Beating Broke

Personal Finance from the Broke Perspective

New Home Sales Down

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So, are you surprised by that news?  That new home sales dropped like a rock in May?  I can’t say that I am.  I try hard to keep my politics out of this site, but what the heck were they thinking?  If you look at the chart that CNNMoney has posted, you can clearly see that, not only did they drop, but they dropped below where they were before.

And obviously, there is a very nice spike for a while.  Incentives do make a bit of a difference.  And, in all honesty, if we had been in a situation where we felt we could afford a new home, we would have jumped at the opportunity to take advantage of those incentives.  But the spike was just that.  A small percentage of people taking advantage of an incentive that made it very attractive to buy a new house.  What it didn’t do was return home sales to anything like previous numbers.  In fact, it didn’t even get the numbers back to 50% of what they were in 2000!  And now, after the incentives have expired, they dropped 33% to an all-time new low. The last time the numbers were this low was in 1981!

I think everybody has the right to purchase a home.  You shouldn’t be dis-allowed from purchasing a home.  But, you still have to pay for it!  Owning a home is not a right.  The ability to purchase one if you can afford it is.  Years and years of politicians buying votes by pushing lenders to finance houses to people who couldn’t afford them is what caused the housing market (and our economy as a whole) to be in the condition it is in.  And that crashs’ ripples are still being felt throughout the country and the world.  Creating incentives to buying a home just extends that streak.  People see that $8000 and think that they can afford a home that they really can’t because they will get a nice $8000 check to help pay it down.  But, when that money comes around, what are they going to do with it?  Spend it.

And in five years, when those mortgages adjust, we’ll have a nice little mess to figure out again.  Sure, it won’t be anywhere near as bad as the current one, but it’ll be there.  If only we could teach people to be responsible consumers.  To not buy what they cannot afford, and to only spend what they earn or less.  If we could do that, then they wouldn’t need those incentives to buy a home.  They might actually be able to afford it without them.

Recession Perception

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It’s officially official.  We’re in a recession.  And it started almost a year ago. Way back in December of 2007 in fact.  But how much of the recession is in current perception?

How would you or I know that we were in a recession?  Well, most likely, we’d learn by being told.  Of course, it’s possible that we’d have some idea based on some indicators in the economy.  Many of which exist right now in the economy.  But is it made worse by knowing that it’s there?  Is there some part of us that, knowing we’re in a recession, buckle down harder and become more frugal than if we hadn’t been told?  Is that sensible?

One thing that has/will come from this “recession” is that many people will have become much more frugal than they were before.  Many of the people who made it through the Great Depression are credited as being the most frugal people ever.  When you’ve gone through extremely lean times like they did, you learn to squeeze every bit of value out of everything.  Even today, I’ve met people from older generations who rinse and reuse their ziploc bags.  Who wash and dry their paper towels.  And those same people are likely not really sweating the current state of the economy.

My wife and I have been following (albeit loosely) the teachings of Dave Ramsey’s Total Money Makeover for almost two years now.  Our financial standing is amazing compared to when we began.  We also live in a part of the country (North Dakota) that doesn’t really feel the violent mood swings of the economy.  We feel some of the ripples, but the real waves are in places like Los Angeles, New York, and even the closer Minneapolis.  And, while we are thinking about the effect the economy could have on us, we aren’t sweating it.  It’s a wonderful feeling to have.

Now, for some positive thinking.  A brighter perception of our economy.  I have no doubt that our economy is a bit in the dumps.  I have no doubt that the dip we’re in is going to last well into 2009.  But, I think we’re on the bottom peak of it.  Somewhere in the first quarter of 2009, many companies will begin to release their earnings for the holiday season and most of the analysts will be surprised by the numbers.  Despite the perceived recession (real or not), we’ll have spent the same as we did last year and a bit more.  Slowly, our economy will regain it’s footing and begin operating more efficiently.

So spread a little hope this holiday season.  It’s been worse, and it’ll get better.  But don’t forget to learn a lesson from it all.  A little bit of frugality never hurt anyone.

What is Freedom Worth

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It’s a bit of a cliche now, but we all know the scene from Braveheart where Mel Gibson’s character screams “FRREEEEDDDDDOOOOMMMM!!!” as some medieval device or another removes an offscreen part of his anatomy.  Despite the cost, he never gave up his fight for freedom.

And really, can you put a value on your freedom?  And are you really free?

You get up at 5 a.m. every morning to hop through the shower, commute to some office somewhere, and sit at a desk for 8 hours so some company can make a few more bucks.  Oh, and they might pay you for it.  Are you really free?  Can you do what you please?  Why not?

 

 

 

 

We all accept the yoke of the “job” because we want things.  And we need things.  The things we need are relatively minor in most cases.  It’s the things that we want that really drive us to go to work each day.  Part of our goal as Personal Finance students (that’s what we all are) is to realize what wants we really care about achieving.  An example; As usual, black Friday rolled around with lots of great deals.  Several such deals revolved around various sizes of LCD and Plasma HDTV sets.  I really, really want one.  Badly want one.  As a result, I’ve struggled with the issue all week.  Should I go get one? Shouldn’t I?  In the end, I decided against it.  Firstly, it wasn’t in our budget.  I shouldn’t have to go farther than that, but I did.  Secondly, I’ve gotten much better about recognizing and separating wants from needs.  I do want a new fancy tv.  But I don’t need it.  And until I do, it’s going to the bottom of the want list.

Recently, there has been lots of talk about our economy and how bad it is getting.  Along with that has been talk about the thousands upon thousands of layoffs that have been announced.  Luckily, I’m not one of them.  Yet.  I really don’t foresee me joining them.  For that I am thankful.  Or at least I was until I read the Fire Fly Manifesto.  Ok, the thought of losing my job is enough to put my blood pressure into previously unseen heights and give me a stress ulcer.  But that manifesto makes it sound like it’s all gonna be ok.

It’s an incredibly motivating piece.  And I truly came away from it wondering if it wouldn’t be better if I did join the corps of the unemployed.  And then I broke out in sweats.  But I did think about it.  And there is a part of me that wishes I had the freedom of the unemployed to do with my time as I choose.

If you have recently lost your job (especially you) or if you feel that your job is threatened, you need to read this paper.  It’s short and sweet and free.  The author is pushing his site and his upcoming book, but only lightly and the Fire Fly Manifesto really stands on it’s own.  Even if you don’t feel threatened, you should read it.