Archive for November, 2009

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Special thanks to the following bankruptcy attorneys for their help with the technical aspects of the cartoon:

• Christine Wilton, Esq. – Los Angeles Bankrkuptcy Law Monitor (Los Angeles, CA)
• Law Office of Gregory A. Holbus, Esq. – Wisconsin Bankruptcy Blog (Green Bay, WI)

For additional information on foreclosure and mortgage issues as they relate to bankruptcy, have a look at the following blog posts:

Bruce Weiner (Rosenberg Musso & Weiner) – NYBankruptcyNet (Brooklyn, NY)

• Loan modification scams and U.S. Foreclosure Relief

Haines & Krieger (Las Vegas, NV)

• Should I Stay Or Should I Go?
• Video: Channel 8 News report on Raul Cadenas foreclosure mediation case
• Las Vegas Foreclosure Round-up

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Get your BAPCPA Man and Mortgantua T-shirts, Mugs, Cards and More!

*To see more of Gideon Kendall’s work go to www.gideonkendall.com or http://www.gideonkendall.com/blog.  Or order yourself a copy of Dino Pets, the wonderfully illustrated children’s book written by Lynn Plourde and illustrated by BAPCPA Man’s favorite illustrator, Gideon Kendall.

J. D. Roth holds forth on the subject of perfectionism, which he suggests is “the enemy of the good.” The point he makes, which is well taken, is that you can waste enormous amounts of time and ruin your health in the pursuit of perfection.

True, to a degree. I have a friend who, having burned out in a high-stress altruistic occupation, decided to apprentice himself to become a carpenter. He was very talented, but he never got anything done because everything had to be EXACTLY perfect. My ex- and I gave him cash to build a dining-room breakfront for us…we never saw either the furniture or the money again. And Friend never did become a master carpenter. He ended up going back to riding herd on juvenile delinquents.

On the other hand, my own experience is that if you set your target too low, you never come up to your full potential. When I was a young thing in college, I discovered that if I would compromise by doing what other people wanted me to do instead of what I set myself to do, I could perform quite well at the lesser tasks that were set for me, with very little effort. The perfectionistic bent I had cultivated as a youngster was, it developed, unnecessary. I graduated Phi Beta Kappa from a backwater state university (instead of Berkeley, where I’d spent my high-school years preparing to go), with a pointless degree that suited me for nothing other than marriage to a man of the sort my parents felt I should marry. Although the grades looked great and the man was a six-figure earner and a decent husband, I never did get to do what I wanted to do with my life.

In the workplace, where mediocrity is the standard, few people will notice that you do anything perfectly (except to resent you for it). They will notice when it takes you forever to get things done, though. You’re better off to do a good job without sweating perfection. If you fail to keep your own standards up, you’ll eventually fall short of your personal goals, and you’ll find yourself performing at the same lackluster pace as the rest of the herd.

The discovery that nothing has to be perfect can lead you to waste as much time as you would in pursuit of the ideal.

Once you realize you don’t really have to do your best in order to get by—or indeed, to generate spectacular annual performance reviews at the office—you stop trying to do your best. You devote your creativity to getting the job done with the least amount of work possible, and that can backfire on you. If you haven’t done an adequate job, sooner or later you’ll either face the consequences that occur when an important issue has been missed or you’ll have to do the whole darned thing over again.

Case in point: Recently I fobbed half of a large project onto one of my young pups, figuring she could do it as well as anyone. While she knows little about the subject matter, she’s technically skilled and I expected she would do “good enough.” I did the other half, hurriedly because it’s a job I dislike that requires a full week of dreary, mind-numbing plodding. Reveling in short-timer’s syndrome, I just wanted to get the damn thing off my desk and walk out the door with the keys locked inside the office.

The result was a study in mediocrity. And—no surprise!—our client editor noticed. Now he’s demanding fix after fix after ditzy time-consuming fix. Tomorrow I’ll have to spend the entire day in the office cleaning up the mess, and if that doesn’t satisfy him, I may actually have to toss the entire thing and start over! That will happen just as 40 ten-page papers come in from my students—400 pages of drivel to read in the few days before final grades are due. I’ve already spent way more time on this job than I should have, and we’re now a week late against the deadline we set for going to the printer. By the time we’re done, we’ll be two weeks late.

A little perfectionism goes a long way…

Related posts:

• The dance of the adjunct faculty
• Layoff Poker: Will the bosses tip their hand?

J. D. Roth holds forth on the subject of perfectionism, which he suggests is “the enemy of the good.” The point he makes, which is well taken, is that you can waste enormous amounts of time and ruin your health in the pursuit of perfection.

True, to a degree. I have a friend who, having burned out in a high-stress altruistic occupation, decided to apprentice himself to become a carpenter. He was very talented, but he never got anything done because everything had to be EXACTLY perfect. My ex- and I gave him cash to build a dining-room breakfront for us…we never saw either the furniture or the money again. And Friend never did become a master carpenter. He ended up going back to riding herd on juvenile delinquents.

On the other hand, my own experience is that if you set your target too low, you never come up to your full potential. When I was a young thing in college, I discovered that if I would compromise by doing what other people wanted me to do instead of what I set myself to do, I could perform quite well at the lesser tasks that were set for me, with very little effort. The perfectionistic bent I had cultivated as a youngster was, it developed, unnecessary. I graduated Phi Beta Kappa from a backwater state university (instead of Berkeley, where I’d spent my high-school years preparing to go), with a pointless degree that suited me for nothing other than marriage to a man of the sort my parents felt I should marry. Although the grades looked great and the man was a six-figure earner and a decent husband, I never did get to do what I wanted to do with my life.

In the workplace, where mediocrity is the standard, few people will notice that you do anything perfectly (except to resent you for it). They will notice when it takes you forever to get things done, though. You’re better off to do a good job without sweating perfection. If you fail to keep your own standards up, you’ll eventually fall short of your personal goals, and you’ll find yourself performing at the same lackluster pace as the rest of the herd.

The discovery that nothing has to be perfect can lead you to waste as much time as you would in pursuit of the ideal.

Once you realize you don’t really have to do your best in order to get by—or indeed, to generate spectacular annual performance reviews at the office—you stop trying to do your best. You devote your creativity to getting the job done with the least amount of work possible, and that can backfire on you. If you haven’t done an adequate job, sooner or later you’ll either face the consequences that occur when an important issue has been missed or you’ll have to do the whole darned thing over again.

Case in point: Recently I fobbed half of a large project onto one of my young pups, figuring she could do it as well as anyone. While she knows little about the subject matter, she’s technically skilled and I expected she would do “good enough.” I did the other half, hurriedly because it’s a job I dislike that requires a full week of dreary, mind-numbing plodding. Reveling in short-timer’s syndrome, I just wanted to get the damn thing off my desk and walk out the door with the keys locked inside the office.

The result was a study in mediocrity. And—no surprise!—our client editor noticed. Now he’s demanding fix after fix after ditzy time-consuming fix. Tomorrow I’ll have to spend the entire day in the office cleaning up the mess, and if that doesn’t satisfy him, I may actually have to toss the entire thing and start over! That will happen just as 40 ten-page papers come in from my students—400 pages of drivel to read in the few days before final grades are due. I’ve already spent way more time on this job than I should have, and we’re now a week late against the deadline we set for going to the printer. By the time we’re done, we’ll be two weeks late.

A little perfectionism goes a long way…

Related posts:

• The dance of the adjunct faculty
• And did I mention we were through the looking glass?
• Layoff Poker: Will the bosses tip their hand?

This weekend I decided to take a trip to a couple of local stores to pick up some food that didn’t involve turkey so I wouldn’t be fatigued of eating the same thing for the entire week.  A chain grocery store had about five people on a Sunday when it typically would have many more.  Now this can be written off as a random case given Thanksgiving but this pattern has been hitting for a few weeks.  After that I decided to stop by a local dollar store to pick up a few items.  The place was so full that I had to wait for parking.  This is the reality of the recession.  Deferring higher end spending for more low cost goods.  Even with recent reports we are seeing that holiday shoppers are buying but not at the high end.  With unemployment still stubbornly at the peak it is expected that families will be cutting back on spending.

Comparing this crisis to the Great Depression may not be appropriate aside from the fact that we have high unemployment and an insolvent banking system.  The U.S. Treasury and Federal Reserve have jumped in with all their ammunition to save the banking sector.  The only problem is they forgot about the average American and the economy that we live in.  As we go deeper into this crisis and already have a hint as to how policy will play out it is turning out to be very similar to the Japanese contraction and lost decade(s).  Global debt is growing at breakneck speed:

Source:  Societe Generale

By 2011 global economies will have close to $45 trillion in debt.  Is this a far stretch?  The U.S. already broke the $12 trillion mark.  In order to compare our current crisis with Japan it is important to understand the history of their boom and bust:

“(Baseline Scenario) At a high level of generalization, the causes of the bubble were similar to those we have just seen. Loose monetary policy (in late 1980s Japan, and in the U.S. this decade) and high savings levels (by Japanese households in Japan’s case, China and oil exporters in ours) created a large pool of money looking for investments to buy. Rising prices encouraged speculation in both real estate and stocks. Poor underwriting standards - due to some combination of government direction of investment and self-dealing within industrial and financial conglomerates - and an unconditional willingness to lend against real estate as collateral meant that banks made hundreds of billions of dollars’ worth of loans that were sustained solely by rising prices. When prices fell, those loans lost most of their value, crippling banks’ ability to lend to creditworthy borrowers and choking the economy. The lack of credit, combined with the negative wealth effect of collapsing asset prices, dampened economic growth, which averaged 1% per year for the 1990s.”

It is important to note that Japan has been in a multi-decade malaise.  No “V” shaped recovery but a very long “L” situation.  Japan’s government sat back initially but then decided to bail out the banks and infuse massive amounts of fiscal stimulus.  The Bank of Japan like Alan Greenspan and Ben Bernanke slashed rates to their zero bound:

The above chart shows a similar path.  The big difference of course is the minor push up in the early part of this decade but this occurred in the back drop of a booming stock market and real estate bubble.  Japan has been in the doldrums since the late 1980s.  In fact, if you look at the chart above Japan has held onto record fiscal deficits for years and we are now following a very similar path.  Our current budget deficit of $1.4 trillion is enormous:

Japan contented with a busted stock market and crashing real estate sector with bailing out an insolvent banking industry and also, pushing rates to the zero bound.  The idea of letting banks keep overvalued assets at peak prices is something many of us are now getting familiar with.  With $3 trillion in commercial real estate, much of it overvalued, it will be interesting to see how banks move on this.  If current actions are any indication, banks are merely going to delay mark-to-market and value assets at inflated prices.  This did not work for Japan.  Why?  The banking sector became a vampire leeching off the productive sectors of the economy.  They couldn’t put their assets on the market because it would render them insolvent.  In the end, it stunted growth.  Keep in mind that Japan also managed to stay somewhat prosperous because it was able to export into a booming global economy.  Demand for goods such as Toyotas, Hondas, Sonys, and other high cost goods was strong.  But these are higher end products that typically ship to wealthier economies.  How will they do in the current global contraction?

The stock market path of the Nikkei and S&P 500 seems similar:

Over 20 years and the Nikkei is no where close to the peak reached in the late 1980s.  It is possible to muddle through for a very long time.  In fact, the Nikkei has been moving sideways with a tendency to the negative for 20 years.  The current stock market rally does not reflect market fundamentals and is merely a reflection of all the liquidity injected into the system.  But like Japan, all this does is keeps an insolvent banking sector walking for a few more years while the overall economy stays in a frozen pattern:

“One of the major barriers to expansionary policy was the weakness of Japan’s banking system. The asset price collapse and economic slowdown meant that increasing proportions of their loan portfolios became non-performing. Because writing down these loans to their true market values would have caused banks to become insolvent, they kept them on their books, rolling them over (extending bad loans indefinitely) in order to avoid having to take writedowns. As a result, the banks were severely undercapitalized and largely unable to engage in new lending. It was only in 1998 or 2003 (depending on whom you ask) that the government got serious about cleaning up the banking sector, letting weak banks fail or forcing banks to accept new government capital.”

This is all sounding very familiar.  Yet talking with friends about this, many dismiss this out right and say “well in Japan, they are big savers so they can do this.”  In reality, as Japan’s population has aged the savings rate has reflected the U.S.:

Analysis expect this rate to go negative:

“(Forbes) Japan has lived beyond its means since the 1990s thanks to massive domestic savings. Households own 1,441 trillion yen ($16.3 trillion) in assets, mostly deposited in banks, which then buy JGBs. Foreigners hold about 8 percent of outstanding JGBs.

An ageing population has eroded the savings rate to about 3 percent from more than 10 percent a decade ago and household assets have declined about 8 percent from a 2007 peak, mainly because share prices plunged after the global financial crisis.

Demographics suggest the savings rate could turn negative in a few years.

‘Like the United States, we will need foreign investors at some point,’ said Koji Ochiai, senior market analyst at Mizuho Investors Securities. ‘I doubt they will be attracted to such low yields.”

And this isn’t so different from the U.S.  American household net worth has taken a major hit of $12 trillion in this crisis but it is still sizeable in terms of real estate, stocks, and savings.  And this ties in with our big group of baby boomers.  They will draw down on their savings and stocks in retirement.  That is after all what a 401k, 403b, or pension is for.  To become your income in retirement.  But many are realizing that with stocks lower and the economy uncertain, some will have to defer that American dream of retirement or at least taper it down.

The U.S. Treasury and Federal Reserve are gambling with the U.S. dollar.  They believe that they can systematically devalue the dollar and slowly allow inflation to wash away our massive amounts of debt.  Japan tried this.  It hasn’t worked.  Now, with savings dwindling and the global economy depending less on exports, they are in a deep mess.  The U.S. is in a tough spot.  What many people don’t know is that in Japan, one-third of all workers are part-time workers.  The headline stats always show a low unemployment rate but these people are counted as fully employed.  One thing we have seen spike in our current recession is the rise in part-time employment:

Source:  Calculated Risk

This is the highest percentage of part-time workers we have had on record.  And there is no sign of this trend reversing.  If Japan is any guide, this is going to be a permanent reality of our new economy.  No job security, minimal benefits, and multiple jobs throughout one lifetime.  If we stay on the current path doing everything Japan has done, why are we to expect a different outcome?  Remember the big deficit we currently have?  Where revenues don’t even come close to matching spending?  Take a look at Japan:

At a certain point, the two major carry trade currencies in the world are going to meet their maker.  No country can spend this much without higher interest rates.  The current low zero bound market is more a reflection of global fears that still remain.  But there is ample evidence to examine Japan and our similarities.  Major stock market bubbles followed by major real estate booms and bust.  And Japan has demonstrated that real estate can remain depressed for 20 years:

What Japan might have bet on was some sort of asset appreciation.  This way, at least some of the value would be regained but that didn’t come to pass.  The U.S. Treasury and Federal Reserve is betting the entire country on this and putting their entire faith in the banks.  But without jobs why are we to expect that home prices will go up?  With less people buying goods, why are we to expect commercial real estate to boom?

The American dream is being deferred.  Japan had their dream postponed for two decades and it looks like they are entering a different phase of their downturn.  With our lost decade on hand already, is it possible we have another decade of stagnant growth?  Until we start seeing job and wage growth, Japan might be an outline of our future.  The American and Japanese dreams are looking very similar.

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According to the National Retail Federation, "Black Friday" shoppers turned out in droves this year, but were only willing to open their wallets/purses if they saw a deal that was too good to pass up. According to preliminary data compiled by the...

According to the National Retail Federation, "Black Friday" shoppers turned out in droves this year, but were only willing to open their wallets/purses if they saw a deal that was too good to pass up. According to preliminary data compiled by the...

{sigh}

Yesterday Costco had two new pairs of glasses ready: a new pair of progressives plus what the optician described as “intermediate” lenses.

I’d asked him to clone the pair of ancient close-ups I use to grope around the house, because my new close-up prescription is way too strong: I can’t see my feet through them, and so it’s unsafe for me to walk when I have them on. The old pair was perfect: I could see to walk around, but they sufficed to read most kinds of copy.

But no. He (being a man and so therefore certain he knew better than the little woman, eh?) insisted on making an “intermediate” pair that he thought would be better.

Apparently, the people who make glasses assume most wearers do only three things in life: watch television, drive, and sit down to eat at a restaurant. Evidently most people don’t read. For the life of me, I can not make these people understand that I need to be able to see more than one or two lines at a time, and that my livelihood depends on being able to see an entire sheet of paper! They just. don’t. get. it.

The progressives are good for those sorts of basic tasks: watching the television (yeah! like I do a lot of that!), driving, and forking food into my mouth. They’re useless for computer work, and they’re just barely adequate for short bursts of reading things like newspapers. Also, I thought it was odd that when the optician’s assistant marked these spots on the progressives where some part of the gradation was supposed to go, she kept getting the one on the right about 1/4-inch higher than the one of the left. She remeasured twice, and every time that’s what she got.

And as I suspected, the lenses on the progressives are not coordinated. When I try to read an 8½ x 11 sheet of music in the half-light of the choir loft, I can see the score OK (sort of) with my left eye, but everything’s a blur out of my right eye.

The intermediates are OK for reading a few things, but not for the variety of copy I read. Neither of them allows me to see enough of a page to parse out more than a three or four words at a time (I read a line or two or even three at a time), and  I can’t even begin to make out the photocopies of photocopies of music that probably was set in hot type. Microscopic hot type!

So this morning at rehearsal, I couldn’t sing because I couldn’t follow the music. I couldn’t see the stuff at all. I finally gave up and came home.

Guess I could have grabbed my bifocals and raced back to the Cult Headquarters—I could’ve made it just in time for the procession. But by the time I got home my mascara had run all over my face, because I cried all the way home, mostly out of frustration. I would have had to wash my face, remove the gunk around my eyes, and reapply make-up. Adding those tasks would have made me late.

Oh, damn it, how I hate that. Once I start to cry, all the loneliness and despair that haunt the corners of my life come bounding out into full daylight, and then I can’t stop crying.

Welp. Let’s get out of these uncomfortable clothes, wash the paint off the face, take the dog for a walk, stop crying, and grade some student papers.

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It has not been a good couple of weeks for Treasury Secretary Timothy Geithner. A report was recently released by special inspector general Neil Barofsky, who was charged with the task of reviewing the payments that were made with taxpayer dollar...

When the job ends on December 31, I’m planning to consolidate all my checking and savings accounts into just three: a checking account, an emergency savings account, and the self-escrow account to pay annual property tax and insurance bills. Right now I use one checking account as a “pool” from which incoming cash is disbursed to a half-dozen “cookie-jar” accounts dedicated to various expense and savings needs. Yesterday, thinking ahead to what the simplified system will look like, I added up all the money that has accumulated in the cookie jars and then estimated the last few pittances due next month. And I was astonished to discover how much cash has quietly accrued, painlessly, without  my trying very hard to save.

Hang onto your hats, folks: over $26,500 is sitting there in the credit union!

That’s about $16,500 more than I thought. What accounts for this startling windfall?

Well, near as I can tell, the combination of a small extra income stream plus certain frugal habits builds saving into your lifestyle in ways that you hardly notice. For example:

• Use a budget to help you live within your means.

How it works: By establishing limits to how much you spend, you rarely spend more than you earn, and you occasionally spend less. Every time you come in under budget, the money you didn’t spend tends to accumulate in your checking account.

• Automate your savings.

How it works: Ask your bank or credit union to divert part of each paycheck to savings. What’s left in your checking account is the amount you view as your net income, and you don’t even think about the savings set-aside. It’s already done by the time you start to budget.

Also, take advantage of any 401(k), 403(b), or other retirement schemes your employer offers. These allow you to save—automatically—with pre-tax dollars, and if your employer matches contributions, you get double the savings at half the hassle.

• Pay yourself first—and last.

How it works: Got money left over at the end of a pay period? Transfer it into a savings account. It doesn’t hurt to have two savings accounts: one to hold automatic savings “payments” from your paychecks for the long term, and one to hold leftovers, which can be used to reward yourself with indulgences and vacations.

• Live within your former means.

How it works: When you get a raise, leave your spending level where it was. Add the new income to the amount your bank or credit union automatically transfers from each paycheck into savings.

During the first six months of 2009, GDU’s ill-advised furlough scheme cut my income by $240 per paycheck. In that period, I learned to live on a lot less pay. In July, when the university started paying us our full salaries again, I continued to live on the “furlough” budget and put the extra income into savings.

• Drop your spending level a small amount at a time.

How it works: Reduce discretionary spending in small, tolerable steps. This allows you to get used to a smaller budget, and a smaller spending budget leaves more from your income to put into savings.

The layoff message has been scrawled across the wall for a long time. At my office, we’ve known since summer of 2008 that sooner or later the university was likely to can us, and as we’ve seen, that suspicion was confirmed in June.  This has given me time to reduce my habitual monthly expenditures from about $1,500 a month to $1,200 and then to $1,000. Or less! The past couple of months I’ve managed to keep the spending in the vicinity of $800. Because I’m still earning until the end of December, all that unspent income has gone into savings.

• Snowball and snowflake savings as you would snowball a loan.

How it works: The “snowballing” principal suggests that you can accrue funds to pay down debt by focusing on a single account and then when that’s paid, add the amount you were paying against that debt to the amount you’re paying against the next debt, speeding payoffs incrementally. “Snowflaking” entails applying every windfall and every bit of “found” money, no matter how tiny, to paying down debt. Well, you can apply that to saving, too:

When you’ve paid off a debt, the amount of the payments can go into savings, rather than being diverted to restaurants and indulgences. Same with unexpected bits and pieces of money—gifts, extracurricular jobs, overtime, bonuses: stash the money in a savings account before you can diddle it away.

Every little bit helps. It’s amazing how fast these dribs and drabs add up. When I paid off the second mortgage on my house, I had the credit union put the $169/month into savings instead of leaving it in my checking account. Same with another $200/month payment I managed to escape. Lo! That’s $369 a month, $4,428 a year of “free” money.

• Divert all income from a second income stream to savings.

How it works: A key way to protect yourself from layoffs, pay down debt, and build savings is to build a second income stream. If you don’t need that income to live on, for heaven’s sake keep it!

I have three side income streams: teaching, blogging, and freelance editing. None of them earns much, in the large scheme of things. Taken together, I probably haven’t netted ten grand in 2009. But everything I earn from these ventures has gone straight into savings. Over time, as we can see, it certainly has added up.

It has added up: so painlessly that I hadn’t even realized how much, really, was stashed in the half-dozen credit union accounts I’ve been using. I have to admit that I had no intention of keeping that much money in low-interest checking and savings accounts.

I’d figured to start unemployretirement with a base “cushion” of $10,000, which I expect will tide me over the first year when Social Security rules will allow me to earn no more than $14,160. Ten grand plus $15,000 of Social Security plus $14,160 of teaching income should just net enough to cover my expenses. So, next month, when I’m certain of how much is in there after my last paychecks, vacation pay, and whatnot, I’ll transfer about $16,000 of those surprise savings from the credit union into my investment accounts.

If, as my financial managers expect, the economy continues to grow in 2010, that should go a long way toward reviving my retirement fund!

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