Tag Archives: economy

What’s so wrong with saving money?

I’m reading a Newsweek article entitled “Stop Saving Now!” It’s overall message, if you couldn’t guess from the title, is that in order from our economy to recover we – as a society – need to start taking more risks and throwing our fiscal caution to the wind.

This brings to mind a time when I received an allowance and I had a choice to save the money or spend it. My parents would advise to save it so I could buy something bigger than what I could with just a few dollars. At that point, there was no risk in not receiving more allowance, but nonetheless the general principle was that risk-free “saving is good.”

It almost makes me ill to think that our entire economy revolves around – well – greed and bad decision making. Not that penny pinching is the way to go, but when an article compares our entire society to Las Vegas casinos (where gambling revenue is down — in January, Nevada’s casinos reported, gamblers lost 14.6 percent less money than they did in January 2008, notes the article), I start to get a bit queasy. Why should we be expected to live our lives with such high risk in order for our economy to work? Isn’t there something wrong with that equation?

“It’s tempting in this period of contraction to mimic Thoreau, to live simply and deliberately. But if we lose our penchant for gain and risk, we’ll lose some of the essence of what makes us American.”

The Rich Get Hit Hardest

My aunt and uncle are in the upper class. They have a really nice house in a really nice town in a really nice part of the Bay Area. They have two kids. They have lost hundreds of thousands of dollars in the stock market. My uncle, who is self-employed with a once-thriving web marketing business, is struggling to retain clients. My aunt, who is in charge of a profitable department at an otherwise struggling company, just got a 10% paycut. With an expensive mortgage, even six figure and then some income isn’t enough to pay for their lifestyle. So they’re watching their spending. They are worried about just how bad this all is going to get.

While I’ve “lost” over $9000 so far in stocks, I feel lucky. I have a job. I make $60k a year, plus any freelance income I can bring in here and there. While I’m still not the best at managing my money (I just spent $100 at Sephora on a few eyeshadows and lipstick… I like to think of it as “stimulating the economy”) my cost of living is not that high. I don’t have any kids, my rent is cheap (well, at least compared to what I was spending living on my own before I moved in with two roommates, and I don’t buy much other than the occasional overpriced pair of jeans or high-pigmented and pricey eyeshadow. So my life is pretty cheap. And I like it that way.

For everyone who has a family to take care of… a mortgage to pay… this recession is really, really bad. It makes me want to never have kids or up my desire to purchase a house. Sure my room is tiny, I have to put up with my roommates for better or worse, and I don’t get to cook naked (which is seriously the biggest downfall of living with roommates), but… my life is affordable. Even as I lose thousands in the stock market. If I had kids… a house… I’d be screwed right now.

Obama Giving Stock Buying Advice

The other day Obama said that it’s probably a good time to buy stocks if you plan to hold for the long term. There’s been a lot of fuss about how the President shouldn’t be telling us when we should buy stocks, especially since the stock market has gone down 25% since he’s been elected.

I have mixed feelings about this. On one hand, it’s important for the President to show faith in the economy, and since people trust Obama for the time being, or at least like him, they may listen to him. But… it really isn’t good to tell people to go buy stock, and then to watch the markets crash even more.

While I believe in the long-term prosperity of America, times are a changing, and I’m kind of thinking we’re going to be stuck in this depression for a while. I worry that people are going to get pissed at Obama if he starts giving stock advice – even if he does say that it’s a good time to buy for the long term.

What do you think about the president giving stock buying advice?

4 in 10 Americans Don’t Know When They’ll Retire

With a mix of a morbid stock market and American’s not understanding just how much money is needed for retirement, the country is filled with people who may never get to enjoy a retirement.

A study that came out today from ING Direct reports that 40% of Americans expect to retire much later on or not at all. Americans will be chained to their jobs longer than ever before just to keep up with their bills and ensure food is on the kitchen table. The survey results also noted that over 60 percent of Americans are significantly more concerned about saving enough money for retirement and having the right type of retirement plan than they were six months ago.

Some other interesting stats from the survey:

· Nearly half of all Americans (47 percent) have “no clue” how much money they need to retire;

· Despite nearly two years of economic turmoil, 65 percent of Americans have not adjusted their retirement investments;

· One in five Americans (19 percent) are still banking on Social Security to be their main source of retirement income; and

· One-fifth (21 percent) of Americans are contributing less to retirement than they were last year

This is pretty scary stuff. The only thing that I go on is that retirement is maybe not a necessity. Well, at some point when I can no longer move or think I’ll want to retire, but I hope I’m well into my 80s at that point. I enjoy working, and can’t imagine enjoying retirement. I’d be bored silly. Maybe my mind will change by then, but still — my biggest fear is not having enough money to take longer vacations and travel in between being professionally productive. I’m definitely not banking on social security to be my main source of retirement income.

The national online survey of 1,223 adults was conducted by Harris Interactive on behalf of ING DIRECT between February 18-19, 2009.

The Recession Will Make "U.S." Stronger

Poor President Obama. He’s inherited a political and economic nightmare. Today he did his best to reassure America that our current struggles will make us stronger in the long run, all while making sure not to get our hopes up.

Reuters reports that “the politician whose memoir was called “The Audacity of Hope” and who won the White House in last November’s election amid chants of “yes, we can” was also back in stride, telling recession-weary Americans they can expect better days ahead.”

I can’t say I have that much faith in the U.S. economy. While we have recovered from various recessions and even a “great depression” in the past, what has pulled us out of those downturns cannot be replicated. It’s looking like what we really need to get us out of this mess is World War III – and that’s not something I’m going to hope for.

Everyone predicts that some day the market will recover. It always seems to. But this time – are things different? Are we in a perfect storm that we can’t see? Are we putting a trillion dollar band-aid on a wound that needs to air out in order to heal?

What do you think?

The Housing Bailout: Responding to a Reader Comment

I always appreciate thoughtful reader feedback, and always enjoy reading what you guys think about what I have to say. Reader Rachel Elizabeth, who noted that she works in real estate, left a comment about my last post on the housing bailout.

She writes… “not all of the people that are being “bailed out” are people that bought houses that they couldn’t afford.”

Some of her friends, who are also realtors, were making good money back when the market was up, but with the housing market crash they just don’t have enough money to pay their own mortgages. Also, she points out that there are a lot of people who were able to pay a 20% downpayment and then later got laid off or reduced hours and are in trouble and in need of bailout help. She also points out that the government is offering a $8000 tax credit for first-time home buyers.

I can’t say those people don’t deserve a bailout. To be 100% honest I’m bitter because in the Bay Area, $8000 is pocket change when it comes to affording a house. You’re supposed to buy a house that’s 3 times your yearly income. Granted, I’m 25, and my income hopefully will increase over the years. But I make pretty good money now (and I’m grateful for that) and even with the housing crash, there is no way I could afford a house here. The cheapest 2br condos in the area go for $600,000. Following the income rule, I’d need to be making $200k a year just to afford that. At my $60k salary, I really should only buy a condo/house worth $180k. You can’t get anything for that around here, except maybe a closet.

My good friend in NJ recently bought a house with her fiance because she felt she needed to own a house right away to be all grown up and successful. Then, she got laid off, and even though her fiance has a good job they’re struggling with payments. And their house is much less expensive (for its size) than a comparable purchase in the Bay Area. They paid $400k for something that would easily be $1.5M around here, give or take a few thousand.

I’ve kind of accepted that I will have to rent for the rest of my life. I just will never be able to afford to own. I grew up with the idea in my head that if I couldn’t afford a house, I was a failure. These days, it’s not just the American dream, it’s the American necessity. But I’m trying to get over thinking that — you can be a success and live the American dream and rent for the rest of your life. Can’t you?

The Housing Bailout: It’s unfair, it’s necessary, it’s ridiculous

They say a housing bailout is necessary. For all the people who purchased homes they couldn’t afford at to-good-to-be-true rates, here’s your bailout. I’m generally a liberal but this is going too far.

The problem stems from how the American dream is so closely linked to owning a house. If you can’t afford a house – don’t buy one. Renting is not the end of the world. It’s a lot cheaper. Wait until you can afford a reasonable 30-year fixed mortgage to buy a house. That’s what I plan to do.

Of course, given that the government is going to bail everyone out who can’t afford their poor choices, it seems I may have been better off buying a condo years ago. I could be facing foreclosure now, with my home underwater. I could be begging the government to bail me out.

I understand that when you have children the situation changes a bit. You want stability, a house that you’ll own, and not have to worry about moving if your landlord decides to kick you out. Ok, I get it. I feel for you if that’s the situation you’re in. But I still think that when it comes down to it, Americans need to be responsible for their own actions.

God, I sound like a Republican.

Times are hard — have some napkins

I visited my aunt, uncle and cousins for a birthday party yesterday. They live in a very nice area in a relatively nice house for said very nice area, and, while they’re probably among the poorest in said area, they still are somewhere in the upper middle class, lower upper class. (I’m not really sure where that cut off is). Regardless, they’ve been living a comfy life until the recession hit.

Now, times are hard. Well, they aren’t that hard, but hard in the sense that their mortgage is a fortune and to keep up with the quality of life they’re used to living, and fit in with their neighbors, it costs a lot. My uncle runs his own business and his clients have been drastically cutting back. Once you get used to living a certain lifestyle, it’s hard to reduce your spending. I’m almost hoping to never let myself make that much money – because I think it would just get out of hand.

Then again, I think about having children, and the kind of life I want my children to have. I was very fortunate to grow up in a house where we could afford luxuries like summer camp, art lessons, etc. I don’t mind being frugal when it comes to clothes and things, but the extracurriculars add up. I want to have a decent income to spend on my children, if I have children, and looking at my aunt and uncle who are struggling on their current salary cuts (even though jointly they still make well into the 6 figures), I wonder what sort of salary I’d have to make to be able to give my hypothetical kids a life at least comparable to the one I had as a child.

Layoffs Hit High Tech; Professional Dominatrixs on the Rise?

Even though the tech sector is still doing better than some other industries in the U.S., it’s not immune to the current economic mess. As more companies report layoffs, demand for high-tech professionals is beginning to slide downward, according to statistics released this week.

Global outplacement consultancy Challenger, Gray & Christmas Wednesday released job cut totals for January, which prove the year-end trend to slash positions as a cost-cutting measure will continue into 2009. According to the firm, the number of planned job losses announced in January reached 241,749, which represents a 45% increase over December 2008 totals and 222% higher than the 74,986 cuts announced at the beginning of 2008, writes Network World.

Apparently with the layoffs comes an interesting career change for some women in high tech. The Daily Beast writer Tracy Quan reports on what becomes of Silicon Valley’s finest post job loss. That is, women in tech, sans jobs, freelance in the – legal – sex industry to get by. As they say, when the going gets tough, the tough bring out whips and chains and scream “who’s your mommy?”

Ok, they don’t say that… but they might as well. “With staff jobs evaporating and former nine-to-fivers cobbling together incomes through scattered side projects, freelancing as a dominatrix — or “pro-domme,” as industry types prefer to call it — has become a plausible gig option.”

The pay is pretty good, and it beats being unemployed. The article refers to Jessica, a pro-domme in her late twenties, who apprenticed at a dungeon before striking out on her own. In Manhattan dungeons, she said, the typical cut on a $200 session is 60-40 in the dungeon’s favor. So that’s $80 an hour. Four times what I’m making working a legit marketing job in high tech.

Still, I can’t quite bring myself to freelance in a dungeon. It’s not that I couldn’t yell at men and tell them worship me… it’s just, I’d be terrified of someone I know, professionally or personally, finding out – or worse – meeting me with their testicles tied in a knot in my dungeon. Yea, that would be weird.

Would you ever consider legal sex work if you needed the cash, or have you ever done any of this kind of work? I’ve always been interested in working as a phone sex operator… seems like a pretty easy job. But I doubt the money is all that good, especially these days where everyone has the Internet.

On the Dawn of the Obama Era

I vaguely remember Clinton’s presidency. It was before I could vote. I remember people seemed to like him, so much as forgiving him for having a lusty affair with his intern. I didn’t know enough about politics then to judge, but he seemed like a good prez.

Then came eight years of Bush. I feel bad for Bush, even though I dislike him. As soon as he stepped into office 9/11 happened, and everything went downhill from that. I disagree with the decisions he made to go to war with Iraq, but with such an attack on the US he had to do something. And then over the last four years, our economy has run out of gas. We’re spending trillions of dollars on a war we probably shouldn’t be fighting, and in our own borders people are going hungry, losing houses, and living without health insurance.

I doubt Obama can really bring the “change” he promises. But there will be plenty of change with the new democratic government. Change that we need. Hopefully. I expected the worst of Bush and I got it. I’m afraid to expect too much of Obama because he is, after all, a politician.