Tuesday, October 28, 2014

Gearing Down, part 5 -- Communications

Keeping in contact is an important part of our lives, and generally it costs money. Cell and landline phones, Internet access, cable TV, all have their associated monthly bills. And when you have a sudden reduction in your income, you have an urgent need to make those bills smaller.

Unfortunately, it may not necessarily be possible to shrink them as rapidly as you like. In the past decade, we have seen a strong shift from a month-to-month pattern to the long-term contract. This is particularly true with cellular phones, and was a big part of the shift by which they went from luxury goods to ordinary goods. Instead of having to make a large lump sum payment for the phone and then pay monthly connection fees, you got the phone free or at a much reduced cost, in return for making a legally binding commitment to maintain service on it for the next year or more. If you want to back out, you have to pay a hefty cancellation fee.

However, it may be possible to drop features and reduce the cost of your connectivity. For instance, you could go to a lower service tier with fewer minutes, especially if you don't use most of your minutes already. Similarly, you may want to examine your cable bill and determine whether you can go down to a package with fewer channels, especially if you seldom watch most of them.

Also, you may want to look into the possibility of a bundle discount if you're getting all of those services from the same company. Frequently you can get phone service, Internet and TV together for the same price any two of them would cost separately.

Obviously, if you have to move, you may have to disconnect the services that are tied to your location, even if it means paying a penalty. But you may want to keep your old cellular service, since that way your family, friends and associates won't have to learn a new number to get in contact with you.

As a result of these complexities, communications can be a difficult expense to reduce. Howwever, with some thought you may be able to pare it some.

Friday, October 24, 2014

Gearing Down, Part 4 -- Housing

Housing is another area of our lives in which making rapid changes often is not possible. Most of the inertia in housing comes from the nature of the legal arrangements by which we occupy our dwellings and the ways by which those arrangements are terminated.

Most obviously, if you own your house and it becomes unaffordable, you have to sell it, which means finding a buyer. And in a down market, that means the whole horrendous hassle of special cleaning and staging and showing it to people and generally being at the beck and call of your real estate agent until someone decides to buy it. The only alternative to the complexity of selling your house is foreclosure, which puts a big ugly black mark on your credit report that lingers for years.

Just because you're renting, it doesn't always mean you can leave an apartment or rental house that has suddenly become too expensive. Renters are often in year-long leases with expensive penalties for breaking them. Even if you're not locked into a lease, you still need to find new digs, which often means coming up with a large lump sum of cash to cover the security deposit, first month's rent and often the last month's rent.

It's possible to make some economies on other areas of your housing cost, particularly your utilities. However, there is only so much you can pare by shutting off lights, turning back the thermostat, and making sure not to run water when you're not actively using it. If a 5-10% reduction simply isn't going to make the difference between crash-and-burn and survival, you're going to need to look at more drastic measures.

One possibility to look into is sharing your quarters, and the expenses for them, with someone else. Although we often think in terms of adult children moving back in with their parents, there are many other possibilities for working out shared housing arrangements. Other family members or friends may be possibilities for co-housing.

However, you will want to think carefully about your arrangements if you bring someone else into your home. If you are renting, your lease may have restrictions on your ability to bring another person in as a co-tenant.

Also, consider how well you will be able to handle having another person on what has previously been your space. Especially if you have occupied your dwelling for some time, you probably have established routines that have become comfortable. How much are you willing to give to accommodate a new person's routines and habits? If you expect them to fit neatly in the spaces around your life, you're apt to discover that things don't work as happily as expected.

If you're going to have friends rooming with you, how well do you know them, and under what circumstances? All too often, people only see one side of a person. If you've only seen their public face, having to share personal space with them day in and day out may reveal a side of them that proves less polished than their company manners.

Then there is the question of rules and boundaries. When adult children move back home, it generally means moving back under Mom and Dad's rules as well as their roof. When siblings, cousins or friends move in together, things can be more ambiguous. Sometimes it can be possible to sort things out on the fly, but with some people gray areas are sources of trouble. And with friends, it's always possible that differences in your family backgrounds mean that things you would never even thought of discussing will suddenly turn out to be a problem.

If you are a homeowner bringing a non-family member into your home, you may well want to formally delineate the rules of living under your roof and make sure those rules are understood before they move in. If you feel this approach is necessary, it is generally best to start strict and become more lenient if it turns out that gray areas aren't a source of trouble. Starting out laid-back and discovering that it causes trouble, then trying to tighten things up to a more strict arrangement pretty much guarantees resentment and may even lead to loss of respect for your authority as the homeowner.

And if it appears that things aren't working out, it's best to get things dismantled before the petty grit in the gears turns into major aggravations. Friendships have been destroyed for good by trying to make a co-housing arrangement work in spite of evidence to the contrary.

Monday, October 20, 2014

Gearing Down, Part 3: Transportation

Like clothing, transportation is something in which reducing expenses quickly may not be possible in the face of suddenly straitened financial circumstances. Unless you live in New York City or a few other large cities with excellent public transportation, you probably rely upon a personal car to get you the places you need to be.

Yes, you could consider trading down to a less expensive vehicle. However, if like most people you still owe on your car, you need to think carefully before making any decisions. During the early parts of the loan, it is very possible that you owe more than you can get for your car. That means that trying to trade down to a less expensive car would not realize any significant savings in your monthly car payment unless you've been driving a really high-end car. Even if you are driving a paid-off car, unless it's a real gas hog, you're probably not going to be money ahead to try to trade down to something smaller and more fuel-efficient.

However, there are other ways that you can reduce your transportation costs. Most immediately, rethink your driving habits. Most of us go about our daily errands without too much thought. When we need to get something, we go and do it. As a result, we may make a dozen small trips over the course of a week, picking up one or two things at each time. If we can plan out what we'll need over the course of a week and make one or two major shopping trips do, except for the sort of emergency we simply can't anticipate, we can save enough gas that we'll have money for some other bill.

On the other hand, don't skimp on the really important stuff. For instance, it may look like a short-term savings to skip routine maintenance such as oil changes and put that money somewhere else. However, while you may get away with delaying your routine maintenance for a week or two to get you to a paycheck, in the long term it's a false economy. Forcing your engine to run too long on dirty oil can do damage that will quickly negate the savings, and if you can't afford to repair or replace your vehicle, could leave you without transportation altogether.

Another sensible way to reduce your transportation costs is to rethink your leisure time activities. Obviously you don't want to cut them out altogether, because you need some form of rest and recreation for your mental health. But you don't have to spring for expensive airfare to distant places, or even gasoline for a day-long drive, to have fun. Instead of one long trip for a vacation, you might want to look at the possibility of several short day-trips to local destinations. You might be surprised at the range of activities your local area offers, including parks, museums, art galleries and concerts. Many of them don't even charge an admission fee.

Thursday, October 16, 2014

Gearing Down, pt 2: Clothing

Coping with a sudden reduction in one's financial circumstances is not easy. We speak of buying habits because they're just that, habits. Things we do automatically. We go into the same stores and buy the same familiar brands. Having to change to make less money stretch further requires conscious thought, not just automatic responses.

Fortunately, clothing may be one of the easier things to change our habits on. Unlike food, we generally don't buy clothing on such a regular basis. Unless we're in a line of work in which we wear through clothes on a regular basis (construction and other manual labor positions) or are required to keep up with the latest fashions (media jobs are notorious for this), clothing purchases often can last a year or more. Seldom-worn special outfits like a good interviewing suit may well last a lifetime.

Still, clothes will not last forever, especially garments we wear on a regular basis. So when faced with a financial downturn that looks to last for months or years, we need to have a strategy for maintaining our wardrobe at a minimally acceptable level.

One important technique for keeping clothing costs low is to buy second-hand. Thrift stores such as Goodwill and the Salvation Army often will have garments that are practically new. Some of them may even be so new they still have the original tags from the high-end stores where they're purchased, although this sort of happy find is most likely at a store that's near a wealthy area where stores will dump unsold merchandise at the end of the season and take the tax deduction rather than store it and risk that it is no longer in fashion the following year.

Of course there are some things that should never be bought second-hand. Personal protection and safety equipment should always be bought new, since you have no idea what used equipment may have been exposed to that may have compromised its ability to protect you. Shoes are another thing that should always be bought new, and not just because of the possibility of transmitting diseases such as athlete's foot and toenail fungus. As we wear our shoes, they mold to the shape of our feet, and will no longer fit anyone else's properly.

The second important thing to stretch one's clothing dollars is to maintain the clothes you have in order to make them last as long as possible. When you have the money to casually replace worn or damaged articles, you don't have to worry about things like care labels or proper storage. Now that you need to avoid unnecessary purchases, you  need to pay attention to things like the temperature of water in which to wash your clothes. Also, consider how to store clothes so that they do not become stretched or distorted, or pick up stains or odors from a drawer.

Finally, even when clothes become worn, you may be able to repair or repurpose them. This may not be possible for all clothes. For instance, if maintaining a professional appearance means having clothes that look new, it may not be possible to wear clothes that have visible patches or other repairs. However, for everyday clothes or for things such as undergarments and socks which are not in the public view, being able to make some judicious repairs can be a good way to get another week or month of life out of a garment.

Sunday, October 12, 2014

Gearing Down

One of the most difficult things in an economic downturn is having to quickly learn to live in straitened financial circumstances. Curiously enough, food waste often actually goes up immediately after such a downturn, as people try to economize and purchase unfamiliar items, particularly cuts of meat that they don't know how to cook properly.

So one of the most important skills to learn if you have reason to anticipate a sudden reduction of income is how to cook less expensive foods in tasty ways. Buying food that just goes in the garbage is a false economy, whether it spoils because of uncertainty about how to cook it or the family flatly refuses to eat it.

In fact, even if you haven't been hit yet by economic reverses, it might well be the time to get the family used to eating a wider variety of foods, and especially less expensive ones. Find a way to make it an adventure instead of a deprivation, so there'll be less resistance when it becomes a necessity.

Wednesday, October 8, 2014

Wisdom from Abroad

The central theme of Grandma's Depression Memories is using the skills that enabled our ancestors to survive previous economic downturns to pull ourselves through the current one. However, social and technological change since the Great Depression has led to concern that those lessons may not be as relevant or useful as one might expect.

However, we can also look outside the United States for more recent examples that may be more useful in relation to our current situation. In her blog Sarah Hoyt relates her experiences living in Portugal during its financial difficulties a couple of decades ago.

To my eye, one of the most telling things is her discussion of the post office going unreliable. Not just the usual petty annoyances, but sending anything becoming a crapshoot. Letters may or may not arrive. Sending anything valuable means having to find very clever ways to conceal it, because postal workers pilfer from packages with impunity. A basic social stricture has broken down, such that people feel no shame whatsoever about stealing from strangers.

It dovetails with something that John Ringo has been talking about of late, especially in The Last Centurion about familial trust vs. general trust. In a familial trust society, you can trust your relatives and close associates, but everybody else is fair game. In a general trust society, that trust is extended to everybody, and it's generally expected that you will deal fairly with everybody. General trust is essential to having an advanced technological civilization, since you're constantly having to work with strangers on critical things, often sight unseen.

Even in the worst of the Great Depression, societal trust never broke down on a broad scale. Sure, there were the usual local issues of people who found it easier to cheat than to deal squarely, but grifters we'll always have with us. So long as the number of bad apples remains reasonably small, they can be kept from causing too much damage. On the whole, people stayed within the boundaries of acceptable social conduct. They did their jobs even when they weren't being watched. And the postal workers who handled the mail still treated it as a public trust they were honor-bound to maintain.

But one can question whether we still have that sense of honor. Over the past few decades American society has slip-slid into a culture of getting by, of doing whatever you can get away with. And that, more than any technological change, may well be the most worrisome shift that could make this financial downturn different from previous ones.

Saturday, October 4, 2014

And So It Begins...

We now have our Ebola Patient Zero in the United States. Already we are beginning to see panic on social media sites, especially among people who have seen the current Administration fumble so many important things in recent days. Can a CDC that's mislabeled vials of viable anthrax spores and sent them to non-secure facilities be relied upon to handle one of the world's most infectious diseases (requiring as few as ten virus particles per exposure to result in the patient coming down with it)? Can an Administration that's been caught lying and covering up on other important things be trusted to tell the truth about the preparedness of the nation's medical system for this threat?

Particularly given the horrific nature of Ebola (in its end stage, the victim's tissues literally turn to mush and disintegrate), there's an atavistic urge to flee, to swathe ourselves in bubble wrap, to shut out the world and hope to wait it out until the whole mess blows over. Obviously it's not practical to shut ourselves away indefinitely from the outside world, so what can we do to protect ourselves?

First, get the facts. Fear thrives on misinformation, and half-knowledge often leads the imagination to paint things in far darker colors than the actual situation. If you don't trust the CDC or other US government agencies to provide accurate, factual information, seek out the websites of other countries' government health agencies, of privately run hospitals such as the Mayo Clinic, and of international health groups such as Doctors Without Borders.

Second, take basic sanitary precautions and be rigorous about them. Wash your hands regularly, particularly after using the bathroom and before eating.

Third, make basic preparations for a disruption in basic services. If things were to prove worse than anticipated, it is possible that the United States could experience a general quarantine period similar to the one in Tom Clancey's Executive Orders in which nobody would be allowed to leave their immediate area. Most grocery stores have only a day's supply of basic goods, and even the local warehouses have only a few days' supply -- a problem we see whenever a hurricane or winter storm disrupts the transportation of goods into the area.

Preparing means first knowing what you need. Food is an obvious one, but also think about the toiletries and cleaning supplies you and your family use in a week. Things can get very nasty, very fast if you run out of toilet paper or dishwashing soap. Also, make sure to lay in an adequate supply of water for your family. Municipal water supplies may be interrupted or contaminated in an emergency, and you don't want to be in a situation where desperate thirst would drive you to drink from contaminated sources. Also, think about any medicines you or family members may need. Can you make sure that you'll have an adequate supply on hand if you can't get to the pharmacy for days or weeks?

The key think is don't panic, but be prepared.