The Wall Street Journal recently posted two stories of women who are selling homemade apple cakes and cornbread dishes to raise enough money to save their homes from foreclosure.
Bake Sale Helps New Jersey Woman Save Her Home reports the tale of Angela Logan, a divorced mother of three in Teaneck, N.J., who has sold enough of her $40 apple cakes to make her mortgage payment and is now eligible for a loan modification from Bank of America.
Fighting Foreclosure with Cornbread reports 48-year-old Beverly Davis of Fairburn, Ga lost her home to foreclosure on March 2, 2010 (she paid $134,000 for the three-bedroom, two-bathroom ranch in April, 2006). She is now selling homemade Chicken potpie with a cornbread crust, Cornbread souffle, and cornbread mix and a cast-iron skillet kits or just the cornbread mix alone. She needs to raise an additional $60,000 to buy her home at the foreclosure auction (in a couple of weeks).
It is inspiring to see these women tap their own talents to come up with a product that they can then turn into needed cash. It is unclear if buying back or modifying their loan is the long term solution. Both women seem to need these ventures to turn into steady income (since they are unemployed).
“The fact is that we are once again, as in the days of the early republic and not in the heyday of the Progressives and the New Dealers, a republic of property owners. Most Americans have accumulated — or will, during the course of their working years, accumulate — significant amounts of wealth. And that is why, I believe, American voters seem to be rejecting the policies of the Obama Democrats.”
The article goes on to review data (lots of pretty charts to look at) and comes to the conclusion:
Instead I see a people with a very short horizon over which they appear to measure their cherished “independence from government” — the years when they are younger and healthy and have a good job, ideally one that provides them with good health insurance.
As they grow older and sicker, however, very large cohorts of Americans have come and in the future will come to look to the rest of society — that is, government — for their main source of income maintenance and health care financing, even as they may protest, at political rallies, that they want “government out of their Medicare.”
For millions of retired Americans, the bill for only one serious hospital episode would wipe out whatever lifetime accumulated net worth they have.
Life-cycle independence from government may be part of the American Dream, but it is just that — a dream. In the end, when the going gets tough, the tough in this country tend to run to the government — even the self-styled rugged individualists.
Dateline NBC ran a series spotlighting a town in South East Ohio and profiled the Friends & Neighbors food bank as it struggled to secure enough funding to feed its growing client base. The story illustrates just how hard the great recession has hit the poorest in our country.
LISA ROBERTS: They’re not asking to be rich – they’re asking to not be hungry, to be able to pay their bills and buy their medicine. That’s not too much. It’s not their fault. It’s not the people’s fault.
ANN CURRY: Why do you say that so much?
LISA ROBERTS: Because I see how hard they work. Sometimes you’ll hear, ‘Oh, you know, they’re just layin’ back, waitin’ for a handout. They could go to work if they wanted to go to work. They’d rather be on welfare, they’d rather have 100 kids.’ It’s not true.
It’s a sentiment we heard all over Southeast Ohio.
The link above takes you to the full transcript of the series if you prefer to read instead of watch (scroll down the page to see transcript).
If you are interested in learning more about the Friends & Neighbors food pantry (or donating) here is a link to the website. If you prefer to give locally to where you live, a quick search should reveal food pantries in your area that I am sure would appreciate donations. For my Boston readers, Rosie's Place is one place I have donated to for years.
For the 75th anniversary of the game Monopoly, Hasbro is celebrating by running a contest to give away the real money equivalent of the "bank" in the game - $20,580.
To Enter
Go to www.monopoly.com and submit a story, of 75 words or less, on how you would spend the winnings. Would you travel? Go back to school? You can submit stories under categories including "Business Startups" and "Charity and Good Causes." There's an "Other" option if none of the listed categories fit.
The deadline to enter is Sept. 2 at 8 p.m. eastern time. You must be 18 or older.
Online voting takes place between Sept. 2 and Sept. 27. You can promote your story on Facebook or Twitter to get friends and family to vote for you.
The 75 stories that get the most votes advance to a panel of Hasbro judges. A winner will be announced in mid October.
Carole and Dave Lutness prepared for retirement the old-fashioned way.
They paid off their house and cars, accumulated no credit card debt, lived frugally and saved with a religious fervor. Carole, 68, is a psychiatric social worker for Los Angeles County and Dave, 64, is an information technology specialist with Guitar Center. Both still work full time.
[...]
The Lutnesses have a combined annual income of $118,000. In addition to having paid off debts and the note on their six-bedroom home, they've accumulated a total of about $560,000 in savings and mutual fund investments. Including their home, they have a net worth of a little more than $1 million.
Still, Carole, a lifelong saver and reluctant spender, fretted about financial security.
"I'm scared to touch anything," she said.
[...]
In addition to their savings, the Lutnesses' retirement is secured by two pensions that Carole has coming from the county and a previous employer. McIntosh said the pensions, along with the couple's Social Security payments, would give them $58,000 in annual income, adjusted for inflation over their lifetimes.
"Why are they delaying their retirement?" the financial planner asked. "They get so much unearned income."
The Lutnesses have lived frugally, in part from necessity. In the 1990s, Dave was laid off four times within a five-year period from different jobs. Each time, the couple pared back, nixing cable, gardeners and housekeeping help.
Also, their commitment to the environment steered them toward a less consumptive lifestyle. To reduce their carbon footprint, they rarely used air conditioning at the house despite 100-degree Santa Clarita summers. The heat came in handy in another way because they line-dried their clothes.
When Carole's job was closer to her home, she took the bus and walked to work to save gas. And Dave hasn't bought a new car in a decade, even though his Toyota Corolla has more than 300,000 miles.
Their lifestyle helped give them the freedom to stop working and relax — most of their living expenses in retirement would be covered by pension and Social Security income. McIntosh said they could dip into savings as need be to fund hobbies and travel.
As I read this article, I was kind of siding with Carole that perhaps the couples retirement account of $560,000 was not enough (since she is reluctant to sell her house and release that equity). But when I read the part about her pension income - I changed my opinion.
It is strange to read about someone reluctant to retire, since I am very much looking forward to the day I can stop commuting and clocking in at the office.
The subjects of a couple of recent posts have left comments - one in a good way and the other - well, had a strong opinion to express.
In the post Fulfilling your own fantasy I linked to a New York Times article which profiled 42-year-old Sandra Foster who created a fantasy get-away for herself by rehabbing and decorating an old shed into a mini Victorian shabby chic cottage. At the end of the post I made this comment:
But I couldn't help thinking - how impractical. She lives four-hours away during the week and then when she sees her husband on the weekends she retreats to this fantasy cottage she built? She is working so hard to pay for a country home that she can't afford to live in and the sweat equity she puts into the cottage is for a space the two of them can't really enjoy and fear of property taxes is preventing her from building something that she likes that also has indoor plumbing and heat? Perhaps I am just too practical to pursue such a fantasy. What do you think?
Her husband found my blog post and reacted to my comment as well as some of the comments left by other readers. You can read his reactions/comments here.
Just when I think that I am getting over my nervousness about this seemingly never-ending "great" recession and feeling like I can relax a bit financially - something happens which convinces me not to emerge from my financial bunker just yet.
While she has admitted on her blog that the book deal helped her pay off her divorce debt (lawyers!) and spend some money on travel, she still relied on her day job to earn her living. While I don't know her personally, having read her for so many years I feel like I do. I have a lot of questions - did her blogging have anything to do with the job loss? Did her writing and book tours impinge on her day job? In her job search is her outed status as Laurie Perry (aka Great Aunt Perl) the author and famous blogger causing any problems? Unfortunately, I am not sure that she will be blogging much about this topic since she posted this:
I realize some people reading today feel cheated out of the good dirt about how it is I came to be unemployed. I got your emails. And I understand your natural curiosity and certainly I would be curious, too. But this is not a website about my day job and never has been. I don't think that's ethical, for one thing, and it's certainly never been the focus of my stories. My job ended. That's all I have to say about it. Think of it as an uninteresting plot device in a bigger, more furry and yarn-covered story.
For several weeks in June I chewed over the best way to even mention it here in my online diary. I didn't want to pretend it hadn't happened since obviously it's a big change in my personal life but I also have no desire to chat with the world at large about all the intimate details. I certainly have zero intention to malign my former employer. And anyway it's in the past. Things are fine.
I hoped that treating this change in my life as a fact, a part of the timeline and brief logistical narrative of June, would be sufficient for this website. I apologize to the people who just think this isn't good enough. I don't know what to tell you. I guess you'll have to find a TV show with a much better plot than this old poopy blog. I highly recommend the new season of The Closer. That Brenda Leigh is the best woman on TV! And a Southerner at that.
Ok, so let's move on.
Which brings me to my last observation. My basement tenant moved out in July (at the end of the lease). The main reason for not renewing for another year was a pending layoff. Knowing that job security was an issue, I was surprised at what I found when the tenant vacated and the keys were turned over to me. The floor of the apartment was riddled with coins. Pennies, nickles, dimes, and quarters scattered everywhere. Why is it that some people literally throw money away - even knowing that shortly money will be tight when the paychecks stop?
Portland Guy looking for advice from Boston Gal's readers
This email arrived in my inbox this week and with the sender's permission I am posting it below in its entirety. I will add my thoughts at the end. Any advice or suggestions you would like to share with Portland Guy can be done in the comments.
Hi Boston Gal,
I've followed your blog (though not religiously) for the last couple of years and am pleased to note your continued success in today's environment. I am probably older than most of your readers but find myself, for the first time in my life, wondering what I should do, and the thought occurred to me: Why not ask Boston Gal? I recognize that you are too busy to respond to each e-mail you receive, and that my situation may not warrant a post, but if you feel otherwise, then by all means feel free to comment publicly. If not, that's okay, too, as it will do me good to write about my situation (you can relate to that, I am sure). Okay, here are a few facts.
I'm divorced and live on the west coast. I have two children, 5 and 7, who live with their mother in Europe. We Skype a couple of times a week but only see one another a couple of times per year at the moment, for obvious reasons. I know now that I should have stayed in Europe (I have the right to live there) but didn't and so here I am.
I have a GED, obtained at the age of 16.
Working as a clerk in Boston I taught myself to operate a particular type of mainframe computer and worked my way up, until the late 90's, when I was able to get consulting contracts at $45+ per hour. I'm a saver, and so I would sock away money with each paycheck, though I'm not averse to spending it, either, as you'll read in a moment.
In 2001 I got married and moved to Europe, with the plan to be a house-husband which is, by the way, a fantastic job. At that point I had a firm job offer from a Fortune 50 company paying $80+ in salary, but I turned it down (I'd like to say that was a dumb move, but my kids are great). As you can probably guess things didn't work out across the pond so I decided to come back to the States. Knowing that my skill-set was stale, I went to India for three months first to get some updated certifications, though while there realized that it probably wasn't the right path. Gained 10 pounds from the awesome food, though.
Still, I soldiered on and went back to San Francisco, but started to get worried when I hadn't found a job after 3 1/2 months. Hemorrhaging money, and starting to be very unhappy, I remembered my Appalachian Trail thru-hike a few years back and how lots of people do that type of thing when they're in between major sections of life. It occurred to me that it was the perfect time to start the Pacific Crest Trail, and so in May of 2006 I did, at the Mexican border, with the idea of figuring out what I should do next as I hiked north, and saving on living expenses to boot.
Right away I started hiking with a nurse, who convinced me to look into nursing over the course of a few weeks. In trail towns I would go to the library and research the profession, and the more I saw, the more I liked it. When I found out that CA residents could pay in-state tuition at Oregon community colleges, I decided to settle in Portland after the trail and pursue an AAS in Nursing, mainly due to the relatively low cost of living (compared to Boston or San Francisco).
I moved to Portland, did my pre-reqs, and entered the lottery for a spot in school. Didn't get one, but found a job doing tech support at $18/hr, for which I was very grateful. After six months I was laid-off when the department was disbanded. Then I was accepted in Nursing school, but soon realized it wasn't right for me and dropped-out a year ago. I don't regret that decision at all, but I'm still unemployed and realize that I'm pretty much unemployable at this point, though daily I seek tech support types of jobs. I get $200/wk in unemployment, but that won't last much longer. In Portland at the moment there are 6 applicants for every job.
To help alleviate boredom and seeking a feeling of accomplishment, I started a degree in Criminal Justice with an online university, which charges $7500/yr for books and tuition. The work is challenging and interesting, though it's unclear to me what a B.A. in Criminal Justice will get me, because I will be 50 next year. I have only worked 7 months out of the last 8 years.
I live in a studio apartment and can't say that many people would envy my life, though my tastes are fairly simple. I'd like a decent job and would be more than happy with $50k/yr. At the moment I have the following assets left:
That's not a lot of money for someone my age, but I have never been interested in owning property or even a car (I don't have one). Me ex owns three houses and has a professional degree as well as a lot of money, so I don't have child support payments (though I've managed to save a paltry $6k for each, not included above).
Now we get to my question: I've come up with a plan to complete my C.J. degree by next June, without working much (if at all) and taking 18 credits a semester, as I had a lot of transfer credit. After finishing, I would have, baring unforeseen problems:
Cash $7k IRA $80k Annuity $15k
Credit Card Debt $0 Subsidized Student Loans $15k
So, I would basically be spending my Roth and some of my annuity (naughty naughty) to get a degree (at 50!), and taking on some student loan debt, though that doesn't bother me much. A full $6k of what I need to spend would just pay for health insurance. Since it would be used for education expenses, I wouldn't be penalized for spending the Roth.
The idea is that I would get a job soon after graduating as well as start a part-time, distance M.A. that could be finished within two years while working. Again, though, it's unclear what state the economy will be in next year and by that point I will have worked only 7 months of the previous 9 years. Plus, it may well be possible that I will need to compete against two or even three years of fresh college graduates, and despite the law and what a lot of people say, age discrimination certainly does exist. The funny thing is, I've always been extremely conscientious and been successful in every job I've ever had, and I don't think any employer has ever been sorry to have hired me.
The alternative to going to school seems to be a $9 or $10 per hour job in a warehouse or something, which wouldn't even allow me to keep my studio apartment, and these days I have aspirations for a one bedroom! I'm the adventurous type and had planned to sail around the world single-handed before I got married. On the one hand my financial situation kills me, but on the other I feel really lucky that I'm not living under a bridge somewhere, though it's important to me to set a good example for my children so I don't consider that an option.
I should probably apologize here for the long e-mail, and so I do. Again, I harbor no expectation of a reply, but I'm feeling isolated here and feel the need for some advice. Any ideas?
Sincerely,
Portland Guy's Empty Wallet
P.s. I sent this to Trent at The Simple Dollar as well...
First off I want to thank Portland Guy for reaching out to me and sharing his story with my readers. I am sure there are a lot of folks out there who are feeling isolated and discouraged by their current financial and/or employment situation. As a single person I can sympathize with the need to reach out and solicit advice and ideas from others (since we don't have that other person in the house to discuss these things with). That said, here are my thoughts:
I would not have advised spending some of your precious remaining resources on a degree that will likely have little value in a future job search. But from your letter above, I think you know that, but since the subject matter interests you and keeps your mind occupied you went ahead anyway. If you were pursuing this degree at a local college, I would advise you to get yourself post-with to your school's career center and haunt that place every spare moment you had between classes. Through the career center you might have found leads on internships or even jobs at say a half-way house for young offenders (these places are always looking for house mothers/fathers where the pay is low, but housing can be included as well as meals and the work with teenagers and young adults can be very rewarding). The other value of pursuing your degree at a local school is the relationships you can develop with facility which can translate into recommendation letters and other job leads - something that can be very important if pursuing work in the criminal justice field. You mentioned that you are doing an online degree - does this online school have a physical presence somewhere or is affiliated with a brick and mortar school where you would have privileges to use services like the career center? If not, this is another strike in my mind against your continuing to spend money on a degree that will never earn its keep.
You mentioned working in IT in the past. If you were going to spend money on a degree, focusing on expanding your IT resume would likely be the best bet. Courses in current database programs (that build on top of your old mainframe experience) might better position you for your next job. But career counseling is not really my thing (perhaps a reader can step up here).
Your plan to draw down your Roth IRA to meet your expenses seems reasonable - but have you figured out how much of your Roth IRA balance is direct contributions vr. investment gains? It is only the gains that you pay a penalty on for early withdrawal. Not sure if paying so much for a degree (one without much chance of future income payback) to avoid some gains is worth it - but then you have to do the math there. You mention setting aside $6,000 for each of your children (so $12,000 total) that is not reflected in your numbers above. Since your children seem well provided for financially by there Mother and since European countries offer free or greatly reduced college tuition - you may want to consider drawing on that money first if it is freely accessible to you. Once you are employed again, you can make refunding those accounts (with interest) a priority.
Obviously finding an income stream is key and likely frustratingly impossible in the current recession. Is there anyway you can utilize your current skills in the "shadow economy" while applying for full-time work? Technical side work or anything else that you can do that people would be willing to pay for? Are your expenses really as low as they can go? Since this post is getting pretty long, I am going to leave it at that and wait for others to chime-in in the comments.
