Entries Tagged 'Culture' ↓

A while ago I wrote an article on Wise Bread titled Five Ways to Squeeze Savings from Your Workplace. One of the commenters wrote that she actually collects cans and bottles at work and then turn them in at the recycling center for a little bit of money. I thought that was pretty funny, but I do drink quite a few bottled waters and soft drinks at work. I also bring home a few drinks that the hubby likes so we discard quite a few bottles and cans each week. Lately I have been feeling guilty about throwing those bottles and cans away. Finally, last week I sort of broke down and brought a plastic bag to work and collected the bottles and cans I used. On Friday I took the dozen or so cans and bottle I collected at work and today I sold them all at the recycling center along with a pile of other bottles and cans I collected outside on the patio. I got enough money to buy a rotisserie chicken, and I was pretty happy about it.

My hubby mocked me a bit and said, “Wow! Months of saving and all you got was a chicken!” I was still pretty proud of it because I got the chicken by recycling! If I were a bit more systematic about my recycling I could earn a few bucks a week and that could cover quite a few expenses. Here’s what I could possibly gain by turning in those bottles and cans.

Rotisserie chicken or burrito - $5 to $7 - Required recycling: 3 to 6 cans a day for a month (This is pretty easy to do between the two of us).

Laundry money - $10 to $15 a month - Required recycling: 6 to 10 cans a day (Sometimes I do drink 2 to 3 of the small bottled orange juices at work so this amount of recycling is definitely reachable).

Internet bill - $36 a month - Required recycling: 20 to 25 cans/bottles a day (This would require collecting other people’s bottles and cans but it is feasible.)

Gas money for my car - $100 a month - Required recycling: 60 to 100 cans a day (Okay this one probably requires me to be a full time dumpster diver so I probably won’t do it).

Now I have to admit that my mom is probably going to read this article and call me and say, “don’t be so damn cheap! You don’t need to be a real bag lady!” However, I think I will stick to turning in at least the bottles and cans my hubby and I produce everyday. A chicken or burrito every month for recycling waste is still a pretty good incentive to me!

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I don’t write much about politics, because I absolutely loathe it. I am also not an American citizen so my opinion doesn’t count in this country anyway. Nevertheless, I have no idea why anyone would want to be the next president of America right now.  With everything that is happening, it truly is a horrible time to be president.  Here are some of my predictions of what would happen regardless of which candidate gets elected.

1. Taxes will increase - How is it possible that America could wage an extremely expensive war for five years and cut taxes?  I’m not sure how the government does its accounting, but it did borrow a crapload of money from the rest of the world to fund this multi-trillion dollar war.  The war is funded on debt, and Americans have not really started paying for it. The interest on the debt will pile on, and we will be paying for it for years to come.  Taxes will increase either because the Bush tax cuts expire in 2010 or because the next president will just have no choice but to raise taxes and pay down some of that debt.

2. The recession will be felt more acutely - This is really anecdotal, but yesterday I walked around downtown San Mateo and at least three shops and restaurants were out of business.  One restaurant just said, “LOST OUR LEASE” on the door. The recession is really just beginning, and usually in an election year the government does whatever it could to prop up the stock market, but once the next president gets up to serve it will come crashing down.

3. The housing market will fall some more - Of course the NAR is calling a bottom now that housing sales went up a measly 2.9% nationally in February. They are not highlighting the fact that this February was a whole day longer than last year, which means that the month was 3.5% longer.  Prices were down 8.2% and housing sales still declined in the west. I am not sure if the bottom will come in the next presidential term, but the housing market will definitely decline a bit more.

4. The war will go on - It is unfortunate, but I don’t think the war in Iraq will be over as soon as the democrats promise.  The Americans are just too entrenched in that country to suddenly pull out.

Whoever the next president is, God help him/her.  I really think that a major problem with American politics is that power changes hands every four years so that every president tend to do short term fixes and make his/her four years look as glorious as possible and leave the seething crapbag to the next person in line.   The entire system fits with the American culture of “I want it right here right now”, and that results in policies that borrow against the future. For example, billions of dollars have been taken out of Social Security in the last couple decades to pay for operating expenses. Unfortunately, I don’t think this prevailing attitude and policy of sealing mortal wounds with bandages would change with new leadership.

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We are officially in a recession! I have written about how I would deal with a recession previously, and also shared the views of one of my company’s founders.  I think most of us saw this coming, and a lot of us will just go on quite unaffected as long as we have a source of income. There are some effects I am seeing due to the recession all around me and I feel like I should address them here.

1. Cuts to education in California- Unfortunately I am hearing a lot of news about good teachers being fired all across California and student walking out of schools  to participate in protests in the hope of keeping their teachers.  It is a pretty difficult situation for everyone, but with 1 in 240 or so homes in foreclosure, the state of California is losing billions in tax revenues.  The former budgets made in the flush housing bubble years are just not sustainable anymore. The funding cuts are necessary because I heard that municipal bonds are not selling well these days and there just isn’t enough money.  I still think it is stupid to fire good teachers, and I hope it really is the last resort.

2. Devaluing of the dollar - The value of the dollar is plunging around the world.  This is going to make travelling quite a bit more expensive for Americans. I know my trip to China later this year will be much more expensive than the past two years.  It will also make everything we import more expensive.  Since we import almost every thingamajig from China and the Chinese Yuan is 12% higher than last year, I expect household goods will increase in price quite a bit. However, it also makes American exports more attractive so hopefully that will make our economy recover more quickly.

 3. Food prices skyrocketing - This is insane, but last  month I picked up pizza dough for 99 cents at Trader Joe’s, and this month it was 1.29!  The same item increased 30% in a month.  Then I heard on the radio that flour prices are skyrocketing and many bakeries are paying 2 to 4 times what they paid last August for flour.  The reason is that wheat supplies dwindled this year and the demand increased.  Other foods are also getting more expensive because of increased  global competition for food and gas.

I haven’t really heard of massive job loss here in the Silicon Valley…yet.  It seems like companies are hoarding tons of cash, and that could be a good thing.  Today our CEO said that “difficult economic times are times for great companies to shine”, and I agree with him.  Anyway, I feel like my life hasn’t been affected greatly by the current recession, but that may change in the future if food gets more expensive than rent.

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You would think that people with less income are less inclined to give away their money, but according to a recent article on Yahoo Finance that is not the case:

The 2000 Social Capital Community Benchmark Survey shows that households with incomes below $20,000 gave a higher percentage of their earnings to charity than did any other income group: 4.6 percent, on average. As income increased, the percentage given away declined: Households earning between $50,000 and $100,000 donated 2.5 percent or less. Only at high income levels did the percentage begin to rise again: For households with incomes over $100,000, the number was 3.1 percent.

What is more interesting is that those who say they cannot afford donations are those who are mostly upper middle income. I wonder why this is the case. Are we in the upper middle class just more in love with our money? In the article they mention that religion is a big influence on the poor and it did remind me of the story in Mark where Jesus observed the donations of people in the temple.

“And He sat down opposite the treasury, and began observing how the multitude were putting money into the treasury; and many rich people were putting in large sums. And a poor widow came and put in two small copper coins, which amount to a cent. And calling His disciples to Him, He said to them, ‘Truly I say to you, this poor widow put in more than all the contributors to the treasury; for they all put in out of their surplus, but she, out of her poverty, put in all she owned, all she had to live on.’” (Mark 12:41-44)

I really love that story because it shows that the amount of money donated doesn’t matter, but it’s the heart that matters. If you feel that you can give, it wouldn’t hurt you to give. Some may say that it is foolishness for the lower income families to try to help others when they don’t have enough for themselves, but I think that a lower income doesn’t mean that these people have less sense in money management. Actually when you are poor you are forced to be frugal, and I have lived through that. You learn to get the most out of every dollar when you are smack in the middle of that environment. Just because someone has a lower income it doesn’t mean they have less of a surplus than those who make a lot more than them.

Another thing they teach in Christian churches is that God will provide and all money belongs to God, so giving away money isn’t a painful thing. I definitely believe that God has provided for my family so much more than I can ever give away. After all, money can’t be taken with me when I die anyway. I am really not surprised that the poor give away more money than the rich if most of them are taught the tenets of the Bible. I think generally the more money you have the more you become attached to it, and you manage and nurture it so much that you are afraid you would lose it. However, if you are poor, you are not afraid of losing your nonexistent fortunes. Additionally, when you are too blessed with wealth God gets kicked to the curbside so His teachings become less important. Money makes you feel powerful in a very human and worldly way and it is not always good.

Donating was hard for me at first because I come from a family that doesn’t donate very much. Since going to my current church I started to donate a little bit of money at first, and then a bit more, and then I sought out places to donate money to. I found that once you are willing to donate you can do it without feeling squeamish about handing out money. My parents say that my husband and I donate way too much money but really I don’t miss the money we give away at all. Since I don’t miss it I know it would benefit others more than it would benefit me.

Anyway, those are my random thoughts of the day. Have a great weekend!

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I am sure that most Americans are quite excited about the tax rebates that may be coming soon this year due to a major economical stimulus package. What is lesser known about this package is that it will also raise the “conforming” mortgage loan limit from $417,000 to $729,750 in high priced regions until the end of this year. This means that government sponsored enterprises such as Freddie Mac and Fannie Mae will be able to purchase loans as large as $729,750, and any loan under this limit will not be a jumbo loan. Basically, people will be able to borrow more money and pay less interest. Who is cheering for this change and why? More importantly, how will you be affected?

Opposing Views on the Issue

What I found interesting is that the National Association of Realtors put out an extremely positive review about this move stating that “NAR’s research found that simply increasing the loan limits for Fannie Mae and Freddie Mac to $625,000 would permit as many as 300,000 families to enter the housing market, reduce foreclosures by as many as 210,000 and allow as many as 500,000 jumbo loan borrowers to refinance to lower cost loans, saving these people $274 to $411 a month.” On the other hand, this article states that “the director of the Office of Federal Housing Enterprise Oversight (OFHEO), which is the governing body over America’s government-sponsored enterprises (GSEs), warned the Senate Banking, Housing and Urban Affairs Committee this week about expanding the GSEs’ ability to take on jumbo loans without first having the appropriate stipulations and regulatory structures in place.”

Who should we believe? The glowing report of an association of realtors who have lobbied for the change or the director of a branch of the government that has been tracking housing prices and demographics for more than three decades? I personally believe that the director of OFHEO’s opinion is prudent and logical. With bigger loans, the government sponsored enterprises will be taking on more risk, and if these agencies are destablized by more risky debt then the entire economy could collapse even further.

Best Case Scenario for the Average American

The best case senario I see is that nothing really happens and very few loans get funded under the new limit. These few homeowners will benefit from the lower rate and keep on paying their bills. Hopefully, the paltry number of these homeowners will not affect the housing market in any significant way. The prices of houses continue to decline for a while making homes more affordable and lowering the need for jumbo loans. Basically, the best we can hope for is that nothing changes.

Worst Case Scenario for the Average American

Unfortunately, I think it is possible that this footnote to the stimulus package could have a devastating effect on the current mortgage crisis. First, it may prolong the bubblicious prices in California and the Northeast. Right now I am reading many stories where offers on homes fell through because of the lack of financing. Considering the fact that the average price of shacks in my neighborhood is $700k to $800k, most of these buyers are trying to secure jumbo loans. Once this package goes through, financing will be possible, and the prices on the shacks will not come down as quickly. Even though this higher limit is only in effect for one year, it is possible that more speculators and fraudsters will get into the market and drive prices up even higher. After all, it only took about two years (2004 to 2006) for home prices to double in many parts of California. You may say that this is not a problem for the rest of America, but if Freddie Mac and Fannie Mae become insolvent because of more risky debt, then all Americans will have to pay dearly with mandatory bailouts. Then we can kiss that tax rebate and even more money goodbye.

What I Think Should Happen

I am not an expert, but I firmly believe that what we need is more affordable homes, and not larger loans. So it is probalby best if the limit was left alone and the ridiculous prices fell back down to earth. I think it is ludicrous that the “conforming” loan limit is being lifted more than $300,000 in this package in the blink of an eye considering that it took a span of 23 years for the loan limit to go up from $115k to $417k. Is more debt really good for Americans? What do you think should happen?

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