Willing to Be Flexible

I really like the woman who cuts my hair. I've been going to her for years, she does a good job, and I've come to see her as a friend. As I've mentioned before on this site, she used to work out of her own home salon, but now that she rents a chair in a bigger salon, I've started tipping her. Aside from it just being customary, it seemed like the right thing to do, given that I knew that her personal circumstances had changed in a way that meant she could probably use the money.
But here's the interesting thing: in a tough economy, I guess a lot of people start to want to cut corners on things like hair care. I asked my stylist how her business had been and she said things were down a bit but not too bad. And the last few times I've seen her, when I am paying, she always says something like "this is still ok for you?" I remember her saying something like that after September 11th too, when she lost a lot of clients: "You know, if you ever got laid off or something, just let me know and we'll work something out. I don't want you to ever stop coming to me just because it's too expensive."
I know it can't be easy for her to volunteer negotiable rates when times are tough, but I think it's smart of her to do it. A customer who pays less is better than no customer at all. I think it also probably makes people feel even more loyal to her. And it may even have some kind of reverse psychological effect, as I think it has on me. I find myself thinking, yeah, times are tough and should I really be spending close to $1,000 a year on my hair? But then I think, hey, I have a steady job with benefits and plenty of other ways I could save money if I have to. I would feel ashamed to plead hardship and accept a discounted price from someone whose life is a lot more complicated than mine right now, and whose income is a lot more at risk in this economy.
Are my assumptions about her true? On an hourly basis, she actually makes more money than I do, but she has to pay for health insurance, equipment, a space to work out of, etc. and she can't necessarily fill 40 hours a week with work. Of course it's not just about which of us makes more money, or which of us feels like she is struggling to make ends meet. She can raise or lower her price as she sees fit and I can decide to pay it or ask for a discount or just stop going. But it's nice to feel like we each want to make it work for the other. And I do love my haircut!

Lucinda Williams' Spending

Even music celebrities can be prone to guilt about spending. In an interview with the New York Times Magazine, here's what Lucinda Williams had to say:

Biggest self-indulgence: Shopping and regretting it later. One time I managed to spend $11,000 on crystals, which to this day I am beating myself up about. They are in a box in the garage. That’s really bad. I don’t know what got into me.

I don't know why I found this so amusing!

One of My Readers Wants to Marry You

Well sort of!

Many of you will recognize the name SandyVoice as a regular commenter on this site, who was also profiled in one of my New York Stories. SandyVoice is trying to develop her business as a marriage officiant, and knowing what a great community of helpful commenters we have here, she's asked for your feedback. Please pitch in if you can, either in the comments or by emailing me at openwallet1 [at] yahoo [dot] com. I'll forward all responses to SandyVoice.

Performing weddings is the best part of my job! I'm a cantor, so of course I do a lot of Jewish weddings, but I also officiate and co-officiate at interfaith weddings, civil ceremonies, recommitment ceremonies, commitment ceremonies, same sex marriages where they are legal, and so on. I'm licensed in New York, which lets me perform weddings in most states.

I'd like to do more weddings to supplement my current income, and intend to turn officiating into a full-time career when I retire. Can you folks help me do a little market research? I would be very grateful for your answers.

IF YOU WERE MARRIED WITHIN THE LAST FIVE OR SIX YEARS ...
How did you find your officiant?
If you did an online search, what keywords did you use, and what did you think of the websites you found?
Did the websites provide helpful information, and did they help you pick an officiant?
When you interviewed officiants, what characteristics and information were you looking for?
What questions did you ask? What questions did you miss, but would advise others to ask?
Did your officiant offer any special services that helped you decide to hire him or her?
Did you write your own ceremony, use one provided by the officiant, or develop a script together?
Can you share any other thoughts about your experience of finding and working with your officiant?

Thanks to all for being so helpful! I can't wait to read your answers!
Thanks to Madame X for letting me hijack her blog for a day!
And, of course, if anyone here is getting married, and needs an officiant ... ;-)
Regards from SandyVoice

Great Way to Save on International Calls

From the Frugal Traveler column in the NY Times, a great explanation of how you can make and receive calls cheaply while overseas:

Staying in Touch Internationally, on the Cheap

When I used to travel a lot to Europe, I had an unlocked quad-band phone and bought a SIM card with a UK number. It was very handy for making local calls, but it was a nuisance to have to tell people back home that I had a different cell phone number.
But back then I didn't have the option of forwarding calls using Skype! And I didn't yet have Google Voice, whose rates for international calling are about half of the lowest rates I'd ever gotten with calling cards! (It's not available to the public yet but since I already used Grand Central I was able to upgrade my account.)

I don't know what I'm more excited by, the "neat-o" technology factor, or the potential for saving money! Unfortunately I don't travel as much these days, or make as many international calls... but hopefully some of you do! Enjoy.

Debating the 401k

From the "Room for Debate" feature on the NY Times website:

So Much for the 401(k). Now What?

Below are a few outtakes from the various contributors:

* Alicia H. Munnell, Center for Retirement Research
* Jacob F. Kirkegaard, research fellow, Peterson Institute
* Thomas R. Saving, economist, Texas A & M
* Teresa Ghilarducci, economist, The New School
* David C. John, senior fellow, Heritage Foundation
* Thomas C. Scott, money manager

When 401(k) plans came on the scene in the early 1980s, they were viewed mainly as supplements to employer-funded pension and profit-sharing plans. Since 401(k) participants were presumed to have their basic retirement income security needs covered by an employer-funded plan and Social Security, they were given substantial discretion over 401(k) choices.

Approximately 60 million Americans today have a 401 (k) plan, or just over 40 percent of the non-farm work force. In other words, more than half the United States work force does not have a 401(k) plan and thus derive no benefits from the associated tax break.

Yet tax-breaks cost our government a lot of money. The latest data shows that 401(k) plans in 2007 alone resulted in lost federal tax revenue of $46 billion.

There is no doubt that the world is risky and rare events happen. But what is the alternative? Assuming that the current value of equities represents the future earnings of the underlying corporations, then unless you believe that something fundamental has changed so that the long-term future of the economic system is one of stagnation, you should continue to invest in your 401(k) and maintain an age-adjusted equity share.

The 401(k) is a failed experiment of how well individuals can save for their retirement in commercial individual accounts. Instead, we need a supplement to Social Security that competes with the 401(k) — what I like to call a “guaranteed retirement account” plan to which all workers and employers would contribute 2.5 percent.

The sad fact is that any form of retirement plan causes risk to someone. Traditional pensions put the risk on the company; government-managed systems put it on the taxpayer, who already must pay for Social Security and Medicare excess costs. What is needed is a way to reduce risk on the individual 401(k) investor.

How do you feel about 401k's as a retirement savings tool?

Money for Candy

Apparently sugar can sweeten even the sour taste of insolvency: When Economy Sours, Tootsie Rolls Soothe Souls

At the Candy Store in San Francisco, the owner, Diane Campbell, has tripled her orders for nostalgic candies like Necco Wafers and Mallo Cups in recent months. Many of her customers tell her that even though they are living on less, they’re setting aside cash for candy.

“They put candy in their actual budget,” she said.

Of my approximately $600 a month food budget, very little ever goes to candy. But I confess that I've been raiding a candy bowl in the office a little more frequently these days! How much do you budget for candy?

Weird Stuff from Dad's Files

I've been meaning to post some funny stuff I found when I was cleaning up all my Dad's old files a few months ago, while helping to look after him before his surgery. I discovered that he was way more of a pack rat than I'd realized, and incredibly obsessive about recording certain kinds of data. I'll spare you the results of his research into replacement garage doors and his records of watering the lawn, but I will share his expenditures for 1975, as he recorded them:

1975:

[Grocery store] $2,761.89
Milk $366.47 (yes, we had a milkman. Fortunately I remember him well enough to know that neither I nor my sister resemble him in the slightest!)

Oil $525.57
Electricity $346.94
Water $103.20

Mortgage $3,821.33
Insurance $250.00

Telephone $406.63

"Checkloan" $1,932.52 (this must have been some kind of home equity line of credit, probably for some renovations we did on the house the year before)

Dentist $217.00

Mastercharge $1,224.12
[Local clothing store] $335.68
[Department store] $257.02
[Department store #2] $141.18
(these were grouped together, suggesting that these were all clothing and other expenses incurred by my mother, for herself, the household and the kids, but I would imagine some other expenses must also have gone on the credit card.)

Books $171.38
Magazines $127.83
Records $368.63 [OOPS! Major correction here! When I was looking at this again, I realized this number was actually a subtotal I copied to the wrong line. The actual number for records was $69.42.]
(these were also grouped together and would all be things for my father's personal enjoyment, for the most part)

Tickets $210.40 (for symphony and ballet subscriptions, which were my parents' only nights out)

To convert these numbers into roughly today's dollars, multiply them by 4.

A few things stick out-- my dad is a big classical music buff. What he spent on records and tickets would translate to almost $200 a month in today's dollars! [See big OOPS above! It's actually quite a bit less, only about $93 a month, though that is still significant.]

He listed "Mastercharge" as an expense, not as a method of payment. I remember my mom paying for most things with checks, so I think they used credit cards differently than most people do now. I'm not sure why he didn't itemize the charges, but as noted above, I suspect he just lumped it all together more or less as "stuff my wife buys that I complain about." But I also wonder if he ever used it to buy gas, as that is a big expense that isn't otherwise noted.

The oil (heat) and electricity costs seem kind of high. We were having an energy crisis in the '70s, though I don't believe it was quite at its worst in 1975. Also, my perspective is probably skewed as my current utility bills are really low. When I was a kid, I remember my dad constantly going around the house turning off lights that weren't being used, even if just for a few minutes! I'd be quietly playing the basement and have to shout "I'm down here!" after being plunged into darkness.

The grocery bills were also pretty high-- this doesn't surprise me at all, as my mother to this day manages to spend a huge amount on food, and at least back then it was for a family of four!


Aside from the 1975 budget, I saved a couple other items of interest. One was a 1997 receipt from J. Press, "Gentlemen's Tailors and Furnishers." My dad bought two pairs of pants, which show prices marked down by about 15% to around $106 and $129 each, plus an ascot for $55! That just cracks me up. I remember my dad wearing an ascot once or twice and I'm sure he fancied himself quite the dandy! He refused for years and years to replace a pair of falling-apart boots he wore to do yard work, but he had no problem dropping $55 on an ascot.

The other receipt was from the restaurant where we celebrated my 30th birthday. My partner at the time managed to arrange a big surprise party with lots of family and friends, many of whom traveled and stayed overnight in New York just to be there. The only problem was that right before the party, my partner and I had a huge, tearful screaming fight which culminated, more or less, like this:

"You bitch! I can't believe I went through all this trouble to plan a surprise party for your f***ing birthday!"

So I had to show up and pretend to be surprised and hide the fact that I was totally miserable and on the verge of a breakup. At the end of the party, my partner sort of cornered my dad, who was quite drunk by that point, and said "hey, let's split the bill, ok?" My dad handed over a credit card and paid his half, but I remember having the impression that the original plans for the party might have been more along the lines of everyone chipping in, and some friends who asked about it as they were leaving seemed pleasantly surprised to be told it was all taken care of! Oh well-- I'll never be asking my dad to pay for a wedding, and if you look at it that way, he got off easy: the receipt he saved was for $940.75.

It's strange how a few bits of paper with dollars signs can carry so many memories...

More Books from the Wall Street Journal

This past weekend, the WSJ's "Five Best" list covered novels about the Great Depression, all of which were actually written during the Depression. I like the idea of reading some of these to try to better understand that time and compare it to what we're facing now-- the main effect of which, I'm sure, would be a reminder of how easy we have it nowadays, crisis or not!

I've always meant to read The Good Earth, mainly because I love reading about China. Although I'd heard of some of the other books, they were never on my radar... but now they are! So many books, so little time!


1. Now in November
By Josephine Winslow Johnson
Simon & Schuster, 1934

A fictional account of one family's experience on the land, Josephine Winslow Johnson's best-selling novel won the Pulitzer Prize before sinking into undeserved obscurity. The Haldmarnes leave an unnamed city for the countryside when Father loses a good job in a lumber mill and with it any hope of financial security for his wife and their three daughters....



2. The Big Money
By John Dos Passos
Harcourt, Brace, 1936

Norman Mailer often said that John Dos Passos had written the great American novel in the three volumes of the "U.S.A." trilogy. "The Big Money" was the final volume in the series, and its success put Dos Passos on the cover of Time magazine....




3. Appointment in Samarra
By John O'Hara
Harcourt, Brace, 1934

John O'Hara's first and best novel tracks the final three days in the life of a young man named Julian English. He is 30 years old, charming and good-looking, married to an attractive woman, and successful as the manager of a Cadillac franchise in a town called Gibbsville. Julian is also a dangerous drunk and a moral trifler, filled with envy and insecurity, a man with no discernible convictions....



4. The Good Earth
By Pearl S. Buck
John Day, 1931

A Pulitzer Prize winner, Pearl S. Buck's "The Good Earth" was also the best-selling novel in the U.S. for both 1931 and 1932. The book would shape American perceptions of China for two generations. The main characters, a poor farmer named Wang Lung and his wife, O-lan, are recognizable human beings, not mere Oriental stereotypes, who do their best to survive in a punishing world of famine, bandits, war and plague....



5. The Day of the Locust
By Nathanael West
Random House, 1939

The best novel ever written about Hollywood appeared in the last years of the Depression. A young artist, Todd Hackett, has come to the West Coast to paint the legions of bored and lonely men and women who migrate to California in pursuit of a dream they never find....




The books were selected by Peter Conn, author of The American 1930s: A Literary History.

Layoffs at Company That Makes Money

Here's a news story I stumbled across today: Mass. company responds to decreased demand for personalized stationery by cutting 70 jobs

NORTH ADAMS, Mass. —

The Massachusetts company that makes paper for U.S. currency has laid off 70 employees in its personalized stationery division in response to a drop in demand for the product.

Officials at Crane & Co. also announced Tuesday that the roughly 200 remaining employees in the division would take a 9 percent pay cut.

Chief Executive Charles Kittredge called the layoffs "extremely difficult."

He says in a tough economy people do not have the discretionary income to buy personalized stationery.

Fifty of the eliminated positions were in Crane's personal design services facility in North Adams and 20 cuts were at the company's factory in Dalton.

The company, founded in 1801, also makes currency and passport paper, and water filters.

It doesn't surprise me at all that people are cutting back on personalized stationery... but what about all the increased demand they'll be getting for paper as the Fed prints more money?

90% Tax on Bailout Bonuses

The House just voted 328-93 to levy a 90% tax on bonuses for executives of any company getting more than $5 billion in bailout money from the government. It's rather extraordinary that we've gotten to this point.

I can't say I'm exactly "for" this bill, though I'm not exactly against it either. I share the sense of outrage that people who run a company into the ground can walk away with huge payouts. I actually joked a while back that the appropriate vengeance against these klepto-execs was to create a very high, targeted tax exactly like this-- who knew anyone would actually have the guts to do it! But it just seems to have the potential to turn into a big ugly mess that won't actually do much good.

However, I'm all for progressive taxation, and I think if we'd never rolled back the very highest marginal rates so much, we'd be in less of a mess in the first place. As I always like to remind people, we had extremely high marginal tax rates in the 1950s and it was not incompatible with booming economic growth. If there's any lesson to be learned from recent months, it is that there will always be people whose greed and ambition knows no bounds. They may work their way to the top, or they may steal their way to the top, but they are dying to get there one way or another. Higher taxation won't stop them from being productive, but it will help pay for protecting the rest of us from their excesses.

But geez, let's go back to doing it in a nice, graduated way-- what's going on these days is enough to give you whiplash!

People Want Cheap Stuff

Boy, have we become a price-conscious country. More people are shopping at Wal-Mart. Inexpensive paperback books are outselling hardcovers by ever wider margins. And L. L. Bean is highlighting a whole range of items that are still the same price they were in 1995:


Enjoy it while it lasts!

My Dinner with Richard

I had a nice meal last night with a friend who I'll call Richard. He owns a small business which has been very successful in the last few years, catering to a very wealthy clientele. Richard himself seems pretty wealthy these days, and it's gotten to the point where arranging to have dinner with him makes me a little anxious, as he sometimes suggests rather expensive restaurants!

It's not always a problem-- sometimes we just order cheap Indian food and eat at his apartment. But last night we went to a place where the entrees ranged from about $27-40, and Richard ordered an $18 appetizer. He also picked the wine without my seeing the list, and when I did the math in my head afterward, I think it must have been between $40-50 for the bottle. And who knows, maybe that was the cheapest bottle! The total bill with tip ended up being about $80 per person-- you could certainly do far worse in New York, and the meal really was very good, but I couldn't help thinking it was the kind of thing I should only be doing for a special occasion, not just a routine dinner with friends.

The other thing about the dinner that made me laugh was that just before we were about to leave, Richard's eyes suddenly opened wide as he was looking behind the other friend who was sitting next to me. "Don't look, don't turn around!" he said. At first I thought, ooh, what celebrity is sitting behind us at this swanky place... but there was only a wall behind us-- a wall upon which a giant cockroach was crawling! I reached over and swatted it away with a napkin and an attentive waiter immediately stomped on it with a big crunch. And that is one of the great truths of life in NYC-- no amount of money will ever make you totally immune to cockroach encounters!

WSJ's Five Best Money Books

In the March 14-15 weekend edition of the Wall Street Journal, the "Five Best" book column was focused on books about money. Here are Jane Kamensky's picks:

1. The House of Mirth, by Edith Wharton
Suze Orman could have saved Lily Bart. Alas, poor Lily: The heroine was born a century too early for CNBC...

I read this book ages ago, and I'm thinking I may have to read it again!





2. Money, by John Kenneth Galbraith
Full of the grainy particulars of history and the god's-eye grandeur of economics, "Money" boasts equal parts empathy and majesty.

Galbraith is one of the authors I've always thought I should read as part of an attempt to teach myself Economics 101.


3. Money and Magic, by Hans Christoph Binswanger
A large and startling theory spills out of this offbeat little volume: Modern money systems have deep roots in alchemy, the Renaissance science of turning base metals into gold.

I'd never heard of this book, but I'm intrigued, especially since the few used copies on Amazon are selling for over $600!



4. Boggs: A Comedy of Values, by Lawrence Weschler
[Conceptual artist J.S.G.] Boggs draws paper currency so accurately that his bills might enter the marketplace undetected. But he doesn't quietly pass them off; he spends them at face value, after providing a full explanation, with any shopkeeper who will agree to play along.

After reading Mr. Wilson's Cabinet Of Wonder, I'd read pretty much anything else this author has to offer!


5. A Nation of Counterfeiters, by Stephen Mihm
This rogues gallery of forgers, coin-shavers and engravers-gone-bad holds up a funhouse mirror to the entrepreneurial face of American money-making.

The book focuses on the years between the Revolutionary and Civil Wars, when the U.S. had no national currency and instead a variety of privately issued notes competed with each other, making forgery especially easy. Sounds interesting, and I'd love to see pictures of some of those old bills.

Jane Kamensky, who compiled this list, is the author of another book that might be of interest in today's economic climate: "The Exchange Artist: A Tale of High-Flying Speculation and America's First Banking Collapse."

Happy reading!

Money-Related Images

All found at Design Observer, where I also saw a mention of Slate's "Shoot the Recession" photo pool on Flickr. Those aren't as pretty!

Almost $13 Trillion in Net Worth Lost

From the NY Times website:

Net Worth of Families Down Sharply

Family net worth had hit an all-time high of $64.36 trillion in the April-June quarter of 2007 but has fallen in every quarter since that time.

The record 9 percent drop in the fourth quarter pushed total net worth down to $51.48 trillion, a level that is 20 percent below the third quarter 2007 peak.

Wow. If you estimate the population of the US at around 305 million, it's a drop from about $211,000 per person to $169,000 per person, a drop of $42,000 each. I can't say I'm proud of having done more than my share of the losing!

Found Money... and a Seat on the Subway!

This is the weirdest way I've ever picked up change: the other day, I got on a crowded subway car. I saw one empty seat but quickly realized it was being shunned because someone had spilled coffee on it. Then I saw another empty seat-- that one was being shunned too, apparently for no other reason than that someone had left 4 pennies on it! In the split second it took me to snag the seat, my brain somehow decided that I should just sit on the money rather than picking it up first! But at the end of my ride, I remembered to grab them out from under me.

I guess you could call that a bum deal...

January/February 2009 Recap

I finally updated my net worth for the first time this year-- not good news, but that's hardly a surprise! I'm at $282,997, a drop of 5.2% year to date. I should probably be expressing this as a range of perhaps $250,000-$282,997, to account for a possible drop in my home equity.
I haven't changed my home value up til for a number of reasons, mainly because I have tried to be conservative in how I valued it all along, and because my research into comparative sales seemed to support it based on price per square foot in my area for properties I'm familiar with-- but so few things are selling lately that there aren't that many data points, and with things the way they are now, I probably wouldn't get that value if I had to sell tomorrow. Fortunately, I don't have to sell tomorrow! I bought my home as a place to live in, not an investment. That doesn't mean I don't care if the value goes down, and in retrospect, of course I wish I'd timed my purchase differently, but it's all somewhat abstract until I have to sell. I'm also still confident that I could rent my place out for more than my carrying costs, so I don't forsee a situation where I'd be forced to sell.

As for my expenses in January and February, here's a few items of note:

• Charity $51 (for a friend who's doing the AIDS ride)
  
• Clothing $249 (a $19 pair of pants at Muji and some boots at Zappos)
  
• Dining $1,253 (included stocking up on wine)
• Education $58 (French class tuition and une livre)
  
• Entertainment $226 (included tennis tickets and seeing August Osage County)
• Gifts Given -$442 (returned some expensive Christmas items that I didn't end up giving)
• Household $318 (includes about $200 for some curtains bought on sale)
• Medical $495 (includes the usual insurance and FSA expenses, plus $200 for adjustments to a nightguard I wear because I sometimes clench my jaw. This wasn't covered by my insurance.)
• Miscellaneous $244 (a haircut and some art supplies)
• Utilities $333 (gas, electric and telephone)

All in all, I haven't been doing too badly when it comes to expenses, so at least I am saving some cash this year. Unfortunately, it can't seem to keep up with the hemorrhaging in my investment accounts! Oh well... onwards and upwards!

Captain Matthew Webb: Swimming for Money

Over the past few months, I've been slowly making my way through a book called Haunts of the Black Masseur: The Swimmer as Hero, by Charles Sprawson. If you love swimming, you'll find it fascinating, as I have. It's a hard book to describe-- Sprawson traces the history of recreational and competitive swimming from its earliest days, to the Victorian era's fascination with sea bathing, to modern times. He explores the obsession with swimming that runs through literature, and visits famous waters that have beckoned to swimmers, sometimes luring them to their death. It's more of a meditation on the spirituality of swimming than a straightforward history.

Towards the beginning of the book, Sprawson tells the story of Captain Matthew Webb, the first man to swim the English Channel. His swimming exploits made him a celebrity in the late 1800s, on a level probably far surpassing Michael Phelps's fame today. Not surprisingly, one of the things that drove Webb, aside from a love of adventure, was a need for money, as it seemed to slip through his fingers easily and he had a family to support. Eventually, he was desperate enough that he decided to attempt a swim through the rapids below Niagara Falls, hoping this extraordinary exploit would end his swimming career by earning him enough money to retire on. A friend warns him that the feat is impossibly dangerous:

We discussed Niagara. "Don't go," I said. "From what I hear, you will never come out alive." "Don't care," was the reply [from Webb], "I want money and I must have it." As we stood face to face, I compared the fine handsome sailor, who first spoke to me about swimming, with the broken-spirited and terribly altered appearance of the man who courted death in the whirlpool rapids. His object was not suicide, but money and imperishable fame.

Webb's last words before he entered the water were supposedly "If I die, they will do something for my wife." He did indeed die in the Niagara rapids that day. The book doesn't say whether anyone took care of his wife.

Looking at Japan's Stock Market

Ugh, this is the ugliest thing I've seen in a while:

Japan's Long Slump Tests Faith in the Resilience of Stocks




I've been continuing to contribute to my 401k, and I still have a fairly aggressive blend of investments there. And with the kind of share prices we've fallen to, I've been thinking about perhaps even buying a few individual stocks again, a few good dividend-paying blue chips that may be relative bargains right now. But when I see things like that chart, I wonder if my dad was right all along when he seemed to scorn the stock market as being a risky, rigged game that was better avoided in favor of conservative investments. And this is a man who has a real defined-benefit pension-- it's not like he even had to worry about losing all his retirement income!

What's scary is that some of this isn't even about the underlying value of the companies. It's about panic and herd mentality. So far I've had the nerve to stay the course and hope I can benefit from the poor choices of others. But at other moments I start thinking "30 years to retirement isn't going to be enough..."

CD Maturity

I just had a 5-year CD mature. Often I'm pretty lazy about doing anything when this happens-- if you don't act, the bank just automatically rolls it over for the same term at whatever the current rate is. But given how things have been going lately, and how low interest rates are, I wanted to make sure I took a more careful look this time before the grace period for making changes expires.

And what a depressing look it was! The current CD rates at Chase suck, to be quite frank. For anything under 18 months, I'd only earn 0.25%. 18 months to 59 months is 1.0%. 60 to 120 months is 1.49%. I don't want to tie up money for too long at those rates.

I may just roll over the CD for 18 months, but I'll also be shopping around for better CD rates at other banks. The CD is a Roth IRA, but hopefully it won't be too complicated to roll it over into cash and then redeposit it-- I plan to call Chase today to find out! I tried to call the other day, actually, but perhaps because of the snow, their phone lines seemed to be tied up and I got sick of holding!

Where Did It All Go? Here's One Answer...

I got a kick out of this story: Paul Greenwood is the Town Supervisor of wealthy, horsy North Salem, NY. He is also a partner at Westridge Capital Management, where he is accused of bilking investors of $553 million. According to the 2/28-3/1 Wall Street Journal weekend edition, "prosecutors allege that client money was used for horses, homes, collectible teddy bears and other luxuries."

What next, will we find out that Bernie Madoff spent his ill-gotten gains on Cabbage Patch Kids? Did Allen Stanford's Ponzi scheme fund a Beanie Baby binge?

Bizarre...

Rule #20: Don't Be Dumb

How's this for a nice simple rule?

• Don't Do Stupid Things

How much money do you spend because of plain old dumbness? Here are two small examples from my own recent life:

At my gym, there are half lockers, one above the other. I always use the top locker. When I go swimming, I usually take off my earrings and bracelets and leave them in the locker. A couple of weeks ago, when I was getting dressed after my shower, I went to pull something out of the locker and heard a little "plunk." It was one of my earrings, falling through a crack into the locker below mine-- which was locked. I peered through the crack and could see my earring, sitting right there, amidst some dust bunnies. I told the attendant it looked like the locker was abandoned, and in any case wasn't one allowed for overnight storage anyway, but she couldn't open it with a master key and she said she'd have to get permission to cut it off. I didn't have time to deal with that, so I just left-- the earring I'd lost was a favorite, but not at all valuable, so I figured I would just come back and try again to get into that locker after speaking to a manager.
But in the meantime, I felt naked! (Almost as bad as that day I forgot my underwear!) And I had a big meeting that day that I was dressed up for-- I felt like I couldn't go without earrings. So I stopped in a little store at lunch and bought the cheapest earrings I could tolerate, which were only $10.
The next day at the gym, I was still wearing those earrings, and took them off as usual when I went swimming. And later, when I was getting dressed, guess what? "Plunk." I did the same exact thing, dropping one of the new earrings in a different locked locker! Afterwards, I went to buy a pair of earrings again, this time super cheapo ones from Duane Reade for only $5-- but unfortunately they hurt my ears, so I only wore them once.
Bottom line, I always knew it was dumb to leave the earrings on the bottom of the locker where they could easily fall in that crack, but I did it anyway, even after losing them the first time. Ever since then, I've put my jewelry inside a shoe or even poked them through a sock to make sure they'd stay put! Fortunately, I only had to spend $15 on earrings as a result of this dumbness-- no great loss, and a reminder that it is probably a good thing that I don't own any expensive jewelry in the first place.

The other dumb thing happened last night. I went to see the Billie Jean King Cup at Madison Square Garden. I love watching tennis, especially the Williams sisters, so I was happy to go, even though $60 for a ticket to a sporting event is not usually my preferred way of spending money. It was actually Mortimer's idea, and he'd gotten a group together a while ago. Though Mortimer is a rabid sports fan, now that he's lost his job, I'm sure he'd rather have kept the cash too.

Before I got to my seat, I bought a beer-- this in itself is pretty dumb, when you consider that a beer costs $8.75 at MSG. One of my other friends bought a bottle of water and they don't let you keep the cap on the bottle-- apparently they're afraid you'll throw the cap at someone. Despite this, they put a lid on my cup of beer. We were talking about the likelihood of spillage and my friend was envying that I had a lid and asked if I wanted a straw, which I scornfully declined-- it just seems wrong to drink beer through a straw.
Back at my seat, I removed the lid and took a few sips of the beer. Then... I managed to spill it, partially on my bag but mostly on the back of a young man sitting in front of me. Of course I was mortified and apologizing profusely and trying to help him clean his jacket off with napkins. And he was a good sport about it, shaking it off and saying it was supposed to be waterproof anyway. But the woman sitting next to him, who I'd at first assumed must be his girlfriend, turned out to be his mother. She turned around and rather imperiously announced "He's going to have to have that dry-cleaned now!" So I said "ok, I'll give you something," and once there was a break between games, I apologized again and gave the guy ten dollars, which he thanked me for and then handed to his mother.
The rest of the evening was without any disasters, but the tennis dragged on a bit and I ended up leaving at about 11:15, in the middle of the 2nd set. (Serena went on to win, though I'd been rooting for Venus.)
So $60 for a ticket, $8.75 for a beer, and $10 for someone else's dry cleaning. It ended up feeling like kind of a dumb evening all around.

Of course, this is just one kind of dumb spending among many. We spend money on things we don't need, things that don't work, unresearched purchases that could have been gotten more cheaply. And then look at all this dumbness of people lending money they knew couldn't be paid back, and people plowing money into investments they should have known were too good to be true. Dumb, dumb, and dumber.

But does dumbness, on some level, actually drive our economy? I mean, if everyone only did the most smart, sensible thing, a whole lot of consumer products would never be purchased. And in every transaction, there is a buyer and a seller-- what benefits one doesn't usually benefit the other too, so somebody's got to be a little dumb or it would all grind to a halt.

But don't let that stop you from trying to be smarter!

Book Review: The Secret Currency of Love

Back in December, I posted a link to an essay I really liked called The Accidental Breadwinner. That piece was excerpted from a book called The Secret Currency of Love: The Unabashed Truth About Women, Money, and Relationships. A sharp-eyed publicist picked up on the interest the book generated here, and was kind enough to email me the manuscript so I could review it.

If you like reading personal finance blogs, you will find a lot to like about this book-- some very talented writers tell their money stories with a lot of introspection and candor. But I have to say up front that if you like reading personal finance blogs, you may also be slightly disappointed in the book, as I was.

The book is divided into 3 sections: Money and Romance, Money and Family, and Money and Self. I thought the Romance section would be the most interesting, as relationships are such fertile ground for money issues, but as I made my way through it, I came to a realization: the problem with some books is that they are written by WRITERS. I found that too many of the relationship essays ended up being very similar: young struggling female writer is trying to make ends meet, always falls hard for the type of guy who is not a big earner, anguishes over inner feminist voice telling her it's okay for her to be the breadwinner while inner not-feminist voice tells her it would be really nice to have the man pay for things so she won't have to have a day job and can still enjoy an upper-middle class lifestyle while writing full-time.

Not all writers come from the exact same socio-economic background, but let's face it-- many are well-educated and come from families with some level of comfort and privilege, though usually not the kind of great wealth that allows total freedom from having to make a living. Writers want to spend lots of time writing, but it's hard to make it pay the bills-- hence that insidious desire for a man to swoop in and take care of them. (All the women in the book seem to be heterosexual.) And sometimes writers seem to embrace a supposed freewheeling artistic personality, happily professing ignorance about the nitty gritty of finances while reveling in the sensual pleasures afforded by expensive things. I would have liked the book better if there had been some "as told to" stories from women who represented a broader spectrum of society.

But if you can get beyond that, there are some great moments in this book, and a wide variety of money dilemmas are explored. Publishing exec Joni Evans writes about her high-profile divorce from a man who had been her boss. Ann Hood writes about keeping separate accounts in her relationships: after being married to a man who obsessively tracks their spending and makes her pay for her share of everything, she finds love with someone else who just has different financial priorities and budgets only $5 for family Christmas presents.
Lucy Kaylin loves a man who is pursuing his passion, but then she finds herself wondering if she can handle his disregard for money:

Kimball was the sort of guy who'd sooner gouge out his own eyeballs with a fork that publicly split a check and figure out the tax. And he found the unseemly settling up one is expected to do each month with the utility and credit card companies to be such an unremitting buzz-kill that he tended those relationships haphazardly.

After she and Kimball marry, she makes repairing his finances a pet project, trying to remind him about late fees and questioning him about whether he can afford all his purchases:

Having thrown my lot in with his, I made it my mission to put his financial affairs in order and transform him into a fit life partner.

But it backfires. He eventually tells her she has to get off his back:

I'm 39 years old; I've been taking care of myself for a long time. And maybe I'm not perfect with money but I'm not irresponsible. I've always had a roof over my head and everything I needed. I'm fine. And you can love me or not-- that's your choice. But you have to stop trying to change me, because it's not going to work.

In the end, Kimball manages to turn his low-paying passion into a more lucrative job and the couple now owns a 3-bedroom coop in Manhattan-- happily ever after!

I actually found the second section of the book the most powerful: Money and Family. The best pieces explore the shifts in financial attitudes that can occur when people have children. Jennifer Wolff Perrine tells a wrenching story of having a baby with a surrogate mother. Lori Gottlieb's piece, called Planned Parenthood, will resonate with those who have wondered how that mother of octuplets could contemplate bringing more children into her family. Gottlieb has a child as a single mother, via expensive inseminations. Then, with her finances even shakier than they were before the first child, she debates with herself about having another one.
This section of the book also gets into relationships with parents and other family members, including a piece by Yolonda Lawrence about how she dealt with her family looking to her for handouts since she'd achieved a level of success above their own:

Though I'm single, I wasn't alone when I spent my money. In my head, my family was always along for the ride. Every time I threw down a credit card at Barney's, I'd see my mother's face. Or hear my stepfather's voice, "Things have been a little slow. They cut back on my hours, so your mother and I can't take a vacation this year." I'd sign my name and my throat would choke with guilt. A tape played in my brain on a constant loop. "Guess what Yolonda, you're not just a disgusting daughter. You're a disgusting human being. How can you achieve financial freedom without giving your family the same opportunity? Yes, your work is sporadic, and you haven't saved for retirement-- but it's up to you. Free your family from the binds of middle class life."

Unfortunately, the real problem isn't her parents-- it's her drug-addict brother, who borrows money from her until the author finds herself getting into debt.

There's lots more quotes and interesting stories I found myself jotting down, but I don't want to spoil it for you! And I'm also skipping that step a real book reviewer is supposed to do, where you check the advance proof against a finished copy of the book, so I don't want to risk including any more quotes that might not be 100% accurate!

But bottom line, whether or not you find yourself sympathizing with every writer in this book, there is a lot of honesty here. These women rarely cite hard numbers for their earnings or expenditures, but they express feelings-- pride and shame and delusion and insecurities-- that all of us have felt, which is, in the end, what makes the book a compelling read.

It's available at Amazon here.