Summer Link Love

I couldn’t let this one go, so here’s the 5calls action for it.  Call now and leave a message for them to get on Monday.  Or Fax.  I admit it’s all been too much for me recently and my activism has dropped considerably from the relentless overwhelm of it all (plus weekly activism email I get has been on break and the others I used to get have moved their focus elsewhere or closed up shop entirely), but I know I need to step up again because that means that everybody like me is stepping up again too.  A few weeks from now I’ll probably post a pep-talk for me and everyone else who wants to take this country back.  But right now, I’ll just point out that this one item is really horrific and deserves a call every bit as much as net neutrality or the ACA did.

The Feds LOST 1,475 migrant children

https://twitter.com/hashtag/WhereAreTheKids?src=hashtag_click

It sucks to be a woman

This is a really good frame for what’s going on with the White house.  There is only one scandal– it is all corruption and stealing from the US government.  (That’s of course not quite true– there’s also racism and cruelty and fascism, but corruption explains a lot of the news stories coming across our feeds these past couple years.)

Speaking of corruption:  Trump lawyer paid by Ukraine to arrange White House talks

This just in:  Republicans are racist

The NYT is SO AWFUL these days.

The answer is still feminism

Interesting thread on hierarchies in the animal kingdom

Macro

More women know other stuff

#2 wants to talk about this sometime, I think

Dishing up faith and charity

Mistakes made planning a  year abroad

Revanche is brilliant!

Best full cast audiobooks

What your favorite clothes brand says about you (h/t Xin)

Appreciating nature

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Ask the grumpies: Pay for renovation in cash or take out loans?

Ellie asks:

I am moving to take a new job and have been fortunate enough to be able to buy a house in New Town right off the bat. There is, however, some fairly significant work to do on said house, also right off the bat. I will have enough cash from the sale of my house in Current Town to cover the cost of this work, but am wondering if I should. Given what’s going on with interest rates, would you pay for renovation work in cash? Or take out a second mortgage/HELOC to cover reno expenses and invest the house proceeds? Once moving expenses work their way through the cash flow pipeline, I would be able to pay off a second mortgage pretty aggressively.

I feel like this should be a relatively simple opportunity cost calculation, but somehow it doesn’t feel as simple as it feels like it should. Secondary question: Is there any way to blame the Ongoing Unpleasantness for making this a harder decision that it ought to be?

Well, if you’re asking what we would do, we would pay in cash.  It’s possible you could open a HELOC in case of emergency and then just not use it unless there’s an emergency. But, we also left carpet in the childrens’ bathroom until our mortgage was mostly paid off (and #2 doesn’t even own a house), so we may be too risk averse.

In terms of what is optimal:  If this is just a short term cash-flow thing, then you won’t be wasting much time not being in the market and can put the moving expenses into it once they’re done.  Second mortgages are a hassle and sometimes you are not allowed to prepay them or you still have to pay for mortgage insurance even after you’ve hit 20% loan to value ratio (this will depend on the mortgage terms– some of them are pretty nasty).  HELOCs tend to have interest rates that are higher than your first mortgage and make the uncertain gains of the stock market less attractive compared to the certain losses of the HELOC.

If this were a longer term thing in terms of repayment, say, more than a year, you’d want to look at the bigger picture more carefully and it might be more worthwhile to take out some additional debt (probably the HELOC rather than the second mortgage just because the hassle factor is smaller, but intelligent people will disagree on this).  Mainly the margin I would be looking at would be an employer match for retirement.  If paying in cash for renovations means that your retirement savings isn’t going to happen, then I’d take a long hard look at that– what renovations need to actually happen, and what are interest rates on loans?  Getting an employer match will blast past most interest rates, even high ones.  Then after that you’ll have to think about whether you’ll remember to set up more retirement savings once you have money again– if not, then you might want to set that up and take out more loan just so you don’t lose out on retirement savings by not getting around to setting it up.

The Ongoing Unpleasantness makes long-term planning difficult for many people.  Uncertainty at large makes things difficult at small.

So:  tl:dr

If you’re going to have the money in a few months, pay in cash.
If it’s going to be longer, make sure you get your employer match for retirement and take a loan if you have to.
Then: think about hassle, interest rates, and how likely you are to set up retirement savings later.

Update with some numbers:

The total cost of the work will be in the neighborhood of $40,000. So a very decent chunk of change that could do a lot of things. Once the down payment on the new house is made, I should have about $59,000 left of the proceeds from selling my current house and I have $40,000 or so cash in savings. I don’t have any other debts that would be logical first priorities—student loans and car are paid off, and credit cards are paid in full every month. But there will be some decently expensive travel & transition costs in the immediate term, as well as some concerns about cash flow because the new job pays 9-month contracts over 9 months, without the option of distributing payments over 12 months. So there will be a couple of months between the last paycheck from my current position and the first paycheck from the new one.

It looks like the local credit union there is offering home equity loans at 4.75%.  [No numbers for a second mortgage.]

Investing options are… my Roth [IRA and] my TIAA-CREF [presumably a 403(b) through work].

One thing to remember is that you’re most likely not going to have to pay all of the renovation costs upfront.  So it is possible that some of the bills will not come due until after your reimbursements have come in, possibly after your paychecks have started (depending on how long things drag).  You won’t need to decide on the IRA until April.  It sounds like you will have enough leftover that you should be able to start your retirement savings via direct deduction from your paycheck without worry when school starts.

Given the numbers above– the HELOC rate isn’t terrible, but it’s not low enough to make investing the difference a slam dunk.  Personally I’d figure out how much you intend to contribute to the 403(b) and get that started with the school year (so that it goes on auto-pilot) and then decide on the IRA after all the renovation stuff stuff has been figured out or April happens, whichever comes first.

#2 says:  Pay cash because it takes time to open a HELOC (apply, get approval, etc.) and you want the reno done ASAP so you can move in and not go insane.

Grumpy Nation:  What are your thoughts?  Any experiences with HELOC/2nd mortgages/renovations/etc.?

How do I adult?

I went to the grocery store. Now I have to cook, UGH. While I was at the grocery store, I wasn’t cleaning the bathroom or calling my mother or reviewing an article.

All I want to do is read books all the time when I’m not at work. Just because I have SO MANY great books and reading books is awesome and fun.

Now I need to go buy cat food and pick up a package but first I have to sit in this chair for 8 hours.

How do you adult?

Options for handling the long unpaid summer

Academics and teachers are often on 9 month contracts rather than 12 month.  That means that there’s often not a paycheck coming in for 3 months out of the year.  For folks used to budgeting the 9 month paychecks as if they were 12 month, that can be a problem.

There are a number of different ways that people deal with the summer months.

Let the school do the math

Perhaps the easiest (though not economically optimal) is to ask the school to prorate the 9 month salary and pay it over 12 months.  Not all schools offer this option, though some offer it as the default (it is very common for K-12 teachers, for example).  The benefit to doing this is that no planning needs to go into this option.  The negative is that you get three months worth of income later than you would have otherwise, which means you miss out on debt repayment savings or investment gains while you wait.  Back when she was an academic, #2 chose this option. She calculated the interest she could earn on the extra money if she got it over 9 months, and it was something like $11. She decided it was worth $11 to her in order to get the same amount of money every month.

Get more $

An attractive option is to earn additional summer money, although this requires extra work.  Summer money can come in the form of teaching summer classes, taking on additional administrative roles, or getting summer money through grants.  For people who do not have university options, it is possible to take on another job or make some additional money via consulting.  #1 loves getting grant money, but it doesn’t happen every year.

Another attractive option is to be married to someone who makes enough money to live on during the summer without having to save, although this requires either luck in love or sacrifice.  This option requires not lifestyle inflating to the point where you cannot live on the spouse’s salary alone for three months.  This summer #1 is sort of doing that, but with a hefty back-up emergency fund that she’s been saving to refill after our most recent car purchase.

Save when you’re paid

For many of us, saving is the best (or only) option.  There are different ways to save.

If you generally make a lot more than your expenses, you can just save what you don’t spend and then figure out what to do with the leftover money in the Fall when you get your first paycheck of the new school year.  This method requires you to be putting away more than your required summer expenses during the school year and to be able to moderate your optional expenses based on how much you have in the bank.  This method is basically what we did the first few years when we were living like graduate students on professor salaries.  That additional money would end up going into IRAs every October.  Ironically, this is how we handled money when we didn’t have as much money because we also didn’t have enough of an emergency fund to have many luxuries built into our budget.  As our savings and income grew, we were able to take more risks with spending (ex. eating out once or twice a week), and our monthly spending has become more predictable.

If your gap between income and spending isn’t that large, then you’ll need to do some math.  You can figure out the expenses needed for 3 months, by taking your annual expenses, dividing by 12 and multiplying by 3, though if any big bills come due in the summer (property taxes, life insurance, etc.) those will also need to be taken into consideration.  Then you can save up until you hit that target number.  Alternatively, you can divide the total amount needed by 9 and put the same amount away every month, possibly via an auto-deposit.  #1 saves up to the Target number and then pads it with some additional emergency fund (the emergency fund part is larger when her DH is unemployed than when he is employed– likely this summer most of that money will just roll over to next year).

If you have the resources or have problems with impulse control, you can put money in CDs or Termshares that come due when you need the money in the summer.  Some credit unions also allow “Christmas clubs,” where they automatically deduct money from your account that you can’t touch until a pre-determined date, that are more general than just saving for Christmas, though they generally charge you money rather than giving you interest for the option.  Back in grad school when #1 got paid 2x/year, she put a significant portion of her first paycheck into a CD due 9 months later so that we’d have money to live on during the summer (interests rates were high and my income was low, so the $200 or so that we got in interest via doing that was highly welcome).

If you have a lot of resources, you can undrip dividends from stocks during unpaid months, though it’s not clear this would be optimal unless you have a lot of wealth but not a lot of income (maybe if you’re one of those mythical trust-fund humanities profs that people on the Chronicle forums loved to complain about).

Trick yourself

Sometimes it is just hard to save money when you have it.  When that happens, it is likely that the summer will be leaner than it should be.  There are a few ways to trick yourself into spending necessary money when you have it so you don’t have to pay it when it runs out.  For example, you can prepay required summer expenses like insurance or summer camps during the paid months.  Another thing #1 used to do when money was tighter was to put off getting reimbursements for things like daycare or credit card rewards until Summer– those little credit card rewards were really helpful when checking got low near the end.  Another trick is to put reimbursements and other “found” money in a bank account that is separate from your main one and then only tap it when you need it or make regular transfers from it in the summer.   #1 is a big fan of hiding money from herself in online savings accounts as a way to decrease unnecessary spending.

Those of you on 9 or 10 month contracts, give or take, how do you handle the unpaid months?

Eine Kleine Link Love

This is horrifying

Cloud is on point in this thread

Economists are also upset about income inequality. #2: how do they think we should fix it? #1: well, electing Trump was the wrong way to fix it. As to how we should fix it, there are two camps:Conservative economists believe we should invest more in education and job training so that poor people have more skills because there are too many unskilled laborers. Liberal economists believe that we should do that, but also we should be investing more in children and making sure that income is less variable and precarious for families with children so that these kids so that they can make investments in the future and can become more skilled. They also believe we need to tax the rich a hell of a lot more. BOTH sets were pro-Clinton

Faculty offices?

What do academic employers want?

Career crossroads

How long 1 million in retirement savings will last by state

I heard Laurel, but DC2 heard Jerry and DH and DC1 both heard Yarry

Reliable

Armed in her fashion

Delagar with a link to a Fault Lines giveaway

It took three years to work

The pain of homeownership

I wonder what they did with the pig this year

Disconcerting

#rebrandaspecies

A warning from basement cat

DH has been reading a lot of cat pic reddits

Aww

Mama Cass says vote

Ask the grumpies: An invitation to rant about @#$@# who think 300K/year (or more!) is middle class.

Anoninmass requests:

I just read on another blawg a comment that declared $400,000 a year was middle class. Discuss…

Chacha1 asks:

what does “middle class” even mean, anyway?

Clearly we think that idea is ridiculous.  Even in Manhattan.  There’s not any set definition of middle class, even in economics.  I think in practice we mostly use Obama’s “Under 250K” definition, even though that’s from a couple presidential campaigns ago, or we use something like 25th percentile to 75th percentile of household or family income.  If you’re curious, that’s something like 29K to 106K for household income .  There might be adjustments for cost of living, but cost of living isn’t going to get to 400K.  You can also look at median incomes by state, but with the caution that you shouldn’t cut the geographic area too small– it is likely that 400K complainer is living in or wants to live in a big house in Atherton or one of the nicer LA suburbs or Battery Park in Manhattan.  There are plenty of places in the same commuting zones with decent schools that have wider ranges of income and housing prices.  (And even there, 400K is well above median household income!)

Anyway, we don’t need to go on too much at length as this topic went around the blogosphere this past Spring.  Here are some links worth reading.

Is frugality inspiration porn?

Fire Blogger Manifesto– why it’s important to be transparent about income.

Who is the audience for this blog?  (This one also has especially great comments.)

Some forum commentary on the FrugalWoods higher than expected income.

Delagar discusses life in the lower middle class when you started out with medical debt.

Here’s another forum thread on why the post from Financial Sam about needing 300K/year to be middle class in SF is so much BS.  (I’m leery about sending more traffic his way though because that rewards him for spewing crud.)  That post did finally get me to stop clicking on his click-bait headlines when they pop up in blogrolls though.  He’s another blogger with an extremely limited lens.  His post probably emphasizes the point most of all (by the way he completely misses it) that middle-class people have to make trade-offs within the set of middle-class lifestyles.  If you can have all of the variants of middle-class lifestyle (geographic location, house, schools, cars, vacations, no college debt, insurance, stuff, no real money worries), then you’re not actually middle-class.

Middle class:  What everyone claims to be, but nobody knows what it actually is.

Discuss

Trying out recipes that sound kind of gross

The first recipe I remember as an adult that fit this category was egg and onion soup from Help! My apartment has a kitchen!  The name sounds awful.  But this turns out to be a quick and amazingly delicious soup that became part of our regular rotation until our children started mobilizing against diced tomatoes.  It’s a comfort food that blends different textures and feels healthy without tasting too vegetal.

Most recently we bit the bullet and made eggs sardou Cooking Light style (so hard boiled eggs instead of poached and a faux hollandaise).  Basically:  frozen artichoke hearts, spinach, green onions, with sliced hard boiled eggs on top, then covered in a roux that has a touch of thyme, pepper, and Parmesan.  Finished with Parmesan and paprika sprinkled on top.  It came out and looked terribly healthy.  But… it actually tasted good.  Hard boiled eggs, cooked spinach and all.  And it didn’t make me feel at all gross like eggs Benedict recipes often do.

This has me wondering if I should try the next appetizer in the Gourmet Magazine cookbook— it is a chicken liver pate (we’re in the crostini section).  I am not a fan of liver in any form (disclaimer:  have not tried foie gras) and hate the smell of it being cooked.  (One of my grandmothers LOVED calf liver and onions, and although I loved my grandma, I did not love that dish.)  But maybe it’s worth a try?  [Update:  it was ok– the first taste was kind of yummy, then it was ok, but then I didn’t like the aftertaste.  So not as horrifying as I’d predicted, but also not something I feel the need to make again.]

Have you tried out any foods lately that sounded gross but turned out to be ok, even good?  Have your tastes changed as you’ve aged?