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March | 2008 | The Grumpy Pundit

Monthly Archives: March 2008

Turbo Budgeting

Posted by on March 3, 2008 No comments

With all the emphasis I place on living comfortably within your means, it may come as a surprise that I don’t bother with a budget.

Yes, it’s true; the tight-fisted, penny watching Grumpy Pundit doesn’t use what is possibly the most often recommended means of managing your home finances. And you probably shouldn’t either.

Heresy!

Now, if this were the conventional sort of financial advise blog, I would jabber on for a bit here about how to set up a budget. I’d tell you to list your monthly expenses and total them up, and total up your monthly income, and carve away portions of the former until it fits within the latter. Most likely you would nod thoughtfully and make a mental note to do that, then go watch TV and forget about it. If you were feeling particularly dutiful, though, you might fire up your bootleg copy of Excel and fill in a few numbers, take your best guess at a few more, and decide that if you cut your drug habit back to $500 a week that’ll still leave you $50 a week for groceries and let you save up a little money for a spring break trip to the coast to get laughed at by girls who are much too young for you.

Or something like that.

At any rate, after reading my conventional advice and spending a bit of time fudging numbers in Excel (come on; do you really know how much you spend on groceries every month?) you might actually come up with a budget, determine that you can spend this and that much on these and those things and you might stick with it for a week or two and then you’ll forget about it. Right? Come on, be honest. You can’t even stop watching that crappy TV show that was funny last season, but sucks this season. Do you really think you’re going to change your spending habits just by whomping up a spreadsheet and deciding to?

(OK, sure, there are a few people who could do that. They aren’t surfing the web for financial advice.)

But this is the Grumpy Pundit Blog. We do things differently here. I’m going to tell you how to live within your means, and even save money, without wasting any time on a budget that you’re not going to pay any attention to anyway.

First rule. Pay your bills in full. That is, don’t carry a balance on your credit cards; pay them off every month.

Second rule. Pay yourself first.

Sounds pretty simple, doesn’t it? But simple does not mean easy and most people can’t manage it.

If you can follow the first rule, you are automatically living within your means. You are not spending any more than you are making. The adjustment you have to make here is not a budgetary one; it’s mental. You must fix the idea in your head that what you buy in a month must be paid for that month. Be as extravagant as you like, but remember that the credit card bill has to be paid off completely when it comes due. Do that and your spending is automatically limited by your income.

That may seem obvious, but it is a — perhaps the critical step to getting control of your finances. Pay your bills on time and in full. It’s a simple rule that is easy to get your head around and I find that simple rules like that are much easier to stick to than a complicated budget.

But what if your credit cards already have balances on them and you simply can’t pay them off each month? Simple; pay off all the new charges plus interest. Don’t let the balance grow. Cover what you spend each month out of that month’s income (or, if you have to, your emergency fund).

It may take you two or three months to adjust to that. Once you have, it’s time to go to Rule 2.

Pay yourself first. This reverses the way that most people save money. Rather than taking anything left over at the end of the month and putting into a savings account, decide how much you want to save each month and put that into savings before you pay your bills. If possible, set up an automatic transfer so you don’t even have to think about it. (If you are carrying a balance on your credit cards put the extra money towards paying that off instead.) By doing this you are adjusting your spending to fit your savings rather than adjusting your savings to fit your spending.

Let’s try an example to see how this works. Let’s say that you make $4000 a month and after you finish paying your mortgage, car payment, utilities, groceries, etc., (including that money that just seems to melt out of your wallet; the two or three hundred a month you never can quite account for) you have $1000 left of the month’s pay.

Then the credit card bills come in. You have outstanding balances of $3000, with $1200 in new charges.

Uh, oh. There isn’t enough to even pay all the new charges. You grit your teeth, remind yourself, “Pay in full,” dump that $1000 on the credit cards and resolve to cut back on your spending so you can do better next month.

Next month you’ve got $1100 left before the credit card bills (progress!). The credit card statements land with a thud on your dining room table and amount to $3250 in balances carried over plus $800 in new charges. Pour all $1100 into the credit cards, to start paying down that debt.

Fast forward several months. You’ve paid off the credit cards and gotten your average credit card bill down to about $700 a month. You figure you can start saving $300 a month now. Pay that $300 a month into your savings account first. Then pay all the other bills. Conceptually, what you are doing is subtracting that $300 from your income, forcing yourself to live within that reduced income. It’s like your pay was cut to $3700 a month and now you have to cut back.

These are, as I said above, very simple tricks. They are, however, very powerful tricks. The magic isn’t in what numbers you juggle around, it’s getting yourself into the habit of following one simple rule that’s easy to grasp and focus on. Whether it’s setting yourself an exercise plan (“I’m going to work out for twenty minutes every Sunday night.”) or managing your household finances, creating a simple rule for yourself and sticking to it come hell or high water is the way you get things done.

Pay your bills on time and in full. That’s all the budget you need.

Pay yourself first. Decide how much you want to save and put that money aside automatically, before paying any other bills.

Do those two things and you’ll be ahead of nearly every other person in the United States. Practically no one will be as good at managing their money as you. Take pride in your accomplishment.

Oh, and think about that exercise plan too.

Let’s Do The Time Warp Again

Posted by on March 10, 2008 No comments

It’s that time of year again, when most people in the United States waste time resetting clocks. I always get a reminder the day after the time switch; my two-year old son’s sleep schedule is thrown all out of whack. He sleeps late and is cranky in the morning, and doesn’t want to go to sleep in the evening. This makes me and his mother cranky as well. It takes about a week to get him settled back in.

Daylight Savings Time is one of the greatest boondoggles ever put over on the American Public, right up there with trickle-down economics (which was at least honest; Reagan pretty much came right out and said that the rich would trickle all over the poor). It is supposed to save energy, though everyone knows it doesn’t, and now there’s proof. Hell, DST kills people, when an already sleep-deprived American public takes to the roads the following Monday.

Daylight Savings Time. It actually causes people to use more energy, it disrupts people’s sleep schedules, causing traffic accidents and an incalculable amount of misery and grouchiness. (How many more mistakes do workers make on the Monday following the ‘spring forward?’ Would you want to buy a car built on that morning?) So, then, why do we stick with it? Who benefits from all this extra expense and misery? As near as I can tell, only one group. Only one group of people is wholeheartedly in favor of Daylight Savings Time.

Golfers.

Yes, golfers. No matter what price other people may pay, they have an extra hour of daylight and can get in an extra hole or two of golf.

Keep that in mind as you blunder your way through the day, wishing you could take a nap. If you happen to meet a happy golfer do all of us a favor. Kick him in the balls.

Golf balls, of course. What did you think I meant?

Here Comes the Cavalry…But to Whose Rescue?

Posted by on March 17, 2008 No comments

Right now, I would like a lot of people to lose their homes.

OK, that’s perhaps overstating the case a bit. Allow me to explain.

You have surely by now heard about the housing crisis in the US. The one where home values are dropping and people who bought homes they couldn’t afford are being foreclosed on, and the banks who hold the mortgage paper are getting killed. (As I’ve said before; your bank doesn’t want your house; they want your money.) The Federal government is frantically slathering money all over the problem as politicians scramble to be seen saving the homes (and mortgages) of millions of registered voters.

The trouble is, that’s how this mess started. What with lots of loan money out there looking for borrowers, and lots of Federal guarantees on the loans, there was more and more money chasing houses and in certain markets the home prices became grossly inflated. The houses were soon priced out of the reach of most people, including the people who had actually bought them. As will happen in a free market, with no buyers the prices fell. With houses now worth less than the mortgage, many home owners are stuck in a terrible financial crunch.

Now the Fed is spending hundreds of billions of dollars — our dollars — to try and prop up those unreasonably high home prices, so the banks and homeowners won’t be hurt so badly.

Personally, I think it’s a damn bad use of my tax dollars. I don’t much care if those homes are ‘saved.’ I want home prices to drop precipitously. You heard me; I would love to see home prices in those overheated markets drop by 50-75%. (Any realtors or bankers reading this just fainted.) Yes, that would be ugly. Many families would suffer great financial hardship, and many banks would lose piles of money. But let’s be honest here. Their greed and stupidity got us into this mess. Do we want to spend hundreds of billions of dollars rescuing them?

In other words, should the rest of the country pick up the tab for them, so they don’t have to suffer the consequences of their bad decisions?

No. Let the people lose their houses, let the banks crumble. It will all sort itself out, fairly quickly. People who bought houses they couldn’t pay for will lose them, but home prices will fall back to a level at which people can actually afford to buy them. People who bought within their means will be unharmed. Lenders who engaged in shoddy practices will go out of business. Banks who behaved more sensibly will survive.

Let the prices fall and the economy will rebound fairly quickly. Keep the prices artificially high, and the economy will limp along for years. It’s like being very sick for a day or two, but then it passes and you feel better, versus just feeling kind of sick for weeks or months. You’re better off taking the hit and moving on.

That won’t happen here, of course. There’s an angle that I haven’t mentioned yet. As far as I know, it has hardly been mentioned at all. There’s a third party panicking at the sight of falling home values, besides the home owners and bankers.

The city and county tax offices. Most local governments get a majority of their revenue from property taxes. With values dropping, the tax base is eroding out from under these local governments. They got used to fat budgets when grossly inflated home values sent tax dollars pouring their way. (And that huge tax burden doubtless has a lot to do with why many people are walking away from their houses.) Now they have to cut back, and governments hate cutting back. They don’t like trimming a budget. If home prices continue to fall it’s going to put increased tax pressure on the remaining home owners to take up the slack in the tax rolls, and local services are going to decline, both of which are going to contribute to causing more people to walk away from their houses. Further diminishing the tax base.

Local governments desperately want to keep their inflated property taxes. I suspect, but cannot prove, that that has more to do with the Federal bailout of home owners than any desire to save people’s homes.

Governments don’t really care about people, you see. They do, however, care a great deal about their budgets.

Toddler Lockdown

Posted by on March 23, 2008 No comments

Having a baby limits your personal freedom more than just about anything this side of a prison sentence. It’s a life sentence too, with the possibility of parole after eighteen or twenty years. If you’re lucky.

Those of you with children know what I’m talking about. For the benefit of the rest, I will elaborate.

Your first few weeks with a new baby are a blur of diaper changes, howling, and being covered in disgusting bodily fluids. Your baby will probably sleep for most of its first week on the outside and you may begin to think that this is not so difficult. Don’t fall for that. It’s a trick. Once the baby wakes up she or he will, it seems, not sleep again for several months.

Infants have only one means of communication. Crying. It’s your job to try and figure out what the problem is. You’re as likely as not trying to solve that riddle at 2:30 in the morning, after having only slept for a total of three hours over the past two days. Good luck.

Things that were very easy before, like jumping in the car and running over to the store, suddenly become major productions. Not only are you tethered to a baby that may, at any moment, start howling like a fire engine, but there is a whole caravan’s worth of support hardware that you have to haul around. At night, someone always has to be available to cover nighttime feedings and other crises. (After the first few weeks I had, much to my wife’s disgust, learned to sleep through the routine nighttime wake-up crying. A few times, though, our son managed to get his leg caught between the slats of his cradle and woke up with an entirely different “Daddy, daddy, something’s got me!” cry that would snap me out of bed instantly.)

In short, your entire life now revolves around providing support to a tiny, helpless, human being who is entirely dependent on you. It affects everything, down to taking time to use the bathroom.

It gets a little easier when he begins sleeping through the night, but there is another trap out there waiting for you. Not long after that your helpless little baby becomes mobile.

The one saving grace of the early months is that the baby will stay where you put him. Lay him on a blanket on the floor for a few minutes while you go to the bathroom and he might start crying, but at least he’s going to be there when you get out. Once he becomes mobile, though, you have a whole new set of problems. Now the whole layout of your house might have to change, especially if you have stairs. (Our boy could climb stairs before he could walk.)

Toddlers become very mobile. They won’t even stay with you in the store. They’ll hare off to the other side of the store, where they remember finding toys the last time you were there. They’ll hide on you, or run around obstacles in a deliberate attempt to lose you. Elevators and escalators are fascinating new toys.

They are also endlessly curious. Any sort of container is liable to be opened and dumped out, just to see what’s in it and if it’s any fun. Or tastes good. A cup of water is almost as likely to be dumped on the table (splash, splash!) as to be drunk. A moment’s inattention to what the little imp is doing might cost you twenty minutes in cleanup.

As of this writing, my son, Nathaniel, is two and a third years old and our life revolves around him as much as it did when he was one month old. Getting him dressed is usually a tag-team wresting match and shopping is a major expedition (and likely to result in the purchase of more little toy cars, regardless of what it was we were originally shopping for). He can climb like a monkey and has to be watched carefully to make sure he isn’t getting into something dangerous that he couldn’t reach the week before. He is as demanding as ever of our attention and has a broader vocabulary with which to tell us what he wants. Even what kind of car I buy is determined primarily by the fact that a toddler is going to be riding in it. Now, though, instead of crying endlessly he’s scampering around the house, or demanding to watch Wow Wow Wubbzy one more time, or pushing me down behind the couch with instructions to “Hi’n’see’.”

Being the parent of a young child is, in many ways, like being a prisoner. I wouldn’t trade it for anything.

I am luckier than many parents in that I am self-employed, which means I have some flexibility to set my own hours. I try to make a little time every morning to play with him before I leave for work, and I try to be home every evening not later than bath time. Sometimes I am lucky enough to have a day when I can work from home and spend much of the day with him. He loves that.

Most days, though, I leave in the morning and get back around suppertime. When Nathaniel sees me getting ready to leave in the morning he knows he’s not going to see me all day and he gets quite upset. He will run to me and throw his arms around my legs and if I pick him up he will wrap his arms and legs around me and resist any effort to get him to let go. Eventually we get him pried loose and I drive away, with him still sobbing, “Da’y, Da’y!”

Under the circumstances, it is hard to work up any enthusiasm for heading off to work.

The last couple of months have been very busy ones for work, with me frequently working six out of seven days a week. I have very mixed emotions about that. On the one hand, of course, the money is very welcome. On the other hand, I hardly saw my son at all.

Toddlers are toddlers for such a very short time, and watching them discover the world, all bright and new in their eyes, is such a joy, that I begrudge any time away from my family. Right now, I am still a superhero to Nathaniel. It won’t be very long before he’s a teenager and I’m a public embarrassment to him. As far as I’m concerned, every hour is precious.

But the bills still need to be paid.

It’s an irreconcilable situation and I have no particular words of wisdom for anyone else who may be struggling with the same balancing act. We all have to set our own priorities and find our own paths.

I’m sleep-deprived and my house looks like it’s been carpet-bombed with toy cars. I’m giving up my two-seater pop-top roadster for a sensible family car. My library is still mostly in boxes because we don’t have money to spend on expensive bookcases and Nathaniel would just pull all the books off the shelves anyway. We hardly ever get to go anywhere because by the time we get out the door it’s his naptime and he falls asleep in the car. If we’re lucky. With all the germs the kids pass around on their playdates, I’ve been sick more times in the last two years than in the whole ten years previous.

And I’m a superhero. Da’y, da’y!

Once More Unto the Breach

Posted by on March 31, 2008 No comments

The past several weeks have been very frustrating ones at work, not just for me but for one of my clients as well. What with one thing and another I’ve been averaging six long days every week. That’s a lot of time in front of computers.

It started with a client’s move to a new office space. From the client’s point of view it went well enough, but I had to work my ass off to make it so. Due to some organizational changes on their side my input on their IT structure was cut off and I had to work with the result of decisions made by non-technical people, who used criteria that I have not yet been able to decipher.

At any rate, the move itself went well, but not long afterwards they began to have odd networking issues, mainly people intermittently not being able to print to certain network printers. While I was still trying to figure that one out, their Exchange email server began to go offline.

The problem with the email server was that the database size had grown to the limit Microsoft had set for that particular server license, and it was going offline periodically as punishment. Part of the networking problem was that they were out of user licenses. (They use a lot of seasonal workers, swelling the user list, which then shrinks down again, so we typically only have to add users there about once a year.)

A big part of the blame for those things falls on me. I screwed up. Partly through distraction from the several other projects I was working on at the time, partly through disgust with the way decisions were being made (or not made) at that organization (and quite specific indications that any input from me would be ignored anyway), I wasn’t paying close enough attention to those things.

The email problem was quickly diagnosed and it was easy enough to keep things moving along while waiting for a new mail server to come in (which had originally been planned for a month earlier, right after their move). The network oddities, however, had me pulling out my hair and took much longer than I would have liked to track down. It turned out to not be just a matter of the user licenses, but also the switch that one of the network printers was attached to, a hardware failure with the printer itself, a bad network switch, and a bad cable connecting two switches back in the server room. Six different intermittent problems, in other words, all showing similar symptoms, and it took a while to track them all down.

Shortly after getting all those problems finally exorcised, the new mail server came in. I started setting it up and the new software told me that I had to apply a patch to the old server before setting up the new one. OK, no problem, it’s a routine patch.

Except this time. That patch blew the old server from Hell to Christmas. I worked furiously all night to try and get it back up and running before people came in to work the next morning, and was only partially successful. I started installing the patch at 9pm and it was 3pm the following day before I had everything fully up and running again.

(Then the next day I had to go in and try to install the patch again. A process I faced with some trepidation, after my ordeal of the days before, but I did it.)

The point of all this is that the client has had several days recently when their computer infrastructure wasn’t working worth a damn. There are some lessons to be learned here.

First, the client is not, so far as I know, particularly unhappy with me. I am sure they are not thrilled about the problems, but I haven’t taken too much of a hit because of it. The key here is that I’ve been working with them for a number of years now and the systems have generally worked quite well, and I worked my ass off trying to resolve the various problems as quickly as possible. Also, because of the way I had things set up, the impact of some of the problems was minimized. During the hours in which their mail server wasn’t talking to the outside world, for example, they could still use the Internet and the rest of the network, and inbound mail was queueing up on the email gateway so nothing was lost.

Everyone screws up now and then, and things break sometimes. If you consistently do a good job for your clients (or your boss, though that’s more problematical), you’re building up credit that will serve you well when something goes wrong. Relatively major problems at rare intervals are more tolerable than constant annoyances.

Second, I had to go outside the organization’s chain of command and bother some people whose job it wasn’t (but who were willing, much to their credit, to make some noise and make things happen) in order to get some decisions made. As a result, we’ve done some reorganizing and clarified the lines of communication and generally made it a lot easier — I hope — to get things done in the future.

When everything is going well, there’s no motivation to reorganize and try to make things work more smoothly. If you bust your tail holding everything together with chewing gum and duct tape, no one is going to notice, because you are holding it together. Things that work well are invisible, and eventually taken for granted. That’s not a bad thing, usually. A company’s computer network, for example, shouldn’t call attention to itself. But, like an economic downturn that shakes out weak companies and makes the economy stronger in the long run, sometimes it takes a failure somewhere to bring problems to light and provide the motivation for a proper fix. Every failure is a source of lessons to be learned.

Looking at all of this work from another angle (and all that fuss and bother with that one client was only part of it; there were lightning-blown computers, server migrations, and so on and so forth), I’m bloody exhausted. My wife asked me if I was going to bill the client for all of the many hours I spent fighting that crashed mail server. “Most of them,” I told her. I’ll probably give them a bit of a break, but for the most part, they’re going to get billed what I worked. I didn’t make any mistakes on that one; it was just a bad break and unfortunately the nature of computers is such that every now and then you’re going to have to deal with a crash. The big wad of hours I’m going to bill as a result is, to me, like collecting on life insurance. I wish it hadn’t come to pass, but since it did I’m not going to turn down the money.

Speaking of which, the money has been pretty good these past couple of month, but there comes a point when I just want some free time to spend with my family and to get some rest. As I believe I’ve said before, no on ever lay on their death bed wishing they’d spent more time at the office.

Minor disasters in the workplace can sometimes be made to turn out well, even an improvement over the pre-disaster state. The price can be high, though, for everyone involved. Sometimes there’s nothing for it but to throw yourself into the breach and do what needs to be done, close up the wall with the bodies of your English dead, and afterwards collect your pay. But no amount of money is worth not being there while your child grows up.