Wednesday, April 30, 2008

How Much Do You Make?

A recent NY Times article, Not-So-Personal Finance looks at the question of should one talk about money publicly. In particular, paycheck size.

For people old enough to remember phone booths, a blunt reference to salary in a social setting still represents the height of bad manners. But for many young professionals, the don’t-ask-don’t-tell etiquette of previous generations seems like a relic.

I guess I'm of the phone booth relic for nine to fivers, but in the restaurant industry it's fair game. I have no problem asking how much someone (I know, even casually) makes in tips at another joint, and within the same restaurant there usually is a fair amount of transparency between, say, the floor and the bar. Especially if the floor is tipping out the bar. But if you earn a paycheck paycheck? No way am I asking you how much you make. Not unless you're one of my best friends. But that's just me, I wouldn't be offended if someone asked me how much I made, I'm just not really going to go around asking people that question. I guess because I think that they themselves don't do that.

There are definitely benefits to sharing salary information with friends in the same industry. Also, I think that women have a tendency to inadvertently sell themselves short because they don't talk about money as much as men. But that is a totally uneducated assessment (however I would like to point out that I am very skilled at the uneducated assessment, so it's not without merit). And honestly, I am all for people talking more about money in general with each other.

Apparently, if you're under 35 you already know how much all your friends make. And those extra two years of me sometimes wishes I was under 35, so guess what. I make $2300 a month (a mix of before tax and after tax, don't ask), but that's mostly freelance work so it can easily change.

And if I asked you how much you made, would you cringe or tell all?

Monday, April 28, 2008

iTunes Free Single of the Week

iTunes' free single of the week is Melody Gardot's Worrisome Heart, a smoky jazz title track from Verve's reissue of her debut album in 2006. It's a nice song for this overcast day, so head on over to the iTunes store for the free download. And then quickly exit the program before you, like me, start snatching up random songs from bands like Journey (listen, Lovin', Touchin', Squeezin' is a good song!)... and Busta Rhymes' new single... and, oh never mind.

Friday, April 25, 2008

New York's Finest

One of the great things about having people visit you in the city is that you get to show off all your favorite things to do. Not necessarily the big things, like shoot up to the top of the Empire State building, but the little stuff. Like watching the sunset from Fairway's outdoor cafe in Brooklyn.

Fairway is a large supermarket. Like 33,000 sq. ft. large. For a city that like to grocery shop in corner store bodegas, that's one hulking store. For those readers who don't live here, it's also a New York institution with a store originally in the Upper West Side and Harlem, and the fact that one moved to Brooklyn was a huge deal that had people shaking with excitement over the prospect of fresh fruits and vegetables (we must have the worst produce in all of the US) and legendary store prepared food. Okay, we New Yorkers love the hyperbole of our institutions, but it really was a big deal. The Brooklyn store sits right on the waterfront in Red Hook, in a restored five story brick building from 1869 that was originally a coffee warehouse.

We got some picking's like Italian olives and Fairway's killer guacamole with chips, and each picked up some dinner. Basically an outdoor picnic. Then we headed out the back to the cafe and watched the sun slink down behind Jersey, and watched the New York harbor just slide by. Kayaks(!), tug boats, the Staten Island Ferry, and of course a fantastic view of the Statue of Liberty. We even saw the FDNY pull up to the dock right at the foot of the cafe, get off the boat in full gear, go inside to grocery shop, then get back on the boat and float off into the harbor.

Everybody has their favorite spot to watch a sunset, and I have to admit this is one of mine. It's waterfront dining at its finest, and without killing your budget.

Wednesday, April 23, 2008

Bananas Going Bananas

Yesterday I was at the Park Slope Food Co-Op and I noticed a sign above the boxes of bananas. After a long haul of 69 cents per lb., organic bananas are expected to hit $1 per lb., with no price ceiling in sight. There goes the one and only fruit I actually enjoy eating. If cheeseburgers had the caloric and nutritional equivalent of asparagus, I'd be golden. But alas, I'm mourning the price of bananas.

I tried to google my way to knowledge about the banana situation, but I couldn't find much. I recently wrote about the world food crisis, but just this past week The Economist put out an excellent article, The New Face of Hunger.

“World agriculture has entered a new, unsustainable and politically risky period,” says Joachim von Braun, the head of the International Food Policy Research Institute (IFPRI) in Washington, DC. To prove it, food riots have erupted in countries all along the equator. In Haiti, protesters chanting “We're hungry” forced the prime minister to resign; 24 people were killed in riots in Cameroon; Egypt's president ordered the army to start baking bread; the Philippines made hoarding rice punishable by life imprisonment. “It's an explosive situation and threatens political stability,” worries Jean-Louis Billon, president of Côte d'Ivoire's chamber of commerce.

Some of the shift has certainly been an issue of supply. In the case of my beloved bananas, there was a devastating flood in Peru where the Co-Op purchases its supply from. But it is also largely an issue of demand. Countries like China and India increase their consumption of grain and meat as they become wealthier. In the meantime, biofuel production is pegged to Western governments' targeted goals, shrinking usable farmland (for food) in the process. Farming is not limber, and it is notoriously slow to respond to market forces. There are large swaths of unused land in Russia and Brazil, for example, that will take at least a decade before they are farmable. If that's a word. Farming, it seems, is experiencing some serious global growing pains.

But the food scare of 2008, severe as it is, is only a symptom of a broader problem. The surge in food prices has ended 30 years in which food was cheap, farming was subsidised in rich countries and international food markets were wildly distorted. Eventually, no doubt, farmers will respond to higher prices by growing more and a new equilibrium will be established. If all goes well, food will be affordable again without the subsidies, dumping and distortions of the earlier period. But at the moment, agriculture has been caught in limbo. The era of cheap food is over. The transition to a new equilibrium is proving costlier, more prolonged and much more painful than anyone had expected.

“We are the canary in the mine,” says Josette Sheeran, the head of the UN's World Food Programme, the largest distributor of food aid. Usually, a food crisis is clear and localised. The harvest fails, often because of war or strife, and the burden in the affected region falls heavily on the poorest. This crisis is different. It is occurring in many countries simultaneously, the first time that has happened since the early 1970s. And it is affecting people not usually hit by famines. “For the middle classes,” says Ms Sheeran, “it means cutting out medical care. For those on $2 a day, it means cutting out meat and taking the children out of school. For those on $1 a day, it means cutting out meat and vegetables and eating only cereals. And for those on 50 cents a day, it means total disaster.” The poorest are selling their animals, tools, the tin roof over their heads—making recovery, when it comes, much harder.

I encourage you to check out the article. It's a little long (it is The Economist after all), but I learned a lot about how agriculture plays out on the world stage.

Tuesday, April 22, 2008

Airlines to Charge $25 for Second Bag

Yes, it's official. Shortly after a handful of airlines announced they would charge $25 for a second checked bag, most major airlines now will do the same.

I am a freak about traveling with carry on only, to the point where it drives M nuts, but now it will save me money. My fear is that now everyone will sneak on a decidedly not within 45 linear inch bag, overstuffing the overhead bins.

The new fee of $25 for a second bag is being levied by Continental, Delta, Northwest, United and US Airways. The low-fare carrier AirTran has announced that it will charge $10 for a second checked bag. Airlines have long levied fees for checking a third bag. Some carriers have recently increased those as well, and the fees on the major carriers now run as high as $100.

Friday, April 18, 2008

Average Manhattan Home $1.6 Million

Housing slump my a$$. The average Manhattan home now sells for $1.6 million. The city average is $853,000.

What does this tell us? It tells us that the wealthy remain unscathed by the national economic turmoil, and the rest of us are left with even less affordable housing than before. And the before wasn't so great to begin with...

Thank god for Brooklyn.

Wednesday, April 16, 2008

The 2008 Return on 1998's $100k

New York Magazine's Relative Investment- What If You Had $100,000 to spend in 1998 is an eye popper. Okay, sure, NY Mag is a real estate junket, and NYC real estate is a kick in the pants, but the list isn't all city square footage.

Some examples- Eighty grand on a Harlem townhouse shell, is now worth $800k to $1.5 mil, and that's still a shell. Then we have the example of a hair below $100k worth of Apple stock, now worth $1.9 million. In 1998 I had some jacked up Mac laptop circa 1994 that was the size of the Manhattan yellow pages, and I had to jiggle the power cord to get consistent power. But what did I expect, I bought it at a Salvation Army in Los Angeles. I should have bought some Apple shares, but I was still too busy blowing off my student loans, which is why one would shop at the Salvation Army for a laptop to begin with.

Anyways, check out the list, it's kind of fun. It runs through everything from real estate to Hermès Kelly bags to 64 cases of Dom. It also helps put things in perspective because the past ten years have had some serious market woes. At the end of the day, it's all about investing for the long term.

Monday, April 14, 2008

Economic Stimulus Check Schedule

The WSJ's When You'll Get Your Check has a handy dandy chart that explains when those economic stimulus checks are expected to hit your wallet.

First of all, the schedule is assuming your taxes from last year are processed by April 15th. Since I'm doing mine today (yes, I know...) hopefully that will be in the nick of time. Then they break it down by direct deposit (starting May 2nd) and paper check (starting May 16th), and finally use the last two digits of your Social Security number.

To get the check, you must file this year (by October 15th)- even if you don't normally meet the filing minimum. Mine is already spent on vacation, even though I thought about saving it. Has anyone else already spent theirs?

Thursday, April 10, 2008

Truckers Revolt

Barbara Ehrenreich has a great post over at The Nation, Truckers Hit the Brakes.

Until the beginning of this month, Americans seemed to have nothing to say about their ongoing economic ruin except, "Hit me! Please, hit me again!" You can take my house, but let me mow the lawn for you one more time before you repossess. Take my job and I'll just slink off somewhere out of sight. Oh, and take my health insurance too; I can always fall back on Advil.

Then, on April 1, in a wave of defiance, truck drivers began taking the strongest form of action they can take: inaction. Faced with $4-per-gallon diesel fuel, they slowed down, shut down and started honking. On the New Jersey Turnpike, a convoy of trucks stretching "as far as the eye can see," according to a turnpike spokesman, drove at a glacial 20 miles per hour.

Owner operated truckers, organized via CB radio and internet, are staging highway revolts across the country- taking over all lanes and crawling for miles, getting arrested, or just simply idling in enormous groups on the highway. Kind of like the truckers version of a sit-in strike.

Their goal? Reduce the price of diesel fuel. At $4/gallon, they cannot survive. Ehrenreich says that of all the truckers that she spoke with, they all knew that Bear Stearns got $30 billion bailout over the course of a weekend. Hello, my thoughts exactly. Our speed of a sloth government gets all miraculous for Bear Stearns while the rest of the sky is falling and they're like, oh well.

And kids, truckers have clout. 70% of goods in the US travel by truck. If they want to do a sit-in on the I95, it's no joke. And their clout is not lost on them.

We were able to survive a writers' strike, but a trucking strike would affect a lot more than your viewing options. As Donald Hayden, a Maine trucker put it to me: "If all the truckers decide to shut this country down, there's going to be nothing they can do about it."

More importantly, the activist truckers understand their protest to be part of a larger effort to "take back America," as one put it to me. "We continue to maintain this is not just about us," JB--which is his CB handle and stands for the "Jake Brake" on large rigs-- told me from a rest stop in Virginia on his way to Florida. "It's about everybody--the homeowners, the construction workers, the elderly people who can't afford their heating bills... This is not the action of the truck drivers, but of the people." Hayden mentions his parents, ages and 81 and 76, who've fought the Maine winter on a fixed income. Missouri-based driver Dan Little sees stores shutting down in his little town of Carrollton. "We're Americans," he tells me, "We built this country, and I'll be damned if I'm going to lie down and take this."

Check out Truckers and Citizens United for more info.

Wednesday, April 9, 2008

Income Gap By State

An article in today's Times, Income Gap in Connecticut Growing Fastest, Study Finds, marks CT as the place not to be if you are poor. Put NY up there as well (highest income gap among 50 states), and certainly DC (highest income gap, period).

The newly released study took family incomes from 2004 to 2006, and compared them to an inflation adjusted period of 1987 to 1989. The study is not so surprising; everyone knows that minimum wage hasn't moved in tandem with market wages. While CT's spike of a 45 percent increase for its top fifth of households is not a shocker (I've seen those Land Rovers on the Merritt Parkway), it is a little bit of a WTF that the bottom fifth actually dropped 17 percent.

Some other sobering stats:

    New York had the highest income gap among the 50 states in 2004 to 2006, according to the study, with the top fifth earning an average of $148,200 a year, or 8.7 times the $17,100 income at the bottom. Connecticut ranked seventh and New Jersey, where the rich earned 7.5 times what the poor did, was 14th. (The rankings did not include Washington, D.C., which had by far the biggest income gap, with the rich earning an average of $188,500, the highest income in the country, 13.5 times the poor’s $14,000 average.)

    The study’s authors adjusted family income for federal taxes but not state and local taxes. So the study may not accurately capture the gap in high-tax states like New York that tax high earners for the benefit of those who are struggling.

Of course, the article goes on to make brief mentions on tax policy. I am no expert on taxes, but I like that NY taxes its high earners. What I don't like is that NY state spends more of its tax dollars on its prison industry than its universities. See, the thing about tax policy chatter is that it fills the room with a lot of talk about how a state gets money, rather than what the state does with it. And that's one stunted conversation on tax policy.

Monday, April 7, 2008

March Net Worth

Egads, it's more than a week into April already! Well, better late than never.

$29,446- almost thirty but not quite. I had a slight rebound, mostly due to the market. But it's still behind the December high point. That's okay, I'm more obsessed with the savings account, which got a boost because I saved one of my freelance paychecks. I was torn between bumping up our savings account or opening up an individual 401k, and decided on the cushion. I'm still going to check out the individual 401k plans, and I'll get back to you on what I find.

I would just like to make one last comment on this whole net worth thing. I still find it weird that I post my net worth, despite the fact that the voyeur in me enjoys reading other posts on it. Which is why, I guess, I do it to begin with. I kind of have fun figuring it out every month. But back to my one last comment.

I looked on the comparison report tab of the NetworthIQ program, and folks, my net worth is sad. And how do I feel about this? Okay, really. So people my age have, on average, hundreds of thousands of dollars more in net worth. But then, that's the funny thing about doing net worth calculations every month. In the end, it's all relative. Even though it's a numbers game, it's also about your own life, and your own progress bars. So even though my peers in age, income, zip code, etc. squash my little net worth bar, I'm cool with that.

Friday, April 4, 2008

Bankruptcy Laws and the Economy

An article in the latest New Yorker, Going for Broke, tells the tale of bankruptcy law in the US and how it may or may not have contributed to the current economic meltdown.

The credit crisis has turned into an economic alluvion, with no dry land to be had. The link between the sub-prime mortgage fiasco and the 2005 Bankruptcy Law is interesting, and something I wouldn't have made on my own. But that's why I read Surowieki.

Bankruptcy law is one of those hot button topics, like sub-prime mortgages, that sends people into orbit with a they-did-it-to-themselves ire. It's not as if this anger is without a point. I know that to live below your means is sometimes about as much fun as having 2 cents in a 99 cent store, basically broker than broke, and I have little time for someone complaining about money problems when they have a flat screen TV with TiVo and Wii. And I'm perfectly content with these feelings, but I also know they are reactionary. I am reacting to the a$$hole who just cut me off in his leased SUV that sucks up 50% of his disposable income. And when viewing politics and the economy, reactionary just doesn't always work.

Because as Surowieki points out in the article, there is plenty of bailing out going around, just not for those at the bottom of the economic food chain.

In recent months, a lot of people have been handed financial get-out-of-jail-free cards. C.E.O.s who presided over billions in losses have walked away with tens of millions in compensation. The Federal Reserve has showered cheap money on banks and brokerages. Even Bear Stearns caught a break when, last week, J. P. Morgan agreed to quintuple the price it will pay to take over the firm. But there’s one group for whom forgiveness has not been forthcoming: ordinary consumers struggling with piles of credit-card debt. For them, escaping the burden of their bad decisions and their bad luck has become much harder.

It's important to remember that, I think, because it is too easy to blame things that are easier for us to see, like when the news is full of these after-the-fact interest rate breakdowns on sub-prime mortgage loans. I think that there's probably a lot more transparency after you're f*cked than before you are. Which just might be one of the ways they f*cked you over in the first place. But what do I know, I actually read the fine print and every word on a shampoo bottle because, well, I am a compulsive reader. For example, did you know that the wording on a toothpaste box is concise and grammatically correct, which is more than I can say about Citibank's fine print. Anyways, I digress.

So the 2005 Bankruptcy law. Basically, you couldn't declare bankruptcy over credit cards anymore.

One might say: so what? Even if bankruptcy is sometimes precipitated by bad luck or by an economic downturn, it’s always the result of people living beyond their means, and why should they get away scot-free while the rest of us pay our bills? It’s a fair question. But there’s a reason we did away with debtors’ prisons: having millions of people enslaved to their debts is a bad thing for an economy. Putting people into Chapter 13 essentially means they pay a heavy extra tax that goes straight to the credit-card companies. That creates a disincentive for debtors to work, since the more they earn the more they pay. It also takes away spending power—not the best thing during a recession. Making it harder for people to discharge their credit-card debts has other drawbacks as well. Homeowners would once do almost anything to keep up payments on their homes, even if it meant falling behind on other debts. In the past year, though, economists have reported an increase in the number of people who are just walking away from their homes, because it’s now often easier to abandon a mortgage than a credit-card bill. (The practice has even been given a name—“jingle mail,” because people simply send their keys back in an envelope.) So the new law may very well have exacerbated the housing crisis.

He goes on to connect bankruptcy laws to entrepreneurship (more than 15% of personal bankruptcies are from a failed business), self-employment, and learning a new trade.

In the meantime, bankruptcies have plummeted 62% between 2004 and 2006, and credit card companies' profits rose over 30% between 2005 and 2007. That's all fine and good, but don't tell us you did it for good people like us who pay higher interest rates and fees. Because I know my rates and fees didn't go down, did yours?

Tuesday, April 1, 2008

The Cost of Farming, The Cost of Eating

Four dollars for a slice of pizza. Two dollars for a single bagel. Did you pay attention to how much that loaf of bread just cost you? Yes, food prices are going up, and it's not just because of the price of gas.

Make no mistake about it, it's more expensive to eat. With less land for crops, a drought in Australia and other countries, and a global market that can hook countries on food that they don't produce, the true cost of farming and food is complicated, and in its complications- more expensive.

For example, the NY Times article, Food Prices Rise, Farmers Respond, explains that US farmers are meeting one demand by cutting back corn production in favor of soybean production.

    If they carry through with their intentions, the resulting additional soybean oil could help alleviate global shortages of cooking oil that have led to sharply higher prices, hitting poor countries hard.

    But a smaller corn harvest would most likely raise prices for that crop, which could also increase the prices Americans pay for meat. Most corn is used as animal feed. Higher corn prices may also compound the difficulties of companies that use corn to produce ethanol as a motor fuel. Despite government mandates for the use of ethanol, those companies are struggling. They expanded so rapidly in recent years that an oversupply of ethanol depressed prices, even as the cost of their main feedstock — corn — was rising.

It's not as simple as just grow more of something to meet demand, even though I am this close to rioting at nearby Bageltique. Unfortunately, the cause and effect of the global food market has become a worldwide food crisis. An article in the CSM, Grain Prices Soar Globally, begins,

Bangkok, Thailand - - Rice farmers here are staying awake in shifts at night to guard their fields from thieves. In Peru, shortages of wheat flour are prompting the military to make bread with potato flour, a native crop. In Egypt, Cameroon, and Burkina Faso food riots have broken out in the past week.