Category Archives: Money Matters

Green Tour 11

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Last April the GalPal and I thoroughly enjoyed Olympia’s first Green Tour of 7-8 environmentally advanced homes. Two weekends ago we went on the second annual tour which had 20 homes and businesses available for people to visit. Last year the tour highlights took one afternoon, this year we spent the better part of both Saturday and Sunday visiting probably ten homes.

The extra-personable designers and builders use the tour to educate people and of course network in the hope of drumming up business in an obviously dismal housing market. Sometimes we’d look at a house for fifteen minutes and then spend another forty-five talking to the designer or builder.

We were especially impressed with the work of a young female architect who has designed Olympia’s and Washington State’s first passive homes. Here’s her company. I can be as skeptical as they come when presented with trendy buzzwords like “green,” “sustainable development,” “and eco-friendly,” but I’m convinced that when it comes to energy efficient home building there’s at least as much fire as heat (pun intended) and substance as style.

The one downer of the tour was visiting the “Jewelbox“, an 1,100 square foot passive home (excluding the separate state of the art art studio/shop) with an incredible 270 degree view of the Puget Sound just two miles from downtown. As the GalPal and I walked down the tree-lined street towards the “Box” and the Puget Sound, we realized it was on a property a friend had tipped us to two years ago before it went on the market.

We looked at it and loved the location, but passed because we thought it was overpriced and we couldn’t get past the decrepit house that would need to be knocked down. The furniture maker/sculptor owner found it on craigslist. He said the day he visited it the owners dropped the price 100k and eventually accepted his offer that was another 100k less. I’m glad I resisted punching him because he couldn’t have been a cooler, more soft-spoken, down to earth dude. I’m fascinated by the way many artists can envision things that I can’t. Sometimes landscaping, decorating, housing design vision is just built-in.

In the last year, the greenest U.S. designers and builders have taken a great leap forward. If your house is even two or three years old there’s a good chance it doesn’t capitalize on many of the most recent advances.

Granted, the science is interesting, but I’m more interested in the economics and the politics. In Europe, passive homes add about 7-8% to the cost of building a traditional home of equal size. In the U.S., because most of the wall and window materials have to be imported, it’s more like 15%. That 7-8% gap will no doubt slowly close as North American demand picks up. Once completed, a passive home’s utility costs are about 10% of normal. I’ve looked at computer models that suggest the pay-back period is approximately ten years. One 2,400 square foot home used a 1,000 watt b.t.u. air blower (less than a blow dryer) to heat the whole house.

Even with padding and rugs, the concrete floors would probably take some getting used to, and the outdoor siding is quite rough and different looking. No doubt you and I will adjust to those differences in short order as we become more familiar with them. More generally, the aesthetics of the kitchens, bathrooms, and other parts of the homes can be exceedingly nice.

I know not everyone can afford a stand-alone home and very few will ever be able to afford “overpaying” up front in anticipation of future savings. But for the economically most fortunate, the economic calculation is the same one I did with paper and pencil five years ago when deciding to buy a slightly more expensive hybrid car. I thought it would take 7-9 years to begin saving money on my car, but we’ve chosen to drive it more than expected and with a higher average cost of gas than I conservatively estimated, it’s only taken five years to reach the break-even point.

Now every time I fill up for $40 (based on about 46mpg), I think I just saved myself $40 more (based on 23mpg). Here’s another interesting example of the same concept. The analogy works even in the sense that I received a federal tax break for my hybrid car purchase because there are many rebate type incentives in place for things like solar energy (in that case, for nine more years apparently).

I’m thinking seriously about building a passive home, or more accurately, sitting passively while the home of the future is built for me.

A Cry for Help

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If you’ve been paying attention, you’ll recall a confession I made a month or two ago—I’m more handsome than handy. As a result, once a year, the GalPal hires a handyman or should I say “person” to caulk, replace the carpet on the garage steps, fix faucets, and other things that I should probably know how to do.

But I’ve always been mechanically challenged and no one ever taught me how to replace or fix carpet or faucets. My “tool chest” is unbelievably bad. So once a year I suck it up and make out a $300 check to some manly man who spends five hours doing what would take me five weeks. Good for the economy right?

The GalPal upped the ante recently when she came home from church with the “great” news that she met a handywoman who was just starting up her business. “I want to give her a try.” Damn, what if her van is parked in the driveway when the boys drive by? Screw the Neanderthrals, good for gender relations right?

If only I was that evolved. Truth be told, one of two things has to happen. She has to switch to a nondescript van or my hyper handy brother-in-law has to move from Indiana to Washington so he can chip away at my “Honey do” list throughout the year, thus sparing me more Handywoman humiliation. My b-i-l, let’s just call him Bil, is known among his four adult children as “The Smartest Man in the World.” Not just the smartest, also the handiest and funniest. I’m beggin’ ya Bil.

Like all of us, Bil is fallible. His one flaw is a doozy too. He lives several states and thousands of miles from his only grandchild, see below in full dog regalia, my godchild. The inhumanity! It’s high time he pack up his fishing poles, rifles, Pittsburgh Stealer jerseys, wife, and head due west. If Olympia is too dark, gray, and wet for six months of the year, what about Wenatchee, which is convienently half way between here and Missoula, MT, home of flappy eared grandchild.

The outcome? He sees his grandson every few months, he sees us a few times a year, he makes the Handywoman redundant. A distinct win-win for family and my ego.

Postscript. I recently installed a new toilet. Well, truth be told, I watched my friend next door instal our new toilet. To his astonishment I had removed the original before he arrived. Him, where is it? Me, recycled downtown at Habit for Humanity. Him, didn’t know you had it in you. Wish you had saved the hardware. Me, breaking down things and demolition have never been the problem, it’s the putting back together where I suck.

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In Praise of Anonymous Giving

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We’re living in the Age of Self Promotion. That’s why this recent headline, “Secret Admirers Give University $100m,” is so refreshing. Thank you to the anonymous “Kalamazoo Promise” donors.

The magnitude and non-Ivy League nature of their generosity are both inspiring, but their counter-cultural selflessness even more so. Appears as if the donors were honest about a few strings or conditions that accompanied their gift. “If you accept this gift, you can’t name the medical school after us, you can’t allow us to influence your construction and operation of the medical school, and you can never reveal our identities to anyone.”

Save or Spend?

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There are three types of people in the material world: savers; spenders; and somewhere, someone, who perfectly balances the two. Too bad young lovers rarely get around to asking, “Saver or spender?” because mismatched partners no doubt deal with more than normal stress and conflict.

A consummate saver, I’m a distinct minority. News outlets have been churning out report after report about Baby Boomers not having saved nearly enough for their impending retirements. Look for older and older employees in the workforce.

Recently, a Wall Street Journal writer (article link—Want to Retire Wealthier?) asked, “Why is it so difficult for people to set aside money for the long-term future?”

Then answered, “Low earnings and high temptations are obvious reasons. But perhaps the most basic cause is a fundamental human frailty: We view our future selves as strangers.”

The intriguing article continued:

Estimating with any precision what you will want 30 or 40 years from now is almost impossible. You don’t know your future desires, because you don’t know your future self. What will you want or need when you are 65 or 70 or 80 or older? Who knows?

Viewed this way, it isn’t surprising that the young typically don’t want to save for their retirement, since that stage of life feels as if it will be lived by someone else. And when you save money today on behalf of your remote future self, you deprive your immediate present self of cash you could use right now.

Of course, if you spend tomorrow’s savings today, you won’t have cash when you need it in the future—but that day of reckoning is decades off. That is true for those of all ages, but the lost opportunity is greatest for young people, because money set aside at an early age has more years to grow.

Yet it is highly unusual for people to think more vividly about their future selves than about their present selves, say psychologists.

The project underway at Stanford seeks to close this gap between the present self and the future self, without turning young people into misers. By enabling the young to see themselves as they will be when they are old, virtual-reality technology can transform their urge to spend for today into a willingness to save for tomorrow.

Interesting finding. Pictures of people’s future elder selves inspire them to save more.

Reminds me of the “marshmellow study” described here.

In that study, researchers learned that young children who couldn’t wait to eat one marshmellow (“low delayers”) and thereby sacrificed receiving a second one, seemed more likely to have behavioral problems, both in school and at home. They got lower S.A.T. scores. They struggled in stressful situations, often had trouble paying attention, and found it difficult to maintain friendships. The child who could wait fifteen minutes for a second marshmellow had an S.A.T. score that was, on average, two hundred and ten points higher than that of the kid who could wait only thirty seconds.

You and I know S.A.T scores are inconsequential in the bigger picture, but it’s hard to underestimate the importance of delaying gratification.

I wonder, what’s the secret to striking the best possible saving-spending balance? Put differently, how should one balance living in the present on one hand and in the probable future on the other? And if virtual-reality technology holds promise for helping spenders save more, what might help hyper-savers strike a better balance?

The Public School Budget Crisis and the Dilemma of Professional Development

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From the Tacoma News Tribune—During the course of a school year, the cost to offer professional development adds up to a tidy sum, which is getting harder for school officials to ignore as they comb their budgets for savings.

Fork in the public school budget road. Given budget shortfalls in the tens of millions, the question for the Tacoma School District, and nearly every other one, is how to prioritize among competing trade-offs including: 1) continuing professional development including the mentoring of beginning teachers; 2) retaining more teachers and thereby maintaining smaller class sizes; 3) consolidating (meaning closing some) schools; or 4) reducing pay. Put differently, the District can’t afford to maintain the same professional development program for the same number of teachers in the same number of schools at the same level of pay.

I’m here to help.

Dear Superintendent Jarvis,

While it’s not obvious, as the coordinator of my university’s Masters Teaching Certification program, I’m on the front lines of this dilemma. Currently I’m reading applications, interviewing prospective candidates, and deciding (with the help of some colleagues) who gets the chance to earn a teaching license and who doesn’t. Ours is an above average program, but we need more applicants with even stronger academic backgrounds to choose from. As you’re well aware, legions of fifty and sixty-something boomer teachers are nearing retirement.

In short order, the profession is going to need an infusion of smart, dedicated, caring teachers. The medium and long-term health of your schools depends upon my university attracting deeper and stronger pools of applicants.

While admittedly difficult, I implore you to take the medium to long view by continually asking what priorities are most likely to attract more highly capable college graduates into the profession. The “least worst” outcome is to reduce professional development and consolidate some schools. On average, K-12 teachers make 40% less than their college graduate peers.

I suspect that for every percentage of teachers’ pay you cut and for every student you add to their average classrooms, we lose strong prospective candidates to the business world and other graduate programs. Chip away at compensation and increase teachers’ work loads through larger classes and our pool of applicants will shrink and weaken. The future quality of teaching in your schools hinges on preserving pay and favorable work conditions.

Professional development excellence does not requiring flying in a math expert for two days for $5k. Doing so suggests there isn’t a single teacher within the district who has specialized math expertise that will benefit others. Paying a charismatic professional speaker for a few inspiring talks is easier than changing the work culture, but it creates cynicism because of the utter lack of follow through. If we’re honest with ourselves, we know the medium and long-term benefits of distant experts will always be negligible.

Instead, think bottom-up and assign more responsibility to your teacher-leaders for professional development. Ask them to survey their colleagues and then plan more meaningful discussion-rich sessions around the issues they’ve identified as most important.

If you carefully explain how consolidating schools is the “least worst” outcome most people will eventually come around. People are understandably upset that their property values have plummeted while their property taxes have stayed the same or increased. No one ever likes to see their neighborhood school close, but they’ll be more understanding if you help them connect the dots between school closings, greater economic efficiency, and more manageable property taxes down the road.

Yours Truly,

Ron

The “Bottled Water” Era of Internet News

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Starting today, the Gray Lady is watching and counting. Twenty free articles a month and then at least $15/month. The Times is an excellent newspaper, probably not as good as it was a few decades ago, but still very good. It’s my homepage, I read it regularly, I enjoy it, but unlike Jack Shafer, I will change my reading habits to avoid paying.

Shafer describes the current New York Times website as free. Only if he is using his employer’s internet service or someone’s wireless signal. I pay about $70 a month for internet service (including unlimited iPad 3G service). Of course my internet service providers, Comcast and AT&T, don’t pass along any of my $70 to the New York Times, so I’ll grant Shafer his point that Times writers deserve more support than web hits and associated ad revenues generate.

The problem though is that instead of partnering with other major internet news sites, the Times is making this leap solo. There are too many free substitutes of near comparable quality. I’ve never understood the bottled water craze given the quality of tap water in the U.S. I will read the Los Angeles Times, Slate Magazine, the Huffington Post, the Wall Street Journal, The Atlantic, and the free Economist and New Yorker content more. And I’ll visit the BBC and NPR websites more.

It will be interesting to see what percentage of on-line Times readers cough up for unlimited on-line access. I heard a journalism business analyst say the Times needs 1% of it’s on-line visitors to begin paying for the experiment to be a success. If that’s true, expect to see other periodicals follow suit relatively soon. Then, thank Shafer, not me, for the “bottled water” era of internet news.

A War on Oil Dependence

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Photo credit: Ray Maker, DCRainmaker blog

We’ve had “wars” on poverty, drugs, and terrorism, why not oil dependence? Imagine a bold president challenging and inspiring us to reduce our use of oil by 20% in ten years. Why wait for that type of leadership? Let’s just commit to driving two percent fewer miles, per year, for ten years.

Dare we learn some things from other people in other places, like this Amsterdam family? Note the obvious: the fenders and racks; the large kid/cargo holder; the simplicity of the bikes and bike riders; no lycra, helmets, or cleated shoes; the utter normalness of it. With dedicated lanes and slowish bikes, helmets aren’t as critical. And the less obvious: the slower pace, the reduction in greenhouse gasses, the health benefits and reduced health care costs, the vitality of the sights, sounds, and elements.

City planners need to incentive bicycle commuting by integrating dedicated bike lanes, and safe, well-lit bicycle parking lots into their designs. Cities need to provide employers with incentives for bike lockers, air compressors, showers.

Car insurance should be based upon mileage traveled. Find the national average and set rates so that people who drive the national average pay existing rates. Make people self-report and audit a small percentage each year. People that drive 10% more than the national average, pay 10% more; 10% fewer miles, pay 10% less.

A nod to Friedman, raise the gas tax to $1/gallon.

I would love for someone to point me to counter examples, but our public bus systems are painfully inconvenient and slow. And unless you’re fortunate enough to live in a handful of our largest cities, subways and trains are rarely a viable option.

In the U.S. we like to pat ourselves on our collective back for being creative and hardworking, but we’ve shown no imagination or gumption when it comes to developing genuine alternatives to car travel.

Time to change that.

Two Roads Diverge—The Conclusion

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The conclusion—Our children and the fork.

What should our children do to increase their odds of enjoying some semblance of economic security?

For the last several years I’ve been preaching a liberal arts education gospel. The message has been that the key to success in our increasingly competitive knowledge economy is a rigorous higher education that develops analytical, writing, critical thinking, and related intellectual skills. Then this mind-blowing article appeared in the New York Times—Armies of Expensive Lawyers, Replaced by Cheaper Software.

Fork anxiety alert.

E-discovery companies like Cataphora are forcing me to rethink many of my assumptions. In terms of employment success, a college education, even a law degree, guarantees less and less. Instead of starting over with a brand new gospel, I need to supplement my call for a rigorous college education with additional strategies.

One overlooked strategy, self-sufficiency, is beautifully described in the book Little Heathens. Each of our children have to decide whether to follow our model of pursuing competence or expertise in one particular area, and then trading that competence or expertise into money through long work hours, and then handing significant percentages of the money over to others for a litany of products and services including, but not limited to: growing and preparing food; making and cleaning clothes; entertainment; education, hair and related personal care; pet grooming and care; cleaning and repairing bicycles, cars, and homes; tax preparation; counseling and medical care; yard work; personal trainers and life coaches.

Rightly or wrongly, most modern peeps have convinced themselves that their time is worth more than it costs to pay for those types of products and services. But the fork will change that equation for some of our children. What if our children experience under or unemployment, what if their wages can’t keep pace with inflation? What if they have more time than money? Although no one is talking about it, self-sufficiency is a common sense insurance policy in an increasingly unpredictable woods.

In addition to greater self-sufficiency, young people who develop a specific craft or trade will enjoy more economic security because they’ll be able to use their craft or trade to supplement their income or weather periods of under or unemployment. If artificial intelligence or related technological breakthroughs make them redundant for six months or a year, every four or five years over the the course of their adult working lives, my daughters could teach violin to Tiger Mother offspring. Put all of your economic security eggs in the intellectual skills basket at your own risk. Teach your children to lifeguard or teach swimming, to cut hair, to repair bicycles, to landscape, to design web pages, to care for and tutor younger children.

Also, and we’re nearing the end of our journey, agitate and advocate for “life-skills” in your children’s school curricula. We have to push back against the President’s and high profile business leaders’ insistence that all we need to negotiate the fork is marked improvement in math and science education. Truth be told, I’m not very self-sufficient, more handsome than handy, so for my daughters to become meaningfully self-sufficient, I need the help of teachers and other adults in the community.

Where’s the room in the curriculum? Not sure, but independent, Waldorf, and other alternative schools often find room for life skills. The publics would be well advised to turn to their smaller, funkier brethren for guidance. And since I don’t expect that to happen, parents better put their heads together to figure out how to help their little heathens become more self-sufficient.

And to borrow from Sue Sylvester (I shudder if you have adolescent children and don’t get that reference), that’s how Ron sees it.

Two Roads Diverge 2

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Part 2 of 3—The left, the President, and my evolving thoughts on the fork.

The left attributes stagnant wages, high unemployment, and heightened economic scarcity to conservative Republican ideology, unregulated Wall Street bankers, and all-powerful corporations. The U.S., the left contends, is not a meritocracy. Within our laissez-faire free-market capitalist economy the wealthy have many more opportunities to advance than the poor; consequently, the rich get richer and the poor poorer. Increasing the wealthy’s taxes will reduce inequality, help more people find jobs and pay for health insurance, and give the majority of people with ordinary means a fighting chance.

The right, because they insist our economic problems can be fixed by a kind of American exceptionalism positive thinking, is failing to provide any kind of realistic roadmap that might help us negotiate the fork and create genuine, lasting forward momentum.

The left, because they insist it’s impossible for individuals and families to create any kind of economic security because the gap between the “haves” and “have-nots” is so wide, is also failing to provide a hopeful, credible, compelling roadmap.

With an eye towards November 2012, the President tends to split the difference and articulates an American exceptionalism-lite that he couples with an unfailing belief that a renaissance in math and science education will help us reclaim our role as the world’s undisputed economic hegemon.

Neither political party’s platform offers any assurance that nearly enough decent paying jobs will be created, we’ll transition to alternative energy sources, health insurance and Medicaid will be affordable, and anyone but the already well-to-do will enjoy prosperity.

Despite the understandable fear and foreboding, I’m finding more inspiration from ordinary people living humble, simple, selfless lives, than from any political figure, party, or platform. People unmoved by materialism. People attuned to the limits of time. People who identify more as writers, artists, peacemakers, ecologists, and global citizens, than consumers. People relatively unperturbed by the fork because they’re on simpler pathways.

The wrap against minimalism or voluntary simplicity is that it’s boring. Sometimes minimalists deserve criticism for a one-size fits all mentality, but not for being boring. What’s boring is subjective. For me, inexpensive things like writing, preparing and enjoying a healthy meal with a few family members or friends, reading a good book, seeing an excellent film, working out, and watching basketball with the labradude are sufficiently exciting. I’m cool with other people thinking those things are uninteresting.

The natural reaction to our tough economic times and the fork in the woods is to be disappointed with having to live with less. On the other hand, it could be a catalyst for rethinking our taken for granted consumerist-materialist lifestyles.

Some will conclude, “An out-of-touch sentence that only a person who doesn’t have to live month-to-month or worry about basic needs could write.” I get that. I’m beyond fortunate. I’m not sharing my evolving thinking to convince anyone to give up anything, I just hope my musings about how much is enough and what’s most important resonates with some readers.

There’s a big difference between “voluntary simplicity” and “forced frugality”. A forced frugality mentality, “damn we can’t afford anything anymore,” breeds ever-increasing resignation and frustration. In contrast, a voluntary simplicity orientation that prioritizes health, interpersonal relationships, and service is liberating because not as much money is required, meaning not as many hours or years of work may be needed.

This reorientation is similar to my learning to eat more healthily. Initially, I didn’t particularly care for low sugar, non-fat, veggie and fruit based meals, but ten years later I prefer them. I don’t have to force myself to eat healthily, I prefer it. I don’t have to force myself to live relatively simply (by 2011 North American standards), I prefer it.

Wherever this non-work, simplicity journey takes me, I doubt I’ll ever reach a state of buddhist nirvana. I like to travel, I like cars, carbon fiber bicycles, nice hotels, and massage “therapy” too much. And not too proud to admit, I even like Million Dollar Listing on Bravo. Ample room for growth.

Next—The conclusion—Our children and the fork.

Two Roads Diverge

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The first in a week-long, three-part series.

I’m doing some reorienting. Prioritizing my non-work identities and relationships. Mid-life crisis? Don’t think so, but time will tell. Check back in a year or two from now. Lao Tzu said, “The journey of a thousand miles begins with a single step.” I’m taking the first steps of a journey whose outcome is unknown.

So what follows, like my identity more generally, is a work in progress. I don’t expect anyone to agree with everything. Or anything.

U.S. citizens are at a fork in the woods. A fork formed by a decline in manufacturing, technology-based automation, slower economic growth, and heightened economic scarcity.

More details here, although you don’t need Tyler Cowen or me to tell you about what you’re experiencing day-to-day.

We talk at length about the trees in the woods—fast rising gas prices, exorbitant health insurance premiums and college costs, and declining home values —but hardly at all about what lifestyles are most sustainable and meaningful.

The fork has prompted a radical shift in thinking. In the U.S., throughout the 20th century, parents thought, “I expect my children to live a better, more comfortable life than me.” Today the default is “I worry and wonder whether my children will be able to live as well and comfortably as me.”

Two roads diverged in a wood and I—I worried and wondered.

Economic security seems outside of our control. The economy is in constant flux and no job is secure. We can’t get politicians to think beyond their re-election and balance our state or national budgets. We can’t get them to stop fighting distant wars. We can’t slow China’s and India’s growth. We can’t reduce our dependence on oil. We can’t get consumers to stop shopping at Wal-Mart and other big boxes. We can’t stop companies from outsourcing jobs. And there’s seemingly no way to improve parenting, fix schools, or reduce inequality.

The fork is doubly tough for adults responsible for young people. They worry, what does their future hold? “I’m worried for myself and I’m worried for you.”

If we stop or even slow down, we may be overcome with fear for the future and overwhelmed with anxiety; therefore, we fill our days with work, shopping, entertainment, new apps, Facebook.

I wouldn’t be able to write this sentence if I weren’t extremely privileged, but I wonder if these tough economic times are an opportunity to slow down and think through more carefully how we want to live, to find ways to live more sustainable, meaningful lives. Or maybe, since lifestyle choices are intensely personal, I should say, how I want to live, to find ways for me to live a more sustainable, meaningful life.

Before fleshing out those concepts, consider the perspectives of the political left and right who have distinct opinions about the causes and consequences of the fork. Competing voices in the woods if you will. And yes, I’m conscious I’m overgeneralizing. Sometimes when you’re painting, you just grab the broad brush.

The right interprets economic history and life more generally through the lens of American exceptionalism. They’re more anxious about accelerating ethnic diversity than they are global economic restructuring. They refuse to acknowledge our relative decline and are nostalgic for the second half of the 20th century when the U.S.’s economic, military, and political advantages were much more obvious. They’re in serious denial, but if you tell them that they’ll label you anti-American, because in their worldview, American exceptionalism is self-evident.

Stagnant wages and high unemployment aren’t a result of technology-based automation, economic globalization, or our consumer choices. They’re temporary anomalies. Small bumps in the road. If the Kenyan-born, Muslim president (okay, that was uncalled for) would just embrace American exceptionalism, reduce the government to a fourth of its current size and lower taxes by half, we’d quickly reclaim our rightful role as the world’s unquestioned economic superpower. Then we could pick up living large again.

Wednesday—Part 2 of 3—The left, the President, and my evolving thoughts on the fork.