Money saving for Seniors

Have you seen those PennySaver USA sponsored ads? The last one I saw was "irresponsible spending seniors do." They are click bait--they are hawking spending, not saving. But money saving really depends on your quintile. Until Covid, we had a regular Friday night date to eat out. We got out of that habit, and now it's more like 2 or 3 times a month, and we don't really miss it. We never were big spenders, enjoying the time with friends or each other. But let's say with tip the bill was $60, so cut that out of your monthly expenses x2 and it adds up. Going back to the house for dessert with friends after dinner, really saves you some cash. Someone in the 5% group might give up a vacation to Europe to save money. Joe has been a disaster for our grocery and gas bills--what have you done to cut back, if anything?

10 tips for year-end estate and financial planning

We may not be in a position to do #6 (gift up to $30,000 to an individual if married), but we all need to do #10, organize our records for 2019, and shred documents no longer needed for retention.

Also, in 2018, you can contribute up to $18,500 in your employer-sponsored retirement plan (i.e., 401(k), 403(b), most 457 plans, and the Federal government’s Thrift Savings Plan). Employees aged 50 or older who participate in such plans can contribute an additional $6,000 in "catch-up" contributions. #3

https://www.natlawreview.com/article/year-end-estate-and-financial-planning-checklist-make-your-list-and-check-it-twice

Marriage and wealth

Americans working in managerial or professional occupations boast an average net worth of $1.06 million and that's much more than roughly $269,000 net worth for people working in technical, sales, or services jobs. (Motley Fool, Jan. 2016) But also, that's household wealth--and managerial and professional people are more likely to be married (that's 2 incomes) than lower income people, to have graduated from college, and to save and invest. Marriage benefits for black couples are remarkable, but played down in government social studies (that said, black women benefit less than black men).

Marriage and education also provide health benefits, not only does education give them a boost, but even having children who go to college adds to their life span (Pew Research, July 2014). Professionals are less likely to be obese or smokers--maybe their kids nag them. Marriage provides other benefits like inheritance from 2 families even if it's a small amount like insurance or real estate. We have no control over our ethnicity, but Asian Americans are much better at checking all the boxes. 84% of Asian American children live in 2 parent homes.

The widening gap between the rich and the poor—10 easy reasons

Nine years ago the  Wall Street Journal published a series—the widening gap between the rich and the poor—and this was before the recession and during very low unemployment and an economic boom.  I didn’t like any of their answers, so I wrote my own reasons for the gap. Keep in mind this was May 2005. Notice the word “easy.”

1. Easy credit cards: We got our first credit card in the late 60s--I think it was a "Shopper’s Charge." We now have one department store credit card and one bank card--we’ve never carried a balance. Since the late 80s and into the 90s, many new households have never known what it was to live on their earned income.
2. Easy divorce: Christians now have the same divorce rate as anyone else in the culture. When we married 45 years ago, regular religious observance offered families some protection. No fault divorce particularly hurt women and children, pushing them economically into competition with two income families.
3. Easy sex: Casual one-night stands were glorified in the movies of the 70s and 80s. Although adultery and fornication had long been a theme in literature, drama and movies, casual sex and living together before marriage became the gold standard of relationships by the 80s, even though it’s been proven that it increases the divorce rate. Then easy sex came into the living rooms via TV so that even young children think who’s spending the night is no more important than what toothpaste mom buys. Women having and raising babies alone is the biggest cause of growing poverty.
4. Easy birth control and abortion: The millions of Americans that might have sprung from the loins of some of our best and brightest have been denied life itself, and thus their slots in the pie chart has been taken by poor, less educated immigrants. Obviously this creates a huge gap between the middle class and the poor, who instead of having a solid footing as those aborted citizens might have had, flood across our borders or arrive as refugees with nothing.
5. Easy technology and gadgets: Time wasted on I-pods and text messaging and vegging out in front of bad movies on DVDs has certainly absorbed billions of hours that could have been invested in networking, education or advancing up the career ladder. Cable and cell phone monthly costs easily equal what we spent on a mortgage in the 1960s and 1970s.
6. Easy bankruptcy: Load up the credit cards with consumer spending, mortgage your future, then make the rest of us pay it off for you. It might have been Plan B 20 years ago, but is now Plan A. Interest only mortgages, leases for larger and more expensive vehicles, second mortgages--for a generation who thinks the future will be paid for by someone else, it’s a recipe for a growing gap.
7. Easy leisure: Thirty five years ago (1970) few middle class families took vacations--if Dad had a week off (and most companies didn’t offer it) he spent it fixing the house. Sure it’s a huge industry and employs a lot of people, but we’re looking at the gap aren’t we? We’d probably been married 10 years before we took a family vacation (my parents never had one), and then it was at my mother’s farm for a week. Our daughter and her husband had been to Key West, Aruba and took a Mexican cruise in the first 5 years of their marriage.
8. Easy entertainment: This is related to leisure and technology, but today’s young families have difficulty being alone or quiet, it would seem. Even 30 years olds seem unable to walk around without head phones. They are spending their children’s future at movies, sporting events and theme parks. A visit to the library is most likely to pick up a movie, not a book.
9. Easy college loans: Instead of attending a state school, working during the summer or attending closer to home, many young people begin their working lives with huge debt, a debt that takes years to pay off, assuming they don’t default. Loans were so easy in the 80s, that parents who could well afford to pay tuition had their children at the public trough.
10. Easy shopping: You can be a couch potato or a computer novice and never leave home to shop. Addiction is easy. Just call in with the credit card.

See? And I haven’t even said a word about how much health care costs, or how the women’s movement changed our culture, public transportation or taxes. And while the government is tangentially involved in these areas, mostly it boils down to perfectly legal choices, choices which when they become ingrained in our way of life lead to poverty or slippage down by a quintile for the next generation.

Income sources for wealthy retirees

The problem with Obama's desire to raise taxes is it is a job killer and a way to punish the successful--the dream of all socialists/marxists who want the power of the purse over everyone, not just the poor. I've never been in the top quintile of income, but I have roamed around the other four. And I've had a good life. The bottom quintile was when I was a married college student in 1961 living in an apartment with no car, and a job translating Russian medical journals, warming up baby bottles and changing diapers, and using a wringer washer 3 flights down that took quarters. The fourth quintile was when we were "DINKS" double-income-no-kids after the children left home in the late 80s, early 90s when I was an Associate Professor and my husband was a partner in a small architectural firm. Now we're both retired, and probably hovering between second and third.

But there are definitely wealthy retirees. Among people in the highest quintile who are technically "retired," 43.7% of their income comes from wages, salaries and self employment. Only 18.7% of their income in that group comes from private pensions, IRAs, annuities, etc. So when Obama is successful in raising taxes by scolding Americans about being stingy and greedy, this is the group who can afford to just stop earning income. That means zip, nada zilch to your state government coffers too. Now that's a huge problem, because unlike the feds, the state governments can't just print more money. They are obligated by law to stay on budget. Raising taxes collects less money for the government--especially from rich people who either can take their business off shore, hire a smart tax lawyer or just stop earning until somebody wises up after the next election.

But it's also a big problem for the government to be taking in a lot as it did during the Bush tax cut years, because politicians, whether Democrat or Republican, just salivate when they see those numbers, so instead of paying down the debt, they just increase the government programs.

Source for figures (not opinion) "Income of the Aged Chartbook, 2008," issued by the Social Security Administration, although I can't find a picture that exactly matches those--this one is close.

Living cheap in New York

This one surprised me. Not that a 22 year old could live on less than $30,000 in NYC, but that she could also save $5,000, contribute to a retirement fund, and travel to Europe. Read about cheapskate's daughter at "Down but not out in Brooklyn." The keys?

Shared a nice apartment ($3,100 a month) and took the smallest room.

Used a subway card.

Ate inexpensive but healthy meals--beans and rice, whole grains, fresh vegetables, lentils, joined a food co-op. Ate at cheap restaurants.

Had no college debt to pay off.

Enjoyed the many free things to do in New York.

So what does work? The common cold

With three events cancelled this week, we're still slogging through my husband's annual holiday cold, or so it seems. My colds usually last three weeks, his two weeks. "Americans spent about $3.6 billion on over-the-counter cold, cough and throat remedies in 2009 . . . In addition, cold and flu sufferers will spend millions of dollars on prescription antibiotics that have no effect on viral infections." according to a NYT health/money article. And I know that, but was out there helping the profit margin at CVS and Wal-Mart refreshing our supply of dated OTC cold "remedies," none of which seem to work. This time I bought real Claritin because I couldn't find the generic Loratadine that I like, and I bought a different unbrand antihistamine because the one we like wasn't around anywhere. We also used the old faithfuls of more bed rest, chicken broth, and a whole lot of football (which is the only plus for holiday colds). For the first time my husband put Vicks on the soles of his feet instead of his neck--that remedy is going around the internet! The article continues:

"So, what does work? While few, if any, medicines can shorten the duration of a cold, some can help reduce the onerous symptoms of upper respiratory infections. Nasal sprays shrink swollen blood vessels and relieve stuffy noses, though the relief is temporary and you should not use spray for more than three days.

Acetaminophen and ibuprofen can reduce fevers and body aches. Rinsing your nasal passages with a saline solution or breathing steam can help loosen mucous and increase nasal secretions, which can help to prevent a secondary sinus infection. Humidifiers and hot showers also help. Drinking warm liquids like tea has been shown to reduce a variety of cold and flu symptoms.

And don’t forget chicken soup. The age-old remedy, as you’ve no doubt heard, actually does help to reduce the symptoms of the common cold."

So far, I haven't caught his cold, but I'll touch a door handle or table top at the coffee shop that a germy 2 year old's parent recently used and I'll then be down for the count. If that's the worst health problem I experience at my age, I'll be grateful for the cold. (My New Year's resolution is "practice gratitude and appreciation.")

HT Tara Parker Pope of NYT

How do you cut costs?

That's a big topic in the media today--but it was four years ago too when unemployment was 4.5%, and in the 1990s, and the 1980s during the last big recession. I asked it June 28, 2005, then answered my own question (I do that a lot). I don't. I reread it today, and don't see any changes. Everyone seems to "cut costs" in different ways. Here's my list of non-cuts, and at my age, I'll probably not change what is working (hmmm--could be a motto).

Economically, it makes absolutely no sense for me to leave the house every morning at 6 a.m. and drive to a coffee shop. If you don't do this, you could exclaim, "But that costs you nearly $600 a year, when making it at home is about five cents a cup." Very true. But I read 2 or 3 newspapers, and see 4 or 5 people I know, chat with various folk, so as a social informational event, it's pretty cheap. Compare that $600 to a golf hobby, and you can see it is really pretty cheap.

We eat out about once a week--it's called our Friday night date. When my husband started his own business in 1994, this is one thing we cut for awhile, until we could see how our finances would be, but reinstated it quickly. Sure, I can fix the same thing at home for about $3.00 that costs us $30.00 at the pub, but again, it isn't food, it is R&R and time to focus on each other. It is also a line in the sand dividing the work week from the week-end, and when your office is in your home, you definitely need to keep this ritual (he also dressed for work each day, including a tie). About $1500 a year just to eat one meal. Ridiculous!

I could save about $400 a year if I stopped coloring my hair. That will come, but for now, I prefer to fool Mother Nature and the clerks who ask for ID when I request a senior discount. Brown hair turning gray is not pretty like a brunette turning gray (but prettier than a blonde or red head going gray--just a tip).

We usually get a glass of the house wine (red for the cardiovascular system) with Friday night dinner. I suggested to my husband that we just drink a glass of wine at home afterwards--saving Oh, maybe $500 a year (cheap wine), but he didn't go for that. Frugal, but not romantic.

We really don't need two cars now that my husband is retired. I suggested we get rid of his Explorer and keep my van, but since both cars are paid for (and he really likes his better than mine but his hurts my back). That would be a one time boost to the income, of say $6,000 (resale is the pits even on nice, well kept autos) plus a savings of maybe $300 a year in insurance and $200 in maintenance.

Pets are expensive. Kitty litter, cat food, vet bills, etc. I've not looked at the figures recently, but I think it is something like $6,000 over the life time of a cat, and more for a dog. If your daughter or neighbor won't stop by and look after the sweetie-pie when you're gone, you've got to add in huge boarding bills. But I'm not even going to think about that savings. Pets are good for all sorts of health benefits.

So you see, I could be saving and investing this to leave to our Alma Mater, The University of Illinois, but they didn't graduate any dummies, so we're spending wildly while we've got the chance.

Actually, the U. of I. item has changed. I won't send them ANYTHING because of Bill Ayers.

Only Americans can save the economy

Stop waiting for the President to do something. Stop applying for phony "shovel ready" stimulus money (as of yesterday less than 14% had been spent by federal agencies).

1. Go out and buy something from a local business today. Skip the internet.
2. If you are in business, put an advertisement in a local newspaper or magazine or TV channel.
3. Take the kids to the zoo or go to a movie and then out for ice cream.
4. To to the lumber yard or hardware store and buy that item to do the home repair you've been promising.
5. Leave bigger tips--bus boys pay rent too, you know.
6. Buy school supplies for a low income family at the neighborhood five and dime dollar or drug store.
7. Have a party--invite the neighbors.
8. Put $5 more in the collection plate next Sunday.
9. Buy stock in an American company whose products you know and trust.
10. And if you live in a state like Ohio that is proposing more gambling to bring in jobs, consider the fall out, the outside interests, and cost of social problems before you vote.

Brand Loyalty

Yes, we are a consumer society--authors published mega-hits writing about how we shouldn't buy so much because it was rotting our souls--all the while, hawking their books on Oprah or Dr. Phil. When unemployment was 4.5 in Ohio, newspapers were still writing sob stories about "this economy" and why we should elect a Democrat. Now it's 9.7 and they are just starting to see how they contributed to the problem. But that's history. We've got the man. So what will you give up now that we're in a recession and you can't whip out the credit card, or you're looking forward not to the next career step up, not the next promotion, but just hoping for the next payday.

Would you be willing to change. . . in no particular order

Laundry detergent? Yes, and I have, but occasionally purchase my favorite because I love the fragrance.

From dryer to clothes line? I'd love to have a clothes line, but our city doesn't allow it. It's also good exercise. I use one at Lakeside in the summer. Added advantage of bleaching the hubbie's underwear.

Dishwasher detergent? Yes, and I have, however, I discovered I was using too much.

Beauty school hair cut rather than your regular hair dresser or barber? Absolutely not.

Veterinarian? I've heard people say they'd give up their family doctor before they'd give up their vet. I love our internist, and wouldn't change. The vet's nice, but . . . yeah, I'd change, or use her less frequently.

No hair color? Hmmm. That's still on the table. My mother looked awful with gray hair, very smart with white hair. I have her coloring (very pale). I may have to wait a few more years for white. Although it would save money. It might depend on Obama and how long he can extend this poor economy.

Thrift shop, or remainderer rather than a "sale" at a major retailer. Sure, do it all the time. Those items are often newer than what's in my closet since I retired in 2000. Other bargains too. Yesterday I got a fabulous trombone CD for $1.00.

Library instead of book store? Normally, I'm a heavy library user, or was for many years. I've been using OSU more than UAPL because it's so handy in its temporary location on Ackerman (soon to close). I think I did purchase more books in 2008 than any other year, however. If UAPL manages to fool the public and get this $25 million levy passed, I may just have to boycott it.

Dollar movie or first run? We see so few movies, that they are almost always at the dollar theater by the time I notice them. Two tickets plus a small bag of pop corn equals the price of one first run ticket.

Sit down or carry out? I'm not much for carry out except for the occasional pizza. A meal out with friends is entertainment plus a meal.

Supermarket frozen pizza prepared at home or pizza shop fresh and hot at home? Definitely not the frozen. Like eating cardboard--no savings there if your tastebuds rebel.

Invite friends for dinner at home or eat out? Either, but serving friends dinner is cheaper than eating out, even at McDonald's and the plus is, you'll probably clean the house.

Coffee at home or designer coffee at the shop? For me, it has to be "out." I read the newspapers, write in my blog notebook, talk to friends and neighbors, and listen to music--that's a lot for $1.69. Also, I don't make very good coffee.

Public pool (or tennis) membership for the family or private club? It's been since the early 80s that we had a family membership at the pool, but if you live in a nice town with a good recreation program for which you're being taxed, why would you not do this (ours was within walking/biking distance)? Snob appeal?

Change banks to avoid high fees? We haven't done that--yet. We've been at Huntington since 1967. I think they are all high, but we don't use a lot of services that could get us into trouble. Same with credit cards. We've never had a fee or interest charge.

Change churches to avoid stewardship sermons? Our church has "the talk" so seldom, that wouldn't be the issue if change were in our future.

Use cheaper or free exercise facilities and drop the club membership? Yes, exercising at UALC Lytham is about $1.33 per session which probably doesn't even cover the utilities. We get weights, resistance, stretching and cardiovascular. Walking outside is free, of course, the last I checked.

Buy house brand frozen vegetables rather than name brand? Yes, but only certain vegetables would I buy frozen--except for corn and peas, most of them taste like mush. Fresh is better.

Tithe regularly from the top or pitch in occasionally from the bottom as the plate goes by? For us, the tithe (10% of gross) has been the way to go--no problems since we started that about 35 years ago. Then pitch in for the extras like special campaigns, other good causes, diseases, disaster relief, etc. But this works out differently for other families.

Friday Family Photo--1975

"Unfortunately, we need a recession," writes Jim Manzi, noting that we can't borrow our way out of debt. "Americans are going to live in smaller houses, drive older cars, vacation nearer to home and have less expensive digital camcorders than they expect."

You mean like the 1970s when we lived on one income in a 3 bedroom, 1.5 bath home, managing with one car, a vacation to my parents' farm in Illinois, an instamatic camera, and "gaming" was racing toads in Aunt Muriel's drive-way?

Where did the money go?

The drop in gasoline prices since summer has amounted to about $2,000 per household in spendable income. That's why a "stimulus" check isn't going to dent the recession. Now, we didn't get that much--we have two cars but don't drive a lot, but it did halve what we spent on gasoline. I think our share went to our California relatives (bunches of them--probably more than any other state). According to USAToday here's were it went:

48% for groceries

42% to savings

30% to pay down credit card debt

10% for entertainment

9% for home improvements

I think that shows the American people can make good financial choices when the government gets out of the way. Even though money that goes into savings isn't technically out there circulating by buying "stuff," it is used by banks to offer credit to businesses that do employ people. If you remember, since Congress doesn't, this was the idea behind the huge September scare--TARP. The money was to be used for banks to get the economy going. Instead, it has morphed into PARP POOP PORK. This is why we're getting the return of the Hoover-FDR economic boondoggle of federal fiddling (1929-1943), only this time it will be the Bush-Obama Boondoggle. Let's hope it doesn't last over a decade this time.

Really bad advice for saving on food

The Extension Office at the University of Illinois has a special web page on financial advice, which includes saving on your food dollar. The worst possible advice is to suggest clipping coupons (or using a loyalty card). Here’s my e-mail to them:

Dear Debra,

I see on the web site for financial advice that clipping coupons is suggested as a way to save on food costs. Coupons are a marketing scheme--in the long run it is very deceptive. Coupons, now often shaped like credit cards, are the size of a dollar. They most often are used for promoting 1) processed food, 2) to cover price increases, and 3) to introduce a new product, which is probably a variation of one already on the shelf, like a Ritz cracker in a different shape. Coupons help the printing companies, the ad designers, and the workers in 3rd world economies who count them, but they don't help the American consumer. The smart consumer should plan menus, stick to a list, shop the walls, stay out of the snack and soft drink aisles and contribute her own labor to reduce food costs. Loyalty cards also increase food costs as do games and sweepstakes. The first coupon was a wooden nickel, and you know what we say about those.

Worst advice I've ever heard

Last Thursday my husband called me into the family room to check out the Dr. Phil show. We sat there in stunned disbelief as we heard absolutely the worst advice on finances anyone could possibly be promoting. In fact, if his TV audience actually did what he said, I'm sure we would have been in a total financial meltdown by Saturday! I'm sure Phil and his friend Oprah and Rachel all have enough to get by, but there are a few retail clerks, waitresses, builders, truck drivers, etc. who need to stay in business. I'm surprised he didn't cause a run on banks and a new purpose for mattresses.

A second income? Think again

If Mr. Obama wants to raise your taxes, but still encourage marriage, the greatest non-government, anti-poverty program we have, he should first read the Smart Money article on what that second income really costs.

"After you subtract what you'll owe the feds, your city and state, Social Security and Medicare, you may end up bringing home 60% or less of your spouse's new salary. And if the first spouse already earns a healthy income and you live in a high-tax state, the government pickpockets could easily hit you up for 50%."

But it gets worse; read on.

Two things aren't mentioned in the article. First, the illusion that you actually have that second salary, so you spend accordingly. There's no calculator that can factor in pipe dreams. If your spouse went to work really understanding she'd have less than 1/2 of that $40,000, maybe you'd think twice before buying new toys, or trading up on a higher mortgage and you'd use it to pay down debt or save. Second, keep in mind that if your spouse is in the education field or contributes to a public employees plan, all that money taken out for Social Security is for nothing if they have a state retirement plan. Neither your spouse nor you will see that when you retire. Our federal employees and military can double-dip, but not teachers. The RINOs refused to help Bush fix SS, so now it will be up to the next guy, or the next or the next.

Keep in mind also that no one has fixed the AGI--and Mr. Obama is eyeing you like the fatted lamb; he thinks you're "rich" and can pay more taxes. Remember, the middle class pays; the rich hire accountants and lawyers to hide their wealth.

Also not mentioned in the Smart Money worksheet because it's about as popular as telling someone to stop smoking, a church tithe (start with 10% and work up) on that spousal income is a good way to stay out of debt, but you need to take it off the top so you don't think you have it to spend.

Unfortunately, articles like this do not reduce taxes, they just encourage people to not marry.

Even the media people need to keep their jobs

An interesting story appeared on three national news programs Monday and Tuesday: amid all the bad news they were reporting, they actually brought on experts who were sensible, calming, experienced, and who said we have been through much worse times in the past 30 years (particularly in bank failures) and we will make it through this. Wow. It’s as though the advertisers, producers, writers and reporters suddenly realized they were contributing to the malaise and panic, and just possibly their OWN JOBS might be on the chopping block if they join the “sky is falling” crowd. Of course, it didn’t last long and they soon returned to their hysteria. It’s hard for a leopard to change his spots amidst the zebras. They all look like lunch. For people on fixed income and pensions, as we are, this is not a fun time to open the monthly statement. But from 2003-2007 it was a joy to meet with our investment adviser. It was like having a third person living with us who turned over his salary, but didn’t eat or use utilities or ask for the credit card to go shopping. What goes up must come down; all bubbles burst; nobody ever got rich (except federal and state bureaucrats and lobbyists) by asking the government for help.

The CBS Early show today actually showed how taking your lunch to work can equate to 500 gallons of gas in a year, a trip to Hawaii or contribute to a house down payment. The beautiful female lawyer who was interviewed was spending about $100 a week on just eating lunch at work--and she wasn’t even going to any great places. It’s amazing to think this woman went to college! And law school! I’m sure if interviewed about the state of the economy she’d be a whiner.

Here’s what I’d tell my son and anyone else worried about the economy: stop smoking (or some other expensive habit like daily lattes, lunch out or weekly manicures), put that money into your IRA, take a deep breath, and let the market do what it always does--correct and advance.

4950 Debt Soaked Economic Slump

is the phrase used in the WSJ article today about debt management groups, from 12 step programs to websites, to church classes. The problem I have with that phrase is all the people in the article were in deep trouble with debt long before the current slump. In fact, their problem with debt--spiritual and psychological--fed on the boom times we've just been through. It's the bubbles and booms that often lead people to debt, not the low times. Like Shawanda Green, 26. Her income is $82,000 a year, but she liked to buy $400 boots and she had a parasitic boyfriend who ate up all her food. He like quality and quantity. Richard Rice, 37, with an income of $70,000 has a credit card debt of $20,000. Michael Wagner at 34 had a silver BMW and $25,000 in credit card debt. He started to do better, then got a new girlfriend who was a spender, and went right back in the hole. They didn't get into this mess because of high gas prices and a mortgage crisis. Listen carefully to how financial sob stories are presented. Do they really have anything to do with the state of the economy?

So the solutions presented were: eat at home; dump the spend thrift boyfriend/girlfriend; don't file for bankruptcy--pay your debts; establish a savings account; cut up your credit cards. I'm guessing their mom or dad told them the same thing, but sometimes you need group support or a web site to do the right thing.