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Tuesday, September 27, 2011

Money management: It's not just secular anymore

Over the weekend I went to visit a church that was having a sermon series on staying out of debt.  To me money management is such a completely non-religious subject I was very interested to hear what a church pastor had to say about it.

Years ago when I was doing research for a novel with a character who is a televangelist, I spent some time watching the channel CBN I won't go into my religious beliefs here, but I will say that CBN is not it, so it was very interesting to me to watch some of the televangelists on that channel and get a feel for what their message was.  I admit I expected the sermon on Sunday to be about how if you have faith in God and do right by God you will be rich, and if you don't you will be poor.  But it wasn't about that.  In fact, much of the sermon sounded like something I would write in this blog.  I've never actually stood up and yelled "Amen!" in a church (or anywhere for that matter) but it was tempting on Sunday.

What stood out most was the message "If you tell a lie enough times and loud enough, eventually someone is going to start accepting it as the truth."  The pastor was talking about the lies that debt is normal, that everyone has debt, that you can't get ahead without debt.  He talked about marketing and how there are so many messages telling us we deserve a new car we can't afford or to upgrade old (but perfectly good) things that we already have.  And that it is taking care of ourselves and being good to ourselves to do that even when it means going into debt.

Another point he made was that you can not know where the direction North is, and you can try to guess where it is, and someone can tell you the wrong place where it is, but hopefully, one day you will obtain a compass and it will show you where North is.  Because no matter what anybody tries to say, North will always be North.  Ok, apparently it shifts a tiny bit over the centuries, but you get my point. In our lifetime North will never become East.

And that's how I feel about the reality of what is sustainable financially and what is not.  Anyone in the world who picks up a newspaper talking about the United States economy and how fragile it is right now and how politicians are all fighting about whose fault it is,  will see that our government's way of operating - based on debt - is not working.   And anyone who sees the numbers showing how many foreclosures there are, and anyone who saw the banks have to get bailed out by the government saw that trying to operate on debt does not work.

And it doesn't work in our personal lives either over the long term.

That is all well and good to hear all that, but then I know many people look at their lives and say "Yeah, but I'm so in debt I can't possibly get out of it!"

Everyone can get out of debt.  It just takes time and work and a change of plans.  First, look at what debt is avoidable and doesn't need to get any bigger.  Your mortgage is not avoidable.  But, can you afford your mortgage payments? If not, it is time to seek out some professional advice on if refinancing at a lower rate would help you, or if you should seriously think about downsizing your home (which is tough in this economy but not completely impossible - last year we sold our house in the city four days before a major holiday when everybody said houses never sell).    Do you have car payments that you can't afford? You might want to think about downsizing your car.  You are still a good, valuable person even without your Mercedes or Audi and getting rid of that and getting an economy car you can afford would be a good way to learn that.

A blurb in the most recent Scientific American states that being extremely attached to objects is often a sign of insecurity in interpersonal relationships.  And close friendships are a lot less expensive than anything you can buy with your credit card.

Monday, September 12, 2011

Third of my Bi-Partisan Interview

This is the third in a series of short interviews I'm doing with public figures who have different political beliefs. Everyone will be asked the same five questions and I'm curious to see if their political stance makes any difference on their view of personal financial management.

My third interview is with Matt Smith and he considers himself a liberal. Matt is a very talented actor who has had parts in films such as Outsourced, an internet serial Cookus Interuptus, improvisation with The Edge, along with his own one-man shows. He is also a professional auctioneer and teaches improv. workshops. I don't think I can cover everything he does so here is his website.

Here are his answers to my five questions:

Sustentation Finance:  How do you manage money in your family?  Is one person in charge or is it a family effort?
Matt Smith: My wife does the actual managing of the money.  It’s 80/20, mostly her doing. But the big decisions are made into collaboratively.

S.F.:  How do you view debt?  Do you think there is "good debt" and "bad debt" or is it all "just debt"?
M.S.: I think all debt is bad, but often worth it, like with a house, considering the alternative, which is renting.  Unless you buy at the top of the bubble.  Yikes!  A good loan would be a 30 year home mortgage at 4 or 5%, 2 years later, after inflation kicks in, and the payments seem to get smaller and smaller, as rents rise. But you can’t count on that, can you?

S.F.: What are your thoughts on all the foreclosures in the last few years?  Who do you think is responsible for the high rate of foreclosures - buyers? real estate agents? banks? someone else?
M.S.: Everyone is responsible.  I am responsible. Of course, the bankers who made the policies that allowed other bankers to make commissions on bad loans, during war time (the War on Terror) should be tried for treason. Some of them hung.  At half time of an NFL Football game. How can a banker make a loan without getting 20% down on the house? Would you make that loan?  But the real responsibility is with Ronald Reagan and those that admire what he did. Deregulation means no rules, and we all get screwed by the first people “smart”  and ruthless enough to take advantage. And of course, the buyers.  They got caught up in the delusion, and sacrificed themselves for a corny American Dream.  And ‘dream’ it is.

S.F.: Do you have any opinion on Social Security?  Do you think it will still be around in twenty years and if not do you think about what your financial plan will be if it's not?
M.S.: I don’t plan to retire until I am retired.  No complaints though, since I have been semi-retired most of my life, being self employed in the Arts, and doing work that is seasonal.  I think social security  will be taken away, and then come back.   That’s what it will take to wake up the Tea Party as to how they’ve been manipulated by corporate ad men, who prey on the resentments of people who chose stupidity over truth, so they can hang on to their deep seeded rage.  Cause it’s hard to let go of, and to take responsibility for yourself, let alone for others. After Social security is taken away, there will be a revolution. Democracy as we know it (which is not democracy at all) will be gone, “poof”, and replaced by something else, more honest, like real democracy, socialism or a dictatorship. Hopefully a socialist democracy, something like what has been working in Europe, with the dogs sniffing at the door trying to get back in.  But you can’t take away social security and get away with it, cause people will actually go hungry.
 

It used to be that people voted in their self interest.  That interest was food and shelter.  But it is confused now.  People are “full” because they eat stuff called “food”, stuff that isn’t really food, but the courts have secured the rights of corporations to call it something it isn’t, to promote sales. It’s cheap, and they are fat, so they don’t feel hungry. And much of this stuff is addictive. And they watch TV in a warm place.  So they are reached through the TV.  Whoever appeals most effectively to their fear wins. Until they are fooled into give up their social security. That will be interesting.  So we’ll lose it, and then we’ll get it back.  Or something like it.

S.F.:  If you could be all-powerful and had no limits and could change whatever you wanted in our country - what would you do to bring down the huge debt in our government and balance the country's budget?
M.S.: De-certify corporations.  Change the 14th ammendment  (is it the 14th? That treats corporations as as individuals?) so it actually protects individuals. Make it illegal to spend your own money, or anyone’s money, on elections.  A certain amount is supplied by the government, and that’s it.   That will start changing things.  As far as the debt goes, we missed our chance to NOT bail everyone out , and essentially start over, allowing it to sort itself out.  There would have been great pain, and solutions would have emerged.  But we don’t like pain.  Also, limit military spending to 20% of what we spend for social programs. No more, ever. The “interests” we are protecting with the military are not the interests of the American people. Never have been.  The corruption has reached cartoon-like proportions. And it’s obvious, and we can see it clearly, and it’s STILL not stopping. Cause no one is making them (us!) stop. But changing the election laws would eventually change the courts, and the game, which is rigged so brazenly, will become a little less rigged.  And of course, tax the rich.  Half of the country’s wealth is in the hands of 250 people.  They think the money belongs to them.  It doesn’t.  Not all of it.  Not most of it.  We need it back.
 

Monday, September 5, 2011

A Natural Sense of Ownership in a Culture of Consumerism

In the most recent issue of Scientific American Mind (Sept/Oct 2011) there is an article discussing the natural human need to use objects as part of the role of forming our identity.

It is impossible to express, or even understand our own identity without some objects being involved. The clothes we decide to wear (whether bought or made ourselves) the objects we use for our hobbies, the type of home we live in express who we are (or who we want to be).
It's unreasonable to say that we shouldn't have any possessions or desire possessions. If nothing else, we need shelter, appropriate clothes for the weather, and tools to obtain and prepare food. What we can control is how many and what types of objects we obtain.

Like most natural instincts, the instinct to "own" things is natural and good for survival. But when it overtakes other survival instincts - such as feeling that one can only be happy with things far more expensive than one can afford - is when it becomes a problem.

Here in the United States advertisers and credit companies use that natural desire for ownership and the natural desire to have an image as "successful and powerful" to their advantage to try and sell more stuff. But is it "successful" or "powerful" to have a lot of expensive objects that you didn't actually pay for and that you owe so much money that you may end up having to file bankruptcy? You're in a much more powerful and successful position if what you own is what you have actually paid for and can not be taken back by repo men.

I used to work for a very nice family who lived in a beautiful mansion in the heart of Seattle. My husband and I would've loved to have lived in that vibrant, beautiful neighborhood of Capitol Hill ourselves but we couldn't afford it. Apparently, neither could this family. When I started working with them they were so heavily in debt that one slight misstep and their whole life would fall apart around them and they'd lose everything. At the time my husband and I lived in a four-room house (not counting the tiny bathroom) five miles outside the city. But other than our small mortgage we didn't have any debt and had a solid safety net. Who in that situation would you look at from the outside and say is more successful? Then looking at the reality of the situation who would you say is more successful?

Now is a good time to re-shape your thinking to see that a solid financial foundation is a sign of success, not a lot of expensive possessions. If you can afford a mansion on Capitol Hill and need that much space then by all means make that your home. We were very happy in our tiny house for over ten years because we had everything we needed. And a part of that happiness was knowing we didn't have to worry about money.

Try to rethink what it would mean to you to be successful and powerful. Does is mean buying into the advertising and paying more than you can afford for things that marketing experts tell you that you need to have? Or is to more powerful to know who you are as an individual and know what is important to you? Start today by thinking for yourself on what is important to you, not what advertising execs tell you they want you to think is important.

Thursday, September 1, 2011

Second of my Bi-Partisan Interviews

This is the second in a series of short interviews I'm doing with public figures who have different political beliefs. Everyone will be asked the same five questions and I'm curious to see if their political stance makes any difference on their view of personal financial management.

My second interview is with Suzanne Venker. She describes herself as an Independent Conservative. Suzanne is a strong and controversial writer/speaker who is not afraid to stand up for what she believes in. You may visit her website for a complete description of her work. She it the writer of the blog No Bull Mom and two books, 7 Myths of Working Moms, and her most recent which she co-wrote with Phyllis Schafly The Flipside of Feminism

Here are her answers to my five questions:

Sustentation Finance: How do you manage money in your family? Is one person in charge or is it a family effort?

Suzanne Venker: My husband makes the real money; I spend it! No, really, it sort of IS that way, just as it is in millions of households around the country. I'm in charge of the daily bills, but neither one of us ever makes a large purchase without discussing it with the other.

S.F.: How do you view debt? Do you think there is "good debt" and "bad debt" or is it all "just debt"?

S.V.: Good debt is a mortgage. That's the only good debt in my opinion.

S.F.: What are your thoughts on all the foreclosures in the last few years? Who do you think is responsible for the high rate of foreclosures - buyers? real estate agents? banks? someone else?

S.V.: I think everyone has a role to play, but I'm a big personal responsibility person, so I place the ultimate blame on the individual who chose to live beyond his means. Because even though a loan officer might sit across the table from you and try to tell you you can afford more than you really can, most people know what they can and can't afford. They just did it anyway bc a bank was willing to lend them money. That said, I DO think there are other people who really don't know how loans work and were misled by loan officers who knew better. So there really is enough blame to go around.

S.F.: Do you have any opinion on Social Security? Do you think it will still be around in twenty years and if not do you think about what your financial plan will be if it's not?

S.V.: I think it's the wrong approach to helping people save money. Plus I think it's a form of stealing because I don't believe we'll see our money down the road.

S.F.: If you could be all-powerful and had no limits and could change whatever you wanted in our country - what would you do to bring down the huge debt in our government and balance the country's budget?

S.V.: 1) Flat tax. 2) Revive/encourage the traditional American family structure in order to alleviate dependence on government.