Communal vs. individual school supplies

Update:  FDR quote from the FDR monument in Washington, DC (Thanks Leah!).  I found it as the last slide on Peter Diamond’s history of Social Security changes.

It seems like across much of the US, school supplies for elementary school have moved from being individual (you know, where I was the only kid whose mom followed instructions and bought the 12 pack of crayons instead of the 48 pack, and a couple of kids even got the 96 pack that had gold and silver and a built-in-sharpener) to communal, where the school list will, for example, request two 24 packs of crayons, crayola-only, to be collected and distributed across the classroom.   Back in my day only the Kleenex was communal.

This has caused some complaining across the personal finance blogosphere.  There’s a reluctance to subsidize children whose parents can’t or won’t buy school supplies for their own children.

I disagree with that sentiment.  I like having communal supplies because it makes it easier for kids who can’t afford school supplies. I do wish that we could what we did when we were living in a blue state and give money to the PTA to buy in bulk instead of buying new supplies individually. And I wish our current state was like the blue state we were in before and solicited donations so the school could own the calculators instead of the kids. I feel really bad for the kids whose parents can’t afford to buy calculators or rent instruments or go on field trips or get school supplies. (The district does have a pantry that accepts donations for kids who get free and reduced lunch, but it’s mostly clothing and hygiene supplies.)

It seems so much more humane to do it communally instead of individually.  Of course, it’s still not as humane as everyone’s tax money going to support future generations of Americans, but it’s much better than the idea that kids should be penalized for their parents being poor. Or that kids should have to rely on religious charity because people aren’t willing to give a little extra unless the “worthy poor” end up being indebted to a Christian organization for something that should be a right for all Americans.

Because funding to schools keeps getting cut in the interest of lower taxes, more and more of what used to be funded by schools is now funded by parents.  We’ve had to pay for orchestra music/instrument/uniforms and every field-trip and individual science experiments and many more things on top of more historically standard calls for empty toilet paper tubes and pot-luck dishes.  We’ve been doing directed donations for other kids each time we get one of these requests for our own kid, and there have been a lot of them, but we’ve generally had to take the initiative to ask about it ourselves (only the science teacher added donations for other kids to requests). And I just feel really bad for kids on the other end whose parents can’t or won’t provide for them who have to ask the teachers what to do when they don’t have the money. I remember just not going on field trips to ball games or amusement parks as a kid– not wanting my parents to have to worry about the money and not wanting to ask for charity (my parents would have died of embarrassment)– and that would be something like once every three years since all the local educational trips were covered. There’s so much less covered here.

In contrast, the year we were living in a blue state they flat out asked for a (recommended) largish donation at the beginning of the year from people who could afford it and some smaller amount for school supplies for people who didn’t want to shop on their own and that was it– and that money covered supplies, field trips, computers, calculators, and the arts program. There were also a limited number of free musical instruments that the school owned that anyone could rent if they jumped through a few hurdles, or the richer people could pay to rent through local music stores without jumping through hurdles. Kids didn’t have to feel bad for not having stuff because it was supplied for everyone.

Obviously that’s not possible in an impoverished district.  For those, federal or state funding is really needed to fill in those gaps.  But most of the commenters on these blog posts who are complaining about having to subsidize other people’s kids can afford to pick up more supplies than their individual kid will use at the back-to-school sale, and if they can’t, then someone else can pick one up on their child’s behalf.  And they’re not complaining about the expense so much as the unfairness of having to help a child that isn’t their own (though they don’t put it in those words… I think/hope if they did they might check themselves and not share that sentiment).  It sucks that parents have to buy basic supplies when children are America’s future taxpayers and we should all be subsidizing education through taxes, but failing that, this is one area where I don’t at all mind secular charity from those who can afford it.  Especially if it means some kid doesn’t have to constantly be reminded that they don’t have what everyone else has.  And you better believe we’ll be giving additional unrequested directed donations to our children’s schools this year, especially with DC1 in a 56% poverty elementary school.

And, as a reminder, Donorschoose is a fantastic charity that helps out kids and teachers in districts where having some parents buy a second set of school supplies isn’t possible or isn’t enough.

DH’s company is back in business

But it will be a while before he gets paid…

As regular readers know, the company for which DH telecommutes has been having cash flow problems and they had to shut down for a couple of months.  They were supposed to get back to work in July, but the contract that was supposed to put them back in business for the next 2 years (give or take) kept not getting signed.  Finally it did get signed!

DH and I were able to save up enough to not worry about his lost income and DH’s direct boss is in a similar situation.  It’s been a bit tougher for a couple of the other employees, but it seems like they’ve stuck around.  Anybody who was going to leave left when the company started showing signs of trouble.

Sadly, even though the grant has been signed, it’s going to take 20 days from the first pay request for the grant to start paying out, so that will mean a month and a half without pay even after people have started back to work.  Again, not a huge problem for us since we saved for this, but I feel bad for a few of DH’s colleagues.

Also, annoyingly, they’re keeping the 10% paycuts for now (and any retirement matching) which is irritating, but I don’t think we’ll complain about it until things settle down a bit and the boss is able to pay back some of the debt he’s taken on keeping the company’s health insurance paid.

So what does that mean for us financially?  Well, we’ll be back to being upper-middle class again, but I’m not sure that I’ll feel quite so much like throwing money around like water.  So we probably won’t redo the kitchen and we’ll probably stick with a Prius or something when my car finally bites the dust.  And I won’t be signing up for silly overpriced subscription services (#notallsubscriptionservices) even if they look fun and so on.  I think some of the worry about our income will be sticking.  Though it took a while to start feeling free with money the first time around too.  We will still continue to give money to charity and politics at higher levels.

I think I will probably start putting more money away in stocks so it’s out of sight, even though I don’t know when the market is going to crash.  Or I might keep it in cash in case we need to flee to Canada.  I don’t know.  It really sucks to live in interesting times.  But it’s nice worrying about what to do with extra money.  And we’ll have quite a bit of time to decide– I don’t get paid until October so we’re still spending down our savings and if and when DH’s paycheck starts up it will only be covering expenses.

I definitely see an allure of being truly financially free– instead of thinking, well DH can just not work for 3 years and we won’t be putting a crimp in our lifestyle, how nice would it be to say he never has to find a job unless he wants to?  Don’t get me wrong, he likes work, but it would also be nice to have more options.  Or if we could afford to move to Paradise without anything lined up if we got too fed up with our state government.  But again, even at an upper-middle-class salary, it would take a long time to build up that kind of savings.  So are they worth sacrificing for now?  Probably not.  But I could do a better job of feeling artificial scarcity so our lifestyle doesn’t inflate too much.  Or maybe I should just embrace the benefits that having so much income brings.

In any case, this is something I can worry about after school starts.  Until then, I’ll be spending down our savings account on things like daycare (technically we just gave them the last check), insurance, and groceries.  Mark in your calendars that our money posts will probably start getting obnoxious again sometime in November.  ;)

Ask the Grumpies: Roll over 403(b) to new employer or not?

Amanda asks:

We moved [to a new job in a new state].  Although I continue to have access to TIAA-CREF in my new job and matching contributions that are comparable, the fund selections aren’t identical.  For instance, I have access to a small cap index fund with a slightly (.06% vs .05%) lower fee structure at my prior job (and with similar 5-10 year returns). Obviously new contributions have to follow my new employers plan. But what about the previous contributions? Should I roll over and combine funds, even though the fund isn’t QUITE AS good as before (but very close)? Or not? Why or why not?

Standard disclaimer:  We are not financial advisors.  We do not have fiduciary responsibility.  Consult with a fee-only advisor or do your own research before making any major financial decisions.

You actually have three options, not two.

  1. You can keep things as they are
  2. You can rollover into your new employer’s 403(b)
  3. You can rollover into an IRA

All of these have pros and cons (but probably not major pros and cons).

Keeping things as they are (option 1) means that you’ll have more accounts, more clutter, more chances of losing paperwork or having your loved ones deal with hassle later on in your life should you cede financial decision-making prior to emptying the account.  But the fees are lower, which makes it more attractive than your new employer.  And if you make the switch now, you’re the one who will have to deal with hassle.  Make sure that they don’t have additional fees for people who are no longer working at the company– if they do, then definitely don’t choose the first option.

Rolling over into the new employer’s 403(b) (option 2):  The sole benefit to doing this is that you would have less clutter.  Everything would be in one place.  If you die suddenly, nobody has to go looking for passwords to a second account.  If you hate having multiple accounts, then go ahead and consolidate.  You’ll be paying for the privilege, but not that much.  (Less, in fact, than I pay to use Target Date funds instead of rebalancing manually.)

Rolling over to an IRA (option 3) means you could just put everything in Vanguard along with any taxable funds and IRAs/IRA-Roths you already own.  Your fees would be low.  However, having a large traditional IRA could cause complications should you ever want to convert some of your traditional IRA to a ROTH or if you want to start making contributions to a backdoor Roth.

Grumpy Nation, what would you do in Amanda’s case?

There really is a big difference between comfortable middle class income and upper middle class income

One of the things that annoyed me about some advice for working women is the insistence that if you were making more than 100K you should just buy all the things that make life easier, with an underlying current of it being ridiculous if you didn’t.  The person giving this advice, of course, has a husband who makes substantially more than 100K on top of her own 100K+ income.

During our brief time when DH and I were both employed full-time and we were making upper-middle-class $$ (remember all those irritating posts on “what should we do with this extra money now that we’ve maxed out our 401K” etc.), it became really easy to see why when you’re making that much it is easy to believe that just spending money is the solution.  When you’re making upper-middle-class incomes for long enough (and don’t go crazy with spending on really big ticket items) you really can just say yes to everything.  You don’t have to worry about having a large precautionary cushion because in the case of an emergency, next month’s income will refill the gap, or maybe the month after that.  The answer is always, “yes, we can afford that — even if the roof falls in tomorrow, we’ll be fine.”

But now we’re back to having a comfortably middle-class income on my income alone.  Technically we’re in the long unpaid summer, so we have 0 income, but even with DH employed I saved up for the unpaid summer in case he lost his job (and in this case we saved a bit more than that because we knew there was going to be a layoff… and we, you know, had extra money after maxing out retirement).  And now if we want to spend randomly large amounts of money on something, we have to think about it.  We can have some of the things but not all the things.

So… we could get a new car, that’s in our emergency fund (recall mine is 12 years old and has been having regular issues, DH’s is 11 years old but seems fine), but we couldn’t do that and renovate the kitchen, unless we wanted to sell stocks, at which point we’d be depleting our secondary emergency fund.  So, technically, we could have both, but potentially sacrificing our future security for wants.  And since we spend close to my take-home pay when I have income, it would take a while to replenish our emergency funds without cutting back.  We could buy a refrigerator even though the old one isn’t broken and/or I could see a dermatologist to get skin-tags removed and/or hire a personal trainer and/or have someone else fix our sprinkler system and/or eat out every day and etc. etc. etc. on top of all the things we already spend money on but we can’t do all of those things without dipping into savings or cutting down on our tax-advantaged savings.  We have to make choices that involve money, not just time or desire.

We have to think about where on the need/want spectrum something is.  And thinking about that takes effort.  It’s easiest to default to “no” unless something is important or the cost truly is low.  And yes, sometimes it is worth it to pay for help– DC2 is still in daycare even with DH laid off.  But that doesn’t mean that decisions are obvious and easy.

This is true even if we’re still spending a little bit under what we earn, because we can’t predict emergency expenses in the future.  When the gap between earnings and spending is really large, the emergencies aren’t that important.  When the gap is small, those emergencies could set you back, so ironically, you need a larger emergency fund when you earn less than when you earn more (assuming similar spending).  And it’s harder to refill that emergency fund with a smaller gap, meaning you have to cut back more on spending when you’ve got an emergency.  But most likely, the spending that you’re cutting back on is stuff you wanted less than any new thing or service that you think you might want but haven’t purchased yet.

So no, I’m not saying that people making 100K shouldn’t buy things that make their lives easier.  Just that when you’re making 2 or more times 100K, it’s nothing to say “are you crazy, why wouldn’t you buy that?” Purchasing “that” is a bagatelle in comparison to income.  But when you make less, you have to prioritize and not just on really expensive luxuries.

I’m also not saying that 100K is nothing!  It’s a comfortable income in most of the country (yes, you probably do need a bit more to comfortably support a family in some coastal cities, though probably not as much as most people who complain will tell you) that pays for all of your needs, lots of retirement savings, and lots of wants.  But not all the wants.

Ask the grumpies: Should we rent out our house that hasn’t sold?

Amanda asks:

We moved (and we are renting in our new town halfway across the country).   Our house isn’t sold yet and the “summer season” in a university town is coming to an end.  We’d like to be buying a new house in our new town in the winter/spring.

In the meantime, we are pondering whether we should try to rent the old house or not.  The cost of the house (interest on the mortgage, taxes, insurance, utilities and lawn care) ~= $9000 to hold for a year.  We think we could rent for a little less than our total mortgage + escrow payment.  What other issues am I missing as I think about pros/cons?  How would you set up the “math problem” for this decision?

Ugh– not a fun situation to be in.  I hope someone sweeps in this August so you don’t have to make the rental decision.

The main thing to think about:

How much do you hate hassle?  vs. How much do you need/want the 9K/year?

All of my sub-thinkings are basically in the form of how to deal with the hassle should you decide to rent.

  1. Are there any good managerial companies in the area that you trust to take care of things for you?
  2. How would you react if the tenants trash the place or fail to pay?
  3. What are the eviction laws in your old place?
  4. Who can you rent to– anybody or just single families?
  5. Are you thinking of doing a short-term or long-term rental?  (If it’s short-term, then, since you’re moving from a university town, you may be able to use sabbatical homes or your local university website to rent out to a temporary academic).

You may also want to think about how much you would be willing to lower your house price.  Staging it may also be worth some effort.

Here’s a Washington post article on the “math”— it goes into all the literal costs of renting.  Note especially what it says about capital gains taxes if you’ve lived in the place 2 out of 5 of the previous years.  Though this cbs news article talks about the tax advantages to rental depreciation.  This blogpost has a few more things to consider.

I guess you could set up a math problem with expected probability and expected utility, but you don’t actually know what the probabilities are.  It would probably be some dynamic model where you have some probability of selling each month and that right-hand-side would have to collapse to being less than 9000 for you to not rent it out.  Probably too complicated to actually be practical.

Grumpy Nation– Can you be more help to Amanda?  How would you make this decision?  What would you consider?  Any stories about renting/selling/etc.?

In which we fix the 15 year old fridge again rather than buying a new one

I’m not sure if this was the right decision or not.  Our 15 year old fridge is making whiny noises again.  It last did this (and apparently worse) 3 years ago and DH replaced the freezer fan and everything was fine until just now.  It’s a pretty quick fix involving buying a replacement fan and other bracket stuff, unscrewing a couple of screws, unplugging a few things, then reassembling with the new stuff.

We initially bought this fridge as our own personal fridge when we were working as graduate resident assistants in graduate school.  As such, we did not have much money and bought the cheapest model full-sized fridge at Home Depot (or possibly Lowes).  It is enormously surprising that it has lasted this long.  (Or maybe not so surprising– the newest version of this model is Sweet Home’s top choice for cheap fridges.)

The freezer fan parts cost $70 including shipping.  The replacement fridge we were scoping out costs $800 (on summer sale– regularly it cost $900) and is a little bigger than our current model.  Replacing our current model with a similar GE would cost $500 (on summer sale– regularly costs $600).  Despite DH not having any income, we can easily handle the replacement costs (unlike, say, getting a new car which would put a real dent in the emergency fund and could potentially affect when DH needed to find a new job or when we needed to cut back on spending).

Also of interest to us is the effect of a new purchase on the environment.  New refrigerators are more energy efficient than old refrigerators.  But we’d probably get a slightly larger one than what we have now, and a lot of energy goes into actually making a new fridge.  So what’s the most environmentally friendly option, I don’t know.

So… some folks would tell us not to be ridiculous and to buy a new unit when the old one starts giving us problems since we can afford it.  Others would suggest that we keep repairing it until the repairs get beyond our capabilities.  I’m not sure what’s right.  I don’t like the hassle of dealing with a dicey fridge, but the track record of repairs so far isn’t too bad.  Who is to say that a new fridge wouldn’t be giving us problems in 3 years… not to mention that 3 years is kind of a long time– if I could be sure that my next car problem wasn’t going to happen for another 3 years, I would be ecstatic about keeping my little Hyundai.

Though to be honest, I’m not even sure if I’d be replacing the refrigerator if DH was working and we had more money than we knew what to do with.  We tend not to replace things until we have to.  I guess we didn’t have stupidly large amounts of income long enough for that habit to change, or maybe that kind of ingrained habit never changes.

How do you decide to replace an appliance?

Wanting control

Right now I’m overwhelmed with my research.  My pipeline is messed up in that there’s too many new projects and not enough in the under review or even draft stage.  I feel pulled in all different directions.  And lots of things aren’t going smoothly.  This means I’ve been having a lot of anxiety dreams (last night’s was that we’d gone on vacation and couldn’t remember if we’d left food and water out for the cats!)

So this morning I was musing, maybe we should do a no sugar challenge.  The kids got awfully sugary cereal after we decided that cereal bars was too much like having cake for breakfast.  (Cereal bars had initially been planned as a rare once in a while when they need food-to-go breakfst but soon we were going through 14 bars a week.)  There’s so much added sugar in everything.  We should stop cold-turkey just to see what we come up with.  Of course, each time I’ve been trying to get pregnant or have been pregnant we’ve had no-added-sugar in the house, so it would really be more of a reminder challenge than a voyage of discovery challenge.

Then I wandered onto Mint.  What if DH stays unemployed long term, I thought.  How are we going to handle money?  Maybe we should do a no-spend challenge to see how low we could go.  I mean, there’s the $750/mo for daycare which will be going away except for more expensive day camps in the summer, but can we still stay under my take-home pay?  What do we spend all that money on anyway?  Do we even know?  Let’s say for the sake of easy mental math, that my take-home pay is $6K, but that’s only for 9 months, which means we’d need to spend under $4.5K/month over a 12 month period.   According to mint, we’ve spent under my (actual) prorated take-home pay in January and February, but not so much the rest of the year.  But how much of the difference is reimbursed business expenses?   Let’s see, Utilities average $300, Groceries average $800 (though we could certainly cut there), restaurants $300 (could also be cut), gas $100, entertainment $100, a nebulous “shopping” category (which includes some of DH’s reimbursable work expenses) is $700, and then there’s this huge nebulous “other” which includes a jumble of insurance, work expenses, taxes, car repair, dentist, kid’s activities, yard stuff, and so much more.  I don’t even know where to start separating that stuff out.  And when we’re not spending close to my take-home pay, it doesn’t really matter.  Is it worth sorting out right now?  Probably not.  What would make the most sense would be to keep an eye on how much we have to transfer from savings to checking each month and if we never end up spending down too much of our savings or hitting the emergency fund, we can continue to not pay attention.

Of course, all of these potential challenges take time and mental energy away from the real problem, which is that I need to get a handle on my work.  I need to finish papers and get them out so they’re no longer taking up mental space and keep my head above water on everything else.

So I don’t think I’ll be doing any of these challenges.  I shouldn’t even be typing this post now.  Except I’ve done it which means it’s off my mind and I have one fewer thing for my brain to try to distract me with when it should really be trying to make sense of the work I have before me.