Archive for March, 2009

Do What Is Right

Tuesday, March 31st, 2009

Ethics and Morals are tough. It is even tougher when it comes to finances. The news media is full of stories right now about how overwrought greed is causing our recession to get ever worse, causing our (including our elected leaders’) efforts and dollars to go to waste, and causing an immeasurable price in human lives diverted, broken, or even destroyed.

It starts with a simple concept: Do What Is Right.

If you saw someone accidentally drop a twenty dollar bill next to your foot, where you could easily pick it up with no one the wiser but yourself, would you give it back to the person who dropped it?

What if it was $100, would you return it?

What if it was a penny, would you return it?

I imagine that many of the people who are raking in these outrageous, and likely outrageously undeserved, bonuses in seven, eight, and nine figure dollar amounts started off with questions like these.

Unfortunately, I also expect they started answering, “No,” to each of the above questions as they progressed through their careers. After all, in the scale of finances, $100 all the way down to a penny is insignificantly miniscule compared to a compensation package of six figures or more.

It is true: That amount of money is insignificant. Unless, of course, that penny means the difference between eating your next meal or not eating it.

It is the small decisions that pave the way to making big decisions. If your small decisions are ethically or morally compromised, then so are your big decisions. If your small decisions are right and good, then your big decisions *MAY* be right and good.

Returning a dropped penny to its rightful owner is a small decision. But if you are already in the habit of doing what is right, you will return that penny… just like you will return the roll of $5,000 that a senior citizen left on the table at the restaurant by mistake. Yes, that roll of money might mean the difference between paying your rent or not. But that does not matter. If you lie, cheat, or steal to get ahead, it WILL catch up to you. The accumulated interest on that debt may drain your financial assets, or it may psychologically bleed and weaken you as a person. That analogy probably won’t affect many people who have already started answering, “No,” to the above questions. Unless, of course, you take into consideration the following:

Psychology determines your finances. If you have the mental and emotional basis to handle finances in a sane manner, you dramatically improve your chances of success. Anything that damages your personality, the essential “you,” also damages your chances for financial success. This damage can occur at any time during your life. The more steps you take to reduce the _opportunities_ for damage to occur, the less likely you are to suffer damage to your personality and to your finances.

Think about those high-stress situations where it is so ridiculously easy to make a serious financial mistake:

  • Buying a new car
  • Catastrophic health issues
  • Buying a house
  • Applying for a loan
  • Funerals
  • Legal procedures involving lawyers and/or judges
  • Interviewing for a job
  • Divorce
  • Marriage

If you have built within yourself the habit of doing what is right, you will tend to succeed in these high-stress, high cost-of-failure situations for one simple reason: Doing What Is Right means you can more easily recognize when someone is trying to screw you over

The added benefits are many:
* You establish a reputation for honesty and integrity that will aid you in all other aspects of your life. When your honesty or integrity come under question, you can use your past history of Doing What Is Right as *evidence* that you are still Doing What Is Right.

* Your significant other will trust you more. Think how many relationships you know of that suffer or were destroyed because of a simple lack of trust.

* You can trust yourself more. If you are in the habit of Doing What Is Right, you can rely on that habit to help carry you through even the toughest economic or personal times.

* You will collect people around you who also Do What Is Right. These people will support and advise you when you may falter, need help, or must lean on someone else while you get your feet back under you.

* You will inspire others to Do What Is Right. People tend to rise to meet the level of expectation you set for them. By the same token, people tend to lower themselves to meet the level of expecation. Your children, brothers, sisters, parents, and even strangers on the street are watching. What are you telling them about yourself when you take action? That you will take advantage of them if the opportunity presents itself? Or that you will abide by standards of fairness, truth, and honesty, even when it hurts you in the short term?

Return even the penny to its rightful owner.

Be a person who deserves success.

Do What Is Right.

Thank you for taking me into your home.

You’re very welcome, Pookah. A soft, velvety kitty purring on my arm is a princely reward.

Idiot Parents

Saturday, March 28th, 2009

Attention to all parents with very active offspring!

No, not you skilled and/or harried herders of the next generation of homo sapiens, who have skipped meals and eating out when your offspring fails to maintain self-control. You’re fine. Kids need the chance to practice, and you obviously recognize that there are designated areas for child exhuberance and high-energy release. You also recognize that a grocery store or food establishment (barring those dedicated to children) is NOT one of those designated areas and requires a modicum of balanced behavior in one’s conduct. It is my pleasure to smile tolerantly and with understanding as you train or discipline your child in the manner of acceptable public activity, or remove your misbehaving child to a more appropriate location as needed. I tip my hat to you and will gladly hold the door for you, while you look after your child’s safety and that of the people around you.

I’m talking to the so-called adults responsible for producing the little villains spreading crushed chips and apple juice all over the floor around the cash register. Or the bratlings running up and down the aisles screaming, yelling, and throwing things off of shelves.

Yes, you.

Especially you who think it is my responsibility to put up with your offsprings’ atrocious behavior, because, “he/she is just a child!”

You, sir or ma’am, are a thoughtless, selfish, jerk who shouldn’t have been allowed to reproduce.

I’ve got some sad news for you: Your child is your responsibility. Not mine. Yours. Because I assure you that if little precious becomes my responsibility, I will remove said offensive brat from the premesis with great alacrity and judicious application of appropriate reminders that little men and little women will BEHAVE in public.

You do NOT have the right to impose your family’s history of self-indulgent, histrionic, screeching, tantrums, and inflicting harm to body and property on others. You do NOT have the right to permit your spawn to disrupt or disturb me except as required by basic courtesy – such as a polite, “Excuse me,” while you drag your out-of-control hellspawn out of said public eating establishment and to your transportation vehicle (or other semi-private location) for a quick and appropriate lesson of how little men and little women will BEHAVE in public.

So don’t be surprised when, after your hellspawn dumps my tray of food on the floor, I walk over to your table, wait patiently for you stop yakking into your high tech brain replacement communication device and actually NOTICE the DAMAGE that your offspring is causing, and pour my 16 oz. caffeinated sugarwater in your lap and purse when you fail to close your yap and act like an adult. That’s called consequences. See, you are RESPONSIBLE for your hellspawn’s behavior, and the consequences of little master or miss wonderful’s actions. Your lack of basic attention to your offspring’s safety also means the consequences can be quite severe.

I can also pile the now inedible food that your pampered, over-indulged, ill-trained dogling wrecked, and ceremoniously bestow it upon you, the new owner. Dreadfully sorry about your food, though. But I do hate to ruin perfectly good food, so I am loathe to do this.

Or I can announce to the establishment at large about how wonderful it is that you are allowing your child to destroy the restaurant’s property, aggravate its patrons, and otherwise show what an ass you are. I don’t often get to use my oratory skills. I was quite good at Debate in college, and my voice carries well. I find that publicly pointing out what a mean, venal, lowly, maggot-brained twit you are will often have the desired effect of embarrassing you into leaving. I can also drown you out your usual incoherent shrieking. Personally, I’d rather not be so rude to the other patrons myself, but this method is less likely to result in physical violence for both of us, so it is my preferred way.

Your choice.

However it goes, you WILL get your misbegotten, out-of-control, untrained, bastardized little terror away from me.

Oh, don’t even try that line of, “Do you have children?” It is pathetic and makes you look more stupid. I’ve hauled more squalling and bawling brats, ostensibly members of my own genetic line either by marriage or biology, back out to the car, while my companion tries to enjoy what’s left of a ruined evening out, than you have. Obviously.

Grow up or your brat will beat you to it.

Macro Economics – Encourage People To Save Part II

Thursday, March 26th, 2009

In Part I, I went over some very basics on how banks work, and ended with introducing inflation into the mix. The last questions I asked was: Now everybody’s hurting some, right?

Wrong.

Banks are for-profit businesses.

Banks have lots of smart number-crunchers working for them. They pick an interest rate that they charge for loaning out your money that allows them to not only fund their expenses, but also make a tidy profit and thereby increasing their purchasing and lending power in spite of inflation.

Savers aren’t quite so lucky. The savers’ purchasing power goes down if the saver leaves the money in the bank.

This leads to the bank’s greatest fear: Savers taking their money out of the bank all at once.

See, in our overly-simplified example, the bank has less than the $1000 plus savers’ interest available at any given time. (Remember, for this example, the bank wants to keep about 30% of the assets loaned out at all times so it can collect interest and fees on those loans to pay itself and then the savers.)

If 80% of the savers take their money out of the bank in one month, the bank is in trouble.

  • It doesn’t have enough money to give those savers *their* money back – like the bank is required to under the agreement with the saver.
  • It hasn’t saved enough of its own profits to make up the difference. The bank is now in debt – it owes money.
  • We call this “bankrupt”. The bank doesn’t have enough money to cover the debts.

(This is why banks tend to offer better rates on CD’s – they’re guaranteed to have the savers’ money to loan out for that period of time, and can use those assets to cover themselves better. It’s less risk for the bank, less risk for the saver.)

Bluntly, the banks want to pay savers (the asset providers) the absolute lowest possible return, and charge lenders (borrowers) the absolute highest possible fees. The monetary difference becomes the gross profit/loss for the bank.

Now comes the trick that short-sightedness misses: Banks need more savers to give them the new assets that they can then loan out and use to generate profit.

But banks and the Federal Reserve have been punishing savers by paying very low rates to savers for providing those assets. Those assets have declined in value due to inflation. A certain percentage of savers noticed this, and moved their money to greener pastures. This had the net effect of reducing the bank’s total pool of assets (influation plus losing savers).

(Yes, I know that there’s a LOT more to it than this. Please bear with me, and remember that my focus is on people like me – savers.)

With a smaller pool of assets relative to their loans, banks are harmed more by defaults on those loans, and by people losing confidence/trust in the financial safety of the bank. The net result is more and more savers start moving their savings out of the bank, the bank’s asset pool shrinks more, the risks increase for the bank, who charges higher interest on the loans, resulting in fewer borrowers providing profit to the bank, and makes it even harder to regain savers’ confidence/trust to give the bank more assets. When financial institutions started buying and selling “securities” (basically, selling loans as if they were stocks), they started going beyond their core business of money management and jumped headfirst into gambling: When the price of those securities drops below what a financial institution paid for them, the institution just lost some of its critical reserves — the savers’ money entrusted to their care.

So this boils down to one essential question:

Why would anyone keep their savings in a bank?

1. Safety. The FDIC insurance means that, if the bank goes under, the savers will get up to a certain amount of that money back courtesy of the United States Taxpayers (currently set at $250,000 maximum, though historically it’s set at $100,000 per institution).

2. Habit. Growing up, my generation was hammered with the “save it in a bank” mantra. Don’t think about why you would want to save it in a bank — just do it without asking any questions.

3. Inertia. Once a person makes a decision, especially a “safe” decision, we are loathe to change it.

People, savers, do eventually wise up and start moving their savings elsewhere to get better returns.

This, of course, makes lots of trouble for the banks.

Got all that?

Okay, now look at the reverse: What if savings earned a higher-than-inflation rate of return?

Then we have the opposite problem for the bank. The bank has to loan out assets at higher interest rates in order to cover costs (such as paying the savers that Inflation+ percent) and make a profit. Always remember that banks are for-profit businesses.

Since the cost of the loan is now so much higher than infaltion, fewer people/businesses will ask for loans — it’s better for them to become savers than borrowers. Now the bank has a harder time lending out money, makes less profit, and eventually can’t afford to pay its employees or savers.

The net result of this is that any savings account that earns a return too far below inflation is bad for both savers (due to inflation) and banks (due to the presence of higher-interest accounts that are closer to inflation level or higher). This result, however, is worse for savers.

The break-even point, savers getting the inflation rate, is constantly moving, and less profitable for the banks (businesses exist to maximize profits within the constraints of law and good sense. Banks are businesses.) Therefore, it seems to me that the best savings interest point is 2/3 to 3/4 of the last 10 years of average inflation. At this level, the assets provided by savers or profits from bank operations, aren’t deteriorating as much due to corrosive inflation. And the bank’s ability to generate profits (the bank’s main reason for existing in the first place) is still solid and reliable.

But I don’t think that banks, even the theoretical overly generous and conservative bank in our simple example, will raise their savings interest rates at their rock pile centers that high. It would cut too much into their profits (and reduce executive compensation by millions – a crime beyond imagining).

So for these reasons, I think savers should understand and do the following:

  1. Savings are not an asset because of inflation. As long as inflation is higher than the rate of return on your account, you are losing purchasing power. That’s a continuing expense.
  2. Use savings accounts only for short term goals (1-2 years at most) and as an emergency fund. There are better alternatives for both of those, but they require more effort on savers’ part.
  3. Put your savings in the highest interest account that you can, or ladder them as CDs that earn as close to or more than the inflation rate.
  4. Stop being just a consumer. If all you do is consume, you never produce anything of net worth.
  5. Stop being just a saver in mindset. You’ll never get ahead being just a saver.
  6. Start being a frugal investor in mindset (Pookah Finances 201 and 301).

Now, what should you take away from all this? Two basic things:

1. A better understanding about banks in relation to savers and our current (and developing) economic situation as a nation. Well-run banks are NOT your enemy; but they are not your ally either. They are in it for the money.

2. Motivation to take an active role in your own finances.

Macro Economics – Encourage People To Save Part I

Tuesday, March 24th, 2009

(Note: I actually started writing this post back in early December. I notice now that several talking heads on major news and “research” agencies are starting to think that banks keeping large amounts of savers’ money on hand, rather than shoveling it out the door in bad loans, might actually be a good idea. Be warned – this is a long post. Really long.)

Please consider the following information that I have gathered over the last ten years:

  • Basic economics: Money in exchange for goods or services.
  • The Federal Reserve, in cooperation with banks and other financial institutions, has been punishing savers for years. Just look at your savings account APY.
  • As a nation, our population is now referred to as “consumers”, even in casual conversation. Consumers don’t produce. They consume – resources, money, air, space.
  • The basic pile of rocks bank savings account doesn’t even keep up with inflation. In effect, savers lose money continually. Online banks, CDs, and the “very safe” vehicles often offer only a little better than inflation.

This is bad because those savers are the fundamental source of banking and investment assets. Yet those assets, those ultra-safe and reliable sources of money to loan out or invest, are constantly de-valued.

So banks (and other institutions) are fundamentally slitting their own throats.

Here’s why:

If you’re a bank with $1000 of savers’ money in your accounts, then you have $1000 that you can loan out. To encourage those savers to keep their money in your bank (so you can loan it out), you offer them %1 per year. That means that you add $10 to those savers’ accounts the first year, and compound it in the following years — effectively increasing the bank’s assets by the same amount each year.

Where does that $10 come from? Let’s keep this example very simple.

The bank lends a portion of that $1000 to other people or businesses, after checking to make sure the recipient is capable and willing to repay the loan plus interest. The bank conservatively sets a limit of lending out no more than %30 of its assets ($300 in this case) and charges %8 interest, for a gross profit of $24.

If the bank is destroyed, the FDIC will reimburse the savers. Nice and safe.

If the loan doesn’t get repaid, the bank covers itself by a) requiring some up-front payment, say %10 of the loan; b) seizing the property/business goods for itself and auctioning them off; or c) pursuing other legal means to recover the money plus expenses.

Still pretty safe so far.

So what we have is this:

Assets                                       Debits
Year 1    $1000 savers’ deposit        -$270 loan
$30 up-front for loans        -$10 savers’ payment
$20 loan interest                  -$10 business expenses
=========================================
$1084.02                                -$290

Assets                                           Debits
Year 2    $1084.02 savers’ deposit    -$240 loan
$30 loan repayment             -$10 savers’ payment
$19.20 loan interest              -$10 business expenses

==========================================

$1133.22                                    -$260

etc…

Until Year 10

With me so far? Everybody is making a tidy profit, right? Now, let’s add in the effects of inflation. We’ll assume %3 inflation per year, as a penalty, because everyone’s purchasing power has gone down (your money buys less food).

Now everybody’s hurting some, right?

Wrong.

And you’ll find out why in Part II.

Trust, But Verify

Saturday, March 21st, 2009

I’m revealing my computer techie roots.

In computer security, there is a saying: Trust, but Verify. What it means is (in very basic terms), go ahead and trust the user. But before letting the user do something, verify that the user is who he/she says they are. That’s what the whole userid/password combination is for: You’re claiming to be the person “userid”. The password is the verification that you are. Some setups take it a step further, and ask a verification question.

Trust me, folks. This is NOT meant to annoy you. It is meant to PROTECT you, and to protect the rest of US. If you don’t like having to type in a password, either change the attitude or return the computer to the store. If you are one of “those”, then it’s only a matter of time before your computer starts spewing viruses and malware all over the internet… and spattering the reasonable and sane people with the mess.

But back to my topic.

Trust, but Verify also works in other parts of life. Take this real life example of a phone call I received (details changed to protect the obvious):

Me: “Hello?”

Caller: “Hi! This is your water utility company. There’s a mixup in your billing. We want to verify your credit card number.”

Me: “That’s nice. What is my account number at the utility company?” While I waited for an answer, I fired up ye olde computer to pull up the account information.

Caller: “Pardon me?”

Me: “I said, ‘What is my account number at the utility company?'”

Caller: “I just need your credit card account number to verify the automated billing.” Whups. Clue #1 That All Is Not Well.

Me: “That’s nice. I just need you to recite my account number at the utility company – y’know, the one that is associated with the mixed-up credit card information – so that I can verify that your request is legitimate and not a scam.”

Caller: “Well, I don’t have that information. If you do not provide your credit card information, your payments won’t be processed correctly and your water WILL be shut off. Do you really want to pay a $120 re-connect fee?” Whups. Clue #2 That All Is Not Well.

Me: “Well, I can’t give you that information. If you don’t have my water utility account number, then there’s no way you could legitimately know if my credit card information is correct. Besides, according to the laws of this part of the primordial scrub, you guys can’t cut off my utilities without at least a 30 day WRITTEN notice. So, unless you can provide proof that you really are from the utility company, don’t ever call me again.” And I hung up.

Then I pulled the contact number for my water utility from my House Manual (conveniently placed next to the phone) and called them. After giving them my name and account number, followed by the nice lady responding with the correct billing address, I told her what had just happened. Funny, they had no record of any problems with my auto-billing to my credit card. In fact, they’d just processed a payment earlier that week. Clue #3 That All Is Not Well.

The utility thanked me for letting them know that the bad guys were scamming their customers. I pulled up my credit card info on the computer, and let the credit card company know about the scam going on, and requested that they keep an eye on my account. (I set up only one credit card to handle utility payments, so it’s pretty easy to spot anything out of the ordinary.) I logged both calls, noting down the date, time, person talked to, and summary of discussion. Then I put all that info in the computer for easier reference.

I initially trusted the caller. But as soon as I requested verification that the caller was who she said she was, she refused to provide verification. Then the caller made threats – disconnecting my utility – but I was already prepared: I knew what the requirements were for getting a utility cut off in this region. The caller’s information didn’t match – another failed verification. The first one was more than enough reason for me to hang up. The follow-up call to the utility company, using previously vetted contact information, merely confirmed what I already knew (the utility company requested my name and account number – to verify that I was who I said I was – and gave me the billing address when I requested counter-verification). The follow-up call also served as a stop-gap, just in case I’d gotten a legitimate call from a poorly-trained or incompetent out-sourced agency. Calling the credit card company and logging the call, person I talked to, and subject matter was just a precaution on my part, so that if my account was illegally billed, I had more protection for myself.

Unexpected Links

Thursday, March 19th, 2009

For many years now, S.O. and I have worked with each other to achieve financial stability and success. I buy or borrow many books on both finances and on personal issues in an unending quest to face my own foibles, improve my people skills, and increase my financial acumen. S.O. frequently reads them, also. S.O. tends to handle the more people-related matters of our household because I, frankly, am bad at them.

I have had a personal financial balance sheet for many years. I use it to track monthly expenses, predict future financial famine, predict future financial plenty, and maintain an overview of current status. It has allowed me – with S.O.’s invaluable input – to navigate our financial ship of state through several crises, and put us on a course that we expect will lead to stability and comfort.

This is “monologing”, yes? From the movie, _The Incredibles_?

S.O. has, on numerous occasions, requested copy of this balance sheet for S.O.’s own use. I have provided such, along with the best encouragement and advice that I know how. My encouragement and support in this endeavor is whole-hearted; with the addition of month-to-month tracking of S.O.’s finances combined with the prediction abilities, we can sail our financial ship more accurately and safely. We might even be able to upgrade from a rowboat to a sloop. However, over the course of these years, S.O. has never filled out a personal balance sheet.

There is another matter that we did not realize was linked: In our rock pile, we have a kitchen desk with a number of wooden cubbies. Neatly taped above each cubby, in S.O.’s elegant handwriting, is a name – one for each member of our household. Our mail goes here, divvied up for the labeled individual to process however he, she, or it thinks best. When I get home, I empty my cubby and sort through the mail – needs immediate attention, read on the weekend, and shred. I typically open the letters, scan them quickly, and write a due date on the envelope prior to placing it in the appropriate processing location next to my computer.

S.O.’s cubby rarely gets emptied. In fact, when I get the mail to sort, I often have to fold, contort, or jam the mail into S.O.’s cubby.

These two seemingly unrelated facts that came to a crashing head one weekend.

Unable to put any more mail in S.O.’s cubby, fearing that bills were going unpaid that would undermine or sabotage our efforts, and finally just tired of the stuff piling up, I grabbed the whole mess, set it in S.O.’s lap on the couch, and gave voice to a Request That Shall Be Fulfilled Right Now, Dangit. (If you, gentle reader, are of the gender persuasion known as “male” or “knuckle-dragger”, you should know that this is a dangerous, potentially life-threatening, undertaking if your S.O. is of the gender persuasion known as “female”, “Lady Mistress Of All I Survey”, or “One Who Dictates Sleeping Arrangements”. On the chance that your S.O. is not of a “traditional” demeanor, please take a moment to consider on which side of the knuckle-dragger/One Who Dictates Sleeping Arrangements spectrum he or she tends to fall – and take all reasonable steps to ensure it doesn’t fall on you. If, somehow, this bit of knowledge has escaped you during your upbringing, You Have Been Warned.)

Pookah will now proceed… no, *run*, to the hidey-hole under the bed. Pookah gently reminds blog readers of human’s statement near the top about people-related matters.

S.O., who was quite busy at that time with other matters gravely important, was not amused. I Insisted. The mail had been piling up for months. In addition, I wanted all the financial documents in there so that *I* could fill out S.O.’s personal balance sheet. S.O. was very unhappy – all out of proportion to the request, I thought. But I had Insisted. It needed to be done. I was NOT going to let it go any longer. I would not allow our financial ship to founder due to easily-corrected neglect.

With great reluctance and trepidation, S.O. went through the accumulated stuff. Much of it went into the shredder. Some of it was credit card offers that may be suitable for stoozing (a fact that raised S.O.’s opinion of the effort, since it proved that S.O. really *was* succeeding). Still others were handed over for scanning into the computer and entry on the personal balance sheet. I proceeded to scan and enter the data, letting the numbers percolate through well-tested formulae to spit out understandable and useful results.

Is it safe for Pookahs to come out now?

My first clue that all was not well within our pile of rocks was S.O. hovering behind me, blocking the light. This required three requests, of varying emotional intensity, to kindly move out of the way and let me finish, Dangit.

Not safe.

My second clue was my two requests, again of varying emotional intensity, interspersed between the aforementioned requests concerning light blockage, to please stop asking me questions while I’m trying to enter lots of fiddly numbers. I would be happy to answer, and ask, questions afterwards, Dangit.

With all the numbers entered in and double-checked, I then started asking S.O. for additional information. Where financial statements were not available, I asked for conservative estimates (low on the income, high on the debts) and noted them as such. I also started answering questions about what I was doing and why.

The net result of my efforts were two-fold.

First, S.O.’s finances were in MUCH better shape than S.O. had thought. By a large margin.

Second, S.O. suddenly realized why S.O. hadn’t made a personal balance sheet before, and why S.O. didn’t clean out the cubby.

It was very simple: Fear. S.O. was afraid that all the effort over the last TEN YEARS to get the personal finances under control was a failure. S.O. was afraid that getting regular control over the overflowing mail would show this fear as true. S.O. was afraid that creating and maintain a personal balance sheet would show S.O.’s efforts as a complete failure. S.O. was afraid that I’d find all this out, thus proving once and for all that S.O. was an incompetent fraud. S.O. had all those little tape recorders silently whispering in S.O.’s brain about failure, lies, failure, uselessness, and failure. So S.O. avoided facing the notices, financial statements, and other information necessary for creating a personal balance sheet. Problem solved by taking a short-cut. Not. The fear was slowly poisoning and weakening our relationship. The poison would only grow and get worse until we did something about it.

With the information and estimates available, S.O.’s fears were shown as phantoms. S.O. *had* changed the personal finance habits. Now we had numbers to prove it. (Even if S.O.’s fears were shown as true, the problems would now be out in the open, where we BOTH could work on them.)

I *could* have gotten angry. I *could* have yelled about all the time spent dithering back and forth over this matter. I *could* have gnashed my teeth, torn out my hair, and covered myself with ashes.

Yeah. All of that would have been useless drama. Drama is too much of a drain on life. If I want drama, I’ll rent a movie.

Instead, I looked on all of this as a learning journey. It was all time, emotion, and energy well-spent, if S.O. learned something new and grew because of it. I know I learned and understand more about S.O., I know that S.O. learned more about S.O., and I am PROUD that S.O. is a part of my life!

We’ll see how S.O. fares with gathering up those last three months of e-statements so we can finish filling out the personal balance sheet. That will be a real test of facing one’s own fears.

This particular problem is not over. It’s a habit that S.O. has spent years building. It will take time to tear it down and build something better in its place. And I’ve got my own work cut out for me, too: Remembering to be patient because not everyone (including S.O.) approaches problems the way I do. Remembering that it is far, far, FAR easier to see another person’s problems clearly than it is to see your own problems clearly. Even if that problem is whacking you in the face with a 2 x 4.

The moral of this story is: Sometimes you need to act like a knuckle-dragger and beat on those useless tapes until they shut up, break, and let you live your own life.

(You can come out now, Pooks. It’s safe.)

What Are The Basics?

Tuesday, March 17th, 2009

I’ve posted about this before. I think it’s always helpful to have things spelled out directly.

What are the basic requirements for your life?

Here is my list:
Required for Job
Housing
Clothing
Food
Medical Care
Sleep
Transportation
Retirement

Notice that “Entertainment” is not on my list. There is a reason for that.

Take the time to read through this list and *think* about how it applies to you. Print it out or write it down.

Now add to it the basic requirements for your life.

Keep this list. You’ll need to refer to it again – at least once a month.

Congratulations. You’ve started a budget.

Indoor Cats

Saturday, March 14th, 2009

S.O. and I have, at various times, had anywhere from two to eight cats living in our pile of rocks. None were declawed. All were treated at various points to prevent accidental multiplication. All were kept indoors only.

Gasp! Shock! Horror!

You didn’t DECLAW THEM?!?!

Well, no. We didn’t, and don’t.

We don’t keep furniture and furnishings so fine that they can’t stand the normal wear and tear of daily (sometimes hourly) use. That is what furniture and furnishings are for in our pile of rocks. Yes, the little multi-switchblade-equipped furry feline felons have, upon rare occasion, taken it into their fuzzy skulls that sharpening their talons upon our well-used furniture is a Good Thing. Judicious application of the Mighty Hand of No!! (spray bottle with water) usually takes care of the problem. For persistent feline stubbornness, a light dusting of dried cayenne pepper powder (followed by much howling, meowing, and dragging of nose through carpet) creates the appropriate atmosphere for cattish attitudinal adjustment. (Just make sure you warn your S.O., and vacuum it back up before guests arrive.)

Cruel? No. The one and only time I’ve been pepper-sprayed thoroughly convinced me that I never wanted to be a guinea pig at another self-defense demonstration. (I bought two of the devices on the spot, along with training in their use. You see, I could personally testify as to their effectiveness after I could breathe and see again.) I can speak from first-hand experience, and after consultation with the vet, that this treatment does no serious harm to our beloved pets. For each such cayenne pepper incident, the boundaries of What Is and What Is Not A Scratching Post required only one lesson.

It also happens to save money on vet bills. Here at Life of Pookah, we are all about sane frugal living.

Pookah wishes to go on record that Pookah learned proper behavior on the first lesson. Pookah has NEVER experienced cayenne pepper powder. Pookah has, however, watched Pookah’s foolish, stubborn daughter ignore the obvious signs of violating human territories. Pookah graciously allowed Pookah’s daughter to groom her own fur that day.

Pookah is still considering disowning Pookah’s “offspring”.

Crime! Blasphemy! Inhumanity!

You don’t LET THEM OUT?!?!

Let me explain something that may not be inherently obvious from my previous references to our small portion of the primordial scrub, upon which our pile of rocks is situated.

Where we live, there are these critters known as Wild Animals, and occasional Feral Pets.

And small tasty birds.

That means that there is a high percentage of likelihood that Mr. Fuzzywuzzy will end up as some critter’s dinner, claws or no. If dinner attendance is not enforced, Mr. Fuzzywuzzy *will* have lacerations and punctures to show for the attempted enforcement. This can still easily result in a dead pet. Additionally, with all of these wild and/or feral critters about, not only is there increased likelihood that Mr. Fuzzywuzzy will contract parasitic or communicable infection, there is also a significant chance that the local wild and/or feral critter control methods will accidentally send Mr. Fuzzywuzzy into the feline hereafter.

Take this interesting factoid for example: As of three years ago, there was a feral feline population explosion, numbering some fifteen or more individuals. Fox, coyote, raccoon, possum, and “other” critters in combination with nearby farmers taking exception to attempted chicken feasts and the inevitable attrition due to motor vehicles, reduced that number to barely a half-dozen within a year. Yes, they grow the critters big enough to do the job around here. Personally, I don’t know if muskrat or beaver will kill a cat – but they certainly get big enough to do so.

Now there are maybe three outdoor cats in our area of primordial scrub, of which one is a relatively new immigrant to the region. All of them have the battle scars to prove that they can hold their own – or at least know how to wedge themselves into an opening too small for nature’s dinner enforcers to get at them. (One is becoming a grizzled old veteran tomcat, who thinks that Marine special forces training is for wimps.)

In short, outdoor cats have a very reduced life expectancy in our neck of the primordial scrub. While I am all in favor of natural recycling, I’d much prefer to enjoy many years of companionship and affection with my pets than go through the heartache of finding their gnawed remains. Our indoor cats are well-fed, groomed, played with, play with each other, and get to watch small tasty birds through the window. Pookah herself has shown little desire to return to the Great Outdoors, even though the opportunity has repeatedly presented itself.

Pookah can always get another small tasty bird from the kitchen. If Pookah wants to play Chase, Pookah will let human see Pookah getting the small tasty bird. Humans do not take corners very well at all.

(P.S.: The foxes are absolutely gorgeous, but they are very shy. I have yet to catch one with the camera, but I’m still hoping.)

Do You Own Your Home?

Thursday, March 12th, 2009

Do you have a copy of the original questionaire you filled out for each of the credit cards available for easy review?

(If not, shame on you!!! Get one! Now! In the meantime, check out one of the online offers or a recent snail mail spam you received.)

Do you see where it says, Do you Rent or Own your home?

Here’s one of the tricks that got us, collectively, in trouble during the housing boom and bust.

If you have a mortgage, you do not own your home. The bank does.

The amount of equity you have built up in your home is a percentage of ownership. Until that mortgage is paid off, in full, you only own a percentage of your home. The bank holds the deed and title to the property until then.

See, by asking you an either-or question, the lender (in this case, a credit card company) is tricking you into thinking, “Hey, I’ve got a mortgage, that means I own my home!” It’s a crock.

It is very simple: If you have a mortgage, you do NOT own your home. Any offer of credit based on you owning your home is therefore a trap… UNTIL you really do own your home.

(Yes, I know that revolving debt – like credit cards – can’t normally cost you your home if you default. However, home ownership makes you a good risk, in the credit card company’s eyes, for consumer credit. Regular, on-time, mortgage payments also make you a good risk – though not as good as home ownership – for consumer credit. It seems that the credit card companies forgot this difference, along with a significant portion of U.S. citizens.)

Now, consider the recent credit, mortgage, financial crisis. Credit was given to many people (including me) on the basis that having a mortgage = owning a home. If you own your home, you have an asset of real value. If you have a mortgage, you have a debt.

Here is one instance where Pookah was definitely smarter than I am.

Pookah thought she had a home once. Pookah lost her home. Pookah survived, but fully understands that Pookah depends on her human for comfy-nest and Pookahfood. A small tasty bird would also be nice. Pookah will now purr and entertain human with cat antics.

This is my train of thought (again, overly simplified):

1. Treat a mortgage as home ownership.

2. Offer people credit based on false home ownership.

3. Encourage people to use the credit, which they do.

4. People now have a moderate credit card bill every month IN ADDITION to a moderate mortgage bill. At this point, everything’s okay until…

5. A mistake happens – late on a payment – or life intervenes with an expensive medical or car problem; OR the continuous encouragement to buy on credit turns that moderate credit card bill into a High credit card bill.

6. People default on their payments.

7. The effect cascades as soon as enough defaults start racking up.

8. When enough people have defaulted, the credit card company’s gross income shrinks to the point where they can’t generate enough profit to pay *their* bills.

9. The credit card company can’t get any loans because the same thing is happening to other financial institutions.

10. The credit card company defaults on its loans.

11. All heck breaks loose.

Here is a case where an ounce or two of prevention are worth several metric tonnes of cure.

  • Any credit card offer that doesn’t ask about your mortgage is a trap. Don’t step in any more traps.
  • If you are already in debt, think twice – no, three times – before getting a new credit card. Borrowing more money will NOT get you out of debt.
  • If you are in debt, the only sort of credit card you should even consider is a 0% balance transfer card with a maximum 3% transfer fee. If the offer does not meet these minimums, shred it.
  • If you have any authorized users on your credit cards, cut them off. Seriously. You’ll have enough problems dealing with your own mistakes without having someone else’s mistakes bite your tail. If your kids are authorized users, it’s time to cut the financial umbilical cord. If your S.O., best friend, or business partner are authorized users, it’s time for them to be responsible for themselves. This does NOT mean that you cut your S.O. off. It does mean that you MUST contain the damage before it gets worse.

Non-Frugal Screwups – The Return

Tuesday, March 10th, 2009

If you recall from a previous post, I spattered fried chicken grease across a couple of dress shirts I use for work (part of the required dress code). In an effort to save them from expensive replacement, they were sent off to the dry cleaner, at a cost of about $3.00.

You did not give small tasty bird to Pookah!

Well, the dry cleaning didn’t work. Both shirts are still stained.

Vengeance! Graaawwrrrr!!!

Pardon me while I disengage a furious, frenetic, feline from my ankle. (Yes, Pookah just ran in and wrapped herself around my ankle – snarling, biting, and kicking. In her defense, my leg was right next to the scratching post she normally uses for this activity – and she WAS holding back. I’m only bleeding a little bit. In my defense, my leg bears little resemblance to a scratching post. At least, it used to.)

Now, as I was saying, dry cleaning didn’t work.

So the next step is to try some DiDi7 I picked up years ago. The worst that can happen is that my formerly nice shirts will have the buttons cut off (and added to the general rock pile supply of buttons), and deposited in the rag bin. If it works, I get my shirts back at no cost beyond the time and cleaning.

EvilPantsMustDIE!!!!

Aaargh!!! Pookah!!