The Tiny House Movement and Privilege

These days, thanks to the recession, it’s “trendy” to downsize, when people living in shacks in India are not trendy in the least.

“Tiny Houses” are most famously from Tumbleweed Tiny House Company.

This bed is not for the claustrophobic, window or no… The ladder up to the bed is not for the broken-legged, the heavily-pregnant, or the faint of heart.  (Of course, the whole idea isn’t for you if you’re not a minimalist.)

This site has some demographics if you scroll down, but nothing about renters, race, or disability status.  It seems to say that tiny houses are for educated rich people (though stories abound of people with more time than money doing it themselves).  I guess these guys did it on the cheap, even if it took a long time.

Fat or tall people can’t live in those tiny houses, nor can people with many disabilities (these homes often involve climbing, reaching, and/or bending, limited use of a bathroom such as no tubs and composting toilets, etc.).  My partner and I could never physically fit ourselves into most of these places, especially the beds.  No, a queen-size mattress squished between 2 walls won’t do it, and we’re not the largest people.

A lot of these places have beds you can’t sit up in, and has anyone ever seen a person of color with one of these?  They seem like a certain kind of class marker.  (N.B.  Maybe I take it back:  here is a woman of color who lives in a tiny house with no electricity or running water.  #2 notes that in the South ancient tiny houses without electricity or running water are unfortunately not as uncommon as they should be, and the ones without sanitary services are almost entirely lived in by African Americans, but you don’t read about them in articles about tiny houses but instead in articles about racism and lack of city services.)  In apartments: more fit, white dudes who could afford to hire architects.  These white people paid a bunch of money to not be able to cook or store their clothes at home.

Let’s examine class stereotypes.  Custom-built tiny houses are “trendy, hip, environmentally friendly” but trailer parks are “trashy, low-class, full of meth users”.  Stuff on Apartment Therapy is tres cool, but cramming people into tiny spaces could also be called a tenement.  People who spend huge amounts of money designing a tiny apartment in a major city (if you have that kind of time and expertise) are “the next wave of design” but people who live in one rented room at the YMCA are “losers”.  Wagons are appropriated from the Roma, who are still widely stigmatized.

You could spend thousands of dollars and hundreds of hours engineering a cool, very flexible apartment in the city, but you have to own it ($$) or lose your security deposit to make all that engineering work.  (I love how the dude in the video opens a closet and calls it “a bit of a mess” but there is ALMOST NO STUFF in there.)  Good luck with the condo association.

Live wherever you want; we’re not judging your personal life choice.  The engineering can be pretty cool for those who can afford it, and you can run the numbers on environmental impact.  But the trendiness of the movement is highly class-based.  As with everything, there’s one rule for the rich/white/able and quite another for the poor/POC/disabled.

Who’s with me, Grumpy Nation?  Is there anyone out there who gets around a tiny house in a wheelchair?

Ask the grumpies: What to do with a lump sum?

Susan asks:

I’ve just finally unloaded my own slice of the housing crisis (PHEW), a condo in another place, and have been wired the proceeds, which are between $50 and $100k. What’s the best thing to do with that lump?

My only remaining mortgage (PHEW) is the house I live in. It’s for 80% of that house’s value, at 3.4%, and the monthly nut is reasonable, at ~30% of take-home. I have decent? retirement savings between IRA, investment and TIAA-cref accounts, about $70k (I’m 41). My car is paid off, and I have no CC debt or student loans. There are some upcoming expenses for the house that are within our planned budget. We do not have children and do not plan to.

I feel burned from the housing crisis (yet I know it wasn’t as bad for me as others). The proceeds represent my initial investment, so I came out about flat, although that money was locked up (or, circa 2009, nonexistent) for almost 10 years. Because of that, I’m hesitant to pay down principal on my current mortgage, more than the 20% we already have in there. But 2008 wasn’t so kind to investments, either. I know I don’t want to leave this money in checking or my 0.5% savings, so – where does it go?

Standard grumpy disclaimers apply:  We are not financial advisers.  Talk to a fee-based financial planner and/or do your own research before making any life-changing decisions.

You have a few good options.  Three of them jump to mind immediately.

1.  Put more money into retirement
2.  Pre-pay your current mortgage
3.  Put the money in taxable stocks

I do have a quibble with the last paragraph if your question.  Pre-paying the mortgage *can* provide cash-flow liquidity.  If you’re willing to reamortize (aka re-cast) the mortgage, then you can lower your monthly mortgage payments by re-extending the length of your mortgage if you have prepaid a significant amount.  You can do this even if you’ve lost your job, generally for the cost of ~$250.  Only if you’re willing/planning on foreclosing on your house would it make sense to never pre-pay under any circumstances, but since you didn’t foreclose on the condo, it’s unlikely that you’re in that situation.   The *debt* is what you should be focusing on, not the value of your house.  You will have the debt no matter what the value of your house is (absent willingness to foreclose, of course).  Pre-paying here is the safest option– the low risk, low return option.

Your interest rate on your house is pretty small, so it’s not obvious you should pre-pay the mortgage.  With a higher interest rate, it might tip your decision to the mortgage if doing so meant you could refinance, for example, and it would be a safe investment (assuming no plans to foreclose) and would allow you to decrease your monthly nut by reamortizing in the case of an emergency.  In this case, the return is pretty low and this is something you’d only think about doing if you wanted a safer option.  The return is higher than CDs or savings accounts, but you wouldn’t necessarily be able to get all your savings out in case of an emergency (because home equity loans tend to dry up when you actually need them), just enough to give you a somewhat lower monthly payment with re-casting discussed above.  [Note, too, that the earlier you pre-pay the bigger the benefit of prepayment-- you can play with the numbers using the GRS amortization calculator.]

You should think about how quickly you will want this money.  It sounds like you don’t have any major plans for expenditures that you can’t handle.  However, how are you feeling about job risks over the next 15 years or so?  Is there a chance that you or a spouse could lose income?  Is there a chance that you’ll want to move to a more expensive locale?  If you feel pretty secure on that, then putting the money away in a tax-advantaged retirement fund is going to be better than just putting it into the stock market because you will save money on taxes.  However if you see a chance for needing more liquidity, then you would want to tilt towards regular stock investing (keeping in mind that IRA Roth contributions can be taken out tax-free even if their earnings cannot, so they have added liquidity).

You should also think about whether or not $70K in retirement accounts at age 41 is putting you on track for retirement or not.  My druthers is that you could add more to that, but I also don’t know about your lifestyle and your planned expenses, your work situation, etc.  There are a lot of retirement calculators out there with various inputs that you can play with to get a better picture of how much you think you’ll need going forward.  It is unlikely that you have saved too much at this point.  (And if you have, you can always cut down on the retirement savings later.)

If you choose one of the two investing options, what stocks to put it in?  Broad-based low-fee Vanguard index funds if possible.  VTSMX is a good one if you just want diversification, but there are other combinations you can make with VFINX, VGTSX and so on.  You may want to throw in some bond fund, such as VBMFX.  And ask about their admiral fund shares if you invest with Vanguard directly.  With TIAA-CREF you’ll want to talk to an adviser to get numbers on fees for their broad-based indexes vs. their target-date funds.  We can go more into detail on these if you want to add more information about your options.

Personally I like having a secondary emergency fund in taxable stocks (and/or in IRA Roths) that I feel like I could tap by selling off stocks.  So far we have left ours untouched but the fact that it’s there (even when it dropped down to its lowest point in the recession– it has since more than doubled!) always made me feel more secure.

What I would do in your scenario would be to max out all the retirement accounts that I could (and given the sale, you may want to check with a tax accountant or other expert before putting money in the IRA), and put the rest into taxable stocks or (less likely given your situation) mortgage prepayment.  For the retirement accounts, I would either pick some broad-based indexes with low fees from TIAA-CREF, or I’d pay a little bit more in fees to get their target-based fund.  (Their target-based fund isn’t a no-brainer like Vanguard’s is, but if I didn’t want to sit down and create my own diversified sets of funds, I’d go for it.)

But again, you’ll have to think about what your short- and long- term goals and uncertainties are.  The best thing to do will vary based on your needs.  For shorter-term safety but low return:  prepay the mortgage (knowing your can re-cast for a lower monthly payment later, should you need to).  For longer term safety and the highest rewards:  max out your retirement options.  For a secondary emergency fund and somewhat risky growth (which will be correlated with the economy, as you note, but not necessarily your personal situation):  put it in Roths first and the stock market second.

Grumpy Nation:  What advice would you give Susan?  Are there other things she should be considering in this decision?  Bonus points if nobody mentions landlording as an option.  Unless Susan *really* wants to landlord.  Which we doubt.

What to do when your car starts looking a bit… worn?

I’ve had my little Hyundai Accent since graduate school.

We paid cash for it new and it’s a great little car.  It’s had batteries and tires replaced and other sorts of mildly expensive routine repairs, but for the most part it’s been remarkably stable.  Well, there was that time a couple years after we got it where we smashed in the front and had to get stuff replaced, but after that it was as good as new.

It still looks mostly fine on the outside.  A few tiny dents and scratches, but no rust or missing paint or big dents or anything.

The inside, on the other hand, is starting to look 70s-style bad.  The glue is coming unglued on the fabric on the doors, leaving it hanging loose.  No tears yet, but I can see them in the future if we don’t do something.  Everything that gets touched regularly is coated in a brown-grey grime.  And then there’s dust and crumbs and other sorts of detritus.  It could use a good cleaning.

Before I let DH at it with a glue gun, any suggestions?

Ask the grumpies: Retirement vs. debt

Rented life asks:

If you have credit card debt should you pay that off completely before setting up and contributing to retirement? (And does your advice change is the employer doesn’t offer a plan and your retirement is just whatever you set up?) My friend thinks you should pay off credit card first, no matter what and then when that is gone you can start saving for retirement. I feel that can do more harm than good, waiting to set up retirement until your debts are gone might have you setting up really late or possibly always having to push it off. Who is “right?”

If you get an employer match that is anywhere decent you should absolutely save for retirement up to the match before paying off the credit card.  In fact, depending on the match rate, your credit card interest rate, and penalties, there can be situations in which you would put money in, get the match, then take your original money out minus the penalty and you would still be ahead.

If you’re young (with a lot of earning years left), have high interest debt, and have lousy options for saving for retirement at work (no match, high cost plans at work, etc.) and can (and will) knock out that debt really quickly, and will definitely start putting money away for retirement as soon as you’re done with the debt, then go ahead and pay off the debt first!  This is, in fact, what DH and I did when we got married.  We paid off his (relatively high interest rate) student loans first and were still able to max out our IRAs the next fiscal year.  We benefited more from those 6K getting rid of the debt than we would have putting them in an IRA (especially since it would have been a market peak!  But we didn’t know the tech bubble was going to burst, so that was just luck.)

After those two easy scenarios, there’s a lot more grey area.  And it’s going to depend on your personality and your options what you do.  You will have to sit down and run the numbers, think about the risk, the benefits, and your own personality.  The goal is not necessarily to make the most money on paper, but to get rid of your debt and have enough saved for retirement.  It is far better to make a little less money on paper if it means you’re going to make more money in reality because you actually stick to your goals instead of giving up.

If you’re really bad at doing multiple goals at the same time and you would have to save for your retirement manually (and you don’t get a nice match), then go ahead and focus on the debt.  However, even if you’re bad at doing multiple goals at the same time, if you have retirement through work, you can usually have it auto-deducted so you don’t even think about it.

Similarly, if you know deep down that as soon as your credit card debt is gone or down, you’re just going to spend again until you’re back in the same situation you were in before, put money away for retirement so you can’t touch it.  We don’t understand people who can’t keep from maxing out their credit cards no matter how much they make (and we try really hard not to read their blogs because they’re so depressing), but if that’s you, then you need to contribute the max to your retirement accounts in a way that it’s auto-deducted without you even realizing it’s happening.  That way you can continue to pay off your debt in your 60s, 70s, and 80s, or at least still have something to live on when you’re old after declaring bankruptcy multiple times (as retirement money is protected).

Speaking of which, if you have plans to file hard-core bankruptcy, max out that retirement.  I’m not sure what you should do if you’re planning on doing the lighter kind of bankruptcy… you should probably talk to a lawyer about that.

If your work offers good plans, that’s more attractive than if it offers bad plans.  But, as you note, even if your work only has bad plans, you can still invest up to the IRA or Roth IRA limit with Vanguard.  However it’s more difficult to set up auto-deduction before you see the money than it would be with work, which may interact with your personality type and how many goals you can focus on at the same time.

If you aren’t going to remember to set up auto-deduction for retirement just as soon as you get out of debt, then do it right away when you’re thinking of it instead of paying off debt.

If you are going to be in debt for a long time, then it might also be worth investing in the stock market just to add a little bit of risk to your portfolio, or, as mentioned before, to protect your future self in case of bankruptcy.

There’s probably even more scenarios that I’m not thinking about.  But no, I don’t agree that you should always pay off high interest debt first while ignoring retirement (*especially* if you’ve got a 100% match at work!), nor is it always the best idea to contribute the max to retirement while you’re still paying off high interest debt.  (Heck, if you work for the government, the max you can contribute to tax-advantaged retirement savings might be a lot more than 20% of your income!)

What say you, grumpy nation?  High interest debt?  Retirement savings?  Both?  Neither?  Is it always clear-cut what you should do?

Give a little bit

The holidays aren’t the only time to think about charitable giving!  It’s summer and that means your local animal shelters are probably overrun with too many kittens.  If you can’t give money or be a foster house, try cleaning out your closets.  Humane societies often love donations of cat food, old clean towels, sheets, rags, paper towels, maybe office equipment, etc.

Does your local library need help with its book sale, its summer reading programs, or donations?  If you want to encourage a love of reading, try Literacy Volunteers of America.  They help with adult literacy throughout the country.  Toys for Tots takes books, in case you were wondering if it had to be toys only.  Other organizations for summer giving (time, money) include Reach Out And Read (ROAR), which promotes literacy at young ages and where you can donate a book online.  There’s also Reading is Fundamental, which gives new books to kids (some in Spanish).  Child’s Play also runs year-round, though their fundraising focus is the holidays.  They bring toys to kids in hospitals, and many hospitals have wishlists on amazon.  Even a box or two of crayons is a nice treat.

#2 gives to her alma mater in the summer.  :)  She’s also been giving to political campaigns, but perhaps that shouldn’t count.

Got more summer givin’ ideas?  Tell us in the comments.

 

 

July Mortgage update and playing with numbers (or: another post on why we don’t just pay it off)

Last month (June):
Balance: $52,393.37
Years left: 4
P =$995.17, I =$219.23, Escrow =788.73

This month (July):
Balance: $49,389.48
Years left: 3.75
P =$1,007.01, I =$207.39, Escrow =788.73

One month’s prepayment savings: $7.90

Some fun tiny milestones this month. We’re under 50K in our mortgage balance. We’re over $1,000 in the amount of our regular payment that goes to principal. Next month we’ll be under $200 in the amount of monthly payment that goes to interest. That’s pretty cheap rent! (Our utility bills are far higher than that, at least in the summer.  And I guess technically the escrow part is also rent, making it a bit more expensive.)

At this point there’s two warring feelings going on. On the one hand, wow, we could just pay that sucker off. It is totally manageable at this point. If we applied our extra money sitting in savings (waiting far too patiently to be turned into bathroom linoleum, to fix the damage the kittens did to the master bath, and to finally do *something* about the kitchen) and our emergency fund and our summer money it would be gone. And we’d still even have DC1′s school tuition left.  (We’d have to re-save up for all those various funds, cutting spending under DH’s income, but it’s not like we’ve been in a hurry to fix things because man we’re lazy.)

On the other hand, the way that mortgages work, paying a huge chunk of money down now doesn’t save anywhere near as much money as paying the same chunk early in the mortgage. If we paid off our mortgage tomorrow we would save about $4,372.91 (possibly a little less because we’d have to pay a day or two of interest before the transaction went completely through) assuming the alternative is to stop pre-payments entirely and let the mortgage take its course. $4,372.91 just isn’t a whole lot of money over a 3.75 year period. If we continue pre-paying the $1,996.87 that we’re pre-paying each month, we’ll only pay an additional $1,473.20 in interest over the course of the mortgage, meaning that by paying it off tomorrow instead of as we’ve been doing it, we would only save $1,473.20 (and we’ll be done in 1.25 years). That’s even less savings!

Having the money and the option of stopping pre-payments allows us a lot of freedom. If DH’s company goes under, or I want to take a sabbatical, we could do that more easily by just stopping pre-payments. Paying off the mortgage entirely would free up less than 2K/month because >1/3 of our regular payment goes to escrow. It would stop the pre-payments too, but we wouldn’t have that pre-payment money anymore anyway because it would have gone to the mortgage. (We wouldn’t have our emergency fund either, for that matter, and we’d have to cut way back on spending.) Stopping pre-payments while still having the money we were using to pre-pay in the bank saves a full almost 2K/month.  That’s kind of fuzzy math there, but liquidity is what’s important in those measurements.  Not paying off the mortgage provides more liquidity in the case of an emergency or other desired expenditure.

And we’re willing to pay $1.5K – $4.5K over the course of almost four years for that freedom.  In fact, it’s tempting to stop the prepayments entirely and just wait out the 3.75 years… but if we did that I’d feel even more guilty about the extra money building up savings (the next risk-free option) earning next to no interest.  Keeping on with the current course doesn’t require any thinking and slowly depletes the extra amount in savings rather than increasing it thus forcing me to figure out where else to put the money while it waits for us to call home repair people to take it.

When you get/got close enough to the end of your mortgage that you could see it, would/did you pay it all off or drag it out?

Taming the Work Week: A review

Taming the Work Week is a short e-book by M. R. Nelson, aka Wandering Scientist aka Cloud.  In it, she makes the argument that everyone has a work limit, and that working beyond that work limit not only leads to diminishing marginal return (she doesn’t use that language), it can also lead to costly mistakes that actually create more work.

She notes that although research is clear that for early 20th century factory workers, 40 hours/week is the limit, we have no idea what the work limit is for knowledge workers.  And we really don’t.  It probably depends on a lot of factors (task mix, personal ability, etc.).  However, she provides steps for individuals to figure out whether they are working efficiently, and if not, how to work more efficiently.

It’s a short book with a lot of good tips.

Some may work better for some people than for others. For example, if you get more of your socialization at work than at home or after work, you may need that daily down-time with your colleagues interspersed with work, rather than waiting until you get home.  You won’t be as efficient or productive per-hour at work, but you’re also filling that socialization need on a regular basis.  On the other hand, if your home and social life provide a lot of social interaction already, cutting down on interruptions could greatly increase your productivity, allowing you to get out of work earlier without guilt.

Similarly, just going home when you’re not being productive doesn’t work for me because suddenly I become less productive earlier and earlier in the day as the days go on because I’m rewarding bad behavior and I have no self-control.  Instead, I need to task-switch from doing thinky research work to doing unrelated scut work like teaching prep or service.  That way I’m still being productive on stuff that has to get done eventually and I’m not training myself to leave before it’s time to pick up the kids (which is my hard deadline at the end of the day).

Nelson acknowledges these different kinds of different work styles.  Probably my favorite part of the book is where she provides some of the standard “how to be efficient” advice and points out when it doesn’t work for her and why. (Just going home doesn’t work for her either, but for different reasons.)  This added discussion of “why” really illustrates how you can think critically about the advice that’s out there to craft your own methods to improve your efficiency.

The biggest downside to this e-book is that the writing is uneven– it starts out stilted (carefully avoiding using contractions, for example), then shifts to a more conversational tone that is much easier to read.  Keep reading past the opening section or two– it’s worth it.

Where can you tap if you come up short?

1.  Emergency fund

2.  Summer salary savings

3.  Claim DDA reimbursements (generally there’s also travel reimbursements on their way, but these are filed right away and are highly unpredictable, and sometimes the IRS gives us money back when we file, though not always) and for smaller emergencies, credit card rewards.

4.  Taxable stocks

5.  Roth IRA principal (hopefully we wouldn’t have to touch this)

6.  With a penalty:  IRAs, 529, etc.  I can’t see us doing this though.

7.  Sell stuff.  Do freelance writing.  Though these have delays.  Similarly grants can provide summer salary, but that’s going to have major delays.

8.  Banks of mom and dad.  Middle-class privilege!  (I could probably also tap my sister in a true emergency.)

9.  Credit cards… (if it’s really short term, as in, I could pay off before interest accrued, I’d tap these before stocks), Home equity loan, I dunno…

#2 says:

1.  My savings account

2.  My other savings account

3.  My partner

4.  credit cards

5.  some of my richer friends

6.  my dad & former stepmom

7.  my in-laws, uh… then…

8.  wider family, cousins, aunts, uncles

after that I guess I’m SOL!

Ask the grumpies: 401(K)/403(b) loans

Dr. Koshary asks:

I was talking with my financial consultants – my father and stepmother – last week, and they floated an idea to me that had never crossed my mind before.  They suggested that, if and when, FSM willing, I land a tenure-track job and can look forward to a steadier income, I should borrow a sum of money from my 403(b) and use to pay down my student loan debt.

I immediately disliked this idea, thinking of your observation that, in the grand scheme of things, student loan debt isn’t necessarily the worst thing to carry for a while.  I have around $23,000 in fully subsidized student loans, consolidated at a fixed APR of 5%.  I’m three years into a 20-year repayment plan, so after another 17 years, the loan will be fully repaid, and I will have paid a total of about $41,000 with the yearly interest.  My monthly payment is $173.18, which hardly seems onerous compared to what could have been.  As long as I can avoid any huge unanticipated expenses – or more likely, once I pay off the credit card debt from moving to wherever my next job might be – the student loan is the only debt that I carry.

My parents replied that since that APR over 20 years makes me pay considerably more than the value of the original loan, it would be worthwhile even to take out, say, $10,000 and make a lump-sum payment that would shrink the balance and, therefore, save me some years of interest payments.  According to them, I would then have to go on a repayment plan to my 403(b) alongside the Stafford repayment plan.

The thought of having more unavoidable automatic deductions than necessary turns my stomach, but of course, I don’t yet have a t-t job.  I guess I can understand their logic here, but I don’t have a clear gut instinct what would be best.  Looking ahead, assuming that I might someday have other long-term debt like a new car or a mortgage, what do you suggest?

Disclaimer:  We are not financial planners– talk to a real one about this idea, and a good one (fee-only etc.) if you decide to go forward with it.

Even if you don’t end up with a TT job, you will probably end up with a real job that gives real benefits and a healthy salary.

Our first instinct is NO Don’t do this.  The thing about 401K loans (403b if you stay in gov’t or nonprofit employment) is that if you leave/lose your job, you have to pay them back immediately.  This is only the kind of thing you want to play around with if you already have the money in your savings account just sitting there.  But if you have that money just sitting there, why not *use* it?  It’s not like savings rates or cd rates are particularly high these days.  The worst case scenario sees you declaring bankruptcy.  The best case scenario saves you a little money in interest.

Some other wrinkles if considering bankruptcy as a future option:  It is difficult (nearly impossible) to discharge student loan debt in bankruptcy, so if you’re going to go bankrupt, getting rid of that before other debt might make sense.  However, retirement accounts are also usually protected in bankruptcy proceedings (IRA exemptions are limited, but 403b are unlimited), so taking money from retirement isn’t such a good idea either if you’re planning on a bankruptcy.

5% is pretty high for student loan interest.  That’s not a fun debt to be carrying around.  But it’s also not credit-card levels of interest.  Your monthly payment seems doable, so it’s unlikely to put you into hardship scenarios as long as you’re making enough to pay your rent and feed yourself.  Yes, you’d save money long-term paying it off, but at that level we personally wouldn’t consider adding the risk that comes with 401K loans to do that.

Better:  Once you’re employed with a real job, increase your student loan payments.  That will save you interest and it will decrease your risk down the road.  It won’t save you as much money long-term as paying it off immediately with a 401K loan would, but you also wouldn’t be dependent on your job and your employer either.  If you were stuck in an untenable working environment or if your job were eliminated, you wouldn’t have that huge 401K/403b repayment to make.  At that point you would just stop making the extra student loan payments.

It’s hard to give direct advice for the scenarios with cars and houses without having the numbers.  We will give the standard advice however:  Once you’re employed, contribute to retirement at least enough to get the employer match.  If you can handle it, save 10-20% of your income (including their match) in your work retirement account.  Don’t buy a house unless you have 20% down.  Don’t buy more house than you can afford (and don’t believe the bank calculators about what you can afford– they estimate high).  Don’t buy more car than you can afford (unless the minimum safe option necessary to get you to work is more than you can afford).  Hold on to your car until the maintenance expenses are bigger than the cost of the car, or longer.

We’re betting though, that you’re going to end up getting a non-academic job that will make 23K seem pretty trivial.  (23K is a LOT of money when you’re not making much, but it’s not as bad when you have a high-level salary, so long as you’re able to control your discretionary spending.)  Here’s what we see happening in that scenario:  1st paycheck goes towards moving expenses, living expenses, and a spiffier work wardrobe (as required by work).  2nd paycheck your retirement account on the new job kicks in, you pay extra to your student loan and finish up your remaining moving/living expenses.  Sometime over the next few months you knock out that student loan and start saving for a house and/or new car.  Hopefully your car lasts long enough that its replacement can be paid for in cash.  After the loans are gone and your targeted savings accounts are started and you’ve accrued a couple weeks of vacation, you take a nice relaxing vacation.  When your car finally gives out you replace it.  In a year or two you’ve saved enough for your own condo or townhouse.  Or you’ve found someone to share a house with, get married, and live happily ever after.  If you end up with an academic job, you may decide to start those targeted savings accounts before paying off the loans because it’ll take longer to pay off the student loans.  But you also won’t be spending so much on wardrobe and your expectations will be lower in terms of quality of life.

Grumpy nation, what are your thoughts on 401K loans to pay off student loans?

Is who we are what we do?: A deliberately controversial post.

Usually these posts start out with someone complaining about being at a cocktail party and being asked what they do.  The person complaining generally does not have a job.  Ze is financially independent or a SAHP or HouseSpouse or unemployed etc.  Depending on who is writing, the post becomes an ode to not working for The Man (and how you can only discover who you really are through Early Retirement and going to exploitative conferences in Portland, OR), a discussion about how taking care of hearth and family is the Most Important Job, or how to turn awkward and unfair conversations into networking opportunities instead of reasons to feel bad about ourselves.  And they all talk about how we’re so much more than our jobs and we shouldn’t be defined by our jobs.

This post is going to go a slightly different route.  I don’t know about #2, but I haven’t been at a cocktail party that wasn’t attached to a conference for *ages* (me either!) and when you’re at conference, you’ve got those helpful name-tags plus everyone knows that more likely than not you have a discipline-specific PhD.  Especially once you no longer look like a graduate student.

So this post is specifically going to focus on the question– is who you are what you do?

We say, Yes and  No.

We were both raised Catholic.  (We are recovering.)  And if you’re Catholic or Episcopalian, then belief is not as important as Good Works.  You’re not a nice person if you torture puppies even if you feel sad when you torture them.  If you ignore the impulse to torture puppies even though you desperately want to, you have as much of a shot at salvation as someone identical who would never dream of torturing puppies, maybe more, because you resisted a temptation that most people don’t have.

In economics terms, we tend to only believe preferences when they’re “realized,” which is just a fancy way of saying, “what you did”.  You’re showing what you preferred through your actions and your choices (very behaviorist!).  In that scenario, desire to torture or not torture puppies is meaningless– the lack of torture means that you preferred not to torture given the circumstances.  You are not a puppy-torturer unless you actually torture puppies (given your budget constraint).  We don’t know what’s in the black box or what the shape of your utility function is, but we can see exactly where your utility function hits your budget constraint.

In some sense, what we do defines us.  There may be some inner person trying to get out, but we can’t measure it unless it comes out.  We are what we do.

But also, no… Who are we if we’re not what what we do?   We are what we like and don’t like.  We are how we organize information. We’re a bundle of preferences and actions– we are what the outside world sees of us, though usually we are not how the world perceives us.  The patriarchy tends to twist our actions and our very existence to fit its own warped narrative.  We are bundles of energy and stardust masquerading as humans for now.

We are social scientists, through years of training.  Our disciplines shape how we see the world: how we make sense of the external world and our internal thoughts.  The narratives we tell ourselves, how we make decisions.  One of us used to be a mathematician, but that aspect has been dulled and replaced over time with graduate training and day-to-day work.  We are feminists of various flavors, and that shapes how we interact with people and information.  What we are directly affects what we do, and what we do shows who we are.

However, we are not our jobs.  They’re what we get money for, and they’re not all that we do.  We will still be social scientists without our current jobs.  We will still be teachers without our jobs, even if we never give another formal lecture.  We’ll still be cat-lovers and feminists and book-lovers and partners and friends and almost everything else that labels who we are.  We may no longer be “professor” without our jobs, but very little will change in terms of personal essence in the instant a job is left and a new job taken (or not taken).  Personal growth and change can (and will) come before a job change and after, but we don’t suddenly lose who we are or become a new person with a change in employment.  Maybe a happier (or temporarily sadder) person, but that kind of happiness seems to be more of an “estar” (in the moment temporary kind of being) thing than a “ser” (permanent kind of being) thing.

Who are you?  And how do you even define that?

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