An Analysis of the Banking Fallout - Article Review

Yesterday Glenn Beck shared a letter he wrote to his sister about how we as a nation came to be in the situation we're in financially. I think he states a lot of it far better than I could hope to, and I appreciate that he did not point the finger at one party, but he did name names when particular individuals had acted or made statements clearly showing they played a role.

In simple terms, though, what he said was greed drove it all. I think he has hit the nail on the head. Politicians greedy for power, bankers greedy for profits, individuals greedy to have things NOW instead of waiting for when the time was appropriate, builders greedy to put up more and more homes while credit terms were so loose... greed greed greed.

It really is sad that such a base, animalistic drive got us here. Regulations were ignored, overlooked, or sequestered. Risk was ignored because it was all being passed on to someone else who didn't care about it. Everything spun out of control.

Fortunately, the economy is still functioning. Rampant inflation (caused at least in part by these slackening credit terms) has not managed to destroy it yet. People are still employed at high percentages, and they go to work and do their job, then come home and purchase goods and services from other people. We have not reached a total fallout, nor will we it would appear thus far. So hope remains. Today may seem dark, but tomorrow - or several hundred tomorrows from now - we can still hope for a brighter day. And maybe, just maybe, that day will bring with it the wisdom learned in the midst of these trials.

-- Robert

Older Posts Revisited

My wife and I were laughing together about some of the crazy phone calls I've had over the years, and she told me I should write about them. I reminded her I already had, but she thought I had omitted a particular one. I realize why she might have thought I omitted it when I reread the original post. It was the last thing I said, but since the call said "I' M FINISHED!" really loud on a voice mail, I used it to segue into finishing the post. So, here is the original post:

Crazy Things Heard On The Phone

While I was back there digging, I thought I might also share some other gems of wittiness from my early days that some of my newer readers might not have gotten to see.

One Of Your Drivers Just Ran Over My Car

Tony Drove Off the Side of a Mountain

I Regret to Inform You...

So, enjoy. Feel free to comment here on any of these posts, or comment there. I'll try to look all four places. My apologies if some of these stories seem indelicate. Most of them happened between five and ten years ago, if that helps.

-- Robert

Thoughts from The Total Money Makeover

I am about half way through The Total Money Makeover, and I am thoroughly enjoying this book. I wish, in many ways, I had read it last summer because I think that is when we had our crisis that is as close to rock bottom as I ever want to get again. Right after paying out most of the cash we had in any account to some loan or another, our air conditioner broke. In the dead of summer. In South Georgia. Something also triggered a migraine for the first time in years for my wife, and she needed to go to the doctor. One doctor's visit turned into two MRI's, a MRA, a balance test, and at least one other test whose name escapes me at the moment. She visited a neurologist and another specialist. The concerns ranged from her having an aneurysm to just a small loop of blood vessels in her brain, and it all turned out to be an inner ear imbalance. As the last doctor explained, they have to run all the other tests to rule out the inner ear, and then they can tell it is the inner ear. So, a new A/C unit, several thousand in unexpected doctor bills, and no cash. No expectation of cash any time soon, either. I was certainly worried. I didn't want the stress of that moment to trigger another migraine for Ellie, and I didn't want the lack of air conditioning to drive us nuts.

The first thing I did after all this sudden money crunch was to make sure I paid my tithing. I know a lot of people would consider it crazy to do such a thing in the midst of a money crisis, but I knew I needed the peace and all the blessings I could muster at a time like that. My mind was very much unburdened after I paid it, and I know I was blessed to come out of troubled times because of it, but I will leave my testimony of tithing at that for now.

Then, I did what this book would tell me not to do: I borrowed on my credit card. I had run through all the 0% balance transfer offers over time, and the one I had was for 1.99% for nine months. I borrowed enough to make sure I could pay them out of the funds, pay the bills we were suddenly hit with, and have a reserve in case something else came up. The exact amount is a little too embarassing to publish here, but I never plan to borrow short-term like that again. I actually never plan to truly borrow again, as The Total Money Makeover suggests. Dave Ramsey would describe last summer as the time "Murphy moved in" (Murphy from Murphy's Law that whatever can go wrong will go wrong).

This month, we will pay off all our debts other than our house, and we have no reason to expect to incur any new debts any time soon (read: never). I did not follow the plan Dave Ramsey would have suggested for my debt elimination, but I came close. I still paid into my retirement, paid of all my other credit cards as they came due (though I still used them), paid extra on my home loan each month, and then put any extra I could justify into the credit card debt. I certainly would've paid it faster if I had followed the Debt Snowball and put all the extra onto the debt, but I am thankful it never came to needing to. For anyone familiar with the Baby Steps, we are somewhere between steps three and four, but we're actually not far from moving towards six. We will have most of our necessary emergency fund built up by the end of the month, and I already invest 10% into my 401(k) each month, but we will plan to invest the remaining 5% into our Roth IRA later in the summer. The college accounts are already funded at this point, so we're planning to work on paying off our house as quickly as we can muster from now on. We've only owned our home four years, but we already own nearly half of the equity, and by year end we hope to have paid nearly half our original loan on it. Then we plan to refinance to a 15-year fixed rate loan on the remaining balance.

A couple of things will slow us down this year, but I consider them necessary to continuing our progress. We need to replace our stove to avoid a potentially dangerous situation, and our dishwasher will probably need to be replaced soon, too. We may also invest in a new closet design for our master bedroom because it would improve our ability to manage our space dramatically, which would in turn make it easier to be home more. Being home more comes with the territory of spending less, since we eat out less, go to movies less, and so forth. Our current plan is to spend the next several months really planning the closet and get it from Ikea. We've already paid for a trip to California in May for Todd's wedding, but most of the rest of our summer will be spent at home afterward.

I hope this post does not sound gloomy. I am really excited to become completely debt free. I feel less stress about money today than I have in ages, and I feel like I have a plan now to take control of my income, as Dave says to "Tell [my] money where to go instead of wondering where it went." I will probably write more about this book in the future since this blog is all about success and I think we will be successful. I haven't decided to make it a regular day of the week entry, but I might, just to keep myself on track and motivated. Here's hoping we're completely debt free in a couple of years.

-- Robert

P.S.: For anyone wondering, my wife was able to get her balance straight and has not had another full on migraine since. Her post on the balance issues is here.

Emergency Preparedness

On Sunday, we had a wonderful lesson about the importance of financial independence and preparedness for hard times. While some might think such lessons sound too much like doomsday paranoia, I believe in the message. Looking at the economy as a whole, it is possible that it will be harder to secure credit in the near future, making it harder for many people to buy homes or automobiles. When more has to be purchased with cash, it means more savings and preparedness comes into play. Dave Ramsey does a radio show weeknights helping people figure out how to deal with certain debts they have incurred, how to manage their cash flow, and (once they are debt free) what to do to save and invest for the future. He regularly talks about having a six-month emergency fund in the event of the unexpected. The lesson on Sunday also discussed such a plan, explaining various ways to manage such funds. Some cash should be immediately available (emergencies often mean banks are not available), as well as a 72-hour kits of food, water, and clothing (the link is just one example kit, but it is easy to prepare one without buying it ready-made). A good guideline is to have cases of bottled water, food that does not require microwave preparation (and if any heat is required, it's a good idea to have a pot and pan, as well as some means of making a fire), and clothes that are regularly updated to fit children as they grow. It never hurts to have some fuel around, as long as you have a safe means of storing it away from pets and children.

One of the best things to do for general emergency preparedness - losing a job, new illnesses, unexpected pregnancies, car accidents or maintenance problems, home repairs, extreme weather - is to get out of debt and stay out as soon as possible. Avoiding new debt can be hard with so many "get it now, pay later" sales out there, but it's better to plan for purchases by saving up instead. Debt avoidance can reduce the effect of any emergency on an individual or a family.

Three years ago, four major hurricanes hit Florida after none had come in several years. The next year, one of the most terrible hurricanes in recorded history hit Mississippi and Louisiana. I saw first hand at the sites of all those hurricanes (thanks to relief efforts through my church) how quickly a world can change. Tornadoes have destroyed homes across the nation for the past several years - even in places that almost never get them. Wildfires and mudslides have plagued the West in various places over the past few years.

Planning for such calamity might sound extreme, until it happens. Right now, many families wish they had planned their spending better as adjustable rate mortgages go up, as the economy slow-down means lower wages or lost jobs, and as inflation has caused everything to cost more today than yesterday. One of the best resources around for preparedness is Provident Living. It offers resources for budgeting, food storage, and various other areas.

One thing I personally agree with that Dave Ramsey teaches with his financial planning is including tithing (giving a tenth of one's increase to the church) and offerings (excess giving beyond ten percent). By planning that outlay, it helps begin the process of budgeting, and it blesses the giver. Even if someone does not follow a particular religion, giving to charitable organizations can be an uplifting way to share wealth. Tithing and charitable givings are also tax deductible, but it would be good to do regardless, in my opinion. I can certainly see how giving has blessed my own life, and the results of others' givings have blessed many.

In the end, the main reason to get out of debt and manage finances is to find peace and security. When a long-term savings plan is in place, it becomes easier to face good times and bad. By living on less, it becomes easier to save for retirement, plan for children's schooling, and manage day to day life. Too many in today's world live in the now, or really live on future earnings they cannot guarantee they will produce. We could all stand to learn to manage our finances better.

-- Robert

Technician Who Left Me Wishin'

Today's Hump Day Hmm asks "when and how do I use my words?" and Julie was kind enough to propose several scenarios to elaborate on.

Her first and fourth scenarios each remind me of stories from my own experience. I want to relate the story that came to mind because of her fourth, since it ties in well with the general theme of my blog dealing with my working life.

Technician Who Leaves Me Wishin'
My office relies on phones more than anything, though computers have become a close second. We make our living communicating with shippers and drivers, easing the correspondence between the two we have helped come together. We are, after all, a broker of freight.

Several years ago, we had several instances of needing some technical assistance from the phone company because of lines going down or individual phones going down. Each time we called, one of two men tended to respond. One man always seemed to solve the problem quickly and effectively, and we rarely needed him to return for the same issue he had previously solved. The other man almost always required a follow-up visit from the first to solve whatever else he managed to screw up, along with the original problem. Because of this continued record of disservice, I finally decided to make a specific request when I called for support. I talked to the manager of the local phone company directly and asked him to send the competent man, explaining I had always been pleased with his service.

Not long after my call to the manager ended, I was greeted by an obviously irate technician - the second man. He threw open the door of my office and began his visit with the words, "So I hear you don't want me workin' on your phones anymore?"

Given his obviously excited state, I decided to calm him down with an explanation that veered away from my dissatisfaction. Yes, it could easily be construed as a lie, but I mainly avoided the topic of his competence. I simply explained that it would be fine for him to work on the system. I had simply requested the other man, but I needed help and would take what I could get. It would not have surprised me if the man had gone in and torn out my phone system to spite me, but to his credit, he went to work on it instead. Once he left, I placed another call to his manager.
"I did not ask you to tell [the man I didn't want] that I did not want him," I explained, rather calmly I recall despite my agitation. "I wanted [the first man] to come because he gets it done right. I do not appreciate how this situation was handled."

Ever since, I am fairly certain we have always been serviced by the first man I wanted, or by another man who came to work for them later who is equally competent. Rarely have I been more displeased with how a service company handled a request I made. When people I deal with ask me not to refer their business to a particular employee of mine, I simply comply with the request in the hopes of a continued relationship. If they explain some problem they have with a particular employee, I admit that I have often had cause to take notes on their concerns and convey them to the employee in question. I do not recall ever forcing the specific employee on the displeased customer, though.

And for the record, I am not sure if the man who came in with such fury solved my problem or not. I do recall the first man coming the next day, which suggests he did not manage to get it done. Without any grisly details here, I will just say the second man is no longer employed by my phone company.

-- Robert

Tony Drove Off the Side of a Mountain

I had only been working a few months in the trucking business when I was awakened late one Friday night by those words, "Tony drove off the side of a mountain!" Though I was groggy a moment before, I felt suddenly alert. My dispatcher had called me regarding a young driver named Tony.

"Well, is he dead?" came my reply.

"I don't know," he told me.

"Well, how do you know he drove off the mountain?"

"Another driver called," he explained.

"Well, the man didn't stop to see if he was okay?"

"No, he was driving by too fast."

"Well, he just watched him drive off the mountain?"

"No, he said he passed Tony at the top and Tony was driving slow, but then Tony drove by him and he was lookin' for a place to put 'er down," he told me. "You know what I mean."

"I have no idea what you mean," I told him, feeling somewhat confused.

"Well, he drove onto one of those runaway ramps."

"That's a lot different from driving off the side," I said, more relieved. "Well, let me head up to the office to make some calls."

"Do you want me to come up there, too?"

"No, I'm up now. I'll take care of it."

That is how quickly a day, or a weekend in my case, can change. One minute I was asleep, or at least half asleep, and then I'm up and headed back to the office to deal with a harrowing situation. More often these problems occur during working hours, but being ready to deal with a problem is part of life. How they are handled can establish a reputation. After I handled several crashes as part of my job, I started referring to myself as a fireman. I put out the fires so other people can go on about their day. The ability to handle problems calmly can help someone move up the ranks of management. Managers constantly play the role of peacemaker - between employees, between customer and salesperson, and many other situations - and problem solver. Letting the emotions - especially the emotions of others who are embroiled in a bad situation - affect your judgment can be dangerous and often prevent you from improving matters. Objectivity and a cool head go a long way to helping others calm down and think rationally, which is the best way to find a resolution.

So what happened to Tony? Fortunately for him, he only had a few bruised ribs, but his truck was destroyed, along with part of his trailer and his load. He had failed to adjust his brakes at the top of the mountain where a turnoff is provided for just that need. The saddest part of the story? He had drive several hundred miles out of his way because he did not know to use a shorter route involving a U.S. highway and had instead chosen the interstate (we call such drivers "Interstate Runners") that put him on top of that mountain. We had to let Tony go after that load, but hopefully he learned to pay better attention to signs and learned to read a map.

-- Robert