Friday, June 27, 2008

Time Vs. Money

From Freakonomics:
Not surprisingly, we feel more stressed for time than ever before — the opportunity cost of time has risen compared to the opportunity cost of goods. In fact, people with higher incomes usually express more time stress than those with lower incomes.

What Are You Gonna Do With That Fancy $120K Degree?

Young Ivy League grads are having a hell of a time deciding. According to the Times, too many are pulled away by the lure of lucrative finance and consulting gigs, instead of entering public service. I heartily disrespected this choice as a young Ivy league student myself, because it seemed both materialistic and unimaginative. Granted, some classmates who went into i-banking or joined McKinsey had big loans to pay off. But many were unbravely looking for another competitive, elite experience to replicate what they already know, or a paycheck big enough to justify their parents' expenditures and expectations. Sez one student:

“It’s like applying to college all over again,” he added. “ ‘I applied to 8 to 10 Ivy League colleges, and I got in here. I applied to these 40 companies, and I got into these ones.’ It’s exactly the thing that appeals to the Harvard competitive spirit.”

Ironically, joining the finance world is not the same golden ticket that it was five or six years ago, as so many of these banks are imploding and shedding staff. Pity the kid who hates numbers but took a job at Bear Sterns just for the money.

I was aiming to join a different self-dubbed elite: the Devil Wears Prada, New York media set. This is just another brand of self-delusion, of course: "You work for fabulously wealthy people in divisions of multinational corporations, but are told you’ve somehow opted out of the consulting/I-banking rat race, because your filing and faxing and phone-answering is somehow edifying.”

Ultimately, all jobs have their venal aspects. I learned from some great mentors to respect people who work hard, play by the rules, and have the courage and insight to trust and develop their own unique capacities. And if the rules are too crappy -- change them!

Monday, June 23, 2008

Homeownership and the Dream

“'Owning a home lies at the heart of the American dream.'[. . .] Oops."

Paul Krugman's Monday column is a smart look at one piece of the American dream I also questioned in my column last week: homeownership.

"Why should ever-increasing homeownership be a policy goal? How many people should own homes, anyway?"

Are you less of a citizen, less involved in your community, if you don't hold property?
Is it less savvy financially if you choose to spread your investment risks rather than sink most of your net worth into a single purchase made on margin?
Is the mortgage deduction really fair to those of us who choose to do other things with our money?
And what about the benefit to the planet of living in denser, smaller, more efficient apartments, with less space for stuff, rather than moving out to the suburbs just so you can afford a house?

Taking all this into account, my husband and I do still dream of owning a piece of property at some point--Paul Krugman admits he's a homeowner too.
I think the major advantage to me is the sense of long-term rootedness in a community, especially for raising children. But the fact is that that stability is hard to come by in today's economy, or it least can take a while. My industry, while centered in New York, is completely volatile; my work takes me all over the East Coast and to the West Coast several times a year; my husband's company is less than 10 years old and is headquartered on the West Coast; and my family and friends are pretty well scattered too.

Tuesday, June 17, 2008

Latest Yahoo Column: American Dream

My latest Yahoo! Column is on the old and new American dream.

PS. A story in Time Magazine relates to the "more time, less stuff" part of my piece: How to Live with Just 100 Things.

Friday, June 13, 2008

Financial Decadence

David Brooks, NYT, on the cultural anthropology/history of debt:

"The most rampant decadence today is financial decadence, the trampling of decent norms about how to use and harness money."

He's writing about this report, "For a New Thrift: Confronting the Debt Culture"
which is trying to address the explosion of both personal and social debt.

I love the idea of returning to thrift as a great American value and as a matter of social consciousness. With people my own age, I tend to talk about this idea in terms of financial integrity and sustainable spending. We are in an age where it's so crucial to be aware of the limits on resources of all kinds, to think of each other, and to plan for the future.

Monday, June 09, 2008

American Dream "Wounded"

Says the usually sunny USA Today.

"Work hard, play by the rules and tomorrow will be better than today. That implicit promise has been at the core of the American Experience through good times and bad.
But now, whipsawed by plummeting home values, $4-a-gallon gas, rising food prices and gyrating financial markets, Americans increasingly fear that the national bargain has unraveled, that their once-steady march toward affluence has derailed. In a new USA TODAY poll, 54% of those surveyed say their standard of living is no better today than five years ago.
"Fewer Americans now than at any time in the last half-century believe they're moving forward in life," concluded a recent report by the Washington, D.C.-based Pew Research Center.
The USA TODAY respondents were more upbeat about the prospects for improvement in the next five years, but only 45% expect their children to live better than they do.

"I don't think it is going to be as easy for them. They're going to have to pay back a tremendous debt load. … I just don't see the opportunities being there," says Matt Gwynne, 63, a retired executive in Angier, N.C

"My American dream almost came true
But the things they promised me never came through
I believe in the American dream
But things are never quite what they seem"

Wednesday, June 04, 2008

Latest Yahoo Column: Your Questions

In this week's Yahoo column, I answer questions on student loan repayment, money management and more.

Monday, June 02, 2008

Community Colleges Losing Student Lenders--Good Riddance!

This is perfect. Just in time for the election season, banks like Citibank and JPMorgan Chase
are demonstrating that they're in the student loan business not to help people go to college, but to make a buck. They're dropping community colleges and for-profit colleges from their rolls as the credit markets tighten.

On the one hand, you can't fault banks for acting like businesses, because that's exactly what they are. Loans to low-income students at lower priced colleges tend to be smaller, representing less profit for the same amount of effort to the lender, and they may have higher default rates, especially in the case of for-profit "career colleges".

On the other hand, why in the heck did we put profit-seeking businesses in the middle of the student aid process in the first place? Taxpayers guarantee 97% of these banks' money, and yet at the slightest increase of risk, lenders are leaving needy students in the lurch and forcing them to find new loans. A better alternative exists: the federal direct loan program. By expanding that program, in exchange for increasing that guarantee from 97% to 100%, we would be guaranteeing one, simple, dependable, affordable option for all students who need a loan to go to college.

One community college financial aid person I spoke to today said she was considering switching her school into the direct loan program for all these reasons. I predict more colleges will follow, and that will be a good thing for students. Taxpayers will benefit too, because the direct loan program is cheaper without the trouble of subsidizing businesses that will leave when the going gets rough.