This summer, I had a run in with Labrythitis. No, that's not connected to my love for the David Bowie movie, but rather a weird virus with dizziness, nausea, and headaches as symptoms. In short, it was like an intense case of motion sickness... and motion makes the symptoms worse. Guess when it hit me? That's right... during our vacation period, whem my friend Mark and then my mother visited for six days and ten days, respectively. Naturally, we spent a lot of their trips driving to around, even multiple trips out on Eliott Bay and Lake Union. Fun, fun!
Over the last couple years, I've been teaching myself about the stock market. No, I don't plan on becoming a day trader, but I would like to control more of our investments. For the time being, most of our decisions simply amount to picking mutual funds through 401k programs, but I suspect there will come a time when I'm able to invest additional income (my "Mad Money," courtesy of Jim Cramer) in some stocks, hoping to sell them for profit in a six to eighteen month window. So I started keeping tabs on the stock market. Since I replaced my laptop computer with a Slimline desktop (HP), I've been watching daily. My desktop includes a gadget that has real-time stock updates. Like just about anyone with money in retirement, I've watched accounts plummet for the last year or two, and the last few weeks has been atrocious. Today, a 777 point loss, was especially hard to stomach.
As I said in my last post, I hope to continue incremental investments and make certain Brenda is able to retire comfortably... hopefully before she's sixty-five. Lately, I'm glad we don't have more invested. It's been hard to predict what's going to happen. Will the $700 billion bailout work? Will any form of it pass? Will the pop of the housing bubble and the horrible state of the financial world bring down all the other businesses?
I've heard WAY too many people complain that the "fat cats" are getting rich on Wall Street, and cries of "let the market fix itself." Yes, the CEOs are filthy rich, but do people really think this problem is just the greed of the part of the population that benefitted from the housing bubble? The people to blame include all the dim-witted folks who took out ARMs they couldn't hope to repay without divine intervention. It's all the people juggling credit card debt. It's all the people that hope to retire off of less than $50,000 and live on Social Security, as if that was ever meant to replace a savings plan. In short, most of America is to blame.
I'm sorry if you're in the crowd that didn't contribute. I don't think I had much to do with the problem either. I rent, despite the fact we're closing in on a six-figure income because I won't gamble on future earnings and take out an ARM on a house I can't afford today. I have NO credit card debt. I invest between 11% and 14% of our income into a diverse retirement fund. Of course, I've also had periods of tremendous credit card debt and my family even received welfare (or whatever it was called from 1994 to 1997) for a time. Thankfully, those days are behind us.
My fear is that if the government fails to buy up these foreclosed homes, the recession will deepen to a depression. The unemployment rate when consumers stop consuming, businesses can't expand by attaining loans, and homes sit vacant for years at a time. Does anyone really believe a "correction" of the market--especially one as dire as the Great Depression--is something we'd find preferrable to an increased tax burden? It seems to me that paying a lot in taxes is less of a problem than not having an income to pay taxes with.
BTW, does any one else think Boeing is a really good value at $55/share? Perhaps it'll continue to drop, but BA is one of the few strong manufacturing businesses left in the United States. It may well bounce up when the bailout (in whatever form) passes, the strike ends, and the first 787 rolls off the lines. Those increases alone might make BA an attractive stock to own. *Shrugs*
Don't worry. My next post will be on the 2008-2009 Pistons team.
Monday, September 29, 2008
Monday, September 15, 2008
Short Term / Long Term
Right now, Brenda's employer--Boeing--is dealing with a strike. The Machinist Union is striking on behalf of job security, more or less. Sure, they want their piece of the pie; Last year was an amazing one for Boeing. They earned a record 4.1 billon profit and had 1,413 planes on order, crushing their commercial rival, Airbus. Still, the Union is fighting for the future of their workers, since Boeing is committed to outsourcing. The problem is that Boeing would be headed down the exact same path the auto industry and the airline industry have taken--disaster. To stay at the lead fo the aerospace industry, Boeing has to keep labor costs down and that means outsourcing.
So I understand the situation the Machinists are in. Ultimately, Boeing will reduce it's work force. I'd try to protect my job, too... but I also know the average machinist earns $56,000 per year and has good benefits, including a modest pension program. How many people can earn that kind of income with nothing more than a high school education? Brenda earns around 35% more than that with over seven years of education behind her: her BBA (five-year program, with accounting focus), her MBA (a two year program), and the PMP certification (first half of the Masters in Project Management). She has a nicer work environment--often working virtually, from home--and far more opportunities for advancement, but that's not a big difference in pay considering her qualifications and how many job openings are out there for a skilled person with a finance background.
Boeing is fighting for their future. I'm glad I'm not one of the Machinists, but I don't see a lot of alternative. If Boeing fails to outsource, they'll end up loosing more and more government bids and commercial contracts. Right now, their only commercial competition is Airbus, but I'm certain the emerging industrial countries will compete in the aerospace industry, eventually, just like they are starting to compete in the automotive industry. Companies have to look to the future. Employees should, too. Boeing actually covers 100% of the expense of college courses, all the way up to a Master's degree, regardless of an employee's position in the company and regardless of what they opt to major in. It's an incredible benefit. I happen to have a very good friend who started on the line, installing windows in the planes. She finished a two-year degree, and moved into an administrative job. It was a pay cut, but far less physically demanding with ample room to grow. She then finished her four-year business degree and moved into a professional position, as a business analyst. Last year, she finished her MBA, and has continued to move up the salary grades.
While not everyone is cut out for college, the need for a college education is just a fact of life now. If you graduate from high school and want more than a life of paycheck-to-paycheck subsistence. What other choices are there? A military career probably requires officer training, and that's easier to do through ROTC than enlisting and working your way up. There are some professions that offer middle-class pay, but they require some sort of specialized training, often through vocational schools. There are handfull of very dangerous or difficult jobs that require iron will more than an education, but those are few and far between. In short, success requires some long-term planning, most often in the form of a college education.
The news this morning featured headlines about the Chapter 11 filing of Lehman Brothers and the Bank of America buying (bailing out) Merrill-Lynch. AIG, the largest insurance company in the United States, announced a dramatic plan to sell their assets and bolster capital. It's ugly news... and it's fallout from good old fashioned American stupidity.
People gambled on their homes. They bought homes they couldn't afford, paying only the interest for the first five years and hoping their finances increased enough to afford the rest of their ARMs. It's not surprising. Some point to housing prices, but those prices are driven by what people are willing to pay. If a house costs too much, then rent. It isn't ideal and you're not building equity, but you're not rolling the dice with your financial future, either. The average American household has nearly $10,000 in credit card debt. Yes, this is an average, not the median. 20% of households don't have credit cards at all and another 30% pay off their entire balance monthly, but that still means half of our country lives in perpetual debt... in addition to the expenses of over-priced cars and homes. Whatever the case, it's a rotten situation. Many people borrow from their credit cards and spend many years catching up, spending countless dollars on interest payments.
Brenda and I certainly had our share of debt. Having three children by your early twenties is a sure-fire way to ruin a person's careful plans. It's taboo for a parent to call their children a mistake, but my own children certainly weren't planned. It's not a mystery how they got here, but I wasn't careless, either. Whatever the case, we managed to get through our lean years, and have done pretty well over the last decade--improving our financial standing every year. The last five or six years have definitely been middle class living, despite the fact we rent.
We save money annually, if not every month. We have a healthy saves, about six months of our living expenses. Our only debt is our car payment (which is modest, and two years from being paid off) and Gwen's braces, which should be paid off in short order. Our credit is good (slightly above 750). In short, we're in a good position... but prices in metro Seattle are very high. We're not willing to take out an ARM, betting on a lower cost of living (as the kids move out) and regular increases (annual raises at Boeing, or even a promotion). Probable or not, it would be a gamble. We'll turn that big savings account into a down payment when we're confident we can continue to save a reasonable amount and live with reasonable standards AND still pay our mortgage. Maybe we'll be able to buy in the spring. Maybe we'll have to wait until all three kids graduation, in the summer of 2012. *Shrugs* Whatever the case, we'll plan for as much as we can. It doesn't change the economy, but at least we aren't contributing to the problems.
So I understand the situation the Machinists are in. Ultimately, Boeing will reduce it's work force. I'd try to protect my job, too... but I also know the average machinist earns $56,000 per year and has good benefits, including a modest pension program. How many people can earn that kind of income with nothing more than a high school education? Brenda earns around 35% more than that with over seven years of education behind her: her BBA (five-year program, with accounting focus), her MBA (a two year program), and the PMP certification (first half of the Masters in Project Management). She has a nicer work environment--often working virtually, from home--and far more opportunities for advancement, but that's not a big difference in pay considering her qualifications and how many job openings are out there for a skilled person with a finance background.
Boeing is fighting for their future. I'm glad I'm not one of the Machinists, but I don't see a lot of alternative. If Boeing fails to outsource, they'll end up loosing more and more government bids and commercial contracts. Right now, their only commercial competition is Airbus, but I'm certain the emerging industrial countries will compete in the aerospace industry, eventually, just like they are starting to compete in the automotive industry. Companies have to look to the future. Employees should, too. Boeing actually covers 100% of the expense of college courses, all the way up to a Master's degree, regardless of an employee's position in the company and regardless of what they opt to major in. It's an incredible benefit. I happen to have a very good friend who started on the line, installing windows in the planes. She finished a two-year degree, and moved into an administrative job. It was a pay cut, but far less physically demanding with ample room to grow. She then finished her four-year business degree and moved into a professional position, as a business analyst. Last year, she finished her MBA, and has continued to move up the salary grades.
While not everyone is cut out for college, the need for a college education is just a fact of life now. If you graduate from high school and want more than a life of paycheck-to-paycheck subsistence. What other choices are there? A military career probably requires officer training, and that's easier to do through ROTC than enlisting and working your way up. There are some professions that offer middle-class pay, but they require some sort of specialized training, often through vocational schools. There are handfull of very dangerous or difficult jobs that require iron will more than an education, but those are few and far between. In short, success requires some long-term planning, most often in the form of a college education.
The news this morning featured headlines about the Chapter 11 filing of Lehman Brothers and the Bank of America buying (bailing out) Merrill-Lynch. AIG, the largest insurance company in the United States, announced a dramatic plan to sell their assets and bolster capital. It's ugly news... and it's fallout from good old fashioned American stupidity.
People gambled on their homes. They bought homes they couldn't afford, paying only the interest for the first five years and hoping their finances increased enough to afford the rest of their ARMs. It's not surprising. Some point to housing prices, but those prices are driven by what people are willing to pay. If a house costs too much, then rent. It isn't ideal and you're not building equity, but you're not rolling the dice with your financial future, either. The average American household has nearly $10,000 in credit card debt. Yes, this is an average, not the median. 20% of households don't have credit cards at all and another 30% pay off their entire balance monthly, but that still means half of our country lives in perpetual debt... in addition to the expenses of over-priced cars and homes. Whatever the case, it's a rotten situation. Many people borrow from their credit cards and spend many years catching up, spending countless dollars on interest payments.
Brenda and I certainly had our share of debt. Having three children by your early twenties is a sure-fire way to ruin a person's careful plans. It's taboo for a parent to call their children a mistake, but my own children certainly weren't planned. It's not a mystery how they got here, but I wasn't careless, either. Whatever the case, we managed to get through our lean years, and have done pretty well over the last decade--improving our financial standing every year. The last five or six years have definitely been middle class living, despite the fact we rent.
We save money annually, if not every month. We have a healthy saves, about six months of our living expenses. Our only debt is our car payment (which is modest, and two years from being paid off) and Gwen's braces, which should be paid off in short order. Our credit is good (slightly above 750). In short, we're in a good position... but prices in metro Seattle are very high. We're not willing to take out an ARM, betting on a lower cost of living (as the kids move out) and regular increases (annual raises at Boeing, or even a promotion). Probable or not, it would be a gamble. We'll turn that big savings account into a down payment when we're confident we can continue to save a reasonable amount and live with reasonable standards AND still pay our mortgage. Maybe we'll be able to buy in the spring. Maybe we'll have to wait until all three kids graduation, in the summer of 2012. *Shrugs* Whatever the case, we'll plan for as much as we can. It doesn't change the economy, but at least we aren't contributing to the problems.
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