Why the Rich Don’t Feel Rich

Posted on October 6, 2010 by Ron Byrnes

The title of a great article by Laura Rowley on Yahoo’s Personal Finance page last week.

In short, Todd Henderson, a U of Chicago lawyer who makes $300k/year with his doctor wife, got hammered by his blog readers for arguing that he wasn’t rich and couldn’t afford a tax increase.

The blowback took two forms. First, people understandably took him to task for his questionable logic. After reading his post, I was stunned by his lack of perspective. I guess he doesn’t know many regular folk. And I guess he didn’t read the recent WSJ article that detailed how many poor people go shopping at Wal-mart at 11:50p.m. the last day of every month so that by the time they hit the check-out registers with their baby formula, diapers, and food, their new food stamps have kicked in. Or I guess he hasn’t traveled in a developing country.

Second, people questioned his sanity for daring to write the post, intimating that he would have been better off not writing it at all. This is where I disagree. While I have no sympathy for his argument, I admire his courage for honestly stating his views. As a blogger, and person I suppose, I probably self-censor myself way too much. Henderson didn’t get hung up on “what might other people think”, instead he chose authenticity. Questionable arguments honestly communicated deepen our civil discourse and strengthen our democracy.

The Intrapersonal Conundrum

Posted on October 4, 2010 by Ron Byrnes

Recently I advocated accepting and adapting to people’s irritating behaviors rather than trying to change them. But what about our own irritating behaviors? How do we know when to accept them versus when to commit to trying to change them?

Of course, not everyone is introspective; as a result, some people lack self understanding. Ask them which of their behaviors most irritate the people they’re in relationships with and they draw a complete blank. I’m probably too reflective for my own good, regularly engaging in self-assessment. One limitation I’m keenly aware of is an aversion to personal networking. Closely related to that, I suck at self-promotion.

Among other ripple effects, this blog has a small readership and my professional successes exist mostly within my classrooms. A colleague of mine is the opposite, a brilliant networker and self-promoter. A mediocre teacher, she’s developed a national reputation as an expert in a very specific sub-category of education. She travels all the time and speaks to large groups for lots of money.

Am I envious? Not on a personal level, but maybe professionally. I would enjoy more consulting opportunities than the one or two a year I average. But not enough to change. I understand that there’s a perfect correlation between my lack of networking initiative and the number of consulting gigs I get.

Even though social and professional networking skills are more important than ever, I’m perfectly content not being a networker or self promoter. In fact, I don’t want to get better at networking or self promotion. I’m an educator, so I’m not anti-social, I just have no patience for the phoniness on which so much of it seems to rest. “Here’s my card.” “Who cares.”

Another limitation I’m keenly aware of is a deeply rooted counter-cultural propensity for saving. My dad grew up during the Depression, and it left an indelible mark on him, and so I blame his hyper-frugal modeling. But unlike my aversion to personal networking, this is a limitation I want to change.

Here’s one of millions of examples of my often irrational economic behavior. One day in Chengdu, China I argued at length with a Carrefour manager about socks I purchased. Despite being on sale, the socks were rung up at the regular price. Our language differences, the store’s employee hierarchy, and my stubbornness made for a combustible, and in hindsight, hilarious combination.

In this area of my life, I want to act more rationally, so I’m working on loosening up.

What explains my markedly different way of thinking about these two personal limitations?

I’m not sure.

Bill Gates and the Poor Widow

Posted on September 24, 2010 by Ron Byrnes

Forbes is out with its “Most Wealthy” lists. Bill Gates’s wealth is estimated at $54b. He has reportedly given away $28b so far. $28b out of what would have been $82b is 34%. The $28b is an eye-popping figure, but maybe the percentage figure is even more impressive because the wealthier people become, the more focused they seem on becoming even more wealthy. A lot of credit goes to Warren Buffet and David Rockefeller for inspiring him and providing his wife and him a model for their foundation.

Often very wealthy people get lots of credit for large flashy gifts when in actuality their gifts are usually a small percentage of their net worth and they serve as needed tax deductions. [An aside. I’m looking forward to the Facebook movie coming out next week. Zuckerburg, Mr. Facebook, is reportedly furious at how he’s portrayed in the film. Yesterday he gave $100m to the Newark Public Schools. Coincidental timing?]

Then there’s Luke 21, verses 1-4. “As he looked up, Jesus saw the rich putting their gifts into the temple treasury. He also saw a poor widow put in two very small copper coins. ‘I tell you the truth,’ he said, ‘this poor widow has put in more than all the others. All these people gave their gifts out of their wealth; but she out of her poverty put in all she had to live on.'”

Gates’s example doesn’t rise to the level of the poor widow, but it’s similarly inspiring.

This BGIII mugshot (taken in 1977 following a traffic violation) is pretty funny. His smile suggests he’s confident things will turn out okay in the end even if his insurance premiums go up.

One Less Car

Posted on September 22, 2010 by Ron Byrnes

As I suspected, I didn’t make it twenty years and 200,000 miles. Sold the 1993 Camry wagon last week. Kelly’s Blue Book and Edmunds had it valued at around $1k which is sad considering I’m considering buying a bike frame for $2k. I sold it for $2,500 because of the $1,500 “The Positive Momentum blogger used to drive this” premium. Annual car insurance premium dropped $500. I was spending $1k/year on repairs. In 12 months we’ll have an extra $4,000. Past that point, we’ll pocket at minimum an extra $1,500/year in savings. At minimum because the three or four of us will drive slightly fewer total number of miles in cars that get better mileage (and as bonus, are on average, more safe).

Maybe one of the most vexing questions of 2010 is how does one meet daily expenses, save for children’s college education, and save for retirement when wages are flat? Economists report that it costs just over $200k to raise a child for eighteen years. Social security will be delayed and reduced. Medicare will cost more. Taxes will increase. The few people with pensions will see companies renege on promises and reduce benefits. Today, $100,000 in savings might generate $4,000 in investment income.

It’s easy to gain weight and fall into debt fast, but it takes decades to get physically and financially fit. A frustrating paradox. The question is whether you earn more dollars each week, month, or year than you spend on average.

I’ve written before about how financial journalists and pundits focus far too narrowly on the perfect investment strategy and not nearly enough on defense or reducing overhead. One of the best ways to reduce overhead and one of the quickest ways to balance a personal financial budget, is to figure out how to live with one less car.

Tammy Strobel, is a Portland, Oregon based blogger who has published an electronic book on how to live completely car-free. I’m not there, but appreciate the challenge. Note that one of her chapters is titled “Saving $8,000 a Year”.

Resilience

Posted on September 6, 2010 by Ron Byrnes

I’ve been thinking about how different my daughters’ lives are and the seventeen year old central character’s in Winter’s Bone.

Winter’s Bone has the feel of a documentary/commercial hybrid. It’s the story of a seventeen year old woman taking complete care of her mentally out of it mother, 12 year old brother, and six year old sister in a desperately poor, rural, Appalachia-like environ.

Her dad is elsewhere cooking meth and he’s put the house up as collateral on a bond and then missed his court date. As a result, the house will be repossessed if he’s not located within a week. The bulk of the film is the daughter trying to locate the father. In the hands of these particular filmmakers, it’s a brutal, powerful, mesmerizing story.

Despite the increasing prominence of national chain stores in this country, this film was a reminder that substantive regional and subcultural differences still exist.

My daughters have a legion of educated, financially secure parents, grandparents, aunts, uncles, and older cousins. They’re entering adulthood with a nine-person offensive line to run behind. The central character in Winter’s Bone had an extended family wracked by poverty, substance abuse, and violence. When the ball was hiked to her, she had no one to block for her.

Despite all the countervailing evidence, many Americans believe every young adult has an equal opportunity to flourish. Did the drug users in Winter’s Bone choose separately to take drugs or did they succumb to pervasive environmental influences? Were they immoral, undisciplined psychological weaklings or rather was their demise practically inevitable and entirely predictable from a socio-psychological point of view?

Even though the central character turns out okay because of her uncommon resilience, we need social, economic, political, and education reforms to expand the life opportunities of poor young people. The challenge is implementing those reforms without forcefully capping other young people’s life opportunities. Exceedingly difficult to pull off, especially in a recessionary era.

Sometimes I wonder if my daughters might be too privileged to develop the type of resilience they’ll have to draw upon to be successful adults. They don’t project a sense of entitlement, and they are socially aware, but they could be even more so.

Eighteen’s fancy pants college should show the class of 2014 Winter’s Bone so that they more fully appreciate the amazing opportunities their college experience will provide them.

[first Pad post, harder to edit sans mouse, so DKB cut me some slack]

Class Differences in Tampa

Posted on August 18, 2010 by Ron Byrnes

The scene. Having coffee and toast at a Cuban diner in the Ybor City section of Tampa Florida Saturday with my mom and three of her friends. Wonderful Saturday ritual. The topic, class differences in Tampa. One friend, a former nun for 11 years, and now a kindergarten teacher smiles and says to me, “Since you’re staying in South Tampa, you may have noticed your shit doesn’t stink.”

At least on the surface, there’s lots of well-to-do people in South Tampa, Derek Jeter among them. I work out at a swanky athletic club with unlimited shaving cream, razors, shampoo, towels, mouthwash, and q-tips. The car of choice appears to be a Lexus, Porsche, or BMW.

Walking into the club Monday morning I overheard (remember I’m eavesdropping on you) a woman in tennis whites tell her friends, “I don’t get down here (Tampa) very often, but for tax purposes it’s where they think I live. It’s the only address I have.”

No one chats me up (maybe because I look like death warmed over having just run in the Dante’s Inferno that is Tampa’s August weather). Are wealthy people less friendly?

In the four lane pool, one is marked “open swim” and three “lap swimming”. I’m the only one lap swimming, but that doesn’t keep a few of the four kids playing in the pool from jumping into my lane two and a half times while their parents silently watch. What the hell? They leave with their noodles all over the place, but why should that be a surprise when adults walk away from their ellipticals without wiping them down and the showers are strewn with wet towels. Guess that’s what the workers are for.

I confess, I’m a bit conflicted. I like the plushness, the outdoor 25m pool, the carpeted locker room, the showers that stay on all by themselves (at my “Y” you have to punch a knob every minute), and of course the q-tips, but really dislike the general unfriendly/entitled/disconnected vibe.

Yet, I have to guard against painting with too broad a brush. My mom is a member and she is extremely friendly, appreciative of everything she has, and socially aware. I’m sure there’s at least one other member like her.

Empathy Impaired

Posted on August 4, 2010 by Ron Byrnes

The New York Times’ commentators have been writing a fair amount about how to revive our moribund economy and related issues like consumer and government spending, taxes, and unemployment. Sometimes I find the readers’ “recommended comments” more interesting than the essays themselves. They’re liberal and decidely cynical about life in the U.S. today. Their most common rallying cries are corporate greed, class warfare, out-of-touch politicians, and right-wing media.

Recently, they’ve been most fired up about members of Congress being out-of-touch with ordinary citizens, many who have been laid off, and too many that appear to be entering into permanent unemployment.

The question I haven’t seen asked is how does one, whether a member of Congress, or a college professor, develop empathy for the under-employed or short, medium, or long-term unemployed? The best answer of course is direct personal experience, but giving up one’s job in the interest of greater empathy doesn’t make much sense.

There have to be better ways, whether documentaries, essays, novels, photographs, music, and plays, that can help humanize the out-of-touch among us. The arts seem especially well suited to this task. I wish The Times’ irate, cynical commentators would each choose an art form and begin telling their stories with the out-of-touch Congress as their primary audience.

The Nostalgia Trap

Posted on July 28, 2010 by Ron Byrnes

As I age, I’d like to avoid many middle-aged and elderly people’s penchant for complaining that “compared to back in the day, the world is going to hell.” Much of that pessimism rests on selective perception. Except for the clinically depressed, isn’t life a constantly shifting mix of good and bad?

Here’s a related NYT book review excerpt from a new novel “Super Sad” which takes place in the near future.

“Mr. Shteyngart has extrapolated every toxic development already at large in America to farcical extremes. The United States is at war in Venezuela, and its national debt has soared to the point where the Chinese are threatening to pull the plug. There are National Guard checkpoints around New York, and riots in the city’s parks. Books are regarded as a distasteful, papery-smelling anachronism by young people who know only how to text-scan for data, and privacy has become a relic of the past. Everyone carries around a device called an äppärät, which can live-stream its owner’s thoughts and conversations, and broadcast their “hotness” quotient to others. People are obsessed with their health — Lenny works as a Life Lovers Outreach Coordinator (Grade G) for a firm that specializes in life extension — and shopping is the favorite pastime of anyone with money. It’s “zero hour for our economy,” says one of Lenny’s friends, “zero hour for our military might, zero hour for everything that used to make us proud to be ourselves.”

Is your relative optimism or pessimism based upon the quality of your nation’s governance, economy, and military, or as I suspect, more on the nature of your personal budget, the status of your family’s and your health, the quality of your friendships, and the relative purposefulness of your work.

I’m feeling positive about life today in part because of a post run lake swim, an enjoyable dinner with three friends, and an amazing sunset over the sound.

I have downer moments, days, and weeks like everyone.

I prefer spending time with people who reject the myth of a golden yesteryear and what sociologists refer to as “deficit model” thinking and show empathy for the truly unfortunate. People whose thoughts, words, and deeds are more hopeful than cynical.

Pressing Pause

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Category Archives: Money Matters

Bill Gates and the Poor Widow

One Less Car