RBOC. Ra-bock-a-bok.

  • Economists sit around and complain that they’re not getting paid 160K/year.  Except, of course, the ones who are getting paid far more than that.  *sigh*  On the one hand, I am well aware that my salary is pretty darn high for a college professor… on the other hand, it is nowhere near the 160K that my newly hired tenured colleagues are making.  Going on the market could be worth quite a bit of money.  I really should have done that instead of having a baby.  Except I really like the baby!
    • #2 is unimpressed by economists and says phooey on them.  People in my field might top out at $160k per year by the time they retire after 30 years.  MIGHT.
    • But, #1 notes, should we let the men economists make way more than the women?  Just because other social scientists are paid less…
    • No, men and women should obviously make the same amount.  Except me, I should make more.  :)
  • Dear lifestyle blogger, why would I take advice on how to be happy from someone who is so obviously miserable?  Also:  I’m not sure you’re qualified to be a personal finance blogger if you’re terrible with your finances.  Spending lots of money on things that you hope will make you happy but that never actually do is not really a lifestyle I want to emulate.
  • I wish it were legal for me to viciously harass (and also call the cops on) people whose cigarette smoke enters my apartment windows when I have them open at night.  Go kill yourself [slowly via cigarette smoke] somewhere where I don’t have to share it!  Effing jerks, if you can afford to live in these particular buildings then you can afford the help to quit; you just don’t want to.  Asshats.
  • At least we don’t have loud dogs, though.
  • Every time someone types :), an open parenthesis finally finds a mate.
  • Dear listserv members, having a moderated list means that your ideas are going to get moderated, too.  If you send me more email asking why your shit is moderated it just annoys me.  I’m not on a personal crusade against you when you get an auto-reply that says “your listserv message has been sent to moderation”.  Go away.  Love and lack of awareness, Me.

Ponderings on college costs

We have saved $74,000 for DC1’s college so far.  That’s $500/mo for 8 years in a Utah Vanguard 529 account.

Is it enough?

I don’t know.

This basic calculator says we need to increase our contributions another $470/month if we want to pay full tuition for both kids at a four-year private school.

Will we need to pay the full amount for school, or will we be eligible for financial aid in 9 years (give or take)?

I don’t know.

Whether or not we have to save more for say, Harvard (easy-to-use calculator) depends a lot on assumptions– (using this year’s numbers and pretending inflation cancels out) DH loses his job, we’re eligible for mondo financial aid.  We get a combined raise of 40K (not that that’s going to happen given my salary hasn’t been matching inflation, but DH does work in tech!), we lose any eligibility.  I haven’t figured out how they treat retirement funds– if we include them as savings, we’re not eligible, if we exclude them we’re quite eligible.  Oh, and don’t leave 50K in your savings account when it can be hidden away elsewhere.

MIT (ironically painful to use calculator) says no financial aid at all unless DH loses his job.  Financial aid is pretty good on just my income alone.

I want to throw in an elite SLAC or two there, but I think it’s safe to assume they’re probably between Harvard (known for being giving at relatively high levels of income/savings) and MIT (known for its stinginess) in generosity and costs.  (Actually, I checked Wellesley from a Phil Levine link and it says we get no aid based on annual income alone, similar to MIT.)

74K is already more than ze would need to go to the state school I teach at.  But I know what it’s like here, and ze won’t be going.

Btw, in terms of the cost of education inflation, my underlying assumption is that tuition costs will rise about the same rate as the stock market, but more than inflation.  So if I had my eye on a local state college for DC1, I should stop now.  If I have my eye on private school, then we should probably increase our contributions each year along with our salary increases (if any…) to match inflation.  But who knows.

I guess we’re just going to keep on doing what we’ve been doing.  Even if it’s not enough.  Even if it might be too much.  Because I don’t know what else to do.  And it’s not that painful, really,  because we’ve been doing it for so long and it’s automated so we don’t even notice it.

Update:  related:  Another blogger looks at Stanford costs.  Almost everyone we know who went to Stanford is now a multi-millionaire (the one exception being our classmate who is now an international bum after getting an engineering PhD at an absurdly young age and burning out).  Oh, and one of us knows a guy who decided to get an English PhD after Stanford.  He’s also not a millionaire, to our knowledge.

[tiny rant warning]

I also have a serious problem feeling sorry for people like us [in the over 100K/under obviously-rich range] who complain about not getting financial aid at elite schools, as in this Tenured Radical post.  If your family makes a lot of money, even if it’s not Obama definitions of rich, you can still start early and save.  And there’s still plenty of places to hide money in order to keep eligibility at most private schools at those income levels (ex. retirement and your mortgage, also you may time your car replacement to decrease your cash savings).  This acting like you shouldn’t have to pay large amounts of money as if you didn’t know college was coming and so it’s all coming out of your annual paycheck is ridiculous.  And even if it *is* coming out of your annual paycheck, you’re still doing better than well over 75% of Americans.

In other words, I have trouble feeling sorry for the top 10% even if I’m one of them.  Even if things aren’t anywhere near as nice for us as they are for the top 1% or top 0.01%.  Even if I think that the government should subsidize public education more.  I still don’t see that as something that people like me need (except, of course, as a state university employee where I worry about the long-term viability of my employer, but you know, as a parent I’m doing fine).  It’s the other 90% that I care about.

[/end rant]

How do you decide how much to save for your kids’ college?  Do you feel sorry for the upper-middle class who might have to pay full-freight for their kids’ school, even though their ability to spend will still be pretty darn high?

Link Love

Well… this has been a week.

Remember when Gen X middle-class white folks thought that implicit bias and structural inequalities (which are terrible) were where we should be putting all of our anti-racism focus because we didn’t know that blacks were still being killed by whites with impunity?  When we knew that getting a cab was more difficult and police were more likely to give tickets (also terrible), but we didn’t realize that just walking outside could mean sudden inexplicable death?  When we thought the Rodney King thing was in the past?   Police brutality shouldn’t have to be video-taped in order to get press.   Children shouldn’t have to die for our eyes to be open.

Also for this Christmas season… Imagine A Christmas Story where Ralphie is black.  An icicle to the eye would be the least of his worries.  That is white privilege.  Never thinking to have made that connection before is white privilege.  The only people in this country for whom the justice system even has a chance of working are middle class white people up against middle class white people.  Poor people and minorities get shafted and rich people get away with far too much.  I’ve lost a lot of faith.

Even though state-sanctioned executions of black boys and teens are not a thing of the past, we should still be fighting against the patriarchy and kyriarchy on all fronts.

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Big Hero 6 has gender/racial diversity done right.  (#2 adds: Big Hero 6 is a great movie.  You should see it if you get a chance.  It’s funny, and also it shows how gorgeous San Francisco is!  Also it has a fat cat named Mochi.)

A rape analogy.

What women want, according to designers.

I want to buy whatever they are selling.

Flex your hustle muscles

Coffee is a tiny little mobster.

Flowchart for the opening of any and every Bond movie.

Journal submission recommendations from Larry Katz.

Contronyms

Unlike for most online postings, read the comments on this one!

A castly castle.

The lightsaber jokes begin.

I feel like this

What an editor does

Heroes and villains, Flemish masters style

Working at a research university:  illustrated

 

On judging how poor people spend their money

DH has some extended family whose spending choices compared to their lack of income drives me nuts.  They’re always spending money on luxuries when they have the money (often on luxuries for other people) and then have no money when a small emergency strikes or their taxes were higher than expected or another debt comes due or what have you.  At Christmas we always feel like we have to send money to help out with the latest emergency, though we resist during the rest of the year when there isn’t a good excuse to give.

And it’s really easy for us to judge.  Back when we made little money, back when we had debt, we were frugal to the bone.  We got out of debt by spending money on no luxuries and sending every penny to the debt.  Then we built an emergency fund.  Then we started saving for retirement.  Only then did we loosen up and spend on things we didn’t need.  (Though to be honest, we started eating meat again after the debt was gone.)  I wanted us to be secure before we bought anything we’d wish we hadn’t in an emergency.

But honestly, these days, who are we to judge?  We spend a ton of money on luxuries, just different ones.  We have different priorities.

I think nothing of spending $200 on our annual umbrella insurance, who am I to judge a $200 game console purchase?  How can we judge a $1K granite-topped bar (relatives bought after a windfall) when DH has a $1K ergonomic chair (that he saved his allowance to get)?

The thing is, with us, our money is ours to keep and shelter.  We have no family to impress with conspicuous consumption.  They know we’re doing just fine and they live far away.  We have no childhood of deprivation to try to make up for (though neither of us had much stuff because our parents were often low income, we always had security, we never felt deprived).  We don’t have relatives telling us that we need to give any savings to even more impoverished family.  We’re not caught in the trap of having to spend the money now or give it away.

Possibly most importantly, even when we were living on low incomes with high basic expenses, we knew that situation was only temporary.  We could always and can always tell ourselves that we will have things in the future, when we are out of school and have real jobs, and it’s true and we’ll believe it.  It’s harder to think that way and stay deprived when you haven’t graduated high school and keep failing the GED.  Or when you’re a grandfather in your 30s.  If you don’t buy that  luxury now, you may never get it.  You may never have happiness or an item to show off.

Why can’t people just set up automated savings accounts that put the money away so relatives don’t know about it and people don’t feel the need to spend it?  Because when you’re low income, savings accounts can be dangerous.  Even the most basic bank accounts are expensive when you hit an overdraft fee that you can’t cover or bounce a check or make a mathematical error.  And sometimes you need to draw on that money and everything is empty and instead of just having no money, you have fees and more debt.

And yes, we think we would be perfect and save our way out of poverty, but it’s hard to say what we would really do in those kinds of situations.  We don’t have the pressure.  It’s easy for us to say we’d never be in that situation or we’d get ourselves out as soon as possible, but what would we really do?  People behave remarkably similarly when they’re deprived in experimental settings.  I’m not sure that my willpower is enough to dig out of that big a hole, especially if I didn’t have hope to go with it.

Is yours?

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.

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