The Rage Diaries

Belated fiscal fitness post from September ...

So last month was supposed to be focused on stuff -- what it costs to keep it, throw it out, organize or replace it. And then, well, other things claimed my attention. None of those things were stuff-management related, by the way.

But I'd like to wrap up that theme before unveiling October's theme, so let's commence the linkage and (I hope) a little discussion in the comments.

Now I regret my inabilty to accessorize ...

The women who used to invite all their girlfriends over to their fantastic homes for good wine and catered nosh on the pretense of selling merchandise to one another (Pampered Chef! Rolls of fancy wrapping paper for school charity!) are now inviting one another over to their fantastic homes for parties where everyone turns their gold into cash (ca$h!!) and winds up convulsing with giddy laughter over such treasures as wedding bands from bad marriages or those door-knocker earrings left behind by dearly departed Nana.

-- "The 24-Karat Party," WaPo, Sep 30, 08

I am not a jewelry person. So much not a jewelry person, in fact, that I completely forgot about needing to buy wedding bands until two weeks before the wedding. But these turn-your-jewelry-into-cash parties intrigue me, because they combine the appeal of decluttering -- which I totally get -- with the appeal of getting cash for your goods. Which, again, I get.

There is also something about selling your old baubles for cash that sounds so nineteenth century, like the last measures of a genteel but impoverished heiress. I wonder if the people who are selling their old bling feel that too?

Do you believe in the Costco effect?

[W]hen there are more bagels in my refrigerator, I consume more of them. I think that's human nature. Call it the Costco Effect.

People are often price-sensitive about an initial purchase. But after the money has been spent, there's a tendency to view the stash -- be it a pile of bagels or imported stout -- as manna from heaven. And that's why I've often wondered if shopping at discount clubs saves people as much as they think.

-- "Do Warehouse Stores Really Save You Money?" WSJ, Sep 26, 08

Neal Templin's column goes on to admit that while there's no formal research into the Costo Effect, a few economists suspect that people end up spending more money owing to their Costco habits. The theory goes: if you have more of something around, you consume more of it. Then you're thinking, "Well, I'll just get more," and before you know it, you've increased your consumption and the amount you're spending.

Personally speaking: my experience is the exact opposite of what Templin describes. Perhaps it's because of what we buy at Costo, but perhaps it's because of what we don't. For example, I don't get produce or baked goods or dairy there, because there's too much for two people to use. It would be wasteful to buy food that we know is going to spoil. We do get meat there -- but I tell you, the first thing we do when we get home is to split up all the portions, label them, and throw them in the freezer. There's no meat-binging, because it's not like we have four pounds of skirt steak just waiting to be eaten in the fridge. (Instead, we have eight individual portions in the freezer.) Phil gets beer there, but we keep it in the garage; he only brings in a bottle or two at a time to be cooled in the fridge.

Enough about us. Do you go to a bulk-buying club? Have you had to deal with a portion-control issue? How did you do it? What are the things you steer away from at those places so you don't end up eating a 96-ounce jar of trail mix by yourself?

Wha' happened?

So we all know that Goldman Sachs Group Inc., Morgan Stanley, Merrill Lynch & Co., Lehman Brothers Holdings Inc. and Bear Stearns paid out a record $39 billion in bonuses last year, presumably because everyone did a heckuva job. And now some of these firms have been reduced to smoking ashes, the banking industry is asking those of us who weren't in on the $39 billion money train to please do our part and pony up $39 billion plus another $661 billion so that the banks can fix the mess, Treasury Secretary Henry Paulson is essentially asking for unchecked power by Friday or else terrible things will happen ... but do we have a clear picture of how this whole mess came about? I mean those of us aside from Wanda Sykes?

Below, the links I found that help explain what just happened and what it means.

Where it pays to be selfish

According to "Is Retirement Different for Women?" (Fox Business/Bankrate, Sep 16, 08), more than one in ten retired women are living in poverty. Why? Because women usually make less money, meaning they have less in savings and a smaller Social Security payout. There is this sobering argument:

"If you drop out of the work force to take care of children, that is probably going to be a time in your late 20s or early to mid-30s, when your male colleagues who stay in the work force are getting promotions and climbing the ladder," says Ginita Wall, CPA, CFP and co-founder of WIFE.org, a nonprofit organization dedicated to providing financial education to women.

For women who choose to take time out to raise children, losing those working years means that they return to the work force at the same level they were at years before, maybe even with obsolete skills -- putting them further behind in their careers and savings.

"That means you'll be earning less and will have lost crucial years that you could have been adding to your 401(k) and earning years of service that would get you a higher return," Wall says.

This is why I rarely, if ever, take any "it's better for the family finances if I don't work!" argument seriously. Because for every insistence that the family is no longer spending a king's ransom on dry cleaning and takeout, so of course they're coming out ahead, there is also a conspicuous lack of exposition regarding the retirement plan for the (usually female) parent who is dropping out of the workforce and losing ground in the retirement savings slog.

So, stay-at-home parents -- get a little selfish! Look out for your own retirement. The idea of so many women spending their declining years in poverty should be a sobering lesson for all of us now.

Fiscal fitness -- September's theme ...

... is apparent once you read "Thrift Stores Thriving, But Running Low on Stock" (NYT, Sep 10, 08) Go ahead. I'll wait.

The air diet

Consider this a public service announcement made well in advance of the holiday season: if you're flying, prepare to pack a lunch.

Obviously, this will be an issue if you're on an all-liquid diet -- unless you're careful to pack your meal in several tiny 1-oz. bottles -- but for the rest of us, it makes financial sense. We all know that airport concessions are pricey. And most airlines are charging for food. Read "Hungry at 3000 Feet? Pay Up" (NYT, Aug 17, 08) and weep at the prospect of paying $10 for a sandwich and chips the next time you fly American to Hawai'i.

I am a little surprised that many personal finance blogs have not tackled the issue of eating well and cheaply while flying. In searching for airplane food alternatives, I found an article from Salon that seems positively quaint with its pre-9/11 assumptions ("Mile-High Meal," Sep 2, 97) and not at all budget-conscious. My own personal recommendations for eating whilst in the air are after the jump.

Fiscal fitness -- August's theme ...

... was prompted by the following articles:

"Buying the Wrong House" (ScienceBlogs, July 17, 08)

"Given a Shovel, Americans Dig Deeper into Debt" (NYT, July 20, 08)

"Housing Crisis Hits Exurbs Hard" (CSM, July 25, 08)

"High Heating Oil Prices Loom Over U.S." (Marketplace, July 31, 08)

"After the Bubble, Ghost Towns Across America" (WSJ, Aug 2, 08)

"Gas Prices Apply Brake to Suburban Migration" (WaPo, Aug 5, 08)

Fiscal fitness -- here's what happened when Ben had to cut expenses

It's one thing to get financial advice from articles, but first-person experience is equally valuable. I asked frequent commenter and longtime friend Ben about the financial challenges he faced when he lost his job right before his second child was due. The Q&A is after the jump.

Let's hear it for lunch

In keeping with this month's theme of how we adjust our budgets, I bring you the WSJ's "Bagging Lunch: the Inflation Effect." The lede:

A few months ago Jessie Snider, 23, began to feel the pinch of the rising cost of gasoline, food and, well, everything. Then she realized the $75 to $80 she was spending each week on lunch was really cutting into her paycheck. So in March she traded sit-down lunches of elaborate caprese salads and angel-hair pasta for brown-bag lunches of leftover stir-fry and turkey sandwiches.

A billion years ago, when I worked at Hotwired, the articles about the place almost invariably reported on the "personal chef" we had who cooked meals. Let me tell you a few things. First, Phil Ferrato is a genius; I still dream of his pasta dishes. Second, the meals were subsidized to the point where all you had to do was pay $3-4 per day for a good hot lunch with salad and a sweet. And third, those meals were usually my main meal of the day; I relied on them to stretch my budget.

So I'm sympathetic to the idea of a lunch outlay. But holy cats, I am a little boggled by the idea of spending $15-16 on lunch daily. For those of you who don't brown-bag -- is this the norm? What do you pay when you go out to lunch?