My latest Wise Bread post just showed up at Business Insider, with yet another new title: This One Key Rule Could Streamline Your Whole Life. (Wise Bread called it The Simplest Way to Live Simply and Cheaply. My original title had been Simple Living, Simplified.)
I was pleased with this one, so I’m glad to see it get some traction.
I’ve got a guest post up at Asta Lander’s blog Simply Living, about the trade-offs that people make when they choose to work for wages or a salary, and how you can get most of the benefits while avoiding most of the downside.
It’s called Choosing Freedom.
There was a time when most people were self-sufficient. They acquired what they needed through some mix of hunting, gathering, fishing, farming, raising animals, and making things themselves. Not many people do that any more.
An article I wrote for the Makin’ Money blog at American Public Media’s Marketplace went live last week. Check it out: Four steps to managing personal debt.
My Wise Bread post Live Where It’s Cheap was featured on MSN Money’s Smart Spending blog as Live where it’s cheap- MSN Money.
It’s always nice to see my work get a bigger audience.
Of course, with the Dow down 500 points again, I doubt if anyone noticed.
[This article originally appeared as a guest post on Self Reliance Exchange, but that site no longer exists and the successor site doesn’t seem to be using my post. Rather than just let the article disappear, I figured I’d post it here.]
There’s a reason we don’t see more self-sufficiency: It’s not frugal. It almost always takes more time to make something than it takes to earn enough money to buy one—and that’s without even considering the time it takes to learn the skills (let alone the cost of tools and materials). On the other hand, frugality is a powerful enabler for self-sufficiency. So, how do you find the sweet spot?
My wife spins and weaves. I have a beautiful sweater that she hand knit from hand spun yarn. It’s wonderful—and it’s comforting to know that my household is not only self-sufficient in woolens, we produce a surplus that we can sell or trade. But the fact is you can buy a perfectly good sweater at Wal-Mart for less than the cost of the yarn to knit it.
If you try to be genuinely self-sufficient—in the sense of producing through your own labor everything your household uses, like a hunter-gatherer or a subsistence farmer—you’re going to be poor. Your neighbor who works at a job for wages or a salary is going to be better off by almost every measure.
Oh, his factory-made microwave meals won’t be as good as home-cooked food from your garden and his furniture from Ikea won’t be as good as what you make in your wood shop. But he’ll have so much more! In the time it takes you just to build a kiln he’ll earn enough money to buy a thirty piece set of Corelle ware. Unless he’s only making minimum wage, he’ll probably have enough left over to buy an iPod—and you’ll never be able to make your own iPod from sand and vegetable oil.
That’s why we have trade. If everybody specializes in one or a few things, and then trades with others for what they need, everybody can be better off. It raises your standard of living, but it means that you can’t be self-sufficient.
There are still many reasons to do for yourself. You can make exactly what you want, instead of having to make do with whatever happens to be available on the market. You can use superior materials, and take them from the environment in a sustainable manner. You don’t have to worry that the stuff you use was made in a sweatshop by children or prisoners or slaves. You aren’t dependent on the continued smooth functioning of the vast global economy. But you can’t be self-sufficient in very many things—even if you had the skills and the tools and the land, you’d quickly run out of time.
So, we find ourselves trying to figure out where we belong on the continuum between actual self-sufficiency and ordinary self-reliance. How do you find the sweet spot? Here are my thoughts:
Start with the few things where homemade actually is cheaper, like gardening. Then move on to things that can be done as a hobby—and that you’d enjoy doing as a hobby. Don’t let point #1 above (necessities) keep you from developing self-sufficiency in something that’s fun and interesting just because it’s not important. It may not be important to be self-sufficient in beer, but the equipment is cheap, brewing is a pretty easy skill to acquire, and the result is better than what you can buy.
Finally, remember that there’s a vast range between being “self” sufficient and being dependent on a global supply chain. It’s almost as good as self-sufficiency to source things from your neighbors. Short of that, it’s still an improvement to source things closer rather than farther—your home town, your region, your state, your country.
Once you set your priorities, don’t hesitate to go with the cheapest option for things that don’t make the cut. That frees up money that you can use on the important underpinnings of self-sufficiency—things like land and tools in particular, but also things like books, training classes, materials to practice with, and so on.
Then you’re in your sweet spot.
For our Esperanto group’s discussion circle yesterday, we read a story by Marjorie Boulton from her book Faktoj kaj Fantazioj.
A father, wanting the best husband for his daughter, announces that she has died and requests money for her funeral. Two of the suiters decline, but one opens his purse and hurries to the father to grieve with him. Then the father reveals that it is a ruse and the couple is married.
I found it a odd and disturbing story.
So, I wrote my own version, with what I consider a more likely ending, and shared it with the other members of the Esperanto group. I also sent it to my brother to include with a group of similar little tales that we’ve written (Legends of the Zne Master).
I call it “Legend of a Beauty.” Steve posted it as “The Thrifty Father” and provides an English translation at the bottom of the page.
Back in July I got a note from J.D. Roth, who was lining up some guest posts to run on Get Rich Slowly while he and his wife were on vacation in France and Italy. I was pleased to be asked once again, and wrote a piece that I ended up being rather pleased with. It went live this morning: Why Now is the Time to Think Long-Term. (Spoiler alert: low interest rates are the reason that now is the time to think long-term.)
About twenty-five years ago (as an example of long-term thinking), I had a whimsical investment idea: Buy some cheap land and plant hardwood trees. The trees wouldn’t be ready to harvest for 100 years or so, but it would have been a cheap investment with (eventually) a fairly large payoff.
It takes a certain perspective to make such a long-term investment. I call it a whimsical idea because I’d never have been able to enjoy the financial return. I was already in my mid-20s at the time. Even if I’d selected the hardwoods for quick maturity, they wouldn’t have been ready until I was well into my 90s.
It’s a topic I’ve been aware of since the early 1980s, when very high interest rates produced a spate of very short-term thinking. (In particular, my dad’s publisher tried to weasel out of a book contract, because it seemed more profitable to invest their money in the money market at a guaranteed 14% than to invest it in a book that might not make so much.)
When rates are high, it doesn’t make any economic sense to think long-term. But when rates are low, long-term projects are suddenly reasonable. Since just now rates are at multi-generational lows, Now is the Time to Think Long-Term.
I always enjoy James Howard Kunstler’s rants, and the recent revelation of sloppy bank record-keeping gives him a good jumping-off point.
It’s true that this rather seems to be a third strike by the banks. First, they lent money to people without regard to whether the borrower would be able to make the payments. Second, they made loans on houses that were wildly overpriced thanks to the housing bubble. And now, strike three, it turns out they did such a poor job of record-keeping that they may not be able to prove that they own the mortgage on the house!
The value of those mortgages was already somewhat doubtful, given that the banks only option was to foreclose and sell the house for a fraction of its bubble-inflated value. But if their bad record-keeping means that they can’t even foreclose, maybe the paper is worth zero. If the paper is worth zero, Kunstler figures the results will be dire:
With fraud absolutely everywhere in our banking system, like some advanced metastatic cancer, financial metabolism comes to a sickening stop. Nobody can buy or sell property. Nobody can trust any American financial institution. Money can’t circulate. Nobody will be able to get any money.
Personally, I doubt if most of the records are really lost. If the banks are willing to spend the money—hire a bunch of researchers, archivists, and paralegals along with some secretaries and assistents—I expect they can prove most of the mortgages. But it’d be expensive.
My hope is that this will mean, finally, that the banks will have a real incentive to do what they should have been doing right along—renegotiate the mortgages, writing the value of the mortgage down to something under the fair market value of the house, and the interest rate down to current market rates. If they keep proper records of these new mortgages, they can sweep the problem of the old, sloppy records under the carpet.
So, I’m rather more optimistic than Kunstler on this issue. In fact, I think it just might save us.
Currency, a new personal finance site sponsored by American Express, has just gone live with several articles by me.
The main article is How Much Money Will You Need to Retire?
It appears along with sidebars:
The main article is How Freelancers Can Budget for Health Insurance.
It appears along with sidebars:
The main article is Should You Put Your Money in an Alternative Financial Institution?
It appears along with sidebars:
You may have noticed my posting on Wise Bread was a bit sparse lately. Part of the reason is that I was writing all of those. Enjoy!
Late last summer, I got email from the publisher Gale. They wanted to license my Wise Bread article Bankruptcy is a Good Thing to use in their book Bankruptcy (Introducing Issues With Opposing Viewpoints).
They have a whole series of “introducing issues with opposing viewpoints” books, each of which contains a variety of articles and essays on some topic. I gather that the idea is to help teach students the skill of reading a number of articles, any one of which may be unbalanced or narrowly focused, and then synthesizing an understanding of the topic. It’s a useful skill, and one that’s hard to teach with a textbook, since textbooks generally try to present a comprehensive and balanced viewpoint.
I executed the license agreement back in August. The book came out in April, and the check (payment on publication, of course) arrived today!
It would probably be worth my time to market reprint rights more aggressively, but I enjoy writing more than I enjoy marketing. So, it’s especially nice when the chance to earn a license fee falls into my lap like this.
Because of the nature of (and price of) the book, I didn’t try to negotiate a contributor’s copy. If you happen upon a copy, I’d be pleased to hear a little about it.
