It’s been a long time since I pimped my fitness blog, Get Fit Slowly. To be honest, I haven’t been writing there very much. I’ve been busy with this site. But I’m sort of proud and amused by the righteous indignation I mustered in my latest post: “Walk off 15 lbs by July 4!”. It’s been a long time since something got me that worked up.
In the world of personal finance, here are some of my favorite recent articles from around the web:
First, Trent at The Simple Dollar posted an interesting article yesterday about the relationship between money and power. One of Trent’s readers writes that people don’t want to be rich so they can buy stuff; they want to be rich so they can have power. “Money does not result in influence and respect — instead, influence and respect often lead to money,” Trent argues. “Built respect and influence first.” I agree with him, but I don’t think that addresses the question. There’s a difference between “respect and influence” and power. I’ve seen that money can and does buy power, even if it doesn’t buy respect.
At U.S. News & World Report, Kimberly Palmer recently interviewed Suze Orman about the economic crisis. Orman makes some interesting points. Here’s one exchange:
Palmer: Do you think young people have it worse than any other generation, with their higher unemployment rate, high debt levels, and weak job market for graduates?
Orman: Right now, they have it so great it’s not even funny. If the economy kept running the way it was, you guys would have been broke for the rest of your life. Real estate was going up and up. You would never have qualified for real estate, and companies were shipping jobs offshore. So where were you going to get a job? The price of tuition was so high [that graduates] owed $150,000 in student loans. The price of milk and other prices were so off the charts. What were you people going to do? The stock market was at 14,000, so every time you put money into your 401(k), you bought [fewer and fewer] shares.
Finally, NCN over at No Credit Needed has some advice on breaking bad habits. He has a list of things to try if you find that you make a lot of impulse purchase. Solid advice.
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Loved the post on GFS. (And agree with you whole-heartedly — what a ridiculous claim!)
Didn’t know you had another blog. Consider me another reader!
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yes, we young new grads have it SO awesome right now.
let me throw some numbers at you. i’m completing my PhD in 6 weeks. 59 jobs applied for all over the country, and so far i have had ONE interview. i was turned down for that job. i have another in 2 weeks, in a slightly safer sector. my very lean stipend check is currently the only thing that pays the bills, and come the end of august, that goes away.
my husband just completed his associate’s degree in a field of high demand. or, it was a high demand field until every local hospital underwent a hiring freeze and just started overworking their current employees rather than fill new positions- now there are no open positions for his field within 100 miles of where we currently live. he currently is packing our stuff, since we are going to have to move across several state lines to find one job between the two of us.
yeah, life has never been better. neither of us are going into exportable fields, so it’s not like that was an issue. and now we’re walking into a giant black hole- where the price of milk isn’t exactly coming down but the absence of income makes that a totally moot point anyway. yes, we’ve got it SO good.
less than 2 months until my last paycheck and i’ve got nowhere to turn. and i’m supposed to be GLAD for this. she should think before she speaks.
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Leigh,
I understand what you’re saying, but I agree with Suze’s analysis. I find it great that real estate prices are coming back to reasonable levels. For example, I grew up in the DC suburbs and moved back there a few years ago as an adult. My wife and I being mid 20′s at the time made more combined than my parents ever did and went looking for a house. I could not find ANY property that was not a condo for under 400-500k. The houses that were in the low 500′s were the same shacks by the highway that the poor kids on lunch vouchers were living in when I was growing up. Talk about discouraging! I’m not saying that times are easy now and the short term lack of employment may suck, the long term advantages of an economic correction cannot be discounted.
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Orman may have it right as far as things being far cheaper for everyone now, but what good is cheap housing when you don’t even have a job? A $100,000 house is just as out of reach when you’re jobless as a $499,000 house is when you have a job.
I’m in a very similar situation as Leigh.. unable to find steady work in my field for 2 years, and resorting to working retail part time in a desperate effort to keep a roof over my head (no home of my own for me, I have to rent cheap rooms in other’s apartments), and ready to move out of state at the drop of a hat if I were so lucky to find a job elsewhere.
Orman may believe young people have it great, but only for the select few who are able to find good employment or those whose families will let them stay with them until jobs begin to increase again.
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I generally don’t listen to Ms. Orman primarily because I find her voice and attitude irritating. In this setting I don’t have to hear her voice so I can actually think about what she said. It makes sense in the long term. Yes right now things are tight and jobs can be scarce. And yes her attitude comes across as callous and insensitive. But that doesn’t mean she’s wrong. Housing prices need to come down. Companies need to realize that they need their employees. They need enough competent people who can do the job so that the companies aren’t spending money hiring people every few months.
It will take a little while for the economy to turn around. It will take lots of sacrifices from everybody. More than likely it’ll get a good bit worse before things turn around. But things will turn around. And as they do, people like you and me will finally be in a position where we can actually get ahead instead of having to win the lottery just to break even.
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I vehemently disagree with Orman. I’ve written about this before, but I firmly believe that our generation has been completely screwed over by the Baby Boomers.
Back when my parents were in their 20′s, the man of the house could get a blue-collar job straight out of high school. That means no student loan debt, although those who DID go on to post-secondary education had it MUCH cheaper (note that tuition rates have risen steadily ahead of inflation for several decades now).
The country had no debt, and taxes were low. A family could be raised on that single, blue-collar income. The mother could stay home and raise the 2.5 children. Oh yeah, and that unskilled blue-collar job came with a shiny gold defined-benefit pension. Housing was cheap, and mortgages were paid off in 15 years (on a single, blue-collar income!)
Life was good. How was all this possible? BY BORROWING IT FROM THEIR CHILDREN. As demand for more and more government services rose, the government started borrowing money. The national debt quickly escalated. Seeking ever-higher profits, companies killed off their pensions, and even shipped the jobs themselves overseas. Meanwhile, the price of tuition and housing outpaced inflation year after year.
Government debt kept escalating, even as taxes were raised higher and higher. Did you know that before World War II, there was no such thing as “income tax?” You might also be interested to look into the history of property taxes, capital gains taxes, sales taxes, land transfer taxes, vehicle registration fees, and all the other taxes that our parents never had to worry about, but that bog down our budgets.
So after the government takes a far-bigger slice of our paycheques, we’re expected to use the remainder to pay for more expensive housing and bigger student loans, while simultaneously saving for our own childrens’ educations (which will be even more expensive still), not to mention being expected to set aside 10-15% of our incomes for our own retirement (since our parents killed pensions).
Yeah, Suze, we’re MUCH better off. Thanks.
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One other thing, regarding home prices. Yes, home prices have come down. But they’re still WAAAY above what the Baby Boomers paid for their houses, when taken as a multiple of household income. Furthermore, the housing price slide appears to have already stopped, and prices are still astronomical.
The new adminstration, in its infinite wisdom, is doing everything in their power to keep prices artificially inflated, rather than actually letting the market undergo a healthy and much-needed correction.
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I’ve got a totally different take on history than Kevin. During the 1950s and 1960s the US underwent an enormous economic boom, fueled by government spending during WWII and the weakening of major competitors in same. People got used to the idea that this was the way things were, that every generation should see huge increases in standard of living, that it was normal for stock prices and real estate prices to go up the way they do when industry is expanding and cities are growing, and that every generation should have a lot more stuff and bigger houses than the one before. Transportation got cheap due to a temporarily high supply of oil, and companies thought they could ship all the jobs overseas and people would somehow still have the money to buy their stuff, because everybody would go to college and get jobs programming computers and what not, and then they figured out they could ship those jobs overseas too, and that was OK with the people whose opinions counted because they figured they could make so much money off their investments they could retire at 40 and wouldn’t need jobs anyway. And then it turned out that perpetual expansion isn’t actually the way the world works.
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People always think the past was better. They are almost always wrong.
I personally consider myself fortunate to be young (ish) at this time. Times are tough at the moment but most of our parents and grandparents had it worse at some point in their lives. When the jobs start coming back, younger workers will be hired before older ones; younger workers are often cheaper and more flexible, and not looking to retire anytime soon. Learning how to get by in tough times is an advantage too; living on less we will save more all our lives. And of course we are buying stocks on sale, and in some areas houses too. Things can really only get better from here – not in the short term obviously but over the course of our lives.
Of course, knowing that doesn’t make the present any easier. Good luck everyone.
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>>@#6, Kevin
>>The country had no debt, and taxes were low.
So untrue.
a. National debt was 150% of GDP in 1945 and barely ever went lower.
b. Taxes were *much* higher for higher income earners.
As recently as mid-1980′s, tax rate for over one million incomes was 46%.
Now the highest earners max is 35%.
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@seekinglemonade (#10):
“National debt was 150% of GDP in 1945 and barely ever went lower.”
That’s odd… this graph shows it at 120% in 1945, and in fact it DID go quite a bit lower. Under Carter in the 1980′s, it was less than 40% of GDP. Reference:
http://zfacts.com/p/318.html
“Taxes were *much* higher for higher income earners.”
LOL! And that applies to my single-income blue-collar worker HOW?
My example illustrated how in the 60′s and 70′s, it was possible to raise a family, pay off a mortgage, and have a comfortable, secure retirement with a single blue-collar income. Does anyone really believe that’s even remotely possible today?
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Susie Orman is insensitive. Things are tough now for young folks and every folk frankly Yes there are glimmers of hope as we’ve rebounded in the stock market, however, if one has still been looking for a job, it feels like armageddon.
To NOT buy a piece of real estate within the next 3 years is probably a mistake down the road. Same thing goes for maxing out your 401k. But my question is….. contributing 16-17K/yr in 401k…. is that enuf to retire on? Yes the employer matches 3-10K…. but still, doesn’t seem like enuf.
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Carter wasn’t president in the 80s, Reagan was.
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Carter WAS president in the 80′s (1980 and 1981). Regardless, I was just going by what the graph said.
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I also didn’t know about the Get Fit Slowly blog. Makes sense though since financial and physical well being are both long-term projects that need constant education, motivation, and inspiration. Good luck to all of your online and personal endeavors.
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Kevin, why are you so hung up on this mythical blue collar worker who is the single breadwinner? Economies change, demand for products and services evolves, skills valued 50 years ago or 30 years ago aren’t in such demand today.
I know this sounds callous, and politically incorrect, but I don’t understand why people still cling to this belief that a manufacturing worker with a high school education should be able to support a family in style, in 2009. Like it or not, the economy is more based on moving data today, and that’s what’s valued. Sorry, but it’s true.
Of course, there are blue collar jobs that need to be done — and those in higher demand pay better — same as with white collar jobs. Truckers, for example, can, in many situations, make an excellent living. Plumbers can do well, and there are certainly many other examples. But auto workers and others in old-line kinds of manufacturing? Probably not so much, for a while, anyway. And it really doesn’t do any good to cling to some vision of the seeming “glory days” and get angry that those days are gone.
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Doggie, the difference, as I see it, revolves entirely around the amount of taxes the government confiscates from our paycheques. We still have blue-collar workers today, and they still have families to support. However, it’s much more difficult for them now, because of two factors: a) housing prices that have consistently outpaced inflation and their paycheques, and b) increased cost of taxes.
Back in the 60′s and 70′s, government spent less. Consequently, they collected less in taxes. As demand for more government programs grew, the government borrowed money to fund them, rather than raise taxes. Our parents (the Boomers) directly benefitted from this artificial suppression of taxes. They got the fancy services they wanted, while passing the bill on to their own children. That let them keep more of their paycheques to spend however they wanted. Since housing was so cheap, and their retirement was already provided for (via their company pension), times were great.
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Well, I’d say the children of today’s Gen Y-ers will have the same complaint: “You stood by idly in 2009 while governments continued to raise taxes and increase government programs, and now we are stuck with your bill.”
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