A review of this library that you might not even know is here

There is kind of a “stealth” library really near where I live.  It is part of the county system, not the city system, so I didn’t know about it until I walked in looking for a place to work on my laptop.   It looks like a secret from the parking lot.

It turns out to be a pretty good place to work if I’m feeling done with the coffee shop for the day.

It’s quiet, with just enough noise to not be creepy.  It has lots of places to sit, including this:

bookcase fakeout

Facilities include study rooms, a computer room, and a surprisingly decent collection of graphic novels.  I started a new series while I was there, and I’m planning to go back for 2 more.

Near a sofa is a vase with some yarn and a pair of knitting needles in it.

In the back is a huge classroom with kid- and adult-sized chairs.  I don’t know what classes are held there.

It has carrells, an enclosed children’s room where they can make some noise, and a “Christmas tree” made out of old encyclopedia volumes (it was summer when I went).

If you get bored you can wander around and look at all the pocket pets they have distributed throughout the library in little cages: tiny tree frogs, a guinea pig, gerbil, bearded dragon, gecko, dove, koi.

As you may be gathering, it’s much bigger than it looks from the outside, as well as having good a/c and wireless access.  On the somewhat sad side, there are surprisingly fewer books than I think it needs (the shelves are not full and there is room for a lot more of them).

There are some “honor books” by the front that you can take without checking out and return whenever.  I haven’t checked out their bookstore yet.

It’s really doing a pretty decent job overall!  It sort of looks like they have not grown into their huge space yet, though they have been there at least 3 years.

This review does you no good, Grumpeteers, but it amuses us.  #2 adds:  What do you like about your favorite library?  What would your dream library have?

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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.

link love

Apparently if you let things die down after a double-down, they keep doing the EXACT SAME THING.  (Nature does it again.  I don’t know how anybody can take that rag seriously.)

Anne Jefferson explains exactly how the recent bad science stuff is doing harm.  Trenchant.

The weekly sift explains exactly why angry white men.  Fascinating.

I’d like somebody to name and shame.

The myth of gender blind parenting.

This doctor doesn’t understand why thinking of her patients as if they’re children and calling them “sweetie” might be, oh, I don’t know, just a little bit offensive (just her sweet pathetic female patients, mind you).  And why it’s ok for a waitress at Denny’s to call someone sweetie, but not for someone in a position of authority.  Like, my department secretary can bless my heart when I’m complaining, but I’d be seriously pissed if my dean did the same.  Initially, I thought it was great that she was willing to change her mind and stop doing something she hadn’t realized was problematic, but instead it looks like she’s attacking anybody who disagrees with her and was just trying to justify doing something she knows deep down is bad.  Note that all the people disagreeing with her (except us!) are doing it anonymously, reinforcing that authority thing.

Turns out booth babes don’t actually generate sales at tech functions.  Whoda thunk it?  It’s like it’s not the 1960s anymore or something.

If you can’t find your phone

Ideas are overrated.

capybara sits on a yuku forum

THAT’S NOT A CAT!  RUN!!

The adrenaline rush can be good.

This is so sweet.

This is a kind of neat exercise routine.

Toast.  Read it to the end.  Because it’s more than toast.

I might need one of these for work.

This is (less) funny because it’s true.

This is also true.  And less funny if you’re living it.

The new abortion laws, what you need to know.

Metonymy.  Not to be confused with meronymy or meronomy.

I picked this one.  It’s supposed to come next week.  (See the original thread for more details!)

“White male leader not actually a dickhead. Film at 11.”

A friendly reminder to take what your 3 year old says with a grain of salt.

Ask the grumpies: What to do with signing bonus?

A New Hire asks:

As part of my start-up package, I get a lump sum of ~$60k cash.  The default option is for this to be paid monthly over 5 years, but you can choose other schemes, including all at once.  However, if you leave before 5 years is up, you have to pay it back (I’m assuming pro-rated).  I’m not sure how taxes would be handled.  We assume we’d have to pay back money you already paid taxes on, but maybe it could be written off as a loss.

Considerations:

  • Our (combined income) – (tax sheltered retirement contributions) will be $186 – $228k the first year (bonus is a large component of my spouse’s compensation package).  The expected value (with an “average” bonus) is $206k
  • We only will move away if there are extenuating circumstances
  • We hope to buy a house in approximately 2 years, maybe slightly sooner.  We can probably accomplish this without the lump sum help, but obviously we’d borrow more
  • We expect the home to cost in the neighborhood of $700k, perhaps more
  • If taken as a lump sum, we’ll likely put into a CD until we use it for a home downpayment.
  • We have access to a special loan program requiring 10% down with no PMI, and no real considerations of “jumbo” vs regular mortgage.  The drawback is that while rates are quite attractive (3% today with no points), it is variable and pegged to short term investment returns with a floor at 3%

What is the most optimal way for us to take this money?

I’m advocating for lump sum ASAP or splitting between two years.  I think the 2 years split would be optimal.  Spouse is not sure what to do, but thinks the 5 year monthly trickle makes sense.  I assume that if we choose a 2 year period, it may have to be monthly – but I can check if we can get 2 lump sum payments if determined that is most optimal.
(A separate analysis would ask if the mortgage program is a good deal, given that we could lock in low rates in the private market.  But we aren’t ready to buy yet, so we can’t compare that yet.)

1.  Find out how taxes are going to be handled!  If there’s any chance that you can get that 60K to count for taxes on a lower income year (moving from piddly grad student salary to full year salary) and pay lower marginal tax rates on the full amount, that would be ideal.  Similarly, if you’re moving from a low tax state to a high tax state, it would be nice to have half the year count for the low tax state.

Similarly, if you think your raises or bonuses will be going up over time or that tax rates will be going up over the next 5 years, that argues for front-loading.  If you think Obama is going to be replaced with a tea party member and tea party houses… then you probably make enough money as a family that they’d want to lower your tax rates and you might want to put that off.

The tax bracket you’re estimating is:

28% on taxable income over $148,850 to $226,850, plus… so you’d be paying 33% on anything you earn over 226,850.  So ~2000*.05 = $100 extra for the amount that gets into the 33% bracket instead the 28% bracket, if I did my math correctly.  I would probably not do anything fancy to save ~$100 at that income.

2.  Does your department have a history of kicking people out at the 3rd year review or only at tenure?  How likely are you to stick out a bad situation if there are “extenuating circumstances” (does the spouse’s job keep you in this area?  would you be willing to move to say, Kansas, if this job doesn’t work out?).  More importantly, if “extenuating circumstances” happen, are you easily going to be able to pay back the money from your spouse’s salary or from savings?  Does the university really make people pay it back in practice?  Does the university allow payment plans to be set up if they do?  Of course, if you keep it in a CD you should be able to pay it back with only minimal penalty if you have to break the CD.

3.  Is it really 50K all at once vs. 1/5 of that a year for 5 years?  Even with small inflationary expectations, there’s no good reason except for #1 and #2 that I can think of to let them earn interest on the money rather than you.  Even at a piddly 1% interest rate.

So I guess in general my recommendation is to take the lump sum and keep it somewhere safe.  Unless you feel more confident about #2 or are planning on doing a lot of additional saving so you can easily pay back 20 or 30K at the drop of a hat.  (Something you may want to be able to do before you buy a house, just in case!)

Re: the mortgage issue, ask us again when you’re closer to that decision and know what the rates are!  It does sound a bit sketchy and there may be additional strings depending on the school you’re at.  (The UCs, for example, use their mortgage program as a way to lock professors in, I have heard.)

Standard disclaimer:  we are not professional financial planners or accountants.  Always talk with a real professional before making these kinds of important decisions.

What have we missed, Grumpy Nation?

Kitty update

Ok, the plan was to catch the kittens and mamacat, get them all fixed, get the kittens tamed and rehomed and if mama was tamed to keep her, otherwise to let her out.

Instead…

The three kittens are still in our bathroom (they got booted from the guest bedroom suite when partner’s parents visited).  Little boy is slowly coming around and one of his sisters may be right behind him.  The other sister will probably never be tamed [update:  still have hope].  She’s terrified of people.  Our bigcat is not helping as she does not like her access to my closet (her daytime napping spot) cut-off and she knows there’s kittens in there and she wants to show them exactly who is alpha kitty around here.  She threw herself bodily at the door one night and another night actually managed to get the door open.  Partner doesn’t want to put them back in the guest bedroom because it was a PITA to clean.  (Recall our bathroom is the only one that’s tiled.)

We caught 3 possums.  They are no longer in our neighborhood.

We caught one scraggly (longish-hair) black male cat with lots of scratches on his face.  We got him neutered, revolutioned, de-tapewormed, and vaccinated.  Initially cautious of people, he turned out to be a cuddle bug.  The vet thinks he was once someone’s cat but has been on his own for months.  He’s been in our garage.  He basically hangs out without destroying anything (unlike the kittens) until someone comes in to pet him.  He loves food, but he loves petting more than food.  He is a total sweetheart.  He is so grateful to be in our garage where it’s safe and relatively warm and there’s food and occasional petting.  It breaks your heart.  He was not doing well outside so he’s become our #1 priority for rehoming.  We may put him in the guest bedroom once we need the garage again, or we may try to integrate him with our other two cats.  A lot depends on how he gets along with bigkitty.  [Update:  I think I’m allergic to him.]

We caught one glossy young healthy-looking male cat.  We let him go.  We caught him again a few days later and took him to the vet.  We got him neutered, revolutioned, de-tapewormed, and vaccinated.  He turned out to be completely and totally tame.  Vet estimates him at about 1 year.  But he was covered in fleas and had a major tape-worm infestation.  She says he was certainly someone’s pet once but estimates he’s been on his own for a few months.  We let him recover in our patio during the day and in a carrying case in the nursery at night (it’s been getting cold) for two days and nights, but he was pretty unhappy about it and we let him go the morning after that.  We just don’t have space for him.  And, other than the tapeworms and fleas, he was doing fine outside.  He had a small scratch on his nose and we suspect he was the victor in a fight with garage cat.  He also may be the reason mamacat no longer has her home-base in our yard.  He immediately high-tailed it under our deck where she used to stay.  If we catch him again we may try to figure out what to do again.

We caught a bird.  We let it go.

We found and called another no-kill shelter.  She’s also full-up.  The humane society does have a program where they’ll take really nice cats and no-kill shelter them for a while (and take them to Petsmart  on adoption day and stuff), so we’re signing up garage cat for that.  Maybe.  They need a picture and by the time his face scratches heal and partner gets all the matting out of his fur (he’s almost done there), we may have decided to keep him.  Or we can drive him up to partner’s mom over Spring Break.

Still no idea what to do with the kittens.  Poor things.  It would be easier if they were tame.  Or if we’d caught mamacat way back when.  Now I worry about kicking them back outside unprotected where there’s fleas and tapeworms and big territorial black kitties.  But that may be what we end up doing.

Update:  boy kitten really likes pettings.

Sigh.

Update:  little girl kitten #1 really likes pettings

Update:  WE CAUGHT MAMACAT.  She had hookworms.  :(  She’s currently in our garage.  Vet says she’s really skittish.  We put garage cat in our guest bedroom.  After two nights in the garage she hadn’t had anything to eat or drink and hadn’t used the litterbox.  The only sign of her existence was a trickle of pee coming from someplace inside our car that we didn’t think she could get to.  So the vet said to open a side-door to the garage and hope she makes her escape.  So we did.  Hopefully she’ll be out of there before we have to use the car again in a few days.  (Note:  Honda civic hybrids are not good cars to leave in the garage with a cat.  Stick to a simpler car.)  Hopefully we’ll see her in the backyard so we know she’s out without having to take the car apart.  Update [Tuesday night]:  After another day of no eating and finding her wedged but breathing under the engine, I opened the other garage door.  That night, she seemed to lave left the garage and eaten all the food in there.  I think we saw her tonight just after dusk eating on the porch (after Patio Cat had his fill, talked amicably to our Bigkitty safe in the screened patio, and left).  It was dark, but so far I haven’t seen any other small cats in our backyard and her form in a brief flashlight flash looked tabby…

We did a lot of things wrong.  We should have set up feeding routines and used the kittens to catch mamacat and a dozen other things.  This website has some really great suggestions.  But, I suppose, if we’d done this correctly we wouldn’t have rescued garage-kitty or neutered patio-cat.

So that’s the story so far.  The kittens have come a long way and I think the next step is getting them used to DH or DC1.  Then maybe we advertise.  I don’t know.  It’s hard to know what to do.

What are we reading over break?

I just finished The Way of Kings, by Brandon Sanderson.  A thousand pages of epic high fantasy, and it went pretty quickly.  Interesting characters, some more compelling than others, and unique magic systems that have a lot of potential.  Two characters in particular allow it to scrape a pass on the Bechdel test.  Near the end of the book was a revelation so shocking that I would read the sequel right now if it were out yet.

Also, Hyperbole and a Half: Unfortunate Situations, Flawed Coping Mechanisms, Mayhem, and Other Things That Happened was a big winner in our family this year.  Several of us gave it to each other.  I laughed and cried, sometimes at the same time.  I’m happy to support this artist!  (Currently bathroom reading for #2.)

#2 finally got a chance to have some mental space outside of Georgette Heyer rereads!  Sure, she’s only up to children’s literature but…

Unfortunately, her first pick was Wednesdays in the Tower.  She has literally three shelves double stacked of books she hasn’t read before and she picked this one because she liked Tuesdays at the Castle so much.  Wednesdays in the Tower is a lovely HALF of a book that ends exactly on a cliffhanger.  The next book doesn’t even have a title yet.  So wait to start this one until Thursdays off the Cliff (or whatever she decides to call it) at least gets a release date you can live with.

#2 was also jonesing for some Blossom Culp, which is possibly Richard Peck’s greatest series.  #1 was delightful enough to get her the entire set both new and used.  It was every bit as enchanting as #2 remembered, perhaps even a bit more as I get more of the adult jokes that probably went over my head when I read and reread these books from the library.  The first is The Ghost Belonged to Me, but the first from Blossom’s perspective is Ghosts I Have Been.  And for those of you who grew up in the 1980s, it’s interesting thinking about how this generation would read The Dreadful Future of Blossom Culp… her going from 1914 to the 1980s would be like us going to the 1950s… an odd thought.  Kind of like when you watch Back to the Future.

Finally, we recommend The Book Shopper: A Life in Review by Murray Browne if you like books even half as much as we do.

Do you?

Is prepaying a debt saving or spending?

Planting Our Pennies mentioned this on her blog the other day.

I argue that pre-paying a debt is saving, not spending.  But there’s also an argument for thinking about the regular mortgage payment, even the part that goes into principal in terms of spending.  These can both be true at the same time depending on whether you’re thinking about the stock or the flow.

Ok, so what are stocks and flows?

The text-book example is to think of a bathtub.  The water in the bathtub is the stock of water.  Turning on the faucet (or opening the drain) provides the flow.  Your net-worth is a stock.  Saving is a flow, and spending is a flow.  Since we’re allowed to borrow, the analogy breaks down a little bit unless you can fill the tub with anti-water.

So given that your net worth is a stock, anything that increases your net-worth is saving, and anything that decreases your net-worth is spending.  If you have debt [defined here as your debts>assets], then your net worth is negative.  Prepaying that mortgage is increasing your net worth.  It’s the same as saving.  Putting that money in a safe investment is also increasing your net worth.  It’s saving.

If, in this framework, you think of mortgage pre-payment as spending rather than saving, then you’re saying it decreases your net worth and it’s equivalent to going on fancy vacations or buying super expensive meals etc.  It isn’t.  Pre-paying your mortgage increases your net worth, spending money decreases your net worth.

In terms of your regular mortgage payment in this scenario, the part that goes to principal is savings, because it increases your net worth by removing debt, and the part going to interest is spending because it just sort of disapparates.   (It’s true that if you didn’t pay the interest, your net worth would become even more negative, but if you paid off all your debt at once, there would be no more interest on it going forward– the interest is the variable cost of renting the money.)

However, if what you’re concerned about is your month-to-month expenditures, you are focusing only on the flow.  In this sense, it may make sense to think about your mortgage prepayment as spending, and it certainly makes sense to think about the principal (in addition to the interest) portion of your mortgage payment as spending.  Here you’re not thinking about the stock of your net worth, you’re only measuring the flow of the money (or water flowing in or out in our tub analogy).  You have some amount of income to spend each month, and you have various places to put it.  You have to put the regular mortgage payment money towards the mortgage– it is a fixed obligation.  You have to pay it no matter what.  As you’re trying to figure out where to put the rest of the money in your budget, you can only put it one place at a time.  So you can put it towards true spending, or you can put it towards retirement, or the stock market, or you can put it towards your mortgage principal.  A place for every dollar, and then you’re done for the month.  From your check-book’s standpoint you had inflow and you had out-go and it doesn’t really matter where you put the money short-term so long as you fulfilled all your obligations.  Where it matters is next quarter or next year or 30 or 50 years from now– those are net worth (or stock) concerns.

So from a year’s reconciliation standpoint, no, I don’t think you should count mortgage prepayment as if it’s a bad thing.  In terms of whether or not PoP over-spent given that size mortgage prepayment, it’s probably just an accounting thing– if they’d planned that exact amount of prepayment then they could just say that they meant to spend $spending – $mortgage_prepayment instead of $spending, and they’d still feel like they’d over-spent.  (As DC1 has been learning, X + Y -Y is just X all over again.) If, instead, they diverted additional money they hadn’t been planning on spending to the mortgage, then I don’t think they should be beating themselves up about not making their spending goals.  (Where else was that money going to go, and why didn’t they put it there instead?)

What about you?  Do you think of your mortgage prepayment (or other loan prepayment) as saving or spending?  And over what term?