Freezing in NH

American dream still burns bright for many – but results vary

Interesting article about how men in their 30s are earning less than their fathers did, but overall family income is higher because more women work.

They see new cars and plasma TVs and other accoutrements everywhere, and they want them, too. “I think there are more demands made upon them materialistically, and it’s harder,” says Ms. Curtis. “Things have gone up in price, and I don’t think salaries are commensurate with that.”

I think that paragraph explains a lot of the problem for folks in the middle class.  When I was a kid most families had one car.  Now they have two, or three.   They had one TV, now they have five.  It is more expensive to live like everyone else, but there’s plenty of money if you’re willing to give up a few luxuries.  (I’m sticking to the middle class here, I know that minimum wage is a little trickier.) 

Interesting Money Photos From New York City: These are great pics.  Having spent some time in NYC though, the locals don’t really drive.  That’s why there are so many taxis.  The difference in prices in parking garages is a good example of tiered pricing.  People who don’t care about price pick the parking garage closest to where they’re going, while people who do care go further looking for a bargin.  The operators of the garages (and many are part of a couple big chains) make more money off of lazy people while not driving away the more frugal ones.   Plus there’s always street parking, if you’re willing to drive around until you find a spot. 

Review on Prosper.com – Can We Leverage on it to Achieve Financial Freedom?: Here’s my experience with Prosper. Since that post, the oldest of the lates has been sold for pennies on the dollar.

Don’t Be Fooled Into Thinking an Oil Change Every 3,000 Miles Is Necessary:  The headline says it all. 

Here’s how I negotiated out of bank fees — part 2:  Interesting info, but I use NetB@nk which doesn’t charge you for overdrafts.  Nice since my employment situation has been…interesting…due to a couple of buyouts, and there were a couple times in the past year when I “accidentally” didn’t get paid.  Always resolved with a call to HR, but the mortgage payment is drafted the day after the direct deposit goes in, so if the deposit doesn’t go and they have to mail me a check from HR-land, the mortgage payment causes an overdraft (which pulls from my money market, interest/fee free).

I’ve started reading “I Want That!  How We All Became Shoppers”, by Thomas Hine.

If one could look objectively at the array of stuff available at Wal-Mart—and I’m not sure that’s possible—one might conclude that there is hardly anything on sale there that a person couldn’t live without.  You don’t absolutely require a lawn sprinkler.  You don’t need Barbie.  You do need water, but you don’t need bottled water.  Nobody needs a ceramic sculpture of mother and daughter hippopotamuses, but at under eight dollars, few would label it a luxury.

[…]

The great majority of the offerings at Wal-Mart and similar mainstream, low-price retailers are goods that may be inessential, but which become necessities once you have decided to live in a certain way.  Although we sometimes assume that people consume in order to compete with one another, more often than not, we consume to belong.  We want to have what those around us have.  These objects then become defined as our necessities.   Once you buy the house with the lawn, you realize that you need to get along with your neighbors.  While a verdant lawn might, or might not, fill you with joy, a parched, brown lawn certainly will draw disapproval.  You buy the sprinkler and it feels like a a necessity.  Whether you knew it or not, you made the decision to buy the sprinkler back when you decided to buy the house, and even earlier, when you decided to live in a free-standing house rather than in an apartment or townhouse.

I think this is something that people have trouble with sometimes.  They look at the price of renting vs owning, and decide that owning makes sense for them.  But there are added costs to owning a house and not just the “fix your own water heater” part.  There’s all the stuff you have to buy: snow shovels, a lawn mower, a hose, a grill, a ladder, all those tools, etc.  Once you’ve purchased them, you now require a much larger moving truck and longer to pack, which adds up to more money for each move.  If you’ve hired a mover, it could add up to a lot more money. 

So, either choosing a smaller house/condo/etc or choosing not to conform can save you a bunch of money.  I’m an advocate of living below your means (since it allows me to travel), but you can still have the big house if you’re making the big bucks, just don’t get caught up in conforming to someone else’s standard. 

That’s the title of an article in the NYTimes Sunday magazine (and not my question).  In the article the director of the Consumer Federation of America went through some resesarch to figure out why people at the bottom of the economic spectrum don’t save. 

Poring over Caskey’s research, along with other scholarly and financial literature, Brobeck concluded that the only way to get people to save was to reverse the social pressure while trying to effect modest institutional changes. The key, he realized, was to create a network of support for saving.

He persuaded banks (starting in Cleveland) to offer low or no fee/minimum balance accounts and started groups to encourage saving.  Volunteers gave workshops about debt, budgeting, saving, etc. 

As many as two-thirds of those who attend America Saves workshops sign up, and as a group they save half of what they pledge. On average, participants manage to put away $65 a month.

This sounds like a great start.  At one point I was living in NJ and sharing an apartment with a friend.  She was working some temp jobs and cashing her paycheck at a check-cashing place.  After looking at every bank in walking distance (and there were quite a few) we discovered that it really wasn’t any cheaper for her to get a bank account.  They all had some sort of “Jersey Saves!” account, but it was limited in the number of transactions, didn’t include checking, had a $250 minimum balance and a $5 monthly fee.  And the banks weren’t open when she got home, most closed at five or six at the latest, while the check cashing places stayed open until at least nine or ten and were open on the weekends as well.

I was in a much better place financially than she was (it didn’t feel like it to me, but the luxury of having $250 to keep in the bank and being able to wait while checks cleared was something she didn’t have).  The check cashing place only charged $5/check and she got her cash right away.  So I can see how it might be difficult to get started in “normal banking” when you don’t have much to start with.  Once she had some savings (to hit a minimum balance) and could wait a couple days for checks to clear without starving, she did get a checking account and join the financial mainstream (and is now, among other things, a homeowner).

In the interests of frugality, it’s best to have your relatives and good friends combine “command events” (such as births, weddings, deaths, etc) with a warm climate.  That way you get a mini vacation thrown in for free.

  It makes a pretty pattern. You can also see some frugality in that picture.  The car is obviously missing a bit of the trim (the door “bump strip”) and the sideview mirror has some writing on it.  After a minor incident in which the left mirror was damaged, I got a new one from the junkyard at about a quarter of the cost of having one ordered.  Relatively easy to change it out, the wiring had a clip-together harness (they adjust from inside the car)  and there are three screws under a snapout panel.  Pain in the neck to do in the cold but still do-able. 

I knew it could be done, because my right sideview mirror had been neatly removed by an 18-wheeler on the Cross Bronx Expressway some years back.  So that one’s from the junkyard as well, since at the time there was no way I could afford new (plus the NYC-metro area rates for putting the new one in).  Now I can afford it but I save my cash for other things.

Update: One thing you need to balance is the amount of time it takes you to do something vs the amount you save.  In this case the first time I did it it took over an hour to figure out how to get everything apart.  At the time, the amount I saved was much more than I would have made working for two hours.  The second time it took about half an hour, which is about what it takes for me to get my car to the shop, walk home, walk back, pay, and drive home again.  So in this case the savings was “free” because the other option would take the same amount of time.