I need a sabbatical

I was supposed to get one this year.  We only get one per division and our two departments are supposed to split them evenly and this year it was my department’s turn.  Only one person from each department applied.  But they gave it to the other person who applied from the other department.  Then he got a job at another university and quit so nobody gets a sabbatical this year.  I am free to apply for next year.  But I have competition.

So much is happening right now.  I have so much work to do.  So many ideas, so many projects, so many revise and resubmits (!), so many conferences, so many referee reports, so many opportunities that I keep saying yes to.  I’m going to be traveling constantly this year and on top of that I have to apply for things… like sabbatical.

And I’m teaching a full load and I’m doing a ton of service.  And my classes have to be updated, except the new course which has to be created.

I think this year I will have to go back to working 6 days a week and sometimes after 5pm.  (I get to work before 8am.)

I hope I don’t pass out from nervous exhaustion!  And I really hope my RAs are good this year, because I need great RAs this year.  Luckily I have enough money to pay for RAs this year.  Unfortunately I didn’t get that grant in on time to get a chance of being able to pay for RAs next year!

Do you need a sabbatical?  What would you do with a sabbatical?

A thought or two on the advice industry

Advice books and blogs and so on are, in theory, supposed to make people happier.  In reality, they often seem to create anxieties in people that they didn’t even know they had.  I suspect that’s how they make their money.  They’re the Febreeze of the book world, especially if you have (metaphorical) allergies.  This is especially true of the parenting and lifestyle self-help industries.  It is shocking the number of google questions that find our blog asking, “What happens if I don’t sleep train.”  (Answer:  nothing– your kid eventually learns to go to sleep on hir own because the human race would not have survived if people couldn’t figure out how to sleep.  It is highly unlikely that adult problems with sleeping are caused by your parents not CIO when you were a baby.)

On the one hand, these different recommendations, which are usually in the form of hard and fast rules (You must live the MMM way or the LV way or the DR way or etc. etc. etc.) might get some folks to think, “Am I happy with what I’m doing now, if not then maybe I can change something.  Here are some things I can try.”

But, on the other hand, some folks think, “I thought I was happy but I’m not following that rule and someone else says I should be so now I feel guilty and maybe I’ll follow that rule and just not understand why it makes me less happy than I was before… until someone else tells me to follow the opposite rule and it may not work out either.”  Because a lot of people are followers who like to be told what to do or don’t have whatever contrary streak one needs to resist constant assaults to their self-confidence and common sense.  And that kind of sucks.

Discuss

Why not just live large while in debt?

Vanessa asks on a GRS post:

I always thought the first rule to getting out of debt was to stop digging, but maybe not? And aside from a few bagels, it doesn’t seem like Honey’s lifestyle has been too compromised. Makes me wonder why I budget so strictly, when I could have a little debt and perhaps be a lot happier.

Kasia adds:

Why are people so negative and critical about someone else’s progress? Consumer debt and mortgage debt are completely different. You have to live somewhere and owning your own home even if you’re paying off a mortgage means you have an asset to your name, renting just means you can be kicked out at any time by a temperamental landlord. Either way you’re paying to live there so why not pay off your own home instead of someone else’s if you have that opportunity?

 

It’s about managing risk. A house can trap you unless you’re willing to foreclose on it. If you already have a good portion of your income stuck in debt-servicing you’re in a very vulnerable state when there’s a job loss or relocation.

In addition, Kasia shows a fundamental misunderstanding of the housing market.  Purchased houses also have a part you’re “throwing away”– mortgage interest, taxes, insurance, and maintenance. In our case, the taxes and insurance alone is 1/3 of our mortgage payment, and of course the interest part is the bulk of the payment when you start with a new mortgage.  On top of that, houses tend to create lots of regular “emergency” expenses (pipes break, trees fall, water-heaters die etc.) that the landlord takes care of when you’re renting.

When you have lots of consumer debt that you’re servicing, a house can add enormously to your risk because it’s a large required monthly expense whether you’re living there or not.  Things may be fine if you can just sell the house when times are bad, but bad times often mean it’s difficult to unload your house, even at a loss.

Living beyond your means is a precarious balancing act. Everything is fine until an emergency that’s too big happens and/or you run out of credit, and then you’re trapped. But if you’re ok with foreclosure and bankruptcy, then well, sure, why not live on the edge? Of course, if you’re high income, you may only be able to restructure debt in bankruptcy, not completely discharge it.

So to all those who are thinking, “why am I making sacrifices when I could just live like ‘Honey Smith’ and be happy?” It is an alluring thought, it really is. And there’s some probability that they’ll make it ok without bankruptcy or foreclosure. But the majority of people who try this are going to end up in bad shape.

So Vanessa– don’t give up.  Being able to spend like ‘Honey’ does without debt and with an emergency fund and with savings feels great (even if you don’t actually do the spending, the ability alone is nice), and it’s worth the sacrifice.  The sooner you start, the smaller the sacrifice you have to make and the quicker you end up with financial freedom.

And Kasia, ‘Honey Smith’ is not a good person to look to for financial advice.

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?

Mutual fund taxes: Lessons learned

Every year I learn a little bit more about investing that I often wish I didn’t know.

Why?  Well, back in the day, my father took care of my investments and he’s really into complicated stuff.  Each year I can generally only handle untangling one crazy thing.  (I think I’m going to have one share of AOL for ETERNITY.  How?  I had AOL, then it became TWC, then it split off again, so now I have a bunch of TWC, some other Turner/Time Warner company, and one lonely AOL share.  Figuring out the cost-basis on that share is a really low priority.  Update:  And now Comcast is buying TWC… that’ll be fun.)

This year I learned that mutual funds can generate capital gains without your knowledge, and they don’t give you the money but instead they reinvest it, buying more shares of the fund.  This particular capital gain hasn’t done any such thing since like 1994 (before I was paying attention), so the $4K capital gain was a surprise.  I immediately groaned and wished I’d given these funds to the school instead of cash back when my dad was donating money to the school, but I was worried about dealing with that paperwork then too.  Or that I’d taken leave from the school when DH was unemployed so that I could claim a 15% marginal tax rate and sell every single one of those tangled up funds.  (Or better yet, taken a capital loss on all of them when the markets were down during the recession!)  If only I were more organized and not still learning in the past.

But, it turns out that paying capital gains taxes now on mutual funds isn’t such a horrible thing.  The tax I pay now will reduce my tax bill in the future when I actually sell the whole thing.  So it may be best not to donate these shares to charity.  (I probably have some QQQQ with a higher capital gain anyway.  QQQQ has been good to me.)

Still, this mutual fund has a 1% expense ratio, and I think it’s just a large cap fund, so I should get rid of it one of these days anyway since I can get large cap from Vanguard much less expensively.

So anyway.  None of our readers probably cares about this, but hey.  Stick with Vanguard index funds or Target date funds and you’ll be fine.  Stay away from needless and expensive complications!

And so say I.

Meeting pet peeves

Here’s some things that annoy us in meetings and workshops.  You know, since it’s that time of year again.
1. People who cannot come to the point.  Don’t say in three paragraphs what you can say in 3 sentences or less.

2. Lack of agenda.  We should not be having meetings for the sake of having meetings.

3. Arguing about the same excrement over and over again without doing anything about it.  Either we do something about it or we don’t waste our time griping.
4. Lack of action items.  It doesn’t matter how many good suggestions people make unless someone actually implements them.
5. People who talk over my female and minority colleagues.  Gentlemen, you suck.
6. People who are making good points but just shut up when they’re talked over. (But I get why they do that and I always break in and say, “What is it you were saying…” etc.  Still, I wish they would break in so I don’t have to.  Also if they did that it would seem more normal when I refuse to let myself talked over by the same senior white guys who try to steamroll everybody.)
7.  “Let’s defer that to another committee.”
8.  “Let’s put you on that other committee.”
9.  People who make a bunch of suggestions about work for other people to do and then leave the meeting early so they can’t be assigned any of said work.  (Bonus points if they email later with more work for people “assigned to the committee [I suggested]” to do after.  Note that they have actually done no work themselves and conveniently ducked out right after suggesting a committee but before being able to be assigned to a committee.  No committee was created after they left, btw.)
10.  Anything longer than an hour and 30 min.  Or more frequent than once a month.  (Exceptions:  research meetings– those can/should be more frequent.)
What makes you want to claw your eyes/ears out at meetings?

compound interest

One of the things Dave Ramsey is infamous for is making the claim that the stock market returns 12%/year.  Lately he’s been saying well, his money market funds return that.  (Uh huh.)  Then he goes through an exercise showing how much money you’ll make if you put away X, assuming an interest rate of 12%/year.  It’s a lot.  Because of the magic of compounding.

And obviously that 12% number is garbage.  (Reality is probably closer to 7%.)  However, after he makes this claim, he’ll often say, “Even if I’m half wrong…that’s still a lot of money.”

The implication being, if the interest rate is closer to 6% you’ll end up with half of that huge number he just calculated, which is still a huge number.

Of course you don’t.

Because compound interest doesn’t work that way.  As time goes on tiny differences are magnified with each compound, so that 6% difference starts out as half as big, but ends up compounding over time to something much larger than half as big.

Here’s a calculator because that’s more fun than doing the math by hand.  (Or at least it’s more fun than either typing out the formula or typing out the derivation of the formula.)

Take a Principal of 100,000.  Don’t add anything to it.  Assume a 12% interest rate that compounds once per year for 30 years.  You get $2,995,992.21 .  Or almost 3 million dollars.

Now let’s assume it’s actually half of 12%, or 6%.  If you’re thinking, I could totally live on 1.5 million dollars… you probably could.  But a 6% interest rate over 30 years only gives you $574,349.12, or half a million dollars.  Not chump change, but not enough to live through retirement on, even assuming these are real interest rates (putting things in today’s dollars instead of tomorrow’s inflationed dollars) and not nominal (if you assume 2% inflation, the real interest rate is 2 points lower than the nominal rate).

Half the interest rate compounded doesn’t result in half the earnings, but instead far less than that.

Losing just 1%, for a rate of 11% gives $2,289,229.66, which is a loss of about 700K!

The truth is that compound interest is magical, and the longer your time horizon, the less you need to put in to get big numbers out the other end.  However, it’s not quite as magical as a 12% interest rate would have you believe.  If Dave Ramsey is 50% wrong, you’re much worse than 50% worse off.

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