Credit Card Limits

High credit card limits are not a sign of financial success but impending financial doom.

As I have noted in other postings, if you have to have a credit card, pick a low limit and don't let them raise it.  Never have more in credit card limits than you can readily pay off in one month.

Some folks read this, and think it is apostasy - having been carefully programmed by the credit card industry to think a high credit limit means they are doing well in life.  "And besides," they say, "suppose you want to travel?  You might need that high limit if you are traveling overseas!"

Well, bullshit.   That is just another excuse to self-justify a suicide attempt as financial acumen.

We travel four months a year, and having a low credit card limit is not a problem.  Why?  Simply because we can, from anywhere in the world, go on the Internet and make a payment on our credit card and "zero" the balance in a matter of days.   There is little risk of "going over" our credit card limits.

"Well, suppose you don't have the cash to pay off the bill?"

Well, if that is the case, why the fuck are you taking an expensive vacation in the first place?  That credit card bill will have to be paid off when you get home.   If you don't have the money to travel, don't go, or find less expensive ways to travel.

But it begs the question, why do credit card companies routinely hand out to people, credit lines that are often in excess of their annual income?

The simple answer is, of course, that you can make more money ruining people today, rather than establishing a mutually beneficial business relationship.  The name of the game at the credit card company isn't collecting some paltry 3% transaction fee on everything you buy.  The name of the game is to collect 18% revolving interest on an intractable credit card debt you ran up - effectively charging you double for everything you purchase.  It beats the snot out of 3% transaction fees, which they can collect only once.  Interest compounds every month, and you collect it over and over again.

And to encourage you to do this, they hand out credit cards with $10,000 or $20,000 or $30,000 credit lines.   And yes, in the past, I've idiotically taken those deals and thought what a smart fellow I was to have so much "credit" at my disposal.

How much of a credit limit is "too much" of course depends on your circumstances.  For me, $5000 is a nice round number.  If my credit card balance is over that, well, something is wrong.  And that "something" is basically living beyond my means.

For others, it may be $2000 or $1000 or $10,000.  The point is, don't let the credit card company tell you what credit line you get, you tell them what you are comfortable with and call them and ask them to lock you limit (no automatic increases).

Credit card fraud is rampant.  As I have discussed before, my credit (and debit) cards were stolen in the past.  Chances are, you've had it happen to you.   You would think that lower credit limits would limit the amount of exposure the credit card companies have to fraud, wouldn't you?  But the low limits, while limiting their exposure to fraudulent transactions, mean lower profits from compound interest payments from Mr. and Mrs. Middle-Class who are "living paycheck to paycheck" and struggling to pay off their intractable credit card debt.   Credit card fraud, to them, is a minor nuisance and part of the cost of doing business.   Frankly, they could care less - the cost of averting fraud exceeds the money saved.

So they fold this into their cost basis, which is why, in an era of tiny interest rates and fractional inflation, we are lead to believe that 13.9% interest is a "good rate" on debt.    The card companies could lose 25% of their charges to fraud and still make a profit, when they are collecting compound interest at "penalty rates" of 25% to 30% in some instances.

Sadly, credit cards, at least for now, are for many a necessary evil.  You can't rent a car without one - or a debit card with a high balance.   It is hard to travel without one.   It is hard to do a lot of things without one.

Like a loaded hangun, a credit card can be a useful tool - or a dangerous toy that could damage you or a loved one.   They have to be taken deadly seriously.

The Contemplative Life

"A life not examined is a life not worth living" - Socrates

"A life over-examined is a life not lived" - Mark Twain

Somewhere between these two quotes is a compromise that allows one to fully live life.   Those who spend every waking hour trying to "figure out" their life or their upbringing tend not to fully live it.  They obsess with naval-gazing and second-guessing and let life pass them by.

But on the other hand, there are others who are so caught up in their day-to-day existence that they fail to truly appreciate how precious - and ridiculous - life really is.

And one reason for both of these extremes is debt and poverty.   The man who struggles from day to day to make ends meet - whether it is the African trying to obtain sufficient calories to survive another day, or the American, trying to make enough money to pay his cell phone and cable bill - never has the time to really sit down and think about what life really means and what it is all about.

"Life is what happens while you are making plans" some folks like to say, and there is a modicum of truth to that.   Many folks are so obsessed with trying to "get ahead" that they fail to really appreciate life.   They work like dogs, eight to ten hours a day, five or six days a week (or more) to have "things" that they think will fulfill their lives.  But they are really just running on a treadmill, trying to keep ahead of the bill collectors and stay ahead of their co-workers and neighbors.

One of the major revelations I had, when I chucked it all and decided to work part-time from a home office was how little work I needed to do in order to stay solvent and alive.   Once I decided I didn't really need a fancy car to impress the other people at the office, or whatever other social climbing criteria (the smart phone, the club tie, whatever) that people seemed to need, well, it turns out the amount of money you need to make to just live is rather small.

There was a small park near our home.  No one ever visited it, although the county mowed it every week and it looked nice.  I would go there after lunch, walk the dog and let her roam off the leash - there was never anyone in the park.  I would sit underneath an old oak tree and lean against it and just enjoy the nice weather - and feel guilty that I was "doing nothing" while my cohorts who stayed in the cubicle were hard and work and scheming against one another.

It literally took months to get comfortable with the idea that it was OK to spend an hour doing nothing, and what's more, it was OK to do so.   And once I felt comfortable with the idea that the wolves were not at the door, constantly demanding loan or debt payments, I could really live my life the way I wanted to.

We are in Northern Montana.  Boy is this a flat place.  But it has its own certain beauty.   What is interesting is the realization that I could, if I chose to, sell my house and live the rest of my life, simply doing nothing and living off my savings - and traveling in our RV.   It has a certain appeal, to be sure.   But people keep bugging me to work.  And a recent report in the Journal of the Patent and Trademark Society illustrates that the number of people entering my obscure profession is declining dramatically.  In other words, a lot of people are seeking out my talent, but very few have the talents to do the job.  I decided that I needed to double my rates.  Oddly enough, business increased.

But what I really cherish, above all, is the ability to sit down and think, for a change, about what life means and where it has lead me.  That is part of the impetus that got me started writing this blog.  Yes, it is about finances, but it is also about much more.   So many folks go through life looking at each stage in life in terms of what they can buy and how much they can borrow.  They keep "busy" at work and at make-work ("I have to do errands!  I am so busy!") that they drown out the deafening silence in their lives. 

Few people have the luxury, it seems, to really do what they want to do with their lives - or even have the time to think about what they would like to do.

For example, where do you live?  If you are like me, you lived most of your life in a place where you had to work to make a living.  The idea of choosing a place to live is just not in the cards.   And many folks, when faced with such a choice, freak out.    I live on a quiet island because I chose to do so.  There was no "job" for me here.  It was just a place with little traffic, decent weather, and a low crime rate.  So, why not?

But few of us have even that choice in life.  We are locked in, we think, to obligations and debt payments.  And for what?  A closet full of clothes and credit card debt?  A fancy cell phone and a cable plan?  A new car every three years?  A house which impresses everyone and yet no one?

The debt treadmill does serve one useful purpose.  It prevents one from really thinking about life and where it leads you.  Since one becomes so obsessed with making money and paying off loans and bills, one doesn't really have any time to think about where this all leads.   It serves to drown out the silence in our lives.

And I guess for most folks, that's enough.   But not for me.

The Fracking Frontier

Saudi Arabia?  No, North Dakota.

Here in the wilds of North Dakota, the fracking boom has taken off.  It is a pretty amazing thing to see - all these oil pumps running and oil trucks racing down the road, not to mention the huge flames of the waste gas burning off at night.  It is like being in Saudi Arabia.  The rolling fields of brown wheat look like sand dunes, to complete the effect.

It is interesting to come here, and visit Theodore Roosevelt National Park, as I just got done reading Gore Vidal's Empire and James Bradley's Empire Cruise, the latter of which was on sale at the Dollar Tree for a dollar (of course) which tells you a lot about that book.  A real shame, too as Bradley's Flags of Our Fathers and Flyboys were both good reads.   Sadly, Empire Cruise relies too heavily on revisionist history - namely that Roosevelt was some sort of Aryan racist (which may or may not be true) and that was his sole motivation for expansion in Asia.   It was, however, a chilling reminder of the horrors of the Philippine occupation - where America began its love affair with waterboarding.  But I digress.

Teddy was a skinny, somewhat effeminate, asthmatic lad, and he came west to experience "The Strenuous Life" and then write about it and become famous as a (part-time) rancher and later a "rough rider" - a term he swiped from the Wild Bill Hickok rodeo show.  It must have been strenuous inheriting $12 million at age 12 and also riding all that way from New York in your private Pullman coach.  But again, I digress.

(Being a part-time rancher, or oilman, however, has been a popular sport amongst Presidents who want to shed their images as a "wimp" or elitist.   Ronald Reagan and both George Bushes relied upon "clearing brush" photo ops to enhance their images.   Roosevelt, who had a tennis court built at the White House, was famous for saying that he made sure always to be photographed on a horse or carrying a gun, but never with a tennis racket.   Something John Kerry should have realized when he went wind-surfing).

North Dakota is a beautiful and wild place still, and it is still a place where machismo rules.   And with the advent of the fracking boom, well, the place has taken off.  RV parks popped up everywhere, and many folks are living in them, or staying in hastily constructed modular hotels - some made from shipping containers.  The big crew-cab 4x4 pickup rules the road here - and for good reason.  Unlike the suburban folks who buy these rigs to overcompensate for lack of penis size, here they are actually driven off-road, haul loads (or trailers) and have "crews" in their crew cabs.  The big pickup is in its element here, and is actually functional.

It certainly has been good for the pickup truck business.   And RV business.  And all the supporting businesses, from the rowdy roadhouses to the skanky prostitutes hawking their wares in front of recently constructed motels.  New restaurants are springing up everywhere, often in modular units.   We did not try the fare at the "Bakken Buffet" (I kid you not) but a lot of other folks were.  The dusty, muddy pickups lined the parking lot.

Everything is so new, than a GPS is basically useless.  New stores, new gas stations, new roads - everything is so new that the database is outdated the moment they update it.   And a lot of people are making and spending a lot of money around here.  It is hard to imagine what these places looked like when ranching and farming was the only game in town.

And that is the sad part.    The bloom is already off the rose on fracking, at least for the time being.  With sanctions against Iran lifted, the worldwide oil glut appears poised to get worse.  $50 a barrel oil is here to stay - or perhaps far less.   The local Halliburton yard is full of idled drilling rigs, and while we saw an awful lot of pumping going on, we saw very little drilling.   Of the literally thousands of pumping sites we have seen (and we have seen only a fraction of what is going on) we've seen maybe two drilling sites.  And a number of pumping sites are idle.

Of course, there are still jobs.  Tanker truck drivers haul the oil from the fracking sites to the rail heads or pipeline terminals.  They drive back and forth all day long, retractable truck and trailer axles up when empty, down when full, putting 24-30 tires on the road with a full load (and sometimes a tandem trailer to boot).  Still nothing like the monster rigs in Northern Michigan (which have ten axles or more!) but pretty impressive nevertheless.

But even those jobs may be waning, as we saw pipes being run from site to site to accumulate oil.    Nevertheless, "Help Wanted" is still a popular sign around these parts.  The local gun shop/convenience store/gas station laments their gun shop hours are only 9-7 Mon-Sat as they don't have enough help to stay open longer.   Hard to believe people complain about being unemployed when less than a day's drive away, jobs are going unfilled!

Of course, like any boomtown, it is hard to live here.   The local modular motel wants $400 a week to stay, so that big paycheck gets eaten up pretty quickly.   Nevertheless, a lot of young bucks are striking it rich - or so they think, anyway, which is what brings us to the point of this posting.

I will leave it to others to discuss oil policy or environmental policy related to fracking.   Those issues have been well-documented.   What fascinates me is the frontier mentality going on out here.  It is like the gold rush in 1849.    A lot of people have come here to strike it rich, and they are, but are spending it faster than they are making it.    A young oil worker, when he gets his first paycheck, runs out to the Dodge dealer and buys a big Ram pickup (because the other workers laughed at his Camry).   And since he thinks this job will last a lifetime, he puts it all "on time".

Worse yet, many are settling down and buying homes, either modular, double-wide, or even stick-built.  Suburbs are springing up near some small cities, which are growing at an exponential rate.   And of course, everyone has to have a party barge, jet skis, or a new Sea Ray (to drive around the Missouri River - this is a land of water, ironically).   And again, it is all paid for "on time" based on the assumption that people will always be willing to pay $100,000 a year for unskilled labor.

But as we are seeing, the oil industry can be fickle.   We've seen booms and busts in the oil business for decades, as the price of oil peaks and valleys.   My seatmate on an United flight back in the early 1990's related to me how he just returned from Oklahoma, to bury his brother.   After the oil business peaked and crashed there, a lot of roughnecks were out of work - and many resorted to crime to stay afloat.  His brother was the victim of a home invasion, and was shot for his pickup truck.   That sort of thing hasn't happened - yet - here in North Dakota, as the oil glut is only a few months old (ironically, gas prices are very high here.  They claim it is because refineries are off-line, but I suspect the real reason is they can gouge these young roughnecks for every penny and they don't really care).

We've seen a few modular hotels already shuttered.  A new mini-mall site sits abandoned, up for sale.  A lot of dreams are starting to crash.  If oil stays low, a lot of dreams could turn into real nightmares.

We are off next to Alberta, the home of the oil sands projects.   It is the same sort of deal going down there, but with more dire environmental consequences.  By the way, we get most of our oil from Canada.  Most folks think we rely on the Middle East for oil.  We don't.  Europe and Asia does - which begs the question as to why we get into such trouble over there, to protect the oil supply of our competitors.  But again, I digress.

The sad thing for Canada, is that their economy is propped up by raping their own natural resources and then selling them for cheap to the United States, in order to keep their quasi-socialist economy running.  We long ago gave up on our longstanding dream of invading and conquering Canada - it is already a fait accompli at this point.   We take everything we want from Canada, and leave to them the messy business of governing their tiny populace.

But getting back to the point, this is a pretty crazy place up here - the last bit of the wild-west mining boomtown left in America.  There are opportunities up here galore - at least in the short-term.   If you decide to get a job in this boom market, just remember it is a boom market.  Once all the wells are drilled, the number of jobs will drop off precipitously.  And if the price of oil stays low, the whole thing could be mothballed in short order.   Don't spend the money like it will be around forever.

Come to think of it, that is pretty good advice for any job.....

Do It While You're Young

Once you get old, you won't be physically able to do a lot of things.   So why wait until your are old?

One negative reaction I get to this blog is the lash-out response that one should "enjoy life" by purchasing things, and if you just save up your money, what is the point?  After all, when you are old and grey, you won't be able to do much, right?

There is a nugget of truth to this and also a lot of denial.   What the people who are making this argument are saying, is that it is OK to get heavily into debt to have a lot of nice things and then work 60 hours a week to pay for them.   It really makes no sense, as you never get a chance to enjoy these things, or indeed, get more than 50 miles from where you live, as you are now tethered to a job to pay for it all.

But it is true that as you get older, you will be able to do less and less.   So it makes sense, if you want to see the world and do things, to do it while you are young.   Traveling around the country in an RV at age 70 and watching television in all 50 States really makes no sense.  You are not "seeing America" nor are you really doing anything other than existing and consuming a lot of money.

I related before about my young friends who hitch-hiked around the world - twice - before they got married.   What they did was live frugally, worked hard, and banked their paychecks.   They traveled modestly and stayed in cheap places like hostels and whatnot.   But they got to see the world at an age where long hikes and whatnot were still physically possible.  And not only that, when they got back home, they still had enough money in the bank to make a down payment on a house.

It was no secret how they did it.  They didn't have cable television.  They weren't glued to a smart phone 24 hours a day.  They drove an older Toyota they bought for $3000 and kept for many years.   They didn't spend a lot of money on restaurant meals and clothes and "shopping" and whatnot.   They set their priorities and then set out to achieve their goals.   

And the kicker is, neither had a very high-paying job.  One worked for a charity and the other in retail.

When they took off to see the world, some told them they were foolish to squander all that money and to "give up" on good jobs and lose their place in line in terms of promotions and advancement.   The folks who live the job mentality thought they were insane!   After all, you have to "play the game" and wait for your promotion so you can trade-in your Chevy for a Pontiac, right?   You have to work your way up the ladder of success, right?

Well, wrong.   The are now living overseas, happily, and have professional jobs that pay far more than they made when they were young.  And they have a happy healthy family.   And they got to do what they wanted to do in life, while young, which is great.

Sadly, many others, including their friends, felt that such a course in life was impossible.   They had "commitments" in the form of car loans and mortgages and cable television payments.  They had a nagging credit card debt that needed to be paid off.  They couldn't just pack up and leave, right?   And when they got back, they'd lose all that seniority at work!

In short, most of their friends were chained to the hamster wheel of debt, and were running as fast as they could, just to stay in place.   I know I was, to some extent.  At the time, we had a fairly expensive lifestyle, a lot of debt, a nagging credit card balance, and "obligations" that prevented us from just packing up and going.

Sure, we did travel to Japan a couple of times, but always associated with business.  And we took an RV tour around America - in a month - seeing the USA through a windshield.  But we were tied down with obligations.  And most of those obligations, if not all, were self-imposed.

Today, we take off in our RV for months at a time, and are looking forward to traveling more, while we are still somewhat young.   But it is hard, even in your 50's to do this, as it is a lot of work and stress to travel.   We can't kayak and ride as far as we used to.   We can't hike as far as we did when younger.  But at least we can do some things, still.

Being financially independent - "owning yourself" - is not just some retirement goal, but a way of life.   If you decide to chain yourself to a series of cable television, car lease, and cell phone payments, remember that it is a choice in life, not a mandate.   The "man" isn't keeping you down so much as you are selling yourself to him.

And if the idea of hitch-hiking around the world appeals to you - or starting your own business, or taking a sabbatical to write the great American novel or start a garage band or whatever - then go for it.   Make a plan, figure out how to make it happen, and then do it.   Sure, it may seem that your "obligations" are preventing you from doing what you want to.   But think long and hard about who made those obligations - you or others?   Odds are, it was you who signed that contract, loan agreement or whatever, that now binds you to a desk.

Do it while you're young.  All the oldsters we meet say the same thing.   They enjoy traveling and seeing different things, but only wished they had done so while they were more ambulatory.

How Will Self-Driving Cars Change Our World (The Conundrum of Automation)

What happens to the millions of people who make a living driving vehicles, when vehicles become self-driving?

Driving across America, it strikes you how many people are employed in the business of driving vehicles.  Truck drivers must number in the millions, as there are trucks going everywhere - from long-haul freight to local delivery.  Taxi drivers, delivery drivers, and so forth - a lot of people make a living behind the wheel.

And these kinds of jobs were always the last refuge for folks who had no other skills or choices.  Recent immigrants to the US tend to gravitate toward the taxi business for some reason - even though they have no language skills and don't know their way around the city they have been transplanted to.   Driving a truck is a job that you can always get, if you have a clean license.  Even a ex-con can get a job driving, in some cases.

And beyond cars and trucks, there are vehicles like fork lifts (many of which are already automated), bulldozers, rollers, graders, and other construction equipment.  We fly drones remotely already.  Why would we need pilots?   The routine operation of machinery is becoming more and more automated.

What happens if self-driving cars become a reality - which they appear ready to do?  How many millions of people will be thrown out of work?

It is a scary thought.   Add to that all the service jobs related to drivers - truckstop workers, roadside restaurants, even the strip clubs.  And what about the cops who hand out speeding tickets?   Not a lot to do when robotic cars all drive the same, regulated speed.

It is a problem we have faced, with technology, for over a century.   A new technology comes along and suddenly, it takes half the number of people -  or 1/10th - to do the same job as before.   Sure, new jobs come along - usually repairing the machines that replaced the old jobs.  But the number of high-skill repair jobs often is a fraction of the low-skill jobs they replaced.

The trucking industry is already seeing this, with the advent of Intermodal transportation.   In the old days, boxes of goods came to the US by ship (or left!) and were manhandled and pilfered by stevedores with grappling hooks.  These were loaded into box cars or trucks and shipped - being loaded and handled at each step of the process.

Today, containers are loaded at a factory and then sent by rail, truck, or ship, without ever being opened and unloaded.  One crane can move an entire container from ship to rail to truck, in a matter of seconds - replacing at least a dozen men who would have taken far longer to do the same task.

Moreover, the use of containers and piggyback rail has meant that the old job of "long haul" trucking is going by the wayside.   Why pay someone to drive from California to Florida with a load (and pay for all that diesel fuel) when you can put the container on a BNSF train and have it there is about the same amount of time for 1/10th the cost?

It is progress, to be sure, but it means that a lot of menial jobs are eliminated.

And this should be a good thing, one would think.   If all the menial labor in the world was automated, we would all have so much free time to do more esoteric things, while robots did all our work.  And with all this automation, well, we'd all be rich - as the cost of products went further and further down.

And perhaps, in part, this is coming true today.  But it also means there are a lot of people out there with no job skills or obsolete job skills with nothing to do with their time, other than to vie for the few remaining service-sector jobs out there.

Remember when I reported on the Kiosks at McDonald's that I saw being use in France?  Well, it appears they are finally making their way over here - in time to meet the $15 minimum wage.   Raise wages and costs far enough, and the impetus for automation becomes even stronger.  Catch-22.

Of course McDonald's is saying the kiosks are being used to "increase consumer choice" and allow for better service - not merely to cut costs.  Of course.   But you won't pay $10 for a Big Mac.  Fast food is already overpriced as it is.

Automation arguably is one reason our society is increasingly being divided into the haves and have-nots.  If you can design or repair the automated equipment, you have a job.  If you run the company or provide the financing to create this new technology, you can become embarrassingly rich.   If you have no job skills, on the other hand, you will be sentenced to a life of penury.

There are alternatives, of course.  We could create make-work jobs like the Japanese "elevator ladies" who push buttons for you, on an otherwise fully automated elevator.  Perhaps truck drivers will still ride along in their rigs, playing video games and watching porn, while the google robot does the steering.   The problem with that model is that it eliminates any benefit from automation, other than increased safety.

Another idea would be to simply have fewer people around since we need fewer jobs.   But of course, this is not a feasible solution, as 99% of the world believes that creating as many babies as possible is God's will, and on a personal level, want to squirt out as many as possible.   And of course, the further down the food-chain you go, the more children they are likely to have.   

In other words, we are destined to have a whole lot more have-nots in the near future, as more and more jobs are eliminated, and a whole lot more stupid people are brought into the world.  It is the March of the Morons, as predicted.

It is an interesting conundrum.    And one that I am not too worried about as by the time this technology becomes reality, I will be well-poised to shuffle off the mortal coil.   But the next generation will have to grapple with these issues, and decide whether automation will create a utopia that we could only dream about today, or a dystopian nightmare of staggering proportions.