Why all this talk of Wall Street vs. Main Street bugs me

Because it’s not Wall Street pitted against Main Street.

I’m always put off by news commentators and especially politicians who set up this false dichotomy of Wall Street vs. Main Street. The businesses and savings of Main Street are dependent on the credit facilitated by Wall Street – like it or not, we are ALL intricably linked.

When credit conditions are so bad that Treasuries briefly returned negative yields (meaning that people PAID for the privilege of loaning the government money), cities are shut out of the bond markets, companies can’t get the short-term loans they rely on for payroll, and banks won’t even lend to each other, no one (especially not middle-class Americans) gets off scot-free.

This article in the New York Times explains:

In 1929, Meyer Mishkin owned a shop in New York that sold silk shirts to workingmen. When the stock market crashed that October, he turned to his son, then a student at City College, and offered a version of this sentiment: It serves those rich scoundrels right. A year later, as Wall Street’s problems were starting to spill into the broader economy, Mr. Mishkin’s store went out of business. He no longer had enough customers. His son had to go to work to support the family, and Mr. Mishkin never held a steady job again. Frederic Mishkin — Meyer’s grandson and, until he stepped down a month ago, an ally of Ben Bernanke’s on the Federal Reserve Board — told me this story the other day, and its moral is obvious enough. Many people in Washington fear that the country is starting to spiral into a terrible downturn. And to their horror, they see the public, and many members of Congress, turning into modern-day Meyer Mishkins, more interested in punishing Wall Street than saving the economy.

For the complete article, click here.

The Senate is voting on the bailout / economic rescue plan tomorrow. I hope that Congress shows some leadership during these times. I hope the House and Senate members stop worrying about their elections in the next six months and start thinking about how to mitigate the worst case scenarios.

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I’ve lost that spendin’ feeling

All the uncertainty about the economy has suppressed my inclination to spend. Last night, I went to a Ross and a Loehmann’s, and walked out with… nothing.

I passed on a deeply discounted Tahari coat, a pair of leather wedges, and a Calvin Klein clutch with a gorgeous silver clasp. I even passed on a $8 bracelet with mother-of-pearl links. The bracelet is adorable, but all I can think about is that $8 will buy me a week’s worth of noodles if I should fall into dire straits. (I may be a tad dramatic here, because there’s no way $8 will make the difference between eating and starving for me…).

This downturn is a little scary, because it’s the first one I’m experiencing as a worker (as opposed to a student), and it’s the first one that I’m experiencing as someone who is mostly in charge of her financial well-being. I am feeling the pressure, which must be so much heavier on people with families, or recent retirees, or single parents.

Partly as a result of my new restraint on spending, September marks the first month that I saved $2,000 after tax. Like many others (consumer spending increased by the smallest percentage in over five years), I am clutching tighter to my wallet – I’ve cut out most of my meals out (which means that I am feeling VERY wary of the economic situation) and quit shopping almost cold-turkey.

How has the economy affected the way you are (or not) spending?

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What will happen?

I’m surprised at the failure of the bailout – from what I heard over the weekend, it was widely expected to pass.

Frankly, I don’t know what to think about the bailout. On the one hand, privatizing profits but socializing losses is a recipe for unbridled and excessive risk-taking. One can say that Wall Street got itself in trouble, and it shouldn’t need taxpayers for a bailout. On the other hand, it’s never a black-and-white issue of Wall Street vs. Main Street, where when the former loses the latter wins. Wall Street’s problems continue to flood Main Street. Frozen credit markets affect everyone – the college student looking for a loan, the newlyweds seeking a mortgage, small business owner trying to expand, and the applicant searching for jobs.

$700 billion is a huge amount, but what would a deep and prolonged recession cost the economy? The bailout is hastily put-together, but is it TOO hasty? The difficulty is that no one really knows the answer.

I don’t know what’s going to happen, but I AM looking for some sort of action from Congress. Even though this vote on bailout failed, I think there will be another round of voting / revisions to the measure.

In the meantime, I’m contributing to the problem by pulling tighter my purse-strings.

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I’m back!

Sorry my posting was sparse during the past week – I was in Hawaii!! Sunny days, balmy nights, beaches that looks as if they were lifted straight out of a postcard… in short, Hawaii did not disappoint.

My 5-day vacation in Hawaii cost me around $800, which is much lower than I could have hoped. This vacation was relatively inexpensive because 1. I stayed with a friend instead of getting a hotel, 2. I didn’t pay for several meals because my friend insisted on treating me. (Must repay the favor when I’m the hostess!), and 3. Bought my plane tickets 5 months in advance.

Although temptation was in every single store in Waikiki, I was pretty proud of myself for resisting the plethora of carved coconut shell figurines, nacre and pearl jewelry, and plumeria-print dresses. I got some cookies from Honolulu Cookie Company, a $10 sarong for me, and a $30 t-shirt for CB. Well, then there’s the food and fun in the sun. I ate out every night, took hula lessons, swam with the fishes, and beach-hopped all day.

Now I’m itching to go back (or at least, plan my next big adventure).

But while I was gone… how about the economy?!

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Weekend = success!

Usually I spend $30-$60 per weekend on food (i.e., almost every meal out). But this weekend, I ate leftovers, cooked brunch, and got some food from home.

So my grand total on food? Less than $21.

I’m going to see if I can keep this up – cooking brunch with CB was fun and relaxing, and the food came out really well. The money saved is awesome as well. The only other thing I spent money on was gas. For entertainment, we watched free movies on hulu.com.

The one thing that I did splurge on was real maple syrup. $6 for a small-ish bottle… but it tastes delicious. I figured with all the money I saved by not going out to eat, I can afford some pure maple syrup goodness.

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Side effect of decluttering = less spending

I’ve been thinking about purchasing a dresser for a while now. My closet is on the small side, so I thought I needed a dresser to hold all of my clothes.

Turns out, I just needed to get rid of some of my stuff! 😉

After spending several hours cleaning, dusting, and hauling out donations, I finally realized that my current storage space, while not as large as I’d like, is perfectly sufficient.

Decluttering has also helped me take an inventory of some of my stuff:

• 20 pairs of shoes
• 63 books
• 16 purses / handbags
• 25 pairs of earrings
• 8 bottles of moisturizer
• 5 foundations (liquid + powder)
• more dresses/skirts than I care to count

And all of the above is counted after I’ve finished cleaning/organizing.

Whenever I’m watching HGTV, one refrain that I hear from home buyers is that they need more space. I hope that when I’m ready to buy a home, I’ll remember that it’s a lot cheaper to get rid of stuff than to buy a bigger place!

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It’s getting bumpy…

The economy is getting a little scary.

Some leading economists say that the recession can last for another 18 months (putting us into the Spring/Summer of 2010), unemployment rate is highest in five years, only two of Wall Street’s five big U.S. investment banks remain, and the government has JUST orchestrated a $85 billion package for AIG.

How can I NOT be apprehensive in an environment such as this?

So I guess, it makes me feel better to have enough funds for… 11 months of bare-bones living. Almost a year. One more month and I’ll be at the One-Year mark.

Earlier this year, I was planning a mini-vacation to Las Vegas. But now, I decided that I’d rather hoard cash. One of the reasons why I love mini-getaways is because the hotels are always so clean and comfortable. But now I’ve cleaned up my piles of clothes and put on freshly laundered bed linens, my room is so much more welcoming. Given how everything is going, I’m planning to enjoy my weekends close to home for a while.

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HGTV producers: if you are reading this..

Dear HGTV producers:

I love your channel, and am very glad that I can find my favorite HGTV shows on hgtv.com and on hulu.com. My First Place, Property Virgins, and House Hunters kept me company while I cleaned & organized this weekend.

However, as entertaining and informative as the shows are, I’d suggest you add in a financial component as well. Or, better yet, a WHOLE NEW SHOW that not only focus on the granite and the double vanity, but on FICO scores, loan amortization, fixed vs. variable, down payments, etc – in other words, the funnest parts of the home-buying process.

In fact, I’ve already come up with a name for this new show: My First Mortgage. Not snazzy enough? Well, then, behold the collective wisdom of the personal finance blogosphere:

Readers, what would your name be for the show?

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The morality of fashion?

Thanks to Squally Reach (who is on a YEAR-long no buying resolution), I found this article in the Vancouver Sun about the morality of fashion.

England’s House of Lords’ Science and Technology Committee released a report that harshly condemned cheap and chic insta-fashion, calling it “costly and socially unacceptable.” …To bring the harsh reality home, consider this: A closet crammed with cheap, disposable clothes is actually more expensive than a wardrobe of well-made, long-wearing classics.

I do think the article raises salient points. All things being equal, more expensive clothing will be better quality (does that mean that its workers will be treated more fairly? I’m asking a real question here). I think almost every women want to have a timeless wardrobe and flattering fits, but HOW timeless and HOW luxurious depends on personal circumstances. It’s something I struggle with

Theory’s quality is better than Payaya’s, no doubt. But it comes down to the question of: Can I AFFORD the quality in my current financial situation? Do I WANT or NEED that degree of quality in my current lifestyle? WHERE does having a great, classic wardrobe fit on my list of priorities – does it come after saving for graduate school but before eating out 4x a week?

What do you think?

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7 years

It’s been 7 years since 9-11.

I’m not quite sure what to write about it… I remember I was in AP US History when I heard the news from a classmate, and at first I thought she was joking.

Time has moved so quickly, and it’s strange to think that I’ve lived a perfectly normal life even though such momentus events were (are) unfolding in the world and in our country, and in the lives of the soldiers and their families. People fighting, people dying, half a world away. What to do? How to feel?

Young men fight the wars that old men start. This is not a statement on the justice or necessity of war in general, much less this war in particular. History, as always, will be the judge.

No matter what, I think it sad that the world that adults leave their children is one in which war exists, and has always existed in one area or another.

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