Home Economics

There was a great article a few weeks ago in the New York Times about budgeting during these touch economic times, and I set it aside to comment on. I can related to the story about homeowners who find themselves buy large quantities of food because of a good price. We installed open shelves a few months ago and unearthed a good deal of food supplies...and discovered we have all sorts of dry goods that we'll never eat!

Tom and I both feel very, very lucky to have what we hope are stable jobs. We were even luckier to have found tenants earlier this year for our house. But now is the time for everyone, lucky or not, to take a step back and look a their home finances.

Recently we canceled our gym membership. I think this is the first time since my college days that I don't have a membership somewhere, but we found ourselves wasting it for months on end. I've been rationalizing that by not paying $110 or so a month, within three months we'll have saved enough for a Wii! On a more serious note, we're hoping to walk the dog more and get back into running, maybe buy some weights off of craigslist.

As for food shopping, we've seen the prices go up and quality go down at our local Shaws. We've been buying more items in bulk, where appropriate, at BJs. I got a big kick out of picking up a three-pack of Chai tea mix. It's the same stuff Starbucks is using to make my $3.78 Chai lattes, and I got at least 20 or so-worth for just $7. Now if only I could find bagels that Tom likes nearly as much as those at Dunkin Donuts!

Tom rediscovered the local butchershop, McKinnon's in Davis Square, where the prices and quality are outstanding. We're still participating in the meat CSA, but find for cold cuts and one-off items that we don't plan to freeze, McKinnon's is the way to go. We ended up dropping the vegetable CSA, feeling that we wasted more than we ate. We recently dropped by Wilson Farms in Lexington, and while the prices aren't complete bargains, the quality and selection is so much better than the supermarket, it's worth shopping selectively.

We sold my car last year and have survived 13 months on one car. This cut back on insurance, taxes and fuel costs significantly, and we were pleasantly surprised at how we dealt with the change. We plan our weekend errands much more carefully now, so I imagine we've cut back in a small way on one-off trips that waste time and gas.

What have you cut back on? What habits have you changed to save money/energy?

A new perspective on home ownership: Habitat

Another non-profit I'm doing work with is Habitat for Humanity. Established in the 1970s as a Christian ministry, Habitat has built 300,000 homes across the globe for families in need. Moana and I spent the morning with the development officer for Habitat's New England fundraising, and visited build sites in Dorchester and Newton. This was really a wonderful opportunity and incredibly inspiring to see. Our company is supposed to participate in both a local and international build over the coming year, and I can't wait!

Dorchester site:

The Dorchester project takes place on Blue Hills Avenue. Once a thriving Jewish community, this area has really fallen victim to crime, drugs and a faltering economy. This is a very unusual project for Habitat -- it's larger than normal (multiple buildings, 24 new homes) and will include 2000 square feet of commercial/retail space. Foreclosures run rampant in this area -- we visited several neighborhoods where home after home is boarded up, and on one street, 11 out of the 14 homes have been foreclosed. We visited Building #1 -- I believe Habitat is still in the process of selecting families for this development, and part of the retail space was recently purchased by a local salon owner to create a hairdressing school.. We had a chance to also drive by a series of Habitat homes that were built more than a decade ago -- all of those families still live there and are thriving.

Each unit has a kitchen, living area, bathroom, storage pace and two/three bedrooms. I'm jealous -- there's some serious closet space!

Newton site:

The Newton property came about as part of a bequest from an elderly woman who owned three acres of land in Newton. Part was given to the local conservation department, the other was dedicated to affordable housing. Habitat is building a two-family home from the ground-up. The two families have been chosen. One is a single mother living in public housing, and the others are both pre-school teachers who were getting by living with family. Both have been very active in the build process.

Clinton on the economy

Those that know me, know that I'm just not a fan of either Clinton. That being said, I was watching David Letterman last night in my hotel room and listened to Bill Clinton give one of the most comprehensive, yet simplest explanations yet of the current economic crisis in the US. Worth listening to!

It's amazing some of the commentary I hear -- the US economy is in its most fragile state since the Great Depression. I think of the 30s, I think of The Grapes of Wrath, dust bowls and bread lines. Today, there are so many households living beyond their means. Materialism has taken "doing without" to a whole new, rather disturbing definition.

I spent today at Habitat for Humanity and was really taken aback by some of the statistics I read about housing and poverty. The official poverty line in the US is somewhere around $19K, but if you add up the basic, most rudimentary costs for living (heat, electric, a roof over your head), you still go north of $20K. So where do these families find the money to get by? And how many middle-class families are falling further and further behind in debt, having overextended themselves over the past few years in low- or no-money down mortgages?

What a mess we've created. No wonder the rest of the world is in a panic, hoping that their economies don't lurch into a tailspin right after us!

Oil

Oil. Just mention it, and people with oil heat just cringe.

Like a lot of folks, we're on a monthly budget plan. The oil company charges our account roughly $175 a month, it goes into our account, and whenever oil is delivered, the expense is held against the balance we've built. Pretty simple.

Oil prices have been going up dramatically, but my budget plan has stayed the same. Then today I discover that without warning, the company has charged me $550. Yikes -- this must be yet another accounting mistake (there have been a bunch with this company, but I digress...). When I called to check, however, I learned that in fact it wasn't. We owe $550 this month and next to pay off our oil for the year, then a new budget charge will begin in July.

Usually when rates change for any other utilities or even our student loan accounts, we get a 30 day notice. None here. Dozens more found out the hard way when they went to the ATM and couldn't withdraw funds -- the customer service rep I spoke to had been fielding calls all morning, and it was only 11am. How on earth is the average person supposed to stay afloat when oil goes up several hundred dollars a whack?

What Starbucks could have learned from MobyDick

There's been a number of articles lately about Starbucks and its lackluster performance. Former CEO Howard Schultz returned earlier this year to help turn the company around. Somewhere there was a tipping point at which they built one coffee shop too many. In most cities to which I've traveled in recent years, finding a Starbucks is a heck of a lot easier than finding McDonald's (can we say cannibalization?). And once you're inside, it's not just about coffee -- over the past year or two, you could buy lunch, music, books (can we say overextended?).

As the economy slows down, perks like grande non-fat chai lattes (my personal favorite) are the first to go. Stores will close, jobs will be cut. As for its product, last month, Starbucks shut down every store to get back to basics and make sure its barristas knew....well, how to make a good espresso.

Starbucks, as you may know, was named after the first mate in Moby Dick, the story of Captain Ahab's obsession with exacting revenge on a white whale that bit off his leg. The story is narrated by Ishmael, who answers the call of the sea by enlisting on the Pequod. For those of you who managed to get through secondary school without reading this classic, I won't ruin the ending, but rest assured only one of these men survives.

The question remains: is Schultz Ahab or Ishmael?

Years ago, I had a summer job at a PR firm that had Coffee Connection as its account. Its owner, George Howell, had an ambitious plan to take on Starbucks. He saw two empires, West Coast and East Coast, meeting at the Mississippi. We know who won that battle! It'll be interesting to see if Schultz can turn around Starbucks for this battle.

The RollerCoaster Economy

Today's NYT has one of the best explanations for the current fix we're in, and it all seems to come down to the housing market. It started this mess, and it's the only thing that will end it.

Basically, prices and rates were so good in the real estate market that everyone put their eggs in that basket. Lenders got greedy and lowered both their rates and standards. Supply and demand hits, rates go up and presto -- foreclosures. Perhaps I'm oversimplifying, but you get the gist.

The market is awful right now -- at least ten months of inventory, buyers can get nearly any price they want if you're a motivated seller, but from what I understand from my realtor, it's becoming much much harder to qualify for mortgages in the first place.

Gas and oil are outrageous -- we fully expect to pay upwards of $70-80 within a month or two to fill our SUV. We sold the Saturn around Thanksgiving -- it was reaching the age at which we would have had to put more money into it to maintain it that was worthwhile, plus we love the 4Runner. However, I really miss that gas mileage. I'm seriously going to look into the possibility of riding my bike to work this summer.

On a totally different track, the NYT had a great article on Obama's speech yesterday. The national election is just fascinating this year! Tom and I are both still registered independent, but really like what we hear from Obama.

It's the economy, stupid...

We went off-grid this weekend up to VT with Tom's company. Totally off grid except for watching snowboarding clips in the lodge while everyone else was skiing. Imagine my surprise to watch TV last night and hear the latest financial woes of Bear Stearns.

I caught up today with the NYT and Boston.com, and I just can't help myself. Read these clips from our fearless leader today talking about the economy.

"One thing is for certain, we're in challenging times....But another thing is for certain: We've taken strong, decisive action."

The president.....praised Paulson for working with the Fed and showing "the country and the world that the United States is on top of the situation."

"....Our financial institutions are strong....[and] our capital markets are functioning efficiently and effectively."

"When need be, we'll act decisively in a way that continues to bring order to financial markets,"

"In the long run, our economy is going to be fine....Right now we're dealing with a difficult situation."

Hmmm.....that and a quarter won't even get you a cup of coffee in this economic climate!

ps -- hey, I figured out how fun linking key words to articles can be!