My ramble Thursday about thrift – and being in the critical habit of saving money – rang a loud bell with quite a few readers, including my buddy Hank out in Hawaii. In addition to Hank’s tale of reality television, we also have some keen insights from a reader who’s a CPA. Both offer incredibly good insights into how this “recovery” is going.
Here’s the note from Hank:
I’m not the writer that you are (neither am I – G), but I thought I might blog a bit about my experiences as the ‘recently unemployed’.
Your article about saving money and jettisoning unneeded ‘stuff’ and expenses was right on! That is something that has been ongoing here in (one of) the most expensive cities in the country to live in… Honolulu.
Housing is the most expensive item on the monthly list here. Recently I have also been selling off parts & test gear no longer needed on eBay for some lunch money.
I am 63 years old and have had a secure tech job for decades as a Television Broadcast Engineer. I have built, rebuilt, moved, and maintained TV stations for decades. I always read your articles about robots replacing humans in the workforce, and figured I was safe because I was the guy that had to install and maintain all sorts of electronic automation stuff for broadcast. Stuff breaks, and someone has to fix it… rapidly and on short notice, usually!
The large national media outfit that owned my TV station sold it this past summer to a ‘management’ company that is a notorious ‘strip & flip’ outfit.
This new company had come through town a decade ago and nearly destroyed what had been the #1 news station and sold it again within two years. Their business model (everything is a ‘business model’, right?) involved installing robotic cameras in the studio and other tech automation to allow the entire newscast to be accomplished by ONE technical director (with seemingly octopus-arms) sitting in a cockpit surrounded by monitors, keyboards, joysticks and audio sliders to switch the entire live newscast.
This assumes the fresh-out-of-Journalism-school ‘news producers’ wrote and scripted all the moves correctly on the interface from their news-automation servers into the ‘production’ TV automation.
The new owners of my TV station wasted no time in announcing plans to install the same automation stuff and let go a bunch of people (many part-timers) who helped produce the newscast for air.
I figured I would be safe, as I am the maintenance engineer who installs and maintains all this tech stuff. Then both of my engineering department managers left… they could not stomach the new management’s slash and burn tactics. The company brought in a half dozen company engineers from the mainland to install the new automation… they were experienced at this, apparently. And shockingly, I was informed that my job was to be chopped before the end of 2015.
It seems the ‘business model’ was structured for only ONE maintenance man for the entire station, and I was #2 on the seniority list, so… sayonara! It is hell on my attitude when I know I am fated for dismissal. Meanwhile, the company engineers were hell-bent on installing the new stuff with little or no regard for keeping the station on the air during the transition. It made it real hard for the people who knew their jobs were fated to keep working and on-air in the mean time. There were blunders and outages on air. Morale was in the septic tank.
I was presented with a severance package of three months pay and termination package. Although they expressed interest in keeping me on for another month or two while the conversion engineering was finished up, it became unbearable to work among the corporate monkeys along with my zombie workmates who were also fated to lose their jobs. I took the hard termination date in Dec. and left.
The whole experience was stunning for someone like me who has worked hard and reliably for my entire life. I didn’t even put up a Christmas tree this year!. Had I just been forced into an unwanted early retirement before I could afford it?
In the past few weeks I have navigated the local Unemployment Insurance website and jumped through all the hoops to apply. My weekly UI benefits are about half what I previously earned, and barely enough to pay my monthly rent… assuming I don’t eat during the month! Severance pay continues through March. UI benefits are good thru June.
Mandatory healthcare is shockingly expensive. If I keep my union membership up ($55/month) I can join the union health plan for $550/mo. COBRA offered from my previous employer is $570/mo.
I looked up the healthcare.gov “Obamacare” plans and found that with my limited present income I qualify for tax credit assistance that covers nearly two-thirds of the monthly premiums.
I got a decent plan that is similar in coverage to my previous employer-plan for out of pocket expenses of only $254/mo. If I use it, it will cost me more, though. The deductibles are high on these plans before they begin to pay, so you have lots of out-of-pocket expenses if you use it. Catastrophic expenses that go beyond the deductible are covered. So first you go broke…. THEN they try to keep you alive so you can live to pay some more!
When (IF ??) I find gainful employment, I will have to notify the healthcare plan of increased income, and that will reduce my tax credits for the year… so what is the point of trying to find work? I get the income, only to have to pay it back into healthcare and reduce my tax credit. That is what will happen if I find some intermittent ‘contract work’ in my self-employment.
The only savings will be if I happen to find some full-time employment with benefits. In Hawaii, employers are required to provide qualified healthcare plans to employees who work more than 20 hours a week. Then I can dump Obamacare and go with the employer plan. But those costs are rising to the employers, as well. There is also a great lack of available jobs in my specialty… TV broadcast engineering, especially for an over-qualified 63-year old.
The only thing keeping me from considering suicide when the benefits run out is that I have some life savings/retirement funds as a buffer.
I had planned to work until age 70 to maximize my social security payments, put my savings into a home and retire in the Hilo area of the Big Island of Hawaii.
Now I am looking at trying to buy a cheap home (cash, no mortgage) on the volcano and rent it out for some monthly income while I try to continue my late-in-life working career.
I want to have a place to land, rent-free, when I can no longer try to work. Still hoping I can muddle through until age 70 to maximize that social security payment.
There seems to be some longevity in my genes, and I’m betting I will beat the actuarial tables.
With my luck, social security will go bust before I get there.
Such is the price of living in “Paradise”… or trying to, anyway. Hey! I have no winter heating bills!
—Hank… shopping for Hot Properties on the volcano lava flows.
Hard as this is for me to write, I’d advise Hank against taking the the rental ownership route. Get homestead exemptions and senior tax breaks as soon as you can, while they are still around.
Oahu, in particular, has a huge homeless problem – we’ve been tracking it for months. It’s the kind of thing we reread when we see employment figures. The rollover in play seems to be axing highly skilled senior workers, like Hank and bringing in 3-lower paid kids part time. Employed headcount goes up, and the main victims are the “million Hanks” in every skilled job from Wall St. to Kona.
I think we may be past the window for rentals work out well. My sense is that multi-family housing is in a bubble. Oilman2 tells me down in The Woodlands, north of Houston, where things are already “worse than the oil collapse of ‘84” that another 30,000 coop-dweller units (apartments) are going in. Sounded bubbly to hear him say it.
If it were me? I’d get as much dough together as I could, lock in the lowest, longest mortgage I could, and go through the exercise of “lifestyle reduction” while there might still be a few shekels in the bank. Look for an assumable at a low rate.
With a new property, somewhere off the road to Kailua-Kona, perhaps, I would put in a big garden and learn the green thumb arts. A few solar panels to power the ham radio (yep, Hanks a ham, like me) and enough dirt to put up some wire beams toward a) the mainland and b) Europe.
That and a cheap internet connection. Selling veggies, working odd jobs, take Social Security now and run the clock until 65 and get on Medicare. Reason? Look into how Social Security bennies are based on highest yearly income and then ensure that IF YOU DELAY filing, you aren’t going to roll off some high income years on the front end of their count.
In the meantime, I’d be dealing with the Union and announce you are willing to relocate anywhere in the USA – the Big Island is nice and all, but unless you’re up at the north end, not enough rain to survive. Prices in the Waipao (sp?) Valley are like astronomical by now.
I’d hit Craigslist to find cheap shelter in a shared room – and keep everything about life online and encrypt the personal computer. When a house is acquired, rent out a room, or two to reduce the effective payment.
That’s how I would play it. Then set up an ALE network with a few hams like Ures truly so when the whole comms infrastructure collapses (e.g. when the power goes out) we will still have low speed (ALE order-wire) 60 baud data and we can (as I have often dreamed about) live in a time when real communications will become highly valued, again. My ALE project is coming up my to-do list.
Hell, even Morse skills we both have might come around again. After the flashes or domestic T attacks or whatever brings it down.
A reader/CPA sent this. Personally identifiable info is redacted but read what he has to say!
Hi George. I know you probably get a ton of emails, and I don’t want to waste your time, but today’s post hit a nerve.
I’m a CPA. I work from home. As such, I go visit most of my clients at their home or business. I just don’t want all those people coming thru my house.
Back in 2007 I began to notice a trend, although it was lost on me at the time. I would go visit a client in a brand new half-million dollar house, two mortgages, Cadillac Escalade and Mercedes in the driveway. AND NO FURNITURE! We would sit and discuss taxes on folding chairs at a card table. No savings (no 1099-INT) no retirement (no 1099-DIV or IRA forms) The tax guy sees everything. Nice fat six figure salary and about two missed paychecks from bankruptcy. NO FURNITURE.
No, I’m not kidding. Yes, it was multiple clients.
I stopped by the burger joint in one of these planned communities to chat with my friend, and former co-worker, [redact] one day. In passing he commented, “I don’t understand it. Million dollar homes and they come in here to get a $6 buck hamburger and their credit card declines.”
My danger alert system went WHOOP WHOOP.
A few months later I started getting emails about clients short selling rent property or homes, if the bankruptcy trustee was going to keep their refund, payment plan options for IRS, etc.
I called and got my and my wife’s IRA money out of the market and into cash. I was about six months early, but we didn’t lose a dime.
This recovery sucks. Clients are paying $30,000 a year to provide insurance for employees that the employees don’t want, but it’s cheaper to buy it than pay the $100k penalty. Everybody is complaining about the cost of insurance. Food is up. Housing is up.
The only bright spot is gas prices, but on the other side O&G companies are going bankrupt and many will probably default on their debt. (Did you see BOKF yesterday?) Every default means that someone on the other end lost some life savings. Hell, I’ve lost $5k on an oil well when the bottom fell out and they couldn’t complete the well.
I guess where I’m going with this is that my danger alert system, which has been on “yellow alert” for a year or so, has started going WHOOP again.
We have an economy where growth is fueled by ever more debt, and the American consumer has reached “max debt.”
Yep, they may stimulate the market to ever more highs, but sooner or later – I’m betting sooner – there is going to be a crash. Party over. Maybe it originates in O&G. Maybe it’s already started. Maybe it’s subprime auto debt, maybe something else. I don’t know, but I can feel that a storm is coming.
I don’t know that I had a real point in writing except that your column today hit a nerve with me. I feast on every peoplenomics issue (subscriber name [redact]) as well as the daily writing.
Saving saving saving. Paying off the house if the nutjobs on wallstreet hold off on screwing us for 3 more years. Stocking food and bullets. Looking for a retreat location out your way (Marshall is my home town. Been on the Rusk to Palestine Texas State Railroad a couple of times.) Terrified of what’s coming.
That is all.
Maybe we can sit and talk sometime. I’m partial to Horseshoe in Bossier (I’ll be at the craps table). Thanks for all you do. Take care.
Deal! We have to get a key cut for the old Lexus (just turned 11) and there’s a Lexus joint in Shreveport. I got the key blank for 1/3rd price online.
There you have it. A concise reality check from two very smart – way above “average” people. And they see the signs, just like I do.
Unless the S&P falls below the 1740 level, and busts the trend lines we have on our Peoplenomics U.S. Aggregate Index charts, there is still a good chance of one more 18-month run, or so.
Even with a hell of a rally (not coming today) the Big Collapse shows in our Peoplenomics work to be not later than late fall of 2017.
I was not kidding when I announced that we’d be selling the old Beechcraft – which is in damn fine condition – this Spring. We have loved the hell out of it, and sure, between now and Q2 2017 there may be one more “hell of a move up.”
But it has become clear to us that the main things we need to be planning for is not an ongoing expense of any kind.
The name of the game in here is reduce your operating expenses as close to zero as you can get.
The good news – such as it is – lies in the lifestyle cost analysis – which we will get into in tomorrow’s Peoplenomics report.
But the main thing this morning is that while this morning’s decline in the markets is NOT the end of the world, you can hear the sound of rushing water from here.
Learning the “Art of Sleaze”
As you may recall, Ure’s truly is running as an independent in Anderson County Texas for the Commissioner District 3 position that will be on the ballot this fall.
I’m only in this because of the terrible condition of local roads.
Today, I will be heading down to the County Elections Office to file my first campaign contribution report. Therein lies a tale…
Naturally, the paperwork that goes along with running for office is a bit intimidating the first time out, and even more-so due to the lack of standard accounting practices.
Thursday morning I called the Texas Ethics Commission and talked with one of their staff attorneys. My question rambled something like this:
“I’m an old business geek and I’m trying to make sense of our WHEN I am supposed to report the massive influx of donations. A whole dollar has already arrived.
My problem as a first-timer is that I have no idea when to recognize revenue. In traditional business accounting, you can recognize revenue almost any time you want, so long as you are consistent. Some companies book revenue (on an accrual basis) when a sales order has been received. Others when the goods shipped. You could book revenue when invoiced, or you might book the revenue when funds are received or even cleared the bank.
In Politics, I could book the revenue damn near any old time, too. I could book it when a pledge is made, or when a check is received, or when the check is deposited, or when the check has cleared and the funds are available.
So what is the deal…where’s the right place?
“Good question…the answer is NONE OF THE ABOVE. You have to go to page 15, paragraph 4 of the instructions for Candidates and Office Holders (C/OH ) Instructions.”
What followed was a trip to https://www.ethics.state.tx.us/forms/COH_ins.pdf to tell me how to fill out form C /OH.
“DATE: Enter the date you accepted the contribution. Accepting a contribution is different from receiving a contribution. You accept a contribution when you decide to accept it rather than reject it. This may or may not be the same day that you receive the contribution. “
Since my first (and so far ONLY) campaign contribution is $1.00 which I didn’t open until January 3 when I got around to things, I don’t have to report this until I “make a decision” on whether to accept the contribution between now and June.
Since I became aware of this contribution (and naturally accepted it on the spot) on January 3, that will be the date for reporting. Which means the first my opponent will learn of it will be in July sometime when it gets reported.
And by the time it gets reported (July) I may have raised 10-times that amount. Why, with a campaign war chest of $10-bucks, my Big Name Party-Backed opponent won’t know what hit him.
I don’t really want to run. But the roads around here (County Road 404 and Country Road 411 which is the now goat trail with potholes in front of our place) are driving me to it. Do I want to be a County Commissioner? No. Do I want to do real work again instead of trading, writing, and playing on the ranch? No.
But brother-in-law Panama is taking his 2-year old Nissan Altima up to Tyler for repairs this week. The whole front bumper is loose now and he’s thinking it’s the roads. Worse: Elaine is looking at the used Lexus lease-returns online again claiming she’s going deaf from a rattle in the door that she blames on the roads.
John the Septic Guy was giving me his perspective on things Tuesday. “Friend of mine says none of the tires around here are lasting anywhere near warranty – they’re being tore up by that big sharp stone aggregate being used on the roads around here…”
Razor Roads, I call it.
To an outsider, this may look suspiciously like an unholy alliance between tire shop owners and gravel pit operators and I have to admit it’s an odd coincidence. You’ve been reading the “hyper obsolescence” articles over on our www.ruralpioneers.com website, I trust. Could that apply to roads?
The problem persists and, our roads continue to suck. Until that’s fixed, I’m in for the duration.
Like Trump, I can afford the campaign…but I still really don’t want to. I don’t really have the time.
Still, if you operate a big out-of-state “grassroots political” fund, send an email to firstname.lastname@example.org for wire transfer instructions.
Politics seems to be the shortest road to riches and I don’t have a lot of time left on my personal clock to be building casinos or attending law school.
Besides, if Hillary is qualified to be a SecState, then Ures truly is easily qualified to be Uber Gross-Fuhrer of the Entire Universe.
Write when you break-even and remember: Weekends is when you should be working as hard (or harder) for yourself as you do for The Man during the rest of the week.
Ya’ll come back Monday, ‘K?