US Consumption the Greatest Currency in the World

December 24th, 2008

Sadly, the world depends on US consumption to raise it’s standards. Our consumption is the world\’s biggest Ponzi scheme. 

Even sadder, our government sets the example and encourages us to do so.

The challenges? 

Meaningful employment for people throughout the world.

Determining how much ‘stuff’ we really need and if we should make or buy it and from where.

Production and transportation of ‘stuff’ should have least impact on environment.

Enough leisure or slow time to actually enjoy our ‘stuff’.

Some things to ponder as we enter 2009.

Resolve to be less “Consumed” in 2009

December 11th, 2008
The holidays bring out the consumer in us even as we try to scale back. In addition to the waste we personally produce, there is a tremendous taxation of our earth in the farming, mining, manufacturing, transportation and sale of most every item we purchase and use.           

Despite my rantings about sustainability, I’ve discovered I have a long, long way to go even though I’ve made much progress. One of the best websites to find a good overall look at your personal & family sustainability footprint is Consumer Consequences . After you input your information you have the ability to compare yourself with others in different categories: house, energy, transportation, food, etc. It helped me identify which areas I should make more efforts in the coming year.

I’ve been reading online the NPR special report “Consumed” that was broadcast November 2007 and highly recommend checking it out:

Its goal is to answer the question, “Is the consumer economy sustainable?” in a serious way. They tackle the question in a comprehensive manner, with a lot of breadth but, if you don’t want to be overwhelmed, just choose one or two that most interest you.

A partial list of the featured topics: ecological footprint, landfills and the waste disposal sector, consumer debt, air pollution, freegans, marketing, junk mail, energy independence, the effect of consumer culture on mental and emotional well-being, carbon tax, food miles, fashion obsolescence, the green economy, e-waste, clean tech, globalization, Bhutan’s happiness index.

Interesting things to ponder as we consider resolutions for 2009.

Your “Fair” Share of Taxes

October 27th, 2008

My former occupation was Internal Revenue Agent and I feel that the Election Taxes Calculator comparing your 2009-2012 Federal Income Taxes under Obama v. McCain pretty fairly represents what will occur. In my situation I came out approximately the same under both candidates plans so that will not be a factor for me. How will your US income taxes fare under the candidates? See the end of the spreadsheet for details but those earning under $100K will do substantially better (by hundreds) under Obama’s plan, those earning more than $300K will do substantially better (by thousands) under McCain. Those earning between $100-300K will not see a great deal of difference between the two.

Income taxes is only one piece of the entire tax picture. When you add and subtract all the different kinds of taxes, there is effectively a flat tax for everyone except the very poorest and very richest. The combined tax burdens of Social Security tax, sales tax, property tax, vehicle tax, and gasoline tax actually show a pretty even overall tax burden between the $50,000 – $300,000 income levels.

Do you know that a poor person pays the same gas tax as a rich person – possibly even more because they can’t afford to buy the new energy efficient vehicle which only the more affluent person can afford? (& thus got a tax credit the poorer person didn’t qualify for).

Sales taxes are even more unfair on the less affluent because a larger portion of their income goes to buying necessities which means “stuff’ on which sales tax is paid (4.4% for income of $15K vs 1.4% for income of $400K); the more affluent buy more services, which are mostly untaxed.

Property taxes run about 1% for every level yet the affluent get a larger tax benefit at the Federal & State level because of higher marginal rates.

Up to $100K you see 6.2% of your wages disappear to Social Security taxes yet those over $100K stop paying resulting in an effective FICA tax of 1.5% for those earning $400K and .7% for those earning $5M. The reasoning, ostensibly, is that there is a cap to benefits – why not raise the cap and the $ flowing into the system?

Those who are able to afford stocks and bonds get such benefits as lower dividend and capital gains rates that lower wage earners do not generally have the income to invest in.

By my calculations (assuming a married couple with one child in all instances) effective Income/Rates are:
$15K (4%) Minimum wage, see Minimum Wage Barely Pays Rent
$20K….. 4%,
$30K ….. 12%,
$50K….. 21%,
$75K….. 22%,
$100K…. 17%,
$150K…. 18%,
$200K…. 21%,
$400K…. 21%,
$5M…… 38%

Refinancing & credit card debt

July 18th, 2008
The federal administration proposed sub-prime bailout is not so much to bail out the victims as to bail out the banks and financial institutions that made the bad loans in the first place. The steps are not mandatory but voluntary to the mortgage companies. NYTimes 

Homeowners might be offered a “opportunity” to extend the length of the loan meanwhile building up less equity and paying more interest over the lifetime of the loan. Many were steered into sub-prime variable loans when they would have qualified for a fixed rate loan anyway; the federal plan would give a slap on the wrist to lenders and have them restructure the loan back to the fixed rate that they should have qualified for in the first place. The plan doesn’t help those who never should have qualified in the first place and were given loans with a wink from the mortgage broker who stood to make a tidy sum from the loan points.

Voluntary rate freezes suggested by the administration have little support from mortgage investors who are not thinking about the future consequences of being inflexible. Mortgage brokers, handlers, banks & investors are blaming everyone except themselves; each group is as greedy as the next and each built their expectations on a house of cards. (Sigh…two of my bank stocks have not done very well lately, fortunately they are well diversified banks). Only 12% of subprime borrowers & 5% of minorities would be helped by rate freezes says the Greenlining Institute .

The plan floated by the administration covers almost no loans in California because of the size of the mortgages – guess where most of the bad loans are? California Assembly

The California Assembly is proposing steps that would both prohibit certain types of mortgage rate structures and fees in the future as well as require lenders to work with the state to reach out to distressed borrowers

What does it mean to you with perfectly fine credit records? You are being solicited to extend their term length so mortgage companies can feed their habit with dependable suppliers. See Footnoted.

What can you do? Be aware of mortgage solicitations and what they will cost you over the long term. Pay your credit cards on time – consider an automatic online bill-pay if you are just plain forgetful so you don’t get hit with late fees and subsequent rate hikes based on late payments.

If you don’t pay off your credit cards each month, don’t charge ANYTHING you would expect to not have at least 3 years later: never use credit for food & toiletries, fashion clothes & accessories, tuition, day-to-day medical, etc.

Best is to save so you may purchase what you truly need with cash. An item is not truly a bargain if you add in the costs of paying 10-20% interest on it over several years.

If you must use credit, use it for truly long term and match the credit term to how long you’ll have the item or less. If you buy cars every 5 years don’t pay for them with a 30 year home equity loan; don’t even get a 7 year auto loan. If you can’t afford a 5 year auto loan, look at a less expensive car or reconsider if this is a “need” or just a “want”.

Holiday time is around the bend. How many unwanted gifts have you recieved in the past? How many gifts that you have given have you actually seen the recipient use or talk about since you gave it? Give gifts of your time or talents and don’t go into debt that you’ll still be paying off next year. Give your children the gift of teaching them fiscal responsibility.

The Compact: Adventures in Simple Living

July 18th, 2008

Several months ago I discovered and, sort of, joined the Compact. A group of environmentally concerned friends in San Francisco made a compact not to purchase any new, non-essential items for a year i.e. a compact lifestyle. They did give themselves a little leeway though to buy underwear, socks, and safety items new. They started a Yahoo! group to refine the rules, record their journeys, give each other tips and support each other.

Joining is not rigid -you are more making a compact with yourself – and is more about reconsidering you personal relationship with “stuff”.I’m now more likely to repair something or borrow something. I usually buy tops secondhand but have a difficult time finding pants that fit so I go straight to the stores I depend on for fit.

Soon so many others discovered the Compact that the original group was helping the world and had little time to help each other. To make it more personal again, geographical Yahoo!group offshoots have started because many shopping sources and ideas for free entertainment tend to be local.

Even teens can be tempted away from the mall and make it their own cause as Marta Marano in Toronto has.

Some other links:

Some local groups: San Francisco/Bay Area
Los Angeles
New York City


Not All Buy into Black Friday

What Would Jesus Buy? asks us to reconsider what Christmas is all about.

Not Made in China, only YOU can make it happen

July 18th, 2008

 A recent e-mail chain started:
“Are we Americans as dumb as we appear — or — is it that we just do not think?

While the Chinese, knowingly and intentionally, export inferior and even toxic products and dangerous toys and goods to be sold in American markets, the media wrings its hands and criticizes the Bush Administration for perceived errors.

Yet 70% of Americans believe that the trading privileges afforded to the Chinese should be suspended.
Well, duh..why do you need the government to suspend trading privileges?


It asks why not make real Easter eggs instead of purchasing plastic ones and goes on to propose an embargo on buying Chinese from 6/4/08-7/4/08.

The message above is somewhat reactionary and and oversimplifies the eco-political situation, but it has many nuggets of truth and guages the frustration of much of America.

As I see it:
Americans are not dumb but….. many do not think, many are not willing to do without having something cheap immediately despite the the fact that that it was made poorly or by captive slave labor.

We do not need plastic eggs or numerous other plastic tchotkes. Many won’t take the time (& receive the ultimate satisfaction) of creating an intricate Easter egg (or needlepoint holiday stocking). We have lots of inexpensive holiday decorations and then complain about how long it takes us to undecorate. We have too much. We are asking the government to legislate what we are unwilling to do for ourselves – say “no”.

We do not need the government to suspend trading privileges. That is the beauty of a market economy which China, India and the rest of the world have embraced. The power is all in our hands as consumers. We must find substitutes for incessant purchasing and become the pioneers we once were. Use the time we spend shopping to instead create something, cook something from scratch, learn a new skill, nurture relationships by our presence to others nearby or write a letter or e-mail to those far away.

Don’t stop on July 4. As you vacation this summer, don’t buy a souvenir unless it is made in the state or country you are visiting. At home seek out farmers markets, roadside food stands & small local shops for not only foods that directly benefit the farmers but also non-food items such as locally made soaps, crafts.

Repair: Fix it yourself, or trade skills with a friend or neighbor, keep local tailors & cobblers in business. We just went shopping for a suitcase and paid a little more for one with a true lifetime repair warranty (disclosure, it was made in Thailand). (Victorinox and Briggs & Riley both offer that warranty)

Re-think fashion: buy less but of better quality that lasts longer, shop local craft fairs (but look at labels) thrifts stores. Accessorize, trade. Learn to sew, knit, crochet, quilt. Let’s bring back old-fashioned American ingenuity & creativity. This may not always be easy but the important things in life never are.