Money and Values

Understanding the financial crisis: the basics

2008-10-12T11:41:00.000-04:00

The causes of the current financial crisis are obviously complicated, but many of them are rooted in human nature-- the way people tend to think about decisions in general and financial decisions in particular-- and there are lessons from the crisis we can apply to our personal finances.

I've spent a lot of time lately reading about what has happened, and I've also had a fascinating time learning more about behavioral economics. (Traditional economics assumes that people always make rational decisions. Behavioral economics explores whether or not this is true-- and suggests that it often isn't.) In future posts, we'll look at some of the rationality-skewing factors that were at play. But to start, we need a basic understanding of what actually has happened. So here's the chain of events (to the best of my understanding):

In the last few years, a significant number of mortgages were issued to people who were at risk of being unable to pay if housing prices did not continue to rise. Most of these were adjustable-rate mortgages, with lower interest rates in the first few years but the risk or certainty of higher payments afterwards (unless the mortgage was refinanced based on a higher home value.) These risky loans were not entirely subprime mortgages (mortgages where the borrower paid a higher interest rate than the prime rate), but there is a strong overlap, both because riskier borrowers are more likely to be charged subprime rates and because subprime terms themselves can make repayment more difficult for borrowers. Subprime borrowers were a wide-ranging group-- about 45% had bad credit, but the rest had credit scores of 620 or above; approximately 10% were investors or speculators, about half were refinancing their home "for cash-out purposes," and the rest were home-buyers; the majority were white and middle or upper-class, but blacks and Hispanics were twice as likely to have higher-cost subprime loans as whites with the same income and loan amount.
Most of those loans, and their associated risk, did not stay with the businesses that issued them. In many cases, commission-based mortgage brokers who never owned the debt were making the loans. And regardless of who actually issued the loan to the borrower, by 2006 75% of subprime mortgages were being "securitized"-- which meant the loan and the risk was not held by a single bank, but spread around by being made into securities in the financial markets.
Banks used subprime loans to create and sell complicated financial instruments. Financial institutions, especially investment banks, bought a lot of subprime mortgages and pooled them together into what are called mortgage-backed securities (MBSs), and then sold a few different types of bonds based on each pool, earning themselves big commissions and fees. The pools as a whole were considered somewhat risky because everyone expected that some of the homeowners would default on their mortgages-- but the banks segmented the risk by selling some people "super-senior" bonds and promising that they would be paid in full before anyone holding the more junior bonds got paid. This made the most senior level of bonds very safe, as long as mortgage defaults were within the range that people expected. It also made the highest-paying highest-risk junior bonds so risky that they actually call it "toxic waste." Sometimes they rebundled the medium-risk and/or toxic waste from a bunch of different pools into what's called a CDO (collateralized debt obligation) and re-sliced it, making new super-senior bonds out of the riskiest parts of a risky pool.
Ratings agencies gave super-senior bonds backed by subprime mortgages the lowest-risk rating. They almost always got AAA ratings, the lowest-risk designation there is, the same as U.S. government bonds. This was based on the belief, backed up by computer modeling, that it was extremely unlikely that enough of the underlying mortgages would default to cause super-senior bond-holders not to be paid in full. The computer models only included the worst-case scenarios that their programmers at the rating agencies thought possible: a relatively low level of mortgage defaults.
Some buyers of the bonds hedged their bets by purchasing credit-default swaps (CDSs), essentially insurance in case the bonds they bought didn't pay out. But because they thought the scenario was so unlikely, issuers of these CDSs (who ran the gamut from insurance companies like AIG to investment banks to other institutions) sold many more than they could actually afford to pay back, including selling many CDSs to people who didn't own any bonds and were just placing a bet that the bonds would default. And because many buyers thought default was unlikely, not all of them bought CDSs, especially on the highest-rated bonds.
The bonds, which paid higher interest than other options with the same risk ratings, were very popular and there was high demand for as many as could be produced. But to make more MBSs and CDOs, you needed more mortgages. The bond buyers made it very profitable for the investment banks to buy and pool and slice mortgages and they didn't mind (and sometimes preferred) high risk loans-- so the investment banks made it very profitable for the subprime lenders and mortgage brokers to make mortgage loans and theydidn't mind (and sometimes preferred) high risk loans-- so the subprime lenders and mortgage brokers did everything they could to push as many mortgages as possible, marketing their loans aggressively, steering borrowers towards bigger loans, and getting riskier and riskier with mortgages that sometimes didn't require any verification of income or assets. (This chain of supply and demand also sometimes led to deceptive and predatory practices by lenders and brokers.)
And then the "unthinkable" happened: home prices fell and many more people defaulted on their mortgages than expected. I won't go into all the details of why and how it happened, but suffice it to say, it was a bubble and the bubble popped-- and as home values began to fall and people began to lose their homes, the problem fed into itself, leading to bigger drops in value and more non-paying borrowers.
Because there were so many defaults on mortgages, the value of the bonds fell. This was/is partially because that they're paying out less than expected and are thus actually worth less than initially thought-- but also because they're so complicated (after slicing and double-slicing) that no one knows what they're actually worth, so they fear the worst and won't buy except at rock-bottom prices. Yet another reason for falling prices is a much higher supply to go along with that low demand: along with those trying to sell the bonds because they wanted to get rid of them, were many institutions who had to sell the bonds once they were no longer rated low-risk AAA (since investors like pension funds are required to hold only AAA bonds.)
Banks were especially exposed to these risks, and things have been going downhill for them over the last year or two, with a sharp acceleration recently. Banks held a lot of these bonds (ones they bought from other issuers and/or the risky parts of their own that they couldn't sell) and sometimes they had to buy back bonds from their buyers because they'd guaranteed to do so if things got bad. And because they had used the bonds as collateral to take out loans for investing purposes, when the value of the bonds fell they often had to sell (even at rock-bottom prices) in order to somehow come up with enough cash to pay back the loans. They were also hurt by the CDS situation in several ways-- sometimes banks had issued CDSs which they now had to pay out on; the prices of CDSs on their bonds went up now that it was clear how risky they were; and the issuers of the CDSs on their bonds (often banks or insurance companies who'd issued many more CDSs than they could afford to pay back) were often struggling financially, raising fears that they would not be able to pay out to the banks.
Banks got pushed towards collapse, which began to snowball. As banks' situation got worse, their share prices fell and investors in their financial products pulled out their money, worsening their financial condition. And as each bank (or insurer) collapsed or came close to collapse, it raised worries about how a collapse would affect the finances of all the other banks, increasing the nervousness still more.
Banks are now much less willing to lend out money because they're worried about having enough cash to keep themselves afloat. They can't sell their mortgage-backed securities to raise cash, and they don't know if they'll get payouts from any CDSs they have. And banks now think that lending to eachother is too risky, which is a problem for everyone. Interbank lending is important because the timing of banks' income (payments from loans) and the debt payments they pay out don't always match perfectly; typically this is solved by banks making short-term loans to each other. But that process has frozen up because banks are afraid that if they lend to another bank it might collapse before they get their money back. That makes banks reluctant to lend the cash that they do have to people or businesses, because they don't know if they can get an interbank loan to make up for it if needed. And when businesses can't get loans, that slows down our economy.

Well, I didn't promise it would be an uplifting story! But by taking a closer look at how we got into this mess, we can think about how to avoid dangerous, irrational decisions in our personal finances (and about what policies and regulations in the financial system can prevent against future disasters like this on a larger scale, too.) And that's what the other posts in this series will be all about.

Five great posts from Lazy Man and Money

2008-10-07T23:58:00.000-04:00

Baseball's regular season is over, which means fantasy baseball is over too. Nine of us personal finance bloggers squared off against each other in a league this year, and in the end, Lazy Man and Money came out the winner. (I'm just proud that I ended up in second place after spending much of the first half of the season near the bottom!)

As his prize, here are five posts of his that you should check out:

10 great socially/eco-conscious companies: vote for your favorite!

2008-10-02T23:09:00.001-04:00

Co-op America is running their annual People's Choice Award for Business of the Year, which means they're featuring ten great companies and taking votes for a winner through October 9th. They're all listed in Co-op America's National Green Pages (along with thousands of other businesses) which means they've been screened and verified as socially and environmentally responsible and values-driven; they also all have many fans who made them the top 10 nominees for Business of the Year.

Here are the ten nominees, in alphabetical order, along with descriptions from proud customers:

Alter Eco (San Francisco, CA)
"They are 100 percent committed to Fair Trade, and use responsible practices throughout their company, like employing disabled workers to package products, and running a green office."
--Carlota O., Dallas, TX

Babyworks (Portland, OR)
"They provide a wonderful assortment of cloth diapers and organic baby clothes. They also have wonderful toys that are not made of plastic, not to mention the fantastic service that you recieve from them."
--Mari W., Vancouver, WA

Frontier Natural Products Co-op (Norway, IA)
"They are a cooperative committed to helping the planet and its people through renewable energy, carbon neutral shipping of their organic products, and their commitment to educating their custormers and the public through their Tall Grass Prairie Project."
--Carol M., Sioux Falls, SD

Gaiam, Inc. (Boulder, CO)
"This company offers responsible choices in many areas-- from cleaning products to linens to solar and wind power systems. Even their own green buildings promote responsibility to our earth."
--Ellen R., Wilmington, DE

Kate's Caring Gifts (Fremont, CA)
"Kate, who owns the business, is one of the most sincere and selfless people I know. She gives so much more to the community with little thought of gain to herself. I truly respect her and what she is accomplishing with her green business!"
--Lin-Lin O., San Jose, CA

Mountain Rose Herbs (Eugene, OR)|
"All herbs are organic or ethically wildcrafted, they support students with a 10 percent discount, their products hold to the highest standard, and their customer service is amazing!"
--Julie C., Madison, WI

Mountains of the Moon (Chicago, IL)
"Not only do they provide eco-friendly and organic hemp clothing, but it's sophisticated and wearable in the real world! I get so many compliments from non-green people, and that opens up the conversation on the benefits of going green!"
--Druanne M., Elkins Park, PA

Pizza Fusion (Fort Lauderdale, FL)
"They practice what they preach! As the first franchise restaurant to be totally green, they cook organic, recycle, and drive hybrids to deliver. Their slogan, 'saving the world one pizza at a time,' is right on the money."
--Lisa N., Thompson Station, TN

We Add Up (Mentor, OH)
"We Add Up has continued to support the green rebuilding in New Orleans, and promotes education on the everyday things that we can all do to turn the tide on climate change. They are social greentrepreneurs with heart!."
--Cristal W., Slidell, LA

West Paw Design (Bozeman, MT)
"Great and innovative dog products using recycled/reclaimed materials. All products show great durability and design and they are made in the US with fair labor practices."
--Beth F., Indianapolis, IN

Enjoy these ten socially/eco-conscious businesses and the thousands of others featured in Co-op America's National Green Pages-- and don't forget to vote for your favorite!

Round-up: financial crisis explained by stick figures (and more!)

2008-09-30T23:54:00.000-04:00

I recently came across The Subprime Primer-- a 45-page stick figure cartoon that is fun, painless, and actually suprisingly helpful in understanding how we got into this crisis. It was done last year, so it doesn't talk about what makes the situation so acute right now, but it definitely lays the groundwork. Enjoy (though beware of adult language!)
And on the subject of the financial crisis, this is so simultaneously infuriating and amusing that I have to share it. An investigation of the credit rating agencies, which routinely gave lowest-risk AAA ratings to risky mortgage-backed securities, found an e-mail by one of the analysts bemoaning their reckless practices by saying: “It could be structured by cows and we would rate it.” (On the less-amusing side, “Let’s hope we are all wealthy and retired by the time this house of cards falters.”)
My Two Dollars has an interesting discussion at Friends Asking Friends For Donations - How Do You Handle It?
The Psychological and Emotional Attachment to What We Have and What We Want is a thoughtful recent post from The Simple Dollar.

Because you can't go wrong with cat pictures...

2008-09-29T01:44:00.000-04:00

It's taking me more time than I expected to finish up the long, complicated, interesting post I'm working on. I should have it for you soon, but in the meantime, enjoy this:

(From I Can Has Cheezburger, found via plonkee money.)

Round-up: free museums and ice cream and more

2008-09-23T08:38:00.000-04:00

Hope everyone's week is off to a good start! Now, without further ado:

This Saturday, September 27th, is Museum Day 2008-- hundreds of museums found here are free if you print out the coupon on the website.
And on Thursday (9/25) between 5 and 8pm is Cold Stone Creamery's annual "World's Largest Ice Cream Social" for the Make-A-Wish foundation-- you get a free 3 oz cup of ice cream (one of two flavors designed by Make-A-Wish kids) and a suggestion to make a donation to the Make-A-Wish Foundation. Locations here.
There are other "free" giveaways for Make-a-Wish this week too... on Tuesday you can get a 3-inch turkey sub at Blimpie's, on Wednesday there's small Mexi-Fries at Taco Time (except in IN, MI, IA, CO, and Seattle), and small Great Fries at The Great Steak and Potato Company on Friday.
Fund your own sabbatical, writes Philip Brewer at Wise Bread.
Plonkee at plonkee money posts that feminism is actually quite important to me.

Thousands of socially/eco-conscious items in one place at WorldofGood.com

2008-09-21T15:29:00.000-04:00

Looking for products that are fair trade, environmentally friendly, support a cause, or mesh with your values in other ways? Tired of searching through dozens of individual websites that each only have a small selection? Enter WorldofGood.com, formed in partnership between eBay and a fair trade company, which is already listing nearly 10,000 products.

I was a little hesitant of the idea given the eBay angle, but I'm actually really liking WorldofGood.com. Not only is it incredibly convenient to have so many items in one place, but they're doing a terrific job of displaying (and letting you search based on) the social and environmental impacts of the products, and they seem to have a good method to ensuring that sellers and products are on the up-and-up.

There are two unique features attached to every WorldofGood listing: Trustology and Goodprint. Trustology is a listing of the independent organizations that have verified the seller and/or product-- groups like TransFair which certify a product is fair trade, or Rainforest Alliance which certifies on environmental and social standards, or Co-op America which certifies that the business or organization is deeply committed to social and environmental standards, or more than a dozen other groups. If a seller hasn't been verified by at least one WorldofGood-approved Trust Provider, they can't sell on WorldofGood; the Trustology box in an item's listing will show all applicable Trust Providers, and you can also search by Trust Provider.

Goodprint fills in the details of the social and environmental impacts of the products. There are four big categories (People Positive, Eco Positive, Animal Friendly, Supports a Cause) and subcategories within those (for example, "economic empowerment" and "preserving tradition" are two of the options within People Positive, while Animal Friendly could mean "animal welfare" or "species preservation.") And when you get to an item's page, you can delve even deeper-- there are thirty different detailed statements that can be associated with each product! These range from "Producer receives more than 75% of the retail price" to "Made in a producer-owned cooperative" to "Green energy fulfills 50% of required energy" to "From 100% sustainably harvested materials" to "No animal harmed, no animal testing, no animal ingredients." I love the level of detail here (although I wish you could actually search by these statements, rather than just by category and subcategory.)

Now, the Goodprint statements are not individually verified in any way, which is unfortunate, but it's probably unrealistic to expect otherwise. But nothing's stopping you from doing your own research, plus you can look at the certifications in the Trustology box to ease your mind-- those organizations may not vouch for individual Goodprint statements, but knowing what a third party guarantees is true helps you give the benefit of the doubt on the further details they put forward.

As I mentioned, you can search by Trust Provider and/or Goodprint category or subcategory; you can also search by type of item, price, and/or the region where it was produced. (Products are sold at fixed prices, not auctioned like on eBay, FYI.) WorldofGood also has a Community section where buyers, sellers, and Trust Providers can create profiles, write blogs, and post articles-- there's some activity there but it seems kind of slow to me, but maybe things will pick up over time.

All things considered, I'm pretty excited about the new site, both personally and more broadly. Personally, I think it's going to make my holiday shopping much easier! And more broadly, I think (or at least hope) that the all-in-one-place convenience will encourage more people to give it a whirl and consider social and environmental factors in their buying decisions. Plus the eBay connection can help spread the idea of conscious consuming to new eyes, since WorldofGood listings get cross-posted on eBay (and supposedly eBay's promoting WorldofGood on the main site, although I couldn't find anything on a quick look today.)

Have you looked at WorldofGood? What do you think of the set-up? Do you think it'll make you and/or others more likely to buy products that are in tune with your values?

Round-up: free smoothies, free credit monitoring, happiness, and strategic charity

2008-09-16T22:20:00.001-04:00

Sorry that things've been quiet around here-- some personal stuff (which is hopefully over now)-- can I make it up to you with a great round-up?

Free 20 oz smoothie from Smoothie King this Thursday 9/18 before 10:30am-- several coffee-flavored types-- find a location here!
Okay, it's not as tasty as smoothies, but you can get six to nine free months of credit monitoring from Trans Union, including access to your credit report and credit score, if you register at this site by September 24th. It's a settlement in a class action lawsuit, so broad that pretty much anyone who has a credit history qualifies.
From Get Rich Slowly, check out The Psychology of Happiness: 13 Steps to a Better Life.
An interesting question at Free Money Finance-- Charity at Home or Abroad -- Is One Better than The Other?-- should you look to get more "bang for your buck," or focus on your own community and country?

Carnival of Ethics, Values, and Personal Finance

2008-09-05T01:24:00.000-04:00

Here's the September edition:

Cash Money Life presents Should You Tithe When Times are Hard? posted at Cash Money Life.
debergerac78 presents Procrastination’s a problem - but is it unethical? posted at The Business Ethics Blog.
David Gross presents Bob Shrugged posted at The Picket Line.
Peter presents Is Tithing Biblical? posted at Bible Money Matters.
GrrlScientist presents High Wire: The Precarious Financial Lives of American Families posted at Living the Scientific Life.
Penny Nickel presents The true costs of driving-- how much could you save on transportation? posted at Money and Values.

Submit for next month with this form.

Improve your finances: organize a union at your workplace!

2008-09-01T23:29:00.000-04:00

On this Labor Day, here's some personal finance advice that might surprise you-- if you're looking to improve your financial situation, organize a union! (Or if you've got one already, work on making it stronger and more effective.)

There are a lot of big financial benefits to being a union member:

Wages. The average "union wage premium" in the U.S.-- the amount that union members make above non-union members-- is currently 11.9%, after controlling for age, gender, race, education, industry, and state. This effect is particularly pronounced for low-wage workers, in the range of 20%, but even at the high end there are still significant benefits: workers at the 80th percentile of wages (those who make more than 80% of other wage-earners) have a wage premium of 9.0% and those at the 90th percentile have a wage premium of 6.1%, still significantly higher than the cost of union dues (typically around 2%, sometimes lower.)
Benefits (most of this is from the government's Employee Benefits in Private Industry, March 2007 Summary, a PDF):

Health Insurance. In the private sector as of 2007, 88% of union members have access to health insurance through their employer and 78% participate, while 69% of non-union members have access and 49% participate. The difference in take-up is probably because non-union workers have to pay much more of the premiums than union members do; union members in the private sector on average pay 8% of the premium for single coverage and 12% of the premium for family coverage, while non-union members pay 20% of the premium for single coverage and 32% of the premium for family coverage. (Union workers are also significantly more likely to have dental, vision, and prescription drug coverage.)
Retirement. Union members are significantly more likely to have access to retirement benefits than non-union workers (among private sector workers it's 85% of union members and 59% of non-union members; among public sector workers, 97% of union members and 83% of non-union members.) However, it's even more dramatic when you look at defined-benefit pension plans, which 69% of private-sector union members have access to, compared to just 15% of non-union workers.
Other benefits. Union members are more likely to have access to a whole host of other benefits, too. 76% of union members in the private sector get life insurance from their employer compared to 56% of non-union members; 61% of union members have short-term disability coverage from their employer compared to 36% of non-union members. Union members are more likely to have paid holidays (84% to 76%) and those who do have paid holidays have more on average (10 for union members compared to 8 for non-union workers.) They're also more likely to have a number of other types of paid leave (from vacations and sick days to funeral leave and jury duty), albeit generally by relatively small margins.

Security/Stability. Unlike the "employment at will" at most non-union jobs in which you can be fired without notice for any reason, in a union job after you're off probation typically you can only be fired if there's actually just cause for it (determined by a neutral third-party.) There's also often language prohibiting the contracting out of work that can be done by employees. And if you do get laid off there's more likely to be severance pay, and you may be kept on a recall list and have the first shot at it if your job or a similar job returns.
Career development. Union members are more likely than non-union workers to receive employer-paid benefits for education and training. The other great part about career development in a union is fairness in promotions; the effects of favoritism are greatly diminished when you can challenge being passed over for someone who's less qualified than you.
Health and safety. I can't access the primary sources that it's citing, but this link talks about a number of studies which found that health and safety is better at union workplaces-- injury and illness rates are lower. Not only does work-related illness and injury effect your quality of life, but it can have short and long-term financial consequences, too.

These are all extremely important, and on a personal note I really appreciate them. I love having no monthly health insurance premium, a $10 co-pay for doctor's visits and paying $1 for prescriptions. It's a cool feeling that I've qualified for a pension at age 26 (a small one, and rightfully so, but I'll get at least $7000 a year-- even after considering inflation that's probably the equivalent of $1000-$2000 today, which isn't too shabby-- and if I stay longer the amount keeps going up.) And as I watch as my boyfriend has to haggle personally for every dollar, I truly appreciate knowing I can count on a couple of wage increases every year, and that when it comes time to bargain new ones, my coworkers and I are all working collectively to do so.

But as a proud union member, I have to say that some of my favorite benefits are actually the non-economic ones. Solidarity-- knowing my coworkers are on my side and I'm on theirs if something goes wrong, that we can and do stand up for each other and support each other. A voice at work-- having labor-management committees in which employees can sit across the table with management and talk about where we think our employer should be going, what changes could be made to help us be more effective. The knowledge that I am accountable to my employer, but my employer is also accountable to my coworkers and me.

Of course unions have their downsides too, and some unions can be very ineffective. But really, unions are as strong or weak as their members. If you have a union you're not happy with, then organize your coworkers and make some changes! Do what you can to make your next contract negotiations more successful. Go to your union meetings and start discussions about the issues that concern you. If you think that some of the priorities and provisions in your contract are off, make your case to your coworkers-- and organize them! Run for an elected position in your union. If you've got a problem with the higher-ups at your union rather than the people at your worksite, then look for another union to affiliate with or go independent. There's no reason not to insist on getting your dues' worth and beyond.

Are you a union member or have you been one in the past? What pros and cons have you experienced? What do you think the net financial (and non-financial) effects are/were for you?

Round-up: quiz yourself!

2008-08-20T23:56:00.000-04:00

And... I'm about to head off on vacation again. (I love having 23 vacation days!) See you in a week.

Check out the Smart Cart Quiz! How much do you know about the social and environmental impact of what you buy? As you answer each question, you'll get links to get more information or take action, too.
The Simple Dollar has Fourteen Techniques for Improving Your Work-Life Balance
The Festival of Frugality No. 139: The Michael Phelps Edition was at Our Fourpence Worth. I liked Reached Financial Independence. Now What? at SavingAdvice.com.

The true costs of driving-- how much could you save on transportation?

2008-08-17T15:59:00.001-04:00

Could you save money by switching from a driving commute to a transit (and/or carpool/biking/walking) commute? There are more costs to be considered than simply the price of gas, and these calculators will help you figure them out:

For a simple approach, the American Public Transit Association has a handy calculator which lets you plug in your commute mileage and enter the precise gas prices, MPG, parking costs, and public transit costs that fit your situation. It also includes (based on the size of your car) an estimate of the increased expenses per mile you drive for maintenance and tires, an important addition that often gets left out of back-of-the-envelope calculations. Check it out here.
This calculator is similar to APTA's, but lets you customize the value for maintenance/tires, and has a field for per-mile savings on depreciation/insurance/taxes/financing.
If you want to get more detailed there's a really cool "Car-Free Diet" website (sponsored by Arlington, VA but it works fine for people anywhere.) It not only explores the cost of driving vs transit/carpool/walking/biking, but also the calories you could burn by walking or biking, and the environmental benefits as well. It's extremely customizable-- from picking the actual make, model, and year of your car, to entering up to 3 different driving routes at a time, to including your weight and age for the calorie-burning calculations! Then you can see numbers and graphs for the money saved, calories burned, and CO2 emissions reduced if you changed each trip to transit, carpooling, biking, walking, or telework (ie "What if I took transit to work twice a week and walked to the grocery store on Sundays?") It's a pretty incredible tool-- check it out here!
And if you want to take it a step farther and really explore the externalities (costs that are borne by people other than yourself) of your driving, try this calculator called The True Cost of Driving. Not only does it add a few other factors to your personal driving costs such accounting for the average cost per mile of car accidents (health care and property damage), but it also lays out things like how much the government pays for highway maintenance, repairs, and waste clean-up per mile driven; a variety of pollution impacts per mile driven; and a bundle of other effects your driving has on society.

How much does your transprotation cost you? Have you run the numbers recently? How do you do your calculations? Is there anything these calculators are missing?

If you're thinking about switching, check out:

Round-up: contentment!

2008-08-13T06:00:00.001-04:00

I wish I was as content as the people featured in this week's round-up. I'm not... but I'm working on it!

This quote (via this post at My Two Dollars) really struck me when I saw it last week: “He who is not contented with what he has, would not be contented with what he would like to have.“ - Socrates
On that note, there's The art of being perfectly content at Blunt Money.
And then the Festival of Frugality #137 was at Frugal Homemaker Plus; there were some really great posts, including The Finer Things In Life from SavingAdvice.com. (She's content too!)

Carnival of Ethics, Values and Personal Finance (August 2008)

2008-08-07T22:56:00.001-04:00

Here's the latest version of the Carnival of Ethics, Values and Personal Finance:

Peter presents Help Those Less Fortunate & And Make Money With Microloans posted at Bible Money Matters.
Toni Graybill presents What is wealth? posted at Maximize Health and Wealth.
Betsy Teutsch presents To Repair or Not To Repair... posted at Money Changes Things.
David Gross presents War tax resistance: conscientious objection or civil disobedience? posted at The Picket Line.
Cash Money Life presents Should the Current Economy Affect How Much You Tip? posted at Cash Money Life.
ChristianPF presents Is buying the iPhone a sin? posted at Money in the Bible | Christian Personal Finance Blog.
Rebecca Newburn presents August Thriving in the Burbs Newsletter posted at Thriving in the 'Burbs
Scott Allen presents James D. Brausch, Glyphius and Shilling posted at About.com Entrepreneur's Guide.

Thanks, and submit for next time by clicking here!

Technorati tags: ethics, values & personal finance, blog carnival.

Link round-up: the "Can you help my zucchini plant?" edition

2008-08-05T11:01:00.001-04:00

I'm getting mixed results from my container garden. My tomatoes are growing and reddening and the first ones will probably be ready to eat within the week (yay!) But my zucchini plant, on the other hand, has not grown a single female flower, which means no chance for zucchini to grow. I know that it's fairly common for there to be only male flowers for the first couple of weeks, but it's been about a month now and still no females. I'll make the most of it by eating the many tasty male flowers that keep blooming, but does anyone have any advice, or am I just doomed to a zucchini-less plant?

Anyway, on to the links:

I've seen this story linked a number of times lately, about a family downsizing their home and selling the proceeds to charity. Here's FMF's take, When is Enough Enough?
I liked Blunt Money's post Of personal legends. "When he was a child, that man wanted to travel too. But, he decided first to buy his bakery and put some money aside. When he's an old man, he's going to spend a month in Africa. He never realized that people are capable at anytime of their lives of doing what they dream of."
Then there's Dangerous Norms: When a Treat Becomes a Routine Matter, a guest post at Get Rich Slowly that's by Trent of The Simple Dollar.
Wondering where all the women are in the personal finance blogosphere? There's a near-comprehensive list up: Wise Bread Spotlight: List of Top Personal Finance Blogs by Women

Get free cab fare home in these 50+ cities/counties with Guaranteed Ride Home programs

2008-08-03T19:01:00.000-04:00

If you commute to work any way other than driving solo-- if you take mass transit, bike, walk, or carpool-- then you should investigate if your local transit agency or your employer offers a Guaranteed Ride Home program that'll pay for taxi rides home if your usual arrangements fall through. And if you are a solo driver who's thinking about switching over but afraid of what'll happen in emergencies, well, you should read on too!

Guaranteed Ride Home (or Emergency Ride Home) programs are designed to get commuters off the road and onto public transit or another method of transportation, by helping assuage fears about how to get home in emergency circumstances. They are often sponsored by counties, cities, or transit agencies, but may also be sponsored by individual employers. If you enroll in such a program, then the sponsor will cover the costs of you getting home if unexpected circumstances interfere with your regular plans. Each program has its own rules, but typically "emergencies" are defined as unpredictable events like illness/injury of yourself or a family member, unscheduled overtime (verified by your employer), an emergency at your home (like a flood/break-in/fire/etc), or the early departure of your carpool driver. Covered events for bikers and walkers may also include severe weather.

If you register for the program, you'll qualify for a set number of trips home per year (often two to six.) If an emergency arises, typically you call the Guaranteed Ride Home coordinator and they'll call you a cab, although in some programs you can skip that step and just call the cab yourself (either filing for reimbursement later or using some sort of voucher.) Some programs cover the tip, some don't. They may also cover the costs of a stop at your child's school or daycare on the way home.

So without further ado, here are links to more than 50 Guaranteed Ride Home programs in more than 30 states across the U.S. (If yours isn't included, try searching for one anyway, since I certainly might have missed it.) There are also many employer-sponsored Guaranteed Ride Home programs, so you can check to see if your employer sponsors one (or advocate for it if they don't!)

AZ:
Tucson, AZ

CA:
Alameda County
Contra Costa County
Los Angeles County
Monterey County
Orange County
Riverside County
San Bernadino County
Ventura County
Sacramento
San Diego

CO:
Denver

DC:
Washington DC

DE:
Delaware

FL:
Broward County
Miami Dade County
Palm Beach County
Volusia County
Tampa Bay area

GA:
Atlanta

ID:
Boise

IL:
Madison County

IN:
Southeastern Indiana

IA:
Des Moines

KY:
Northern Kentucky
Northern Kentucky
Louisville

ME:
Maine

MD:
see DC

MI:
Southeast Michigan

MO:
Kansas City
St. Louis

MN:
Minneapolis/St Paul

MT:
Missoula

NV:
Southern Nevada

NH:
Upper Valley (New Hampshire and Vermont)

NM:
Albuquerque
Santa Fe

NY:
NYC

NC:
Charlotte
Durham County
Orange County
Wake County

OH:
Southwest Ohio
Central Ohio

OR:
Eugene/Springfield metropolitan area

PA:
Southeastern Pennsylvania

RI:Rhode Island

TN:
Anderson County
Blount County
Knox County
Loudon County
Jefferson County
Sevier County

TX:
Houston
Austin

VT:
Vermont

VA:
Frederick County
Middle Peninsula
Roanoke Valley
Charlottesville

WA:
Kitsap County

WI:
Washington County
Madison

Return and round-up

2008-07-31T00:40:00.000-04:00

Yes, yes, I'm back, and slowly getting back up to speed. It was a good vacation, but sometimes the stress of getting ready for vacation and the stress of coming back from vacation really cut into the net relaxation I get from taking a vacation...

Learn from your elders via Everything you need (and want) at Blunt Money
JD at Get Rich Slowly has the fascinating The Economics of a POW Camp
Rent Your College Textbooks, Don’t Buy Them! is a nifty idea via The Good Human

Vacation days: do you use them or lose them?

2008-07-25T08:00:00.001-04:00

I'm away on vacation this week, but here's a vacation-themed rerun from two summers ago:

How many vacation days do you get? And do you take all those you're entitled to? According to an article in today's RedEye (the Chicago Tribune "lite"), 574 million vacation days a year go unused in America.

We already get relatively little paid vacation to start with. According to the article, Americans average 14 vacation days a year-- and 25% of U.S. employees get no paid days off (of any kind, including sick days and holidays). Compare that to European countries, where employers are required by law to give 20 or 25 days of vacation. The U.S. is the only industrialized country without laws giving employees the right to paid vacation.

And then, even though we have less vacation days to begin with, we still leave more days unused-- 4 a year, on average, compared to 1 or 2 in European countries. So we actually end up taking less than half the amount of vacation as our European counterparts.

The article includes a quote:

Culturally, it might be a matter of priorities: Europeans may prefer to be rewarded for their work with vacation, while Americans like having one of the highest per-capita incomes in the world and are willing to work longer to get paid more, Allegretto said.

That is, Europeans tend to choose time over money, while Americans pick money over time. If you take it a step further, Europeans prefer time, and Americans prefer "things" (yes, I know in some cases people are saving the money, so it's "security" or "time in the future" versus "time now"... but in a lot of cases, really, it's "things"). Obviously these sorts of choices fit into a much larger cultural context, both as far as the relative value of time versus money/"things" as well as how taking time off is viewed in the workplace.

The organization Take Back Your Time is making a valiant attempt to affect this greater cultural context as much as it can. They have a Take Back Your Time Day coming up on October 24th-- nine weeks before the end of the year, because Europeans work the equivalent of nine weeks (360 hours) less a year than Americans on average, between more paid time off and less overtime-- and I will surely write more about it as the time approaches. But I encourage you to check out the website in the meantime!

As for me, I never let a vacation day go to waste, but I also don't always pick time over money. This is a little complicated, but... I get 15 vacation days and 9 comp days (which function the same as vacation, really). I roll over the maximum of 10 days vacation every year (I used all 9 comp days my first year but none of my then-10 vacation days-- mostly because I wasn't eligible to during my first six months, which included the summer-- and have maintained those in reserve ever since), but I've used my full allotment of 10 vacation days in year two, and am on pace to use all 15 in year three. I'm also able to cash out up to 3 unused comp days at the end of each year, and I try to do so, but I also make sure to use at least 6 comp days so I don't leave anything on the table.

There are definitely times I'm tempted not to take vacation because there's too much to do. It's usually hectic and stressful catching up when I get back, and sometimes I feel bad about important work being delayed when I'm not there to do it. But taking time off makes me happy, whether it's for a long vacation, an extended weekend, or just a single day off when I really need it. I like spending time with people I care about, visiting interesting places and doing interesting things, and having time that's obligation-free. And I think in the long run it's good for my performance at work, too; when I've gone too long without a vacation, my focus and concentration wanders and my stress levels increase, and I'm just not at my best.

How much vacation time do you get? Do you use all of it? How do you feel about that?