' son took over, he closed down the money-losing division and put my Dad on the street, at age 55.

Suddenly, the treadmill stopped.   And I harp on this a lot in this blog - that your "high-paying six-figure salary" job may just go away when you are in your mid-50's, without much warning.   Look around the place where you work, and see how many people with grey or white hair are working there.   Chances are, if you are in Engineering, Law, Medicine, or Management, there are damn few old people around.   Most are pensioned off or "early outed" or laid off or fired or whatnot, along the way.

(A friend of mine is going through this right now.  He was laid off two years ago, and just now has decided to "move on with life" after over 50 job interviews and no offers.   He is now starting his second career).

And then there are others who just burn out and leave.   For doctors, it could be that killer malpractice suit that forces them out of business and out of the business.   It is not that they did anything wrong, only that one opportunistic lawyer plus staggering insurance premiums starts to make retirement look a lot more attractive.    

For the lawyers, it is the "partnership track" - or lack thereof.  I have written before how the entire law firm scenario is basically a pyramid scheme - with many at the bottom and few at the top.

For managers, it is the layoff or "RIF" - Reduction in Force.    Some young MBA goes on a spreadsheet program and shows top management how they can cut out a lot of middle management and save money - and Wall Street rewards them with a huge boost in stock price (and since they are paid in stock options, it is hard to resist!).  And the folks they cut are the older managers who are paid more and have higher health care costs (particularly now that their 26-year-old son living in the basement is allowed to stay on their health care plan!).

For Engineers, it is not only the RIF but also the gradual obsolescence of their skills.   I work with a lot of Engineering companies, and the age structure is like that of a law firm - a few senior managers who came up the ranks as Engineers, but mostly young folks in their late 20's and early 30's, with maybe a few 40-somethings scattered in there.

My parents did OK.   They sold the expensive house on the lake for a nice profit, and walked away from five-figure property taxes in New York, and built a much less expensive house in Maryland.   And my Mother came into a small inheritance (after fighting her brother for it - never count on an inheritance!).   And my Dad actually got a small pension from the company - which was later bought out by a German concern, instead of Bain Capital - so he is safe.   But retirement for them - like for most people - was something thrust upon them, not something carefully planned out in advance.

So, how does one get off the "treadmill" in life?   Well the easiest way, of course, is not to get on, in the first place.   But often, that is not possible.    Unless one is born to wealth, one has to go out and work, start a career, and spend many years accumulating wealth, which can be a tiresome and tedious process.

But that right there is the key.   The "treadmill" is not an end in and of itself, but a means to an end.  And that end is economic independence.   Sadly, since we spend so many years (decades even) on the treadmill, many look at it as an end in and of itself.   And you hear these folks all the time, decrying how they are "living paycheck to paycheck" and "struggling to get by" and of course, all of this being "Sent from my iPhone".

(They view their salary as wealth not how much they have accumulated.   And the popular media reinforces this message - talking about "wealthy people" in terms of annual income, not accumulated wealth.)

On the other hand, life is to be lived and enjoyed, right?   So, as my reader posits, you do have to "treat" yourself from time to time, right?    Well, of course life is to be enjoyed - but if you view your life as a treadmill, with just occasional breaks of freedom, maybe that is not so much enjoyment of life?

It is a balance, of course.   You want to accumulate wealth (you have no choice in this matter, if you are part of the 401(k) generation.)   You also want to take the kids to Disney world (which can easily cost over $10,000 if you stay on-property). 

So how do you reach a proper balance?   Well, like anything else, it pays to have a plan in place and talk this over with the spouse - and even the kids.  My parents didn't have a plan in place, other than some vague ideas about "retiring someday".   My Dad handled all the money, spending  once a month at a card table "paying the bills" and of course getting angrier and angrier with each new bill he had to pay.   At the end of the night, he would realize he was broke, and his no-damned-good kids were the major cause of it all.   Best to sleep over at a friend's house those nights!

A better approach would have been to sit down with all of us and set out goals for the family.   For example, how to pay down debt over time, increase savings, and set aside money for school.   Instead, we all just spent as much as we could get away with (a classic "race to the bottom") and since we had no idea how fragile our parents' finances really were, never thought about the actual costs.  We just assumed that Dad was "making good money" and that was that.

For example, I went to prep school for a year (before they tossed my ass out) and never thought about the cost (or even knew about it).  My siblings had all gone to private schools, and in retrospect, the cost must have been staggering.  Sadder still was that we lived in places which had excellent public school systems (the run-down ghettos of Old Greenwich and Lake Forest).   I would rather my parents had put that money into their retirement planning, quite frankly.  And in retrospect, a public school education would have been superior to the outdated "liberal arts college prep" education that private schools gave at the time.

But money wasn't talked about in our family.  And we certainly didn't have any monetary goals or targets to reach.   My Dad was on the treadmill, and we all rode him like a cheap pony.   And yea, that really wasn't fair to him, was it?   On the other hand, no one forced him to get on the treadmill, did they?

But, once you have financial goals in place, it is a lot easier to understand whether or not you can "afford" to "treat yourself" to a cruise vacation or a new car or whatever. 

For example, if your goal is to have $2M in your 401(k) by retirement age (enough for $100,000 a year income) how much do you need to set aside between now and then?  It is not hard to calculate this number, based on average rates of return in the market over time (factoring in things like a 2009 recession, or even just a 1995 recession).    Also factor in the concept of "what happens if I am booted out at age 55?"    It is not that you might have to live off your savings at that point, only that you may have to get a second career and not be able to continue to save as much from then on (which is no great tragedy, as the effect of compound interest for old people, diminishes rapidly).

With regard to debt, is your debt load going up or down?   And what is your plan to pay it all off by retirement age - or preferably sooner?   Again, you get laid off at age 55, do you really want to be looking at the front-end of yet another 30-year mortgage you took out to "refinance" your house?

Once you have this plan in place, you can figure out (factoring in some buffer for unexpected circumstances, like job loss, health problems, etc.) what is "left over" for spending on "other things".   And if there is nothing "left over" then it is certainly time to look for unnecessary expenses to cut back on.   The latter part being the point of this blog.

Having a plan puts this all in perspective.

Not having a plan, well, results in chaos.   For example, a friend of mine - I'll call him Sammy - just retired with a fairly nice pension and some savings.   He also just refinanced his home and not for the first time.  His wife is still working, and will have to keep working for another decade or so before she can retire.   While they are not starving to death, they are not financially independent at a point in their lives where they should be wealthy.

And how did they get to this place?   Well, lack of planning.   They spent money lavishly, on vacations, owning two homes, new cars every few years, hobby cars, and of course "helping out" their adult children with things like paying for their cell phone bills and buying them cars and whatnot.   Dad was "making good money" so he felt they could "treat themselves" and even their kids, with "treats".    But I don't think they added up the cost of all of this, in terms of how it affected their overall debt load, their savings plan, and the like.

And yes, an unexpected retirement and layoff were part of this picture as well.   Oh, and the messy and unnecessary expense of divorce (for both of them) factor in.

The treadmill is not an end in and of itself, but a means of achieving a goal.   Set a goal, figure out how much it will cost, and then figure out how much you need to set aside.   Anything "left over" (and there is usually damn little) is disposable income.

And you can still "treat yourself" if you become creative in how you spend your money, or figure out ways to have a "treat" at little or no expense.   Spending the day at a beach, or even a public park having a picnic costs little or nothing, and yet can be a whole lot of fun.   Vacations need not be expensive trips to resort destinations or on cruise lines (which I find stressful, as I realize how much I am spending and how little fun I am having!) but can be as inexpensive.   A week hiking the Appalachian trail costs little or nothing, and certainly is more healthy than sipping tropical drinks at a resort.

We do have choices in these matters.   No one is forcing us to view life as a treadmill.

Thursday, May 28, 2015

Good Time To Buy A House?

Should a personal decision such as buying a home be influenced by national trends?

This morning on National People's Radio, a story about the housing market.   The market is doing OK, which for many of us, after the shark feeding-frenzy of 2003-2008 is a nice reprieve.   Nice slow growth and a stable market is far superior to rapid increases in prices and dramatic drops.

But what about the first-time buyers?   Well, they do seem to be under-represented in this market (note:  not "missing" as the NPR story implies).   And why this is, is a good question with a number of probable answers:
1.  Many young people are burdened with student loan debts, and thus cannot afford to buy a house.

2.  Many young people have bad credit (see #1 above) and have trouble qualifying for a loan.

3.  Banks are tighter with money, due to government regulation, so oddball loan deals are harder to get for people with bad credit.

4.  Houses are still too damn expensive in this market and it may be cheaper to rent in some places.

5.  The younger generation might not place such a high value on home ownership, after seeing their parents "lose it all" in the recession of 2009.

6.  The population of younger people has leveled off, and we are an older nation, thus demographics are shifting older, and there are fewer younger people (as a percentage of the overall population) than before.

7.  Many younger people may be more peripatetic, and thus not ready to "settle down" in an economy where jobs are held for only months at a time.
It may be a number of other factors as well.   Of course, the people at NPR find it horrific that our younger generation has rejected granite countertops as "the American Dream."  Perhaps they grew up with this false value and see through its superficiality.

I think a big part of the problem is tight credit, even in a low-interest market.   When I bought my first house, at age 22, I was working as a tech at Carrier Corporation in 1982.   The house cost an astounding $22,000 (about $55,000 today, according to one calculator).  This was in a depressed neighborhood in an area with bleak employment opportunities.   And one reason house prices were so low then, was that interest rates for mortgages were well over 10% at the time, often 12-14%.  Do the math on that!  Low prices plus high interest means high monthly payments - and houses are sold on monthly payments.

I was able to get around the interest rate debacle by getting a loan from the Farmer's Home Administration (FmHA, not to be confused with FHA) which had loans which subsidized interest rates based on your income.    It was not a "giveaway" program, as the lost interest was "recaptured" when you sold the house - and as a result, I did not make a lot of money on the sale five years later, even though the sale price had increased to $35,000.  (I am not sure if this program still exists.  It applied only to homes in rural areas.)

A few years later, I bought my second house, in Alexandria, Virginia for the whopping sum of $189,000 - the most paid in the development at the time!  Interest rates were still staggeringly high, particularly for a young person with an iffy credit record.    Rates were still in the double-digits, but we managed to "buy down" the rate to 8-5/8% in a "3-2 buydown" loan which lowered the initial rate to 8-5/8% the first year, 9-5/8% the second, and 10-5/8% the third year on out (do the math on that!)   Using this "funny" mortgage (and a 10% down payment from Mark's Dad) we were able to get a mortgage - but still had to buy the mortgage insurance, which added to the price of the loan.

And this was after I quit my job at the Patent Office, making $35,000 a year, to get a job with a law firm making $53,000 a year.   In order to afford the house, I had to go out and make more money.  And yes, this meant giving up partying and going back to law school.  Eventually, we refinanced the loan, as rates dropped.  Stupidly, we folded in other debts, so the balance never went down, but in fact, up.  But that is another story.

At the time, we were renting an apartment for $900 a month, including utilities.   The house payments were more than this, of course, but with the home mortgage interest deduction, perhaps not much more.   Unfortunately, we bought at the height of the 1989 "bubble" market, and by 1990, prices had collapsed by 10-30% or more.   If we had to sell during that time period, we would have lost money.   By 1995, however, prices started to recover, and houses in our neighborhood started to sell for $250,000 or more (a quarter-million dollars!).

So, in both instances, some "creative financing" helped me buy houses, when I was young and had no real assets, other than a steady paycheck.    Today, these sorts of loans are harder to come by, even if interest rates are a fraction of what they were for me.  That may explain why the millenials are having a harder time buying a house.

Today, I still own a condo in Virginia, and a young "Millennial" couple is renting it from us - a real-world example of the choices real-world millenials have to make these days.   The rent is an astounding $1250 a month (including utilities), which sounds like a lot, until you realize that when I was renting in 1988, I was paying $900 a month.   According to the same inflation calculator, that rent would be about $1800 today and the same apartments are renting for $1300 to $1700 according to their website.   So despite what you hear about "high rents" stifling the 20-somethings today, the cost of renting isn't really much higher than when I was that age, at least in the greater DC market.

And yea, I bitched about the high cost of rent back then, too.  I mean, 1/3 of my income went to taxes, and the other 1/3 went to rent, leaving me damn little to buy beer with.   Right?   We all have to live with that, in our lives, so just get over it.   If you are not paying 1/3 of your income in rent, you are either living with your parents, or in the ghetto.  Both are bad options, as the temptation is to squander that free income on electronic junk, clothes, and cars.   Paying more to live in a better neighborhood pays off, in the long run, even if you can't afford as much "bling".

So anyway, suppose my millennial tenants want to buy the condo they are renting?  According to Zillow, the value of the place is $135,000.   If they put down 35,000 and finance a hundred grand at 4%, they will pay about $500 a month in principle and interest.   Add in the $565 monthly condo fee (which includes utilities) and the $90 a month to cover taxes and insurance, and you are looking at.... well, about what they are paying in rent.   And if they have bad credit, or put down less as a down payment, they may be paying more than they are in rent.

So you can see, the market value of the property is roughly about where it should be, but purchasing the condo is certainly no bargain (particularly when there is still another assessment due this September for $3000) and they really have no real incentive to buy the place, particularly when they are young, just starting out, and might want to move to a different part of town, or even a different city, as their careers take them.

And that is where the decision whether to buy or rent should be made - based on personal circumstances, not national trends.  The NPR story disturbingly made the "you'll be priced out of the market!" argument that sold so many overpriced homes back in the mid-2000's (and in the late 1980's as well).   "You'd better take this crappy deal NOW!" goes the argument, "Or you'll get an even CRAPPIER deal later on!"  It is a false choice.

We just returned from a trip to South Florida, and one thing I found fascinating, revisiting "ground zero" of the building bust (where we also owned two condos - but got out in time) was the number of apartment buildings going up around the greater Miami and Ft. Lauderdale areas.   People argue there is a shortage of rental apartments, and the builders are listening.   And new units are going up everywhere, it seems.  A lot of the condos that went bust were converted to apartment rentals as well.

What this will do to the rental market will be interesting.  With more supply, demand will slacken, and prices may drop.   This in turn will make renting even more attractive to many folks (including the very young and the very old) and thus make buying a home or condo seem even less attractive.

This in turn could drive housing prices down over time.    It is possible.   Or it is possible that many millenials will wait a few more years, and then all decide at once, like lemmings (as the NPR piece posits) to buy a house, and we'll have 1989 all over again.

And in markets we see this pattern.   We see a lot of "tri-5" Chevies (55-56-57) still on the road, and not as many 58's or 59's.   Detroit sold a lot of cars in the mid-50's, as the economy boomed.   By the late 50's, however, a steep recession cut back on car sales.   We saw the same pattern in car sales in 2009-2011, with no one buying, even though prices were low.   Then the pent-up demand burst, and they couldn't make cars fast enough to meet demand, and everyone bought at once, at the highest possible prices.   It is funny how markets work that way.   As consumers, we buy high, sell low.

In 1989, I bought high.   And in the subsequent years, no one bought, but many sold.  I had friends sell in the early 1990's and lose money on houses.  By the mid-1990's, I was buying foreclosures and doing OK.  By the 2000's, the great unwashed masses decided they all had to "invest in Real Estate" by borrowing money on onerous terms (you really aren't "investing" if you are borrowing money, are you?).   And by 2008, it all came crashing down yet again.   These things go in cycles.

Trying to time the market however, is an exercise in futility.   Unless you have a working time-machine, you are going to get creamed.  And working time-machines are hard to come by.

Instead, you have to "do the math" on your personal situation, and decide whether it cheaper to rent or to own, including all tax deductions and other calculations, and whether you plan on staying in a given location for at least five years or so (just to recover transaction costs).   If it makes no sense, on a personal level, to buy, I am not sure that a bad deal becomes a good one, simply because someone says that it will be an even worse deal down the road.

That being said, there may be some bargains out there today.   Perhaps.  Get out a pencil and paper and "do the math" and figure it out.   The real estate market is not homogenous.   Values in the greater DC area or Atlanta or New York, or San Francisco are far different than those in Syracuse, Detroit, or Bangor - as are their prospects.  A given property may be a bargain - or a nightmare.  There is no one universal "buy" or "rent" recommendation, for an entire nation or even an entire town.   It is a personal decision that has to be based on personal circumstances.

Myself?  Well, I already own a home and a condo, and I am not interested in "investing" in more Real Estate at this point in my life.   Why?  Well, when I bought the condo in 1998, it was a no-brainer positive cash-flow deal from the get-go.  As you can see today, it is less so, as the cost of carrying it (at today's market values) about equals the rent.   I may make $5,000 a year by renting the property, but I probably could do better investing the $135,000 in stocks or bonds, quite frankly.

I just don't see - on a personal level - any screaming bargains out there, at least for me.  And of  course, I am at a point in my life where risking money buying real estate seems like a bad idea.   If I could only get that damn time-machine to work, I would go back to 1998 and buy four more of those condos - or maybe a dozen.  Sadly, Amazon is back-ordered on time-machine parts.

But your mileage may vary... for some, this may be the time to buy, and some properties out there may be good bargains and good long-term investments.   You just have to do the math.

Tuesday, May 26, 2015

Working in a Law Firm Worse Than Being a P.O.W.? No.

Is working in a law firm worse that being a prisoner of war?  No.  

A legal recruiter sends me these crazy e-mails, and he has links to his articles, one of which compares working at a law firm to being a prisoner of war.   It is a ridiculous comparison, of course.  You can always quit a job at any time - the key to your freedom is in your pocket.   A P.O.W. doesn't have that luxury.

(And it strikes me as odd that a legal recruiter would post an article telling potential clients how awful it is to work in a law firm!).

And yet, many Americans feel put-upon in this way - building their own gilded cages and then complaining they are trapped.  When I worked for the big evil law firm (for a whopping six months) I ran into a young senior associate (or junior partner, I forget which).  She had a model of a 1999 BMW M Roadster on her desk, in Imolarot.   I saw it, and having a rusted-out 1974 BMW 2002 at the time, struck up a conversation with her.

She said, "I bought the actual car last year, and I keep this model on my desk to remind me why working here is worthwhile!"   I kind of felt sad for her - her job satisfaction was measured in car payments.

Ironically, 15 years later, I now own the same car, which I bought secondhand from a friend of mine.   It is a nice car and all, but hardly worth enslaving oneself to a law firm for.

Are the stories in his article true?  I have no reason to doubt it.  I recounted before how a friend of mine's husband decided to start up a crack habit while in law school.   And I knew of a number of people who did "overnighters" - working 24 or more hours in a row without sleep or rest.   And yes, maybe drugs were involved.

As I noted before, lawyers aren't very bright people.  When it comes to their client's rights, they will fight tooth and nail over a tiny term in a contract.   But their own employment contract is usually unwritten, and not even verbally discussed.   It is little more than an implied promise of promotion, based on unstated and nebulous criteria.  It would seem that billable hours would be a concrete way of measuring performance, but in the law firm world, simple mathematics become surreal, and often what is counted as billable ends up a different number than what is actually billed.

And young people - well into their 40's, are often intimidated into working long hours with the promise of riches down the road, or indeed, a six-figure paycheck today.  And often they are so intimidated by the firm or the attorneys, they tell themselves they are lucky to be working such long hours.

I guess I was never so intimidated.   I worked at one firm, and the Senior Partner was a grizzled old silverback who was once famous for taking a case to the Supreme Court and setting a real precedent on the patentability of living creatures.   He was a smart attorney, but he was also an cantankerous asshole, as well.   One other associate did a lot of work for him, and whenever he presented his work to the partner, a shouting match would ensue, with my friend backing out of the room apologizing profusely for his "errors."  Problem was, he never actually did anything "wrong" with his cases, and that made it doubly depressing for him.  He was always "wrong" but nothing he could do could fix things, because he was actually right.

I had one run-in with this partner, when he asked me to monitor some cases at the International Trade Commission.  We had defended a Japanese chip maker in a case, and it was settled.  The plaintiff was browbeating all the defendants (of which our client was one) to certify that all documents produced during discovery were destroyed, according to the protective order in discovery agreement.

Once all the defendants did this, the plaintiff filed a new suit, and then petitioned the ITC to "modify" the protective order, to allow them to keep the documents that they had supposedly destroyed and also browbeat the other parties into shredding.  In other words, they violated the protective order, and once they made sure all the opponents had shredded their documents, revealed that they decided they wanted to keep theirs and moreover make it legal by modifying the protective order.  Kind of a slimebag move.

Well, my boss had heard, over a round of golf, that there was a "routine" petition to amend the protective order, and he asked me to get a copy of it (this before the Internet and scanning documents online).  I did so, and was appalled at what the plaintiffs were doing.   I wrote a concise memo to the partner explaining what was going on.

Well, he called me into his office.  Screamed me into his office, more like.   He was furious, as he had agreed to this modification of the protective order without having read what it was all about and without understanding what was going on in the case.   In other words, he dropped the ball, and he wanted to blame a young associate for his error.

He screamed at me that I had it all wrong, that it was a routine change in the protective order.   I went through it step by step, and explained it all to him.  He just got madder and madder.   But what was I to do?  Change the facts of the case?  Any lawyer who does this is living in a fool's paradise (many do, though).
And unlike my nervous friend, I didn't back down and agree with him, which of course, really pissed him off.    But again, if I said, "Well, you're right!" how is that really helping our client?   It wasn't.   Reality is what it is, and you can't change that to suit the whims of a senior partner.

The difference between myself and my nervous friend was that I felt that I could quit at any time.  The demand for young Patent Attorneys back then was pretty high, and I could always go back and work for the Patent Office if worse came to worse.   And I was prepared to chuck it all, if I had to, rather than be miserable.

Others, well, they back themselves into a corner.   They buy the fancy house, they lease the fancy cars.   For young people today, it is student loans.   They feel chained to the desk by debt, and forced to work the rest of their lives to pay their debt-masters.

It is, of course, still a choice.   You don't have to have a fancy car.  One of the smartest associates I knew at the firm drove an old Mazda (Ford Escort) that he bought before he went to law school.   He could afford to own a fancier car, but chose not to.

The people profile in this story comparing a law firm to a POW camp are the same way.   They chose the big salary and the big salary lifestyle, and now they feel "trapped" by it.   But they can quit at any time, if they chose to.

And the sad reality is, of course, that they will get booted out, eventually - if they don't burn out first.   If you look around any law firm or any tech firm - or any firm for that matter - you will see a lot of young people, but very few oldsters.   Where do they all go?

And sadly, most are not prepared for this eventuality, convinced that if they pull enough "overnighters" and bill enough hours, then they too, can be silverback gorillas and scream at young associates.   But since the nature of the management structure in a law firm is a pyramid, it is in effect, a pyramid scheme.  Most of the young associates end up working somewhere else.   And all that stress is for nothing.

Is working at a law firm worse than being a prisoner of war?  No, not really.  Not unless you decide to make it that way - by building your own gilded cage and stressing yourself out.

We all have choices in life.  Sadly, few people believe this.

Financial Mistakes Are Forever...

When you make a financial mistake, there is usually no "do over" or way to fix it.   The best you can hope for is to learn from the mistake and move on.   Expensive lessons!

One popular trope on situation comedy television is to have an episode where a main character goes out and buys a fancy car.   They then realize it was a mistake and "take the car back" and get their money back.  GLEE! for example, used this in one episode, where the Mr. Shuester buys a new Corvette to impress his girlfriend, and then realizes it was an expensive mistake and "takes it back" and they even give him his old car back in the deal.

Nice fantasy.  In reality, well, things are different.  Financial mistakes often cannot be unwound and set right.   You take a hit and you are hit for life.   And that is one reason why buyer's remorse is so strong.   People buy big-ticket items and then realize they have squandered a large amount of the finite amount of money they will ever earn in their lifetimes and they get upset.  Very upset.

With cars of course, there is no "taking back" a brand-new car to a dealer.   Once you buy it, it is a used car, worth 10-20% less than what you paid for it.   If you decide you don't like it, your only option is to sell it, or try to trade it back in.  Either way, you are out thousands and thousands of dollars.

For some smaller items, it may be possible to "take it back" if a store offers a return policy for unused or undamaged items.

But other items in your life, like home appliances, or expensive vacations, often cannot be returned.   If you buy an expensive washing machine or refrigerator, you generally can't return them, unless they are defective.

For example, a friend remodels a house.   After reading a copy of Fancy Home Magazine they decide to buy a "built-in" refrigerator that has drawers that look like cabinet drawers.   It is really cool looking to be sure, but it costs $10,000.   Is that a lot of money?  Well, if you are a millionaire, it is 1% of your net worth.   Doesn't sound like a lot, but bear in mind you only get 100 of those 1%'s.   And to me, 100 is not a large number.  I can count that high. That's how many times I shake a Martini shaker before serving (I lie, actually 200).   It is a big chunk of change even for someone with a net worth of over a million bucks.

So the friend blows the bucks on the fridge.   It is a done deal, and now they complain they are "broke".   Well, guess what?  You can't rip out that fridge and sell it and get your money back.  You cannot unwind that financial deal.   All you can do is live with the fancy fridge and hope it provides you with $10,000 worth of intimidating your neighbors.

Oh, and you have to pay for all the service calls and maintenance that such esoteric high-end appliances usually require.  My neighbor had a Sub-Zero built-in, and she kidded me that the repair guy was now living in their basement.

On the other hand, the basic refrigerator can be had for under $1,000 and usually never needs service, other than cleaning.  After 15 years you throw it away and start over.   And no, a $10,000 refrigerator does not last ten times as long (150 years, no).

We all make financial mistakes of one sort or another.  There are cars we wish we didn't buy, and maybe clothing that didn't last long or fit well or look good.   There are bad meals we paid too much for in restaurants.   It happens to all of us.   And rarely can you unwind these deals and start over again.   You make a financial mistake, you usually have to live with it for life.

I talk a lot here about the 4th dimension of money - time.   Money over time is a powerful concept and yet it eludes most people.   The lady with the $10,000 refrigerator thinks, "Well, I've already paid for it, so that's that!"  And to some extent this is true.  But it is also true that the entire transaction cost of the refrigerator is easily ten times what it should have been.

You see, appliances, cars, houses, and everything else we own is destined to fail, break, wear out, or go hopelessly out of style (or with electronics, be obsolete or incompatible with new formats) in 15 years max (for electronics, maybe five, particularly Apple products).   When you buy a car or a house or anything, it is tempting (when you are younger) to think, "Well, I have this thing now, and I am now set for life!"

But as you get older, you realize that "things" in your life are very ephemeral.  They pass through your hands in short order, and you end up acquiring new things to replace them.   Cars, clothes, appliances, houses, whatever.   Nothing lasts forever.   And please don't say otherwise, because the cost of rebuilding things eventually exceeds the cost of replacement.

So, to an older person, the purchase of an appliance appears somewhat different than to a younger person.   You look at it as a 15-year relationship, and that over your lifetime, you will be forced to buy a number of these appliances, wear them out, and then buy new ones.   When you needlessly multiply this cost by a factor of 2, 5, or 10, well, you are not necessarily getting 2x, 5x, or 10x life service in return, or even a 2x, 5x, or 10x better "experience".

For example, while I enjoyed owning BMWs over the years, I realize that the cost of these vehicles is very high, and the cost of maintenance and even basic service is often 2x, 5x, or even 10x that of a lesser car.   The problem is, they don't last even twice as long.   In fact, in terms of longevity, some Japanese car is going to yield a longer service life with less maintenance at a far lower cost.

But what about the experience?  Isn't it worth it to have "the ultimate driving machine?"   Maybe in the past, when most "normal" cars handled horribly and rode like buckboards.   Today, well, yes a BMW handles better, but not 2x, 5x, or 10x better than some econobox.   And let's face it, on legal city streets, you aren't going to drive like a LeMans driver - or at least you shouldn't be.

So you can spend twice as much and not get twice as much in terms of service life or user experience.   And once you pull the trigger on a big-ticket purchase like that, well, you can't extract your money back out, unwind the transaction, or otherwise undo the deal.   You've spent X dollars on an item, and that leaves you with Y-X dollars, where Y is your lifetime income, which indeed is a finite number.  No, you can't just go out and "earn more money" even if you wanted to.

So, if you buy a pair of brand-new jet skis and then use them once and let them rot, that's a huge financial mistake.   And you laugh, it happens more often than you think.   I recounted the tail of the dental hygienist who bought a boat at a boat show, used it once, decided they didn't like boating, and then let it sit in the driveway, un-winterized, for several years - unable to sell it because they owed more on the loan that it was worth, compounded by a cracked engine block and a hull full of water and algae.

You really have to think through big-ticket items like this, if you are a middle-class person.   Yes, it is nice and fun to have nice things and all, but then again, if you spend money willy-nilly, you may run out.  And that could be a disaster when you get older.

So you went and bought a motorhome on a 20 year loan and decide you hate RVing.  Or you spend way too much money on a leased Acura, and now regret not buying outright, a secondhand Honda for the same amount.   What can you do about it?

Well, nothing.   Except for one thing.   And that one thing is to confront yourself over the matter, realize you made a mistake (instead of externalizing by blaming the dealer or manufacturer or the loan company) and then learn from the experience.   If you can do this, then the tens of thousands of dollars you spent at least provides you with an education - and painful learning experience that will stick in your brain for life.

And painful lessons are the ones we most remember.

Saturday, May 23, 2015

Wait Ten Minutes, It Goes Away....

If you are hungry, waiting a few minutes often makes the hunger go away.

I often compare over-spending to over-eating in this blog, as they are driven by the same neural network pathways in your brain.   Being 20 pounds overweight is like having an intractable credit card debt of $5000 or more.   You keep resolving to lose the weight (or lose the debt) but next month, you get on the scale (or get your monthly statement) and are depressed to find you've gained three more pounds and another $1000 in debt.

And both are similar in that you can keep living in denial an awful long time and still appear to be doing "OK" until one day you are bankrupt or dead of a heart attack.

Of course, along the way, the symptoms get worse.   You lose mobility.  Your knees and back ache from all that extra weight.   Your credit score drops.   You find yourself "short of cash" more and more.

Same deal, different day.   And in America, the land of plenty (and it is, so shut up about how awful things are, we don't buy that crap here) the biggest problem citizens have is not lack of money or lack of food, but over-consumption on both counts.

People regale me about how "broke" they are in messages "sent from my iPhone" and fail to appreciate the irony.

But the parallels go further.  Fat people and folks in debt are perpetually believing that some "trick" will save them from being overweight and overdebt.  The one trick of the tiny belly will let them lose weight while they "eat all they want" or maybe it is some pill, or acacia berries.   Of course, these things never work, and the huge amount of fat people in America is testament to that.

Similarly, people look for shortcuts to "get out of debt" and "secrets" to making money in the stock market.   People claim they are not worried about their seven maxed-out credit cards, because their stock market money system (blessed by Jesus, of course) will set them free.

And yet, the parallels go even further.   Denial is a big one.   "I'm not that fat" we say, and "I don't have that much debt!"  

Or the blame game.  "It is my big bones!" they say, or "all the hormones they put in the food!" versus, "the stock market is rigged!"  or "the big banks are to blame!"

In all cases, however, these excuses and lies we tell ourselves have one thing in common:  While they may make us feel better for the moment, they do nothing to extricate ourselves from our health and financial predicaments.

So what is the "one trick to the tiny belly?" and the "one trick to getting out of debt and accumulating wealth?"   It is not trick:

Consume less than you need to.

End of story.  Eat less, have a calorie deficit, and you will lose weight.  Eat more, have a calorie surplus, you gain weight.  100 surplus calories a day is 3000 calories a month - about one pound of body weight.   That's 12 pounds a year, 120 pounds in a decade.   Even half that amount - or 1/4 - will cause you to gain weight.

Similarly, if you spend $100 more a month than you make, over a year, your debt load will increase by $1200.  Over a decade, $12,000.   Over a working lifetime, $50,000 or more, with compound interest - perhaps $100,000.

On the other hand, if you save $100 a month it snowballs into a small fortune over a working lifetime.

OK, you say, I get it.   But it is so hard to do.   After all, food is tempting and yummy, and when you are hungry, grabbing a handful of chips seems like the thing to do!

And when you are at the car dealer, the jet ski store, or the smart phone store, you want to have these shiny new things, and the salesman says you can afford them, so why not?

Yea, it is hard.  And that is why I have struggled with finances and weight since the day I was born in this filthy rich country.   We have too much of everything in the USA.   And I think it is sort of criminal to complain about this, when the rest of the world struggles for basic needs.   But bitch and whine we do, and you'd think, from talking to people or reading online comments, that living in the wealthiest country in the world was the worst thing!   It is not.   You just have to have the self-control to get ahead, and not fall into the many traps laid for the unwary consumer.

I recently stepped on the scale and realized that I had gained a lot of weight back.   It happens.  You stop checking your weight, you stop measuring portion, you get fat.  You stop balancing your checkbook, you stop checking your net worth, you go broke.  Again, same deal, different day.

I have managed to lose ten pounds recently, which is a good start, but I still have a long way to go.   My motivations include pain.   Yes, being overweight is painful, and it affects all your joints and well as other bodily functions.   The problem for many young people today, is that they don't feel all that pain - just yet - and then assume they can carry a 60 lb sack of concrete around for the rest of their lives.   They can't - they will end up in one of those electric scooters in Wal-Mart buying Candy Corn Oreos before too long.

Candy Corn Oreos?  ouch.

I don't eat Candy Corn Oreos, or any Oreos for that matter.  Or soda pop, or chips and whatnot.  But still, if I don't watch how much I eat I gain weight.   You can get fat on celery, I suppose, if you really put your mind to it.  It ain't what you eat, it is how much you eat.   Same deal with spending.  You can coupon yourself to death, it doesn't "save" you money if you are spending more than you make.

So lately, I have been measuring portions again, making sure the meal I eat is an appropriate size.   And when I am done eating, if I am still hungry, I resist the temptation to go back for "seconds" or to snack.   Because I have found that if I wait ten minutes the hunger urge shuts itself off.   It is a weird thing, but after breakfast this morning I was still hungry.  But ten minutes later, no hunger.

And the same is true with spending.  No car salesman likes it when a customer says, "I'll think it over and get back to you" as that customer is gone and gone for good.  Once they drive away, the customer will start thinking of the costs involved and then say, "forgetabout it!"   So many people buy things as impulse purchases not as real needs in their lives and instead of shopping around based on price and quality, they just buy things because they want them at the time.

If they waited ten minutes, the urge to spend would have dissipated.   Are you in a store looking at a new dress or a new electronic toy?   Put it down, walk around the block and come back.   Chances are, your urge to buy will have dissipated by them.   Funny how that works.

Or at least, maybe walking around the block, you'd have time to think about whether you really need it, and if you do, where it could be bought for less.  But the urge to buy now will have attenuated.

Wait ten minutes, it goes away.....

Wednesday, May 20, 2015

Average Net Worth of Americans

How does your net worth stack up to others?  Does it really matter?

Comparing yourself to others is always a path fraught with peril - for a number of reasons.  First, most others are brain-dead fools who over-consume and under-save and vote based on social issues.   So saying you are "doing better" than your bankrupt neighbor is an exercise in self-delusion.

But we all do it.  We look to the herd for normative cues as to how we are doing.  If we are doing better than the herd, we pat ourselves on the back.  If worse, we say the game is rigged and "unfair".

You can see why comparing yourself to others is a pointless game.

The real comparison, is to see how much you have set aside (or in a pension or whatever) and figure out whether that is enough to meet your life goals and fund your retirement.   What Bubba across the street has saved, really isn't relevant.   You may have twice as much as he has, but still far less than you need to retire.

But, we all want to know - how much do others have saved?  Am I doing better than the norm?  Worse?  What? 

Curiosity killed the cat.

The problem is, what the average American has saved is hard to quantify, as there are a few "whales" out there who have Billions, and this skews the average.   Median savings is a far more relevant number - and far scarier.

But it gets weirder.  Depending on who you talk to , we are either the richest country in the world - or the poorest:

Middle class Americans: Not so wealthy by global standards ...
Jun 11, 2014 - Americans' average wealth tops $301,000 per adult, enough to rank us fourth on the latest Credit Suisse Global Wealth report. But that figure doesn't tell you how the middle class American is doing. Americans' median wealth is a mere $44,900 per adult -- half have more, half have less.

The Typical American's Net Worth By Age: Here's Where ...
The Motley FoolJan 26, 2015 - Photo: Quozio. Ask most people what their net worth is and they probably don't know. Show them how to calculate it and they'll be dying to ...

In the news
How does your net worth compare with the average American's? - 1 day agoIt may be surprising, however, to learn that the average American's median net worth peaks in the year just following retirement, and then slides ...
Compare Your Net Worth to the Average American's
Money - 1 day agoMore news for average net worth american

The Average American Net Worth Is Huge! | Financial Samurai
Then came a 2014 Credit Suisse survey highlighting the average net worth in America is a whopping $301,000 (see pic)! Regulars here know that I've been pretty positive about the economy for a while, and this stat just makes me even more so.

It Only Takes $10,400 to be Richer Than Most Millennials ...
The Wall Street Journal
Sep 4, 2014 - Are you a millennial with a net worth of more than $10400? ... released today, which tracked the net worth and income of American families in 2013. ... (the median) but it takes $75,500 to be richer than millennials on average.

Compare Your Net Worth to the Average American's ... - Time
1 day ago - It may not be the best way to evaluate your accomplishments, but knowing how your financial situation stacks up against your peers can offer ...

Wealth in the United States - Wikipedia, the free encyclopedia
WikipediaWhen observing the changes in the wealth among American households, one .... and 2007 incomes of the top 1% of Americans grew by an average of 275%.

To some people, the "average" savings of $301,000 seems like a "huge" amount.  To others, the "median" savings of $44,900 seems pitifully small.  Same numbers, different perceptions!  And it gets harder to pin down, as it varies by age as well.

And then there are those who have no savings (like some friends of mine) but huge pensions - well over $100,000 a year.  That's the equivalent of well over $2,000,000 in savings, yet it would not be counted by any "net worth" calculator on the market.

And then we have to ask - where does this data come from?  Well, it doesn't come from computers linked to your bank account.  It comes from surveys.  And survey data can be very misleading, as people lie (to themselves, and others) about how much money they have - or think they should have.   And then there are people like "Financial Samurai" who think $310,000 is a "huge" amount of money.   It isn't.  It isn't enough to retire in a trailer park in Florida, much less in a nice house somewhere.

And then there is the question of what is net worth exactly?  As I noted in my Millionaire versus millionaire posting, many folks don't count equity in the home as part of your "net worth" even if it would be liquidated as part of your estate.   And indeed, you can sell a house and live somewhere else fare more cheaply.

What it comes down to is another number provided by the Bureau of Specious Statistics.   The net worth of the average American is damn hard to calculate and any numbers bandied about based on self-reported data, that don't take into account pension plans and home equity, are basically nonsense numbers.

 A man with a $100,000 a year pension and $50,000 in the bank has a real "net worth" of far more than $50,000.  And if his $500,000 house is "paid for" then he is a wealthy man.  But our friends at the Bureau would have you believe he is "poor" because he has only $50,000 in the bank.  Is he?   Of course not.

Similarly, the fellow with $500,000 in his 401(k) might seem to be "rich" but using the 5% rule, that amounts to only $25,000 a year in income in retirement, which with Social Security, might net him $40,000 a year in retirement benefits - far less than the median or average income in the USA.  And if his house is over-mortgaged, well, does he really have any net worth at all?

It gets down to the same thing I have been saying over and over again - you have to use your own internal compass in these matters, and worry less about what the herd is doing, because the herd is basically insane.  They all have iPhones and think Justin Beber is a "star" or something.   I think they smoke crack.

So, if you look at the TIME article above, and see that the "median" net worth for someone in your age group is say, $150,000 and you are doing better than that, well, don't think you are home free.   You've basically saved up three years worth of income, perhaps less if you have a high-dollar lifestyle.

And sadly, most of the financial media is like this - providing data that is of little use, inaccurate, obsolete, self-reported, or just downright wrong.

* * *

NOTE:  One interesting piece of data from the Wikipedia page is the net worth of self-employed individuals versus those employed by others.  Look at it - it is startling.   But this reflects the necessity of the self-employed to self-fund their retirements.  It may also reflect that the self-employed, not getting money in weekly paychecks, tend to look at money in a different light - in terms of net worth, not monthly cash-flow.

Monday, May 18, 2015

Having it all - and Having nothing.

Like anything else, in RVing, it is possible to take a good thing too far!

We have been traveling to the Keys for a couple of weeks with our tiny camper trailer.  This was just a getaway for a while.  We usually spend about four months of the years this way.  For most folks, two weeks is about it.

Why is this?  Well, we have a tiny camping trailer that cost $8300 used, and a cheap Japanese pickup truck, all paid for.  I don't have to go back to work on Monday to earn money to make payments on toys.

Others in the campground have different ideas.   It is not unusual to see a large camper costing $100,000 to $500,000 (or more) with several cars parked next to it - including BMWs and Mercedes.  In addition to this, are motorycles, scooters, bass boats, jet skis, and the ubiquitous golf cart.  Apparently, riding around in a golf cart (not for golfing) in the campground is the height of entertainment.

I am sitting next to our tiny camper trailer and adding up the amount of motorized depreciating goods at each site around us.   And on each site, is literally hundreds of thousands of dollars of equipment, sitting around baking in the hot sun and getting rained on in the rain and depreciating by thousands of dollars a month.   Literally, some of these folks have more "invested" in camping toys than they have in their principal residences.

So what's the harm in all of this?  Lifestyle choice, right?   Well, that's true, in America you can do as you please.   But these choices are often toxic ones, as the hazardous outcomes are delayed by years or even decades.   So the victims are having fun now - but paying for it later.

As I noted in another posting, most RVs are poorly, poorly made.   The fiberglass walls delaminate over time, leaving unsightly bubbles which are testament to the leaks in the unit.  Rubber roofs bubble up and then crack and leak - often leading to the delaminating sides.  The colorful graphics fade and mildew.   After a decade or so, most of these units are trashed.   And yet many are financed on 20 year notes.

And I can see this on a neighbor's rig.  The rubber roof is starting to chalk up and run down the sides - and wrinkle and bubble at the edges.  Parts of the fiberglass laminated sidewalls on the slideouts are bubbling as the glue holding the fiberglass to the luan plywood starts to fail.   A clapped-out, cheaply made "bread truck" Class-A?   Hardly - a five-year-old "Rock Star Bus" Motorhome costing a quarter-million or more, new.

And each RV'er I talk to says the same thing.  "Well, that will never happen to my rig!  I maintain mine properly!   I treat the rubber roof each year with a cleaning compound and that will keep it from leaking or bubbling up!"   But the reality is, it is just time that wears these things out.  Time and the flexing of the multitude of joints as these things go down the highway.

Everything wears out over time.  Cars get old and go to the junkyard.   And no, buying the right brand of motor oil isn't going to get you to 300,000 miles - it is just going to sell motor oil.  It is the latest marketing gimmick - selling cars and car care, by implying that just anyone can make a car last forever, "if they have the inside secret!"   Same folks selling the "trick to the tiny belly!" and those hot penny stock tips.

The reality is, any piece of machinery or even a building or whatever can be made to last forever, provided you throw enough money at it.   But practically speaking, there comes a point where the cost of repairs exceeds the value of the item, and it is time to start over.

Replacing the rubber roof on a motorhome can cost thousands of dollars (and is a time-consuming pain in the ass).   By the time it is necessary to do this, the motorhome is worth only a few thousand dollars - and many other things need replacing as well.   Thus, it becomes time to cash it in.

And there is the rub.   It is money over time - the 4th dimension of money.  You finance an expensive motorhome, boat, or whatever, and the payments are equal for all the years of the loan.   However, for the first years, you have a nice shiny new motorhome.   For the last years, you have a dilapidated worn-out piece of crap.   Same payment.   And oftentimes, you are "upside down" for most of that loan.

So the folks I see in the campground with all the toys and cars and junk (who all have to leave on Sunday night to get back to work Monday to pay for it all) don't yet realize how much they have spent on all this crap, as they have made only the payments on these things from their bank account, but have not realized the loss in terms of depreciation over time.

At the end of the day, the $250,000 motorhome is worth $125,000 after five years.   And that represents $125,000 subtracted from your net worth.   But since folks see things only in terms of monthly payments, they think, "Well, it is only $2000 a month!" which doesn't seem like a lot of money for a house on wheels - right now.   In five years, or ten years, when it starts to wear out, well, it starts to seem like an awful lot.

Maybe if the RV had a "depreciation counter" in LEDs on the side, they could understand what I am talking about.   A $250,000 motorhome depreciates about five cents a minute, for the first five years (actually very quickly the first years and then slowing down over time).   I would be scary, to be sure, to watch such a clock tick by and run out your bank account over time.

One poor fellow in the campground was starting to feel the effects of time on his RV investment.  He had a nice trailer which was now ten years old and starting to show the usual signs of trouble.   And he had two tow vehicles, one to tow the trailer and another to tow a flatbed trailer carrying the wife's car, golf cart, and motorcycle.   A lot of junk to be hauling around camping.   And one of the tow vehicles, a Ford diesel, was firing on only seven cylinders (most likely the notorious cavitation problem with the powerstroke diesels - if you don't add water wetter to the coolant, it cavitates around #7 cylinder due to an idiosyncrasy in the design, and eventually eats through the cylinder wall).   So now he has to buy a new truck.   Or maybe just make do with less motorized shit in his life.   Myself, I would (and am) choosing the latter.

We've managed to avoid a lot of these problems by insisting on paying cash for "toys" in our lives.   It is tempting to sign those loan documents for the "low low monthly payments" but we've said "No" for more than one reason.  To begin with, usually loan rates for "toys" are higher than rates for ordinary car loans or mortgages.   Secondly, the depreciation on these things is murder, and it is all-too-easy to get "upside down" on an RV or boat loan and end up not being able to sell these albatrosses when you want to.

I guess, too, my thinking is that as "toys" they are not really necessities.  And as such, it is really sort of scandalous (at least to me) to leverage myself so I can have nicer toys - at the expense of my future self.

And since we don't have payments to make, we don't have to rush back to work on Monday morning to earn yet more money to pay for depreciating assets.   We can afford to stay all week - and maybe the next.

The guy next to us, who "has it all" has his motorhome buttoned up for the week and his boat under cover.   Come Friday, he'll fight traffic down the causeway, dunk the boat in and try to get in two days of fishing, if the weather cooperates.   It is a great way to spend a weekend.   But a lousy way to spend money.

It is possible to "have it all" and have nothing.  It is possible, too, to have less and end up with more.

Thursday, May 14, 2015

The Passive-Aggressive Media

Is the news media passive aggressive?  I think so.

  • Ambiguity or speaking cryptically: a means of creating a feeling of insecurity in others or of disguising one's own insecurities.
  • Chronically being late and forgetting things: another way to exert control or to punish.
  • Fear of competition
  • Fear of dependency
  • Fear of intimacy as a means to act out anger: The passive–aggressive often cannot trust. Because of this, they guard themselves against becoming intimately attached to someone.
  • Making chaotic situations
  • Making excuses for non-performance in work teams
  • Obstructionism
  • Procrastination
  • Sulking
  • Victimization response: instead of recognizing one's own weaknesses, tendency to blame others for own failures.

It struck me recently that many of these characteristics are quite typical of today's news media.   Ambiguity and speaking cryptically is often the hallmark of network news or newspaper articles, where "the whole story" is often not told, or if told, told poorly.

For example in a recent article about trailer parks, the Guardian words the article so poorly it is hard to figure out what is really going on.   In one sentence that claim the owner has doubled the rents and doubled the utilities (the latter being illegal in most States, as utilities are regulated, and not up to the whim of the park owner).   This ambiguity, of course, is designed to get you all riled up - thinking that he has increased rents by four times.

The reality is, if you parse through the horrific language of the article (and they say the Brits invented English?  I cannot see how) is that the owner raised the rents to $450 a month which is pretty standard for trailer parks across America, particularly in urban or tourist areas, and is now requiring tenants pay their own utilities (to the utility company).  But that doesn't create the ambiguity needed to make the story seem more outrageous than it is.   And in the UK, they love to put up stories about how rotten our "capitalistic" system is how lucky they are to have a benevolent monarch to lord over them, put them on the dole and provide a council flat.

Making Chaotic situations seems to be the hallmark of CNN.   While the Ferguson grand jury was deliberating for a week, rather than get to the bottom of the story and realize there was no story, CNN decided to engage the speculo-tron and speculate endlessly about how many riots there would be, how bad they would be, and whether they would spread to other cities.  They might as well have put up a big sign saying, "Hey everyone, let's riot!"

It is irresponsible journalism at its worst - causing rioting and death by not investigating, but rather by reporting the "story" that generates the most ratings.

The folks at Fox News, of course, specialize in sulking and victimization behavior - even as they themselves decry our "victim mentality" culture.   From the Fox News perspective, they are an embattled minority of right-thinkers who are being circled - like settlers in a doomed wagon train - by the far left and its war on Christmas, Christianity, and of course, marriage.   To hear them tell it, they are the victims here!  And until Obama leaves office, they are just going to sulk about it.

And yet, most people get their "information" from these sources, without thinking as to whether the data presented is reliable, accurate, slanted, or even clear.   Most of us want to fit the data to our preconceived notions, rather than look at the data and draw conclusions.

For a lot of young people today, continual outrage is the norm.   We are told that "Black Lives Matter" as if the Police suddenly went on a killing spree of blacks - and many of the folks protesting this are young white males.   They have a world-view that the police are jack-booted thugs, and thus any news story that fits this narrative is instantly molded to fit the world-view.

Meanwhile, weeks or even months later, we learn that the media has "spun" these stories to boost ratings.  It turns out the jack-booted thugs were the so-called victims in these cases - people with criminal records for robbery and assault that go on for pages.  Which would you rather meet in a dark alley?  The mugger or the cop?

Similarly, there is a sudden "outrage" that something called Civil Forfeiture exists, even though its existence goes back to the dawn of our country, and its use in the so-called "drug wars" has gone on for decades.   People are "outraged" that someone carrying tens of thousands of dollars in cash, on a known drug route, for no explainable legitimate reason (and large amounts of cash are almost always related to illegal activities) has their money confiscated, at least temporarily (you can, of course, go to court and get it back, but few of these drug couriers do so).

The news media, by telling you half the story, wants to get you all riled up - being cryptic and ambiguous on purpose, in order to create chaotic situations.  And most people bite on these stories, hook, line, and sinker - without considering whether there is "another side to the story".

And years, sometimes decades later, we learn the whole story, but it is too late - the story the media "sold" is already out there and has currency.   A lot of people still believe that the robber in Ferguson was shot "with his hands up" despite the reports of the Grand Jury, the Justice Department, and the President himself.   People telling the story the media wanted to report turn out not to have been there - at all.

But this sort of misinformation fuels more misinformation, until every day is a grueling grind of "another police brutality story" when some suspect decides to fight an arrest, with predicable results.

Of course, it is only going to get worse - as political silly-season goes into high gear, and the media hypes on which candidate you'd like to have a beer with, or which one ate his pizza with a fork and knife or whatever nonsense they decide is "important" this time around, because it attracts eyeballs to sell to advertisers.

Is this the media's fault?  In part.  But it is also our fault for watching this shit - uncritically and 24 hours a day.   We obsess about the "news" but rarely critique it or challenge it or assess it.   So in a way, it is our fault the news media is the way it is - we have met the enemy and he is us.