Spendology

Career Breaks: Better When Not Broke

Posted on: Sunday, March 6th, 2016
Posted in: Spendology | Leave a comment

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This week, Fast Company released a sobering article for anyone drunk on debt or worried about an economy that’s become a tipsy house of (credit) cards. Stephanie Vozza shares her family’s saga about getting spanked in arrears—and then launching into a bold recovery program and emerging debt-free. Her relief is palpable.

Equally evident is that choking sensation happening to the millions who are deeply underwater.

  • How bad is it?

Some pop shrinks say it’s a bad idea to compare yourself to others. But in this case, please do. If you can’t—because you don’t know your own numbers—you may be in the camp of the clueless and hopeless who are worse off than these “average” folks.

According to Nerdwallet, here are 5 debt amounts of the average American…

~ $15K                       Credit card

~ $26K                       Auto

~ $165K                      Mortgage

~ $47K                       Student loans (for the many who got ‘em)

~ $6+K                       Annual debt service (9% of HHI)

  • Too small to bail

You’ve heard the phrase, “Too big to fail.” That’s about the mega-banks with gazillions; the government tends to regulate them po-lightly and bail them out whenever they “spend” too much. In comparison, the crush of debtors crashing on tapped-out households looks more like a Soprano’s shakedown. Little mercy exists for the chronically strapped or bankrupt.

  • Poor mental wealth

So it’s no wonder that the article lists a litany of disorders and conditions from which the in-debt individual often suffers: stress; anxiety; depression; desperation; obesity; accelerated aging; risky behavior; heart attacks. Can you guess the favored therapy for treating these problems? Yep, spending. Now always one click away.

At some point, most broke folk fall into a what-the-hell downward spiral. What will happen if millions of families run out of get-out-of-debt cards at once? Stay tuned.

  • The trip at the end of the tunnel…

Despite the debt, Americans are traveling—more than ever. Alleluia! Postponing joy rarely helps. And a spring BreakAway investment to sun and sand might inspire the revelation that experiences matter more than materialistic expenditures.

After all, could there be a better reward for getting out of the red and into the black than flying off to the adventure of a lifetime and a future of balanced priorities and checkbooks?

Start with these simple 11 Commandments of Fiscal Fitness. Then calculate all your debt and savings and attempt a realistic strategy to break even. Then go for a walk. Meditate. Call your mom. Ditch the digitalia. And try spending time on things that cost little but mean much.

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Boomer Bust: Beware the Retirement Burst

Posted on: Tuesday, October 27th, 2015
Posted in: Spendology, Blog | Leave a comment

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“When I was young I thought that money was the most important thing in life;

now that I am old I know that it is.” ~Oscar Wilde

  • Wealth is the ability to fully experience life.

We BreakAway artists advocate saving money and taking temporary retirement occasionally throughout your life—rather than waiting until your final years—even if it means working a few years longer before closing time. Most anyone can get excited about this idea. Few, however, can prudently pay for it.

Tragically, few will be able to afford perma-retirement either. And that applies particularly to Baby Boomers. All 76 million of us—many of whom have already begun (or delayed) our proverbial walk into the sunset. A recent article from the local paper’s special section, “The Good Life,” paints ugly pictures of stormy sunsets.

  • Consider the “facts” 

As always, research findings will vary. But in this case, the storyline remains consistent regardless of which digits you dig into. Consider these estimates from The National Institute on Retirement Security (NIRS) or the Employee Benefit Research Institute (EBRI)…

2/3 of households 55-64 (pre-retirees) have savings equal or less than their annual income

1/3 have no savings at all

The second study (EBRI) offers more optimism, but still stings…

57% of boomers are prepared to support themselves at their current standard of living

43% are not 

The outlook darkens for various groups, including women, people with serious health concerns, and minorities. And as for young people? Their future looks potentially rosier—because though they’ve also set aside little, they have more time to save. (Do you think they will?)

  • A dearth of bucks, but ample blame to go around

So how did we get here? After all, the current retired generation lives richly in comparison. Blame the death of the pension—which assured retirees a steady stream of income. Blame the rise of the self-funded, tax-free plans—which force folks to cut their income to save (or not). Blame the merciless markets of, oh, the last 28 years or so: Black Monday (1987); global crashes (late 1990s); the tech bubble bursting (2000); 9-11 (2001); the Great Recession (2007-09).

Not only has this unprecedented market mayhem repeatedly shattered nest-eggs, but it’s made would-be investors pull out at lows and forever fear investing. You can’t make money without stashing cash, embracing risk, and letting time work its magic.

The blame game never ends. Stagnant or decreasing wages (some say since the 1970s) means that even responsible, two-income families can be stretched. Income inequality continues to worsen, with the top 5% of Americans now controlling 54% of the assets, while the bottom 50% has 3% (NIRS). That’s rough, if not unethical. But nobody seems to want to do anything about it. We could go on and on.

  • Is a crisis (rather than nice walks on the beach) on the horizon?

Funny. We’ve heard a lot of grousing about the impending student loan bubble fallout. Everyone (particularly politicians) likes to gripe about Social Security and other entitlements going broke. A few of us (like myself) like to point out the mind-boggling materialism wave that has inspired us all to “need” so many things that our grandparents had never heard of to the point that shopping is a popular pastime and Goodwills turn down donations.

I mean, go to a high school with 50% free lunch and most students somehow enjoy the latest iPhone, fancy sneakers and hairdos, and of-the-moment duds. They may be hungry, and their abode may be cold. But most got stuff. Expensive stuff.

In the American household, meanwhile, there may be no retirement plan. But the place is probably abundant with cable plans, wifi plans, cellphone plans, laptops, kitchen gadgetry, recreational gear, monster media systems, late-model cars, and more (including, of course, debt).

I don’t know who pays for it all, or how. I don’t know how my fellow Boomers are going to fare in their golden (raven?) years. I do believe in market forces that somehow, gradually, fix things (sometimes). But I also know those markets can be ruthless and wrong. And they don’t really care about people, individuals—not even if millions of elder-Americans end up living in poverty. Markets care about money.

Money. Numbers on paper or puter screens. We call the category of this post “Spendology.” But perhaps “Saveology” would better fit today’s topic. Wouldn’t it be great if everyone could save enough to take just one three-month sabbatical in their life?

Wouldn’t it be even better if everyone could save enough to enjoy several years of relaxing retirement?

Good luck with that.

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Stuff = Stress

Posted on: Monday, April 27th, 2015
Posted in: Spendology, Blog | Leave a comment

DSC_0346As the CFO of my household of four, I was forced into action recently when a pile of credit card statements finally got my attention, and were packed with pages of purchases for … who knows?

Dozens of Amazons (a company that doesn’t bother to specify the items). Various online purveyors of whatnots. Sports sites and cosmetic clubs and, worst of all, a few scams—that can take hours (months?) to unwind.

Shopping has become easier than ever: Click! And The Thing is on its way. No boring browsing, no pawing or fondling. Heck, trying something on and inspecting it for quality have become passé; just peruse a few reviews, and return The Thing (with free shipping!) if it fails to fit.

Is it any wonder that 40% of Americans state they have too much stuff? Is anyone surprised that the stuff storage industry is booming (with 76% of the stuff stuck away because it’s seasonal, sentimental or simply never used). Should we rejoice that our economy is enjoying a new burst (bubble?) of consumerism thanks to internet commerce? Fine. But the buck stops here.

  • This calls for executive orders

Though I rarely succumb to such extremes—because I know they may not work in the long run—I immediately wrote up and sent out a new procedure for making purchases. Now, there’s a form to fill out: Date, what, amount, from where, why. No pushing “buy” until a parent has initialed approval. And the discussion may include who’s paying. (Extravagant offspring can turn frugal fast when that $55 widget means gutting the piggy bank.)

The goals include stopping the Amazon flood, increasing our family’s mindfulness of greed, clutter, and the environment (Amazon’s packaging—ugh!), and making do with the backpack we have rather than assume the fancier new one will hold more happiness. Above all, we’ll all have one page of purchases to ponder: Transparency!

These life lessons start at home, and are more timely than ever with things like braces and college costs right around the corner. The cost of living keeps rising; does quality of life keep up?

Wish us luck on our new procurement policy; good thing I know better than to expect little more than a temporary rethink/reduce movement. Still, it’s helping. The orders seem to have slowed. We now have more conversations about stuff—and sometimes find a way to say no, make do, or seek a more creative (and less costly) solution.

  • A student essay on simplicity inspires                    

On the same day I was issuing restrictive dictums, I was poring over past student work to find a sample for the writing course I’m currently teaching. The best one—that serendipitously fit that day’s theme—was titled, “The Art of Being Creatively Simplistic: A Minimalistic Manifesto.” She wrote a touching, compelling piece that offers a heartfelt alternative to knee-jerk materialism.

In case you, too, could use some fresh guidance for your SMI (Stuff Management Issues), here are her…

  • 11 ideas for enlightened material restraint
  1. Don’t get in debt
  2. Work to get paid and meet your needs, not advance a career
  3. Live in a small space
  4. Get rid of excess material objects
  5. Reduce expenses
  6. Avoid the materialism of modern technology
  7. Exercise, stay physically capable
  8. Eat basic, wholesome foods
  9. Improve practical skills
  10. Serve your community
  11. Learn the value of true pleasures — nature, friends, art

Pretty simple stuff, right?

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What If YOU Won the Lottery?

Posted on: Tuesday, April 7th, 2015
Posted in: Spendology, Blog | Leave a comment

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Oh my.  A month has gone by. I last wrote about taking vacations—including from devices—and must have been truly inspired by my own ideas! But thus the blogging sabbatical ends. And speaking of inspiration…

  • Local lottery winners say, “meh”

A married couple not far from here just won nearly $12 million, and seem appropriately pleased but surprisingly unfazed by their luck. The Star Tribune reports these heart-warming quotes

“I have a fabulous job, and I like to work. I actually have to work tonight,” says Wife, of her waiting-tables job at the charming Lake Elmo Inn.

“I don’t think it’s going to change our lives that much,” ponders Husband.

“We really hope it doesn’t change the people around us,” suggests Wife.

There you have it: Real winners! Just folks that are suddenly rich, yet obviously have been living rich, content lives all along. That’s what can happen when you do something approximating our 11 Commandments of Fiscal Fitness—which are as much about living well and sanely as they are about money management.

  • Is winning the lottery really “winning?”

Follow-up stories on lottery winners are rarely pretty. Too many “winners” quit their work, spend like crazy, and eventually end up jobless, possibly penniless, and even friendless.

Not long ago, for ex, media reported on a Minnesota young woman who had won millions and, some years later, mostly drove around her small town solo in her Hummer—while locals rolled their eyes and rumored that she’d spent it all, lost her career, and alienated her community.

Sometimes, all we need is right in front of us. As for all we want? Sometimes that stuff is just stuff, and we may be better off without it.

Best wishes to this model couple a few miles north of here. If I ever recognize them in a nearby pub, I’d like to buy them a drink and make a toast to their smarts.

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What If YOU Won the Lottery?

Posted on: Saturday, September 13th, 2014
Posted in: Spendology, Blog | Leave a comment

DSC_0801Oh my.  A month has gone by. I last wrote about taking vacations—including from devices—and must have been truly inspired by my own ideas! But thus the blogging sabbatical ends. And speaking of inspiration…

Local lottery winners say, “meh”

A married couple not far from here just won nearly $12 million, and seem appropriately pleased but surprisingly unfazed by their luck. The Star Tribune interviews the lucky couple here and shares these heart-warming quotes…

“I have a fabulous job, and I like to work. I actually have to work tonight,”

says Wife, of her waiting-tables job at the charming Lake Elmo Inn.

“I don’t think it’s going to change our lives that much,”

ponders Husband.

“We really hope it doesn’t change the people around us,”

suggests Wife.

There you have it: Real winners! Just folks that are suddenly rich, yet obviously have been living rich, content lives all along. That’s what can happen when you do something approximating our 11 Commandments of Fiscal Fitness—which are as much about living well and sanely as they are about money management.

  • Is winning the lottery really “winning?”

Follow-up stories on lottery winners are rarely pretty. Too many “winners” quit their work, spend like crazy, and eventually end up jobless, possibly penniless, and even friendless.

Not long ago, for ex, media reported on a Minnesota young woman who had won millions and, some years later, mostly drove around her small town solo in her Hummer—while locals rolled their eyes and rumored that she’d spent it all, lost her career, and alienated her community.

Sometimes, all we need is right in front of us. As for all we want? Sometimes that stuff is just stuff, and we may be better off without it.

Best wishes to this model couple a few miles north of here. If I ever recognize them in a nearby pub, I’d like to buy them a drink and make a toast to their smarts.

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Airbnb: A $10 billion Idea?

Posted on: Friday, April 4th, 2014
Posted in: Spendology, Blog | Leave a comment

DSC_0006 - Version 2Here’s my hot stock tip: Consider taking some money out of the market (especially your internet allocation) and take a getaway, a winter vacation, or a full-on BreakAway. If you’ve stuck with stocks for the past four years, you’ve earned it! So, yes: Spend some money now!

  • First, the good news

We alterna-travelers have bought into one the biggest, brightest accommodations innovations since the lobby bar. Gone are the days when your holiday meant settling for (and in) a predictable Holiday Inn or a risky hostel. Now you can virtually bounce on the bed—and read about other guests’ experiences—in 600,000 crash pads and palaces across 34,000 cities.

That number will keep surging. And though Airbnb started as a humble idea (want to sleep on my air mattress for a few bucks?), the site now offers castles, boats, and more for your vacation or business lodging. Many travelers, including those in this household, take advantage routinely.

This picture, for example, shows the sunny view from our spacious, clean, and delightful two-bedroom flat overlooking a hip and bustling square in the heart of Copenhagen. Cost? $155 per night.

That’s cheap! And cheap! is not a word one gets to use often when touring Scandinavia. Cheap! would also not describe the value of Airbnb since private investors started throwing cash at this…Big Idea. Airbnb is now ‘valued’ at $10 billion. (!)

High fives to the vagabonds, right? Thanks to us, the Sharing Economy is alive and thriving; we can avoid overpriced, humdrum hotels; and three young, digital entrepreneurs are now billionaires.

  • Now for the bad news

Sadly, the Airbnb valuation may suggest that we’re entering another economic bubble. Don’t believe me? Then believe NYT’s business editor, Jeff Sommer, who wrote the article, “In Some Ways, it’s Looking Like 1999 in the Stock Market” this week, citing “stratospheric prices” for Airbnb, Facebook ($150 billion), and King Digital Entertainment (Candy Crush Saga, $7 billion).

As a oft-spanked investor for 30 years, I know how these things usually (always?) end, and it can hurt. Us, I mean. The Airbnb founders and the hedge-hogs feeding them funds usually come out just fine. But…

Meantime, if you’ve been riding the wave of stocks more than doubling since the Great Recession low in March, 2009, now might be an okay time to consider taking some money off the table to splurge on a trip. You now know where to find 600,000 possibilities!

During that Recession, I often said, “We just need a new bubble.” After all, some say we’ve had about five once-in-a-lifetime bubble-bursting events in a matter of a few decades. But NYT’s Mr. Sommer does say, “Maybe not the entire stock market” is in a bubble. Just Airbnb and some other companies in the internet space.

Still, we know how the house of cards can tumble down. And this raging bull market hasn’t even had a routine 10% correction since taking off. It’s overdue. Are you?

So go for it: Spend some profits; buy some free time. In your memory bank, your experiences may be worth even more than Airbnb.

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College Ain’t What It Used To Be

Posted on: Friday, August 23rd, 2013
Posted in: Spendology, Blog | Leave a comment

DSC_0054You can’t toss a diploma anymore without hitting some media story about the plight of millennials. They can’t find decent jobs. They’re up to their mortar boards in debt. They’re moving back in with their parents in record numbers—40%. That’s 21.6 million millennials (18 to 31) shacking up with Mom and/or Dad.

According to one recent story, in fact, any stigma about returning to the empty nest has now faded away like a forgotten frat party. The great recession humbled many people’s aspirations, of course. But it’s also true that this generation has been particularly cozy with their parents—and many parents welcome them back with open arms and minds.

Some staggering statistics

Living at home is only the beginning. Consider a few more stats:

  • 20% of Americans have student loans. (Countrywide Financial)
  • 55% say their education loans are affecting decisions such as getting married, buying a house, and/or saving for retirement. (Countrywide Financial)
  • 17% of millennials in their 20s with at least some college education claim to be “totally independent” now, compared to 23% in 2011. (PNC Wealth Management)
  • 58% of 20-29 year olds with some college rate themselves behind where they expected to be in terms of financial success. (PNC Wealth Management)

Beyond the numbers, though, the trend hits close to home. In my circle of friends and families, I’m hard-pressed to think of one college grad who waltzed with ease from graduation into a career-worthy job. Even unpaid internships are tough to land. Heck, most high-school students don’t have summer or other part-time jobs, either.

I don’t mean to show my age. But…back in the day, virtually everyone worked. And if you asked your parents for some money, they’d probably reply, “Get a job.”

Yet most folks would agree that “kids grow up so fast these days.” Indeed, in many ways, they do—from an early obsession with colleges, grades, and test scores to early exposure to sex, drugs, and digital living. Even LinkedIn recently announced a new target: High school and college students. “This is a way we can engage kids in their future,” states LinkedIn mouthpiece Christina Allen.

We can engage them in more screen time, I think she means. Yet the best contacts and jobs will still call for traditional social skills like taking initiative, minding your manners, and maintaining presence. As Woody Allen says, “80% of success is showing up.” (And I don’t think he meant on a LinkedIn page.)

Time for Temporary Retirement?

One can only hope for a big-picture, long-term outlook for these young’uns (and their families). Why not, for instance, take that first career break before the career kicks off? One could…

  • Take a gap year, like so many countries kids do, and travel on the cheap; is there anything more educational than travel? Won’t most worthy employers be impressed—especially if you become bilingual?
  • Join the Peace Corps, Americorp, or other worthy outreach program.
  • Look into teaching in a developing nation.
  • Check out living with a relative in a faraway city or country.
  • Get entrepreneurial and start a business.

It’s conceivable that these millennials will need to work 50 years before officially retiring—if they ever do find jobs, that is. My hope is that this group and their challenging circumstances might help usher in the paradigm shift that makes temporary retirement throughout their career a common, and celebrated, experience.

On that goal, they’re off to a good start!

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Airbnb Saves Lives!

Posted on: Tuesday, May 1st, 2012
Posted in: Spendology, Blog | Leave a comment

Attention vagabonds: Airbnb has become the hottest travel tool since the airplane—while bringing to life another trend called “collaborative consumption.”

I pity the sterile hotels that have to compete with this vivacious option.  And as these Fast Company stories confirm, the ripples from this wave reach far and deep…

  • A New York woman made enough new money to handle unexpected medical expenses—and found inspiration in the healthy lifestyles of her guests.
  • A Berkeley couple averted an empty retirement nest egg crisis, started saving for the future, and now dig into their bucket list of travel aspirations.
  • A woman from Rome was able to leave her humdrum job and start a new business from home.
  • After a divorce, a German man opened up his quiet house and makes new friends, practices his English, and happily moves on with his life.
  • A San Francisco woman was able to make the move for a dream job—thanks to the instant and affordabe housing she found through Airbnb.

This BreakAway family has lounged in a NOLA rowhouse packed with eye-popping art, provincial vibes, and all the creature comforts of home.  Soon, we’ll move into pads in Scandinavia—again offering amenities o-mega, and at affordable prices.

It’s hard to imagine travel without this terrific tool—or life before it came along.

Next time you want to travel, jump on the Airbnb bandwagon!

 

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Hate to Bust the Boomers’ Bubble…

Posted on: Friday, March 16th, 2012
Posted in: Spendology, Blog | Leave a comment

A group of guy pals celebrated a friend’s retirement last week. He’s earned it; he’s ready. So what’s next?

I have no idea!”

he answered with a cunning grin.

He does still have a kid at home and more in college—plus cars and yards and chores.  So with or without plans of grandeur, he’ll be busy.  But for his sake, I hope not too!

  • Will the “golden years” be golden?

My friend will be fine, congratulations.  But for millions of other boomers, the golden handcuffs that have kept them working appear to be turning to copper.  Research and surveys with tainted news fall upon us like pennies from purgatory.

  • Surveys sez:

In a nationwide survey of workers age 60 and over,

11% of respondents said they don’t think they’ll ever be able to retire*

45% of baby boomers are at risk of running short in retirement**

20% have already received an inheritance***  (median value:  $64,000***)

15% still expect to receive one***

Baby boomers—that loud, proud crowd born between 1946 and 1964—have lived through an unprecedented standard of living boom.  They’ve helped swell American values like individuality, innovation, and entitlement.

  • The $64,000 question

But will the boomers be able to take care of themselves as the years go by?  (There are still 77 million to worry about.)  Inheritance doesn’t look like the golden ticket.  And of course, Social Security and pensions ain’t what they used to be.  And let’s not even talk about healthcare costs.

For me, my friend’s stepping away from the paycheck is simultaneously celebratory and sobering.  What will our society look like in 2030 when 20% are senior-citizen boomers?  How many will be feeble and flat broke?  Is anyone earnestly addressing this stuff?

  • Time for Temporary Retirement

Nobody knows the solutions.  But one thing’s for sure:  Many folks will be working later in life, and many may enjoy a shorter (or perhaps no) retirement.  As the old Hoyt Axton song goes,

Work your fingers to the bone, what’ya get?  Bony fingers!”

Moral of the story:  If you can, when you can, take your time—off.  The case for retiring now and then throughout your career keeps growing stronger.  Even if the justification includes potential boomer doom and gloom.

*CareerBuilder.com and Harris Interactive

**AARP

***USA Today, 5-25-11

 

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Loyalty Programs: Bogus!

Posted on: Sunday, December 11th, 2011
Posted in: Spendology, Blog | Leave a comment

Everybody’s looking for a way to save money these days.  And nobody’s got more brilliant ideas than Corporate America.  You can’t buy a cup o’ jo or a paperclip without some store-clerk puppet mouthing that smarmy question:

Are you a Bogus Bonus member?”

  • Trick question

This stressed-out consumer dodged those programs like telemarketing calls until, dang it, the cash flow was turning pink and some stores were bleeding my wallet.  Take my hardware store (please): When procuring $1,000 worth of lawn equipment, the sales woman got me all aroused at my potential payback.

  • How could I say no?

So I signed up.  There, and most everywhere.  So now and then, a $5 (or whatever) discount diploma comes in the mail.  One must take them when going to the store. And not forget to use it.  Before the expiration date.  And when shopping, they’ll probably have an irresistible snow blower on the counter, and you’ll spend another $1,000.

  • Worth the hassle?

Are they worth it?  In a word, no.  The issuers send junk mail and spam.  They profile your purchases and probably sell or trade your data.  They pay back a fraction of what you spent to get the “discount.”  And usually, they make you carry around little cards and fobs that make your jeans bulge in strange ways.

  • Take care of your millions…

Back in the day, I worked at a small ad agency with Audrey the Accountant.  She would preach,

If we take care of our pennies, the dollars will take care of themselves.”

Well, yes, BUT.  In the case of loyalty marketing programs, it’s too easy to start thinking like “them,” instead of thinking for yourself.  You get tempted to take extra airline flights to “get the miles.”  You get nowhere.

Audrey, may I respectfully suggest that if you take care of your millions, your dollars will take care of themselves.  Oh, you don’t have millions?  Well then, start saving.  Because spending is rarely the route to wealth.

 

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