Ruminations on finance from a rank amateur

When I was working a day job, consulting, speaking, and writing for professional publications, I didn’t have a lot of time to think about personal finances. Paid my bills, kept my credit card balance low, and contributed to my retirement savings on a regular basis was about as involved as I got.

In retirement I now have what may be too much time to think about personal finances. Added to discretionary time, social media advertisers bombard me with click bait headlines like “7 steps you need to take for a successful retirement” or “BIg changes coming to Social Security: are you prepared?” You get the drift.

So when it comes to economics and finance I am very much a rank amatuer. That, combined with being a certified curmudgeon means you, dear reader, should take the following ruminations with a very large grain for salt….

County property taxes - a great deal for the money

I read 71 books so far in 2021. I bought only 23 of them - slightly less than a third. The rest I borrowed as e-books from the county library system using Libby.  I estimate my savings to be about $750 ($250 higher than I had predicted in May.) The county’s share of my property taxes this year was $215.62. I received about $500 more in value from my taxes than I paid in - and this does not count the savings I had for magazines I read or county parks I used without paying for a permit. Heck of a deal, Dakota County!

How does moving to Florida make economic sense?

I tried to explain the above observation to a gentleman sharing a table with me at Starbucks in a local Target store last week. I was having a cup of coffee while my client to whom I was giving a ride as a volunteer driver was shopping. My tablemate was explaining why he had a house in both Florida and Minnesota and why he spent six months plus one day there. By being a Florida resident, he bragged, he avoided Minnesota’s onerous tax burden.

Yeah, we in Minnesota pay taxes on not just our salaries, but on our pensions, our social security checks, and of course on any withdrawals from our pre-tax retirement savings. But even given that, my MN tax bill was less than $4800 for 2020.

I can’t quite work out how I would be saving any money by owning a second home in Florida. Could I even get a used mobile home on a leased lot for $400 a month? There are many good reasons to spend the winter in a warmer climate. But I can’t make the numbers work that having two homes is cheaper than having a single residence, even if one is in a low tax state.

Tax avoidance DNA

Tax avoidance seems to be part of the genetic make up of human beings. Stories of tax avoidance I’ve heard during my travels include:

• The reason old houses are so narrow in Amsterdam is that owners' property taxes were based on their building’s width facing the street. So the Anne Frank house, as many others, is narrow, but deep and tall.
• In Cairo, many multi-story homes have an unfinished top floor or two. Bare concrete and rebar instead of a finished roof is a common sight. A guide told us that the reason for this is that homeowners do not have to pay property taxes until a home is completely built. No rush to finish up, right?
• Many 19th century large homes here in the Midwest have bedrooms without closets. People at that time used wardrobes instead for storing clothing. Why? Closets were counted as rooms in houses and taxes were based on the number of rooms a house contained. I used an old wardrobe inherited from a relative for many years.

Should I ever decide to do research for a non-fiction book, it would be how and why people are wired to avoid taxes. If such a book has already been written, please send me the title.

Politics and the stock market

For 67 years, I paid no attention to the stock market. During crashes, etc., I read the headlines and shrugged, and focused on financial matters which impacted me directly as an educator (Minnesota government’s financial status primarily).

But my financial well-being in retirement is now rather more dependent on the economic well-being of the nation, if not the world. My IRA is heavily invested in mutual funds. My state retirement pension’s health is determined by how well the plan invests in opportunities in the bigger world.

So I suspect that many of us old-left-of-center types might be shifting how we view economic policy. How will this action impact the stock market? How will businesses in which I am invested be helped or harmed through regulation? How might an increase in the minimum wage affect the profits of publicly traded businesses? Would we be better off as a society if everyone (and I mean everyone) had a stake in the world economy through partial ownership of it?

Or am I just turning into a conservative, selfish old WASP?

One final piece of advice

Don’t take any wooden bitcoins.

How to beat inflation: quit buying stupid crap

Ah, it’s Christmas catalog season. Although I almost never buy anything from a catalog, I still seem to get a half dozen or so each week in November and December. 90% don’t even make it into the house - I dump them in the recycling bin in the garage.

Growing up in the 50s and 60s, the Sears Roebuck and JC Penney and “Monkey” Ward catalogs were treasured by my sister and me. These great tomes would arrive in the fall and become our go-to list for Christmas gift ideas (for us, not for others). Sears, Wards and Penneys sold lots of clothes, appliances, tools, toys, and who knows what else. The lingerie pages were this farm boy’s version of Playboy magazine - a guilty pleasure. Today, the surviving merchants have moved their “catalogs” mostly online, of course.

Catalogs of today are much skinnier, much more plentiful, and more targeted in their content. LL Bean, Sharper Image, and Signals contain page after page of specialized clothes, handy-looking gadgets, and silly coffee mugs. I don’t find it difficult to resist the lure of these well-designed marketing tools. It’s mostly stupid crap*.

A friend and I spent an hour or so at a local high-end shopping mall a couple weekends ago. Stores like Pottery Barn and Tumi and Ampersand were brightly lit and busy and contained not a single item I was tempted to buy. The new Hy-Vee grocery store in the neighborhood is the size of a Wal-Mart and contains not just a deli and a bakery, but a restaurant and clothing department and pharmacy. 90% of what grocery stores now sell is frivolous - an unhealthy. What do Target and Best Buy and Macys sell that we actually need, not just desire?

So here’s the thing. If you pay to drink flavored water or energy drinks, stop bitching about the price of groceries. If you drive a pickup or SUV that gets less than 30 mpg and never haul anything, stop complaining about the price of gas. If you have so many clothes, your closet is jammed and your sock drawer is stuffed, don’t whine about supply chain problems.

Most of the people I know, even those of us who are on “fixed incomes”, can easily beat inflation by beating the temptation to buy stupid crap. 

To be fair, I know few people on the lowest income level and I am sure inflation hits them quite hard. And there are some stupid purchases I would find difficult not to make, even knowing doing so would save me a lot of money (already hard boiled eggs, premade salads, cut up fruit, premium ice cream, too much wine). I’ll try not to look down my nose at you for buying Gatorade if you don’t sneer at my Ben & Jerrys. Let’s just neither of us complain about rising costs. 

* I would rather more accurately say “stupid shit” but I’d be setting a bad example for my grandchildren.

Do books make good gifts?

 

I love books. I love presents. But I have mixed feelings about both giving and receiving books as gifts. 

People should have books. As a librarian, English teacher, author, and reader, I want people to have access to as many books as possible. Experts now say that we should spend our money on experiences, not things, in order to achieve happiness. In a very real sense, giving or getting a book is giving or getting an “experience.” Sometimes, as with coffee table books, the object of the book is the point, but most of the time the story, the ideas, or the information that the object itself contains that are the reason we shell out the bucks for a book. For many people, books become keepsakes, items of sentimental value. I still have a copy of the literature textbook I used during my first year teaching. Books can be selected easily if one knows and understands the tastes or interests of the recipient. Books can be shared among family members, through “little libraries,” or donated to the public library or various charities that redistribute them to schools in developing nations.

So what could possibly be wrong giving someone a book for Christmas?

Perhaps I am the only one who feels this way, but a gifted book is always accompanied by a sense of obligation to read it. And I really, really don’t much care to be told what to read. (Yes, that’s ironic for an English teacher to feel this way.) I do however want the person who gives me a book to feel good about making a good choice.  So most gift books I go right ahead and read out of guilt.

Perhaps a gift card to a local bookstore with an explicit statement that it is to be used to buy a book just might be a better choice for that friend or relative one wishes to gift. Not only can they choose the titles they wish, but the format as well - hardback, paperback, or ebook. Or do what I do and give a donation in a person's name to a Friends of Library group .

Should I give physical books in the future, I will add this inscription: You won’t hurt my feelings if you don’t read this book. 

Oh, the photo above* is of Grandson Paul receiving a box set of Harry Potter books for ninth birthday on 2010. I knew he was reading the series and he was excited about the gift. It was not just the full seven book series in hardback, they came in a cool treasure chest-like box as well. It was only years later that Paul told me that he never finished reading the whole series. I am glad he didn’t and I am glad he told me. I would not have wanted him to feel the same sense of obligation I do when being so gifted.

I sincerely hope I didn’t hurt too many people’s feelings with this post. I am grateful for every gift I receive. 

*Damn, it took me longer to find the photo than it did to write this post!