Vow of Middle Class Poverty

Superb Article About How Silicon Valley Destroys The Working Class

Wed, 11 Apr 2012 11:55:33 -0400

http://www.kernelmag.com/yiannopoulos/1786/extreme-cognitive-dissonance/

The Insanity Of Non-Group Insurance

Tue, 03 Apr 2012 11:41:04 -0400

The Delta Dental non-group insurance plan is insane.

It provides a maximum of $1000 in benefits per year and the premiums cost about $600 per year. So, if I simply save another $400 above the premiums, I can create my own insurance plan that is the equal of the Delta plan. The Delta plan does nothing for me or for anyone else. It does not help in extreme situations when the costs greatly exceed what I can pay which is what I want insurance for.

This is but one example of the insanity of non-group insurance. It simply doesn’t exist at any price.

Not surprisingly, medical costs are the single greatest reason why the middle class declares bankruptcy.

Reducing Variance Is Critical

Mon, 19 Mar 2012 20:32:00 -0400

My girlfriend like to say, “The best way to solve a problem is to throw money at it.” Unfortunately, when you are a member of the middle class you don’t have money to throw at problems.

So, then, what is the best way for the middle class to overcome financial emergencies? One answer is to insure against everything.

This weekend I will be driving eight hours. Should I insure against a car accident? Absolutely. Should I insure against having to pay to have my car towed for 200 miles? Absolutely. As a member of the middle class, a $1000 towing expense is devastating so paying $50 to to avoid a $1000 expense is almost certainly worth it even if the $1000 expense is very unlikely.

Some might say that I should self insure. But what happens if the accident happens the first year? Where do I get the $1000? From my food budget??

So, to reduce variance on my trip, I upgraded to AAA Premier which covers a 200 mile tow.

Paying The Plumber

Thu, 08 Mar 2012 11:16:10 -0500

A few weeks ago I mentioned that I had a toilet leak and that fixing it might sink my budget.

Fixing the leak cost $175 which is approximately one quarter of my monthly food budget. I found the plumber through Angie’s List, a wonderful service which, unfortunately, cost me about $9 to access so the total cost of fixing the leak was about $185.

The plumber cost so much in part because I did not have a good strategy for finding one. I asked the building supervisor for recommendations and he gave me the names of three plumbers who had done work in the building but none of them were available when I needed the work done.

So I wound up doing a search on Angie’s List and calling plumbers in order of rating. Fortunately, the third plumber I called was available almost immediately, but, not surprisingly, he charged me for being available on such short notice.

The lesson? To reduce costs, I need to establish relationships with vendors before I have a problem, not after.

One Dollar, One Vote

Wed, 22 Feb 2012 11:14:34 -0500

The United States has become the land of one dollar, one vote.

The gap between the slightly rich and the middle class is so large that paying heed to the bottom 50% does not make financial sense for politicians. The top 1% make $350K a year or more while the median income is $25K. So the ratio between the top 1% income and the median income is 12:1.

Critically, we are not comparing the super-rich to the poorest of the poor. We are comparing the top 1% — there are over a million people in that category — to the median.

When we focus on the super-rich, the extreme concentration of political and financial power in the United States becomes clear. USA Today is reporting that just five people are responsible for 25% of the money going into super PACs.

The middle class has no representation in Washington D.C. so there is no way out.

Number of people on food stamps has increased by 50% (source:...

Tue, 21 Feb 2012 23:03:00 -0500

Number of people on food stamps has increased by 50% (source: mybudget360.com).

Phenomenal Article On The End Of The Middle Class

Sun, 19 Feb 2012 00:40:44 -0500

Thirty more years of hell: http://jacobinmag.com/blog/2012/02/thirty-more-years-of-hell/

Toilet Leak May Sink My Budget

Tue, 14 Feb 2012 14:32:00 -0500

I recently discovered that my toilet is leaking and fixing it may sink my budget.

My budget is so tight that there is no provision for emergencies or unexpected expenses. I suspect that the toilet leak will cost me hundreds of dollars to fix. And if I choose to fix the damage to the floor and ceiling it might cost thousands of dollars. I clearly don’t have the budget to fix the floor and ceiling, and I may not even have the budget to fix the toilet.

Budgeting for emergencies when virtually all income is going to basic necessities is difficult and sometimes impossible. Unexpected medical expenses are the single greatest cause of bankruptcy in the middle class.

A Wonderful Example Of How The Middle Class Gets Destroyed

Fri, 27 Jan 2012 21:47:22 -0500

Enterprise has sent me a bill for a total of $19.25: $1.25 to pay for a toll and $18.00 to cover an “admin fee.”

Last year, someone smashed into me and totaled my car. I rented from Enterprise. I don’t know how I went through a toll but apparently I did.

This past week I received a bill from Enterprise for the above mentioned total explaining that they “were notified by a toll authority or another agency that your rental vehicle incurred a violation or toll during your rental period.” They go on to say that “Enterprise is assessing a fee as our administrative and processing charge.”

An $18 fee to pay a $1.25 bill? That is how the middle class gets destroyed.

Bodyfat Is Another Great Way To Track The Effect Of My Vow

Wed, 25 Jan 2012 21:31:47 -0500

I have added body fat to the list of metrics I am using to track the effect of my middle class vow of poverty.

Body fat will supplement my Zeo sleep scores and my Moodscope scores as ways to determine how the vow of poverty is influencing my health and happiness. Right now I am at 13.4% with the plurality of the fat around my waist. That is consistent with my lifestyle. Fat accumulates around the waist when cortisol levels are high and cortisol levels are high when stress is elevated.

I will track body fat every 1-2 weeks and update the blog with the latest figures.

Getting Rid Of The Capital Gains Tax Would Be Wonderful For The Middle Class

Tue, 24 Jan 2012 23:00:54 -0500

Some of the wealthiest Americans pay 15% on the bulk of their income while most middle class Americans are in the 25% tax bracket.

Why is that? Because the income of wealthy Americans is often in the form of capital gains which is taxed at 15%. This is one of the largest loopholes in our tax system.

I suspect that one of the reasons that Romney is so cagey about releasing his taxes is exactly because most of his dollars have been taxed at 15%. In Obama’s State of the Union he is proposing a set of measures which would partially address this loophole.

I hope that Obama has the skill and courage to reform the tax system.

A Reasonable Budget For 2012

Mon, 23 Jan 2012 22:28:43 -0500

I finally have a reasonable budget for 2012.

Here are the highlights:

Taxes: $18,095. That’s $10,153 for Federal, $3,742 for state, and $4,200 for Social Security.
Housing: $27,900. $21,000 for the mortgage, $4,200 for the condo fee, $1000 for insurance, $900 for electric, and $800 for heating. The last three numbers are guesses and are not based on my 2011 expenses. I plan to look at my expenses within the next few weeks and update the numbers.
Food: $10,600. That’s $800 a month for groceries and $1,000 for restaurants for the year.
Medical: $7,600.
Car: $7,000. $5,000 for a new (used) car, $1000 for insurance, and $1,000 for gas. As discussed previously, this is the one area of my budget where I could save thousands. Right now I do not have a car so I am saving about $600 a month.
Communication: $1,560. $600 each for Internet and cell phone and $360 for a land line.
Other Insurance: $1,500
Presents: $500. Some people are going to be disappointed. :)
Haircuts: $150

That adds up to $74,905, leaving me $95 under budget.

Revising My Budget Again

Fri, 20 Jan 2012 22:46:23 -0500

After my last pass at calculating how much I have left after taxes, my accountant pointed out that I forgot Social Security and Medicare which amount to $4,200.

So, my current best guess is that I have $56,905 to spend in 2012 after Federal taxes of $10,153, state taxes of $3,742, and the Social Security and Medicare taxes.

The good news is that this is more than the $50K I thought I was going to have. The bad news is that it is not much more.

My Mistake

Thu, 19 Jan 2012 22:14:36 -0500

In my article on taking a middle class vow of poverty, I wrote:

After the dotcom crash, I nursed my psyche and hibernated as a civil servant, a research scientist, and a contractor in the defense industry and then, in 2009, I became an agile lean consultant, moving from company to company every 3-6 months.

Hibernate means to withdraw, not seek safety which is what I thought it meant. As a result, this sentence makes it seem as if I had quit life and was seeking refuge in low stress businesses. That is not true at all.

I moved into the defense industry after 9/11 because I thought I could contribute to the peace effort. I became an agile lean consultant because I thought I could contribute to people’s happiness.

Saving Money By Rethinking Cars

Wed, 18 Jan 2012 22:11:38 -0500

I thought I needed a car, but maybe I don’t.

I travel a lot for work so any car I might buy will not be used much. Here are alternatives:

Taxi: My guess is that getting into Boston will cost $100 round trip. If I take fewer than 50 trips in a year this will be less expensive than a car.
Zipcar: For longer trips, Zipcar will work. Unfortunately, the closest car is about eight miles away so getting to the Zipcar will be a time consuming chore.
Time Trade Circle: An awesome organization in which people exchange time, instead of money, for goods and services.
Friend mooching: Getting rides from friends is a wonderful way to save money and build relationships.
Getaround: The ultimate solution for me. They just need to open in Boston.

In my original budget, I allocated $6K for a new (used) car and insurance. I suspect that I could save at least a thousand bucks by using a combination of these methods.

Saving Money By Doing My Taxes Right

Tue, 17 Jan 2012 10:47:22 -0500

I originally estimated that I would have to pay $25K in taxes on my $75K income but, after spending half an hour with the free online TurboTax tool, I discovered that I only have to pay $14K in taxes.

The only deduction I applied was $16K in mortgage interest. TurboTax calculates that I need to pay $10,153 in Federal taxes and $3,742 in Massachusetts taxes.

This makes a huge difference. Now the first pass at my budget looks far more reasonable.

Being Middle Class Means Overcoming Embarrassment

Tue, 17 Jan 2012 00:31:57 -0500

I lost $10 because I was too embarrassed to say that I didn’t want to split a restaurant bill evenly.

I saw the Patriots game with a friend and an acquaintance at a mid-priced restaurant. I had two salads and tea. The acquaintance had two beers and a dozen oysters. My friend had a salad, an entree and dessert.

When it came time to pay, I thought nothing of splitting it evenly until I saw the bill and remembered my middle class vow of poverty. In the moment, I didn’t have the courage to say that I wanted everyone to pay for their own dinners, a lapse which cost me about $10.

Social pressure — keeping up with the Joneses — is one of the reasons why people live beyond their means. I fell prey to this pressure on Sunday.

The End of Sleep?

Fri, 13 Jan 2012 07:39:00 -0500

My sleep happiness has hit a new low during the past two days.

I use the popular Zeo to monitor my sleep. Every day it calculates a sleep score based on a variety of factors, including the amount of time spend in REM and deep sleep.

Two days ago my sleep score was 50. My previously low was 60 so I thought it was a one day fluke. But today my score was once again 50.

I monitor my sleep in part because I want to have a quantitative measure of how my vow of middle class poverty is affecting my happiness. Qualitatively, I feel only slightly unhappier. But the numbers are telling a different story.

Bain Capitalism is American Capitalism

Thu, 12 Jan 2012 01:02:48 -0500

Mitt Romney, the Republican frontrunner, is getting flak for being a vulture capitalist at Bain Capital.

I don’t know if Romney would be a good President. I don’t know if Bain Capital practices vulture capitalism.

I do know that Bain Capitalism is American Capitalism.

The primary complaint is that Bain made money even when workers were getting laid off. Wikipedia says there is no widely accepted definition of capitalism, but none of the possible variants says anything about keeping people employed. Under capitalism, employment is a means to an end, not an end to itself.

The fact that this criticism rings true to so many Republicans reveals a deep, but almost completely hidden, truth: When given the freedom to voice what they want from an economic system, most people do not choose American Capitalism.

Being Middle Class Means Not Losing Things

Tue, 10 Jan 2012 10:30:36 -0500

I travel a lot. And I often lose things. And that costs money. Money that I don’t have now.

In my most recent move, I thought, for two days, that I had lost my bag of bathroom essentials. The most essential item among them is my night time mouth guard. Without it, I have persistent headaches throughout the day. I would rather lose my work laptop than lose my mouth guard.

The guard cost $420 and I suspect would cost about half that to replace. That is money that isn’t in my budget.

Happily, I found the mouth guard after looking for it somewhat frantically for several hours. In doing so, I learned that not losing what I have is an important part of staying within my budget.