Sunday, November 30, 2008

Great Expectations

Sorry for the slow month, folks.  I've been on the road for work and working long, long days this month.  A few days at home for the holiday week has finally cured me of jetlag and general exhaustion.  It took some time for my brain to switch back to the 'on' position.  

It's the holiday season again.  I love the holidays.  Friends, family, good food, beautiful decorations...I love just about all of it.  But there are a few downsides that appear over the course of the season.   The expense.  The number of commitments that can spring up.  The pressure from those beloved friends and family members to meet their expectations.  It's easy to fall prey to a nice helping of stress and guilt.  So here are some ideas to help navigate the emotional minefields that the holidays can generate.

1. Gifts
We put away money all year long for Christmas gifts in the form of a 'Christmas club' at our credit union.  I strongly recommend this, even if it's just a few dollars a month - takes a huge amount of the sting out.  Still, it can be a big expense for us, especially because when the holiday season wraps up, we're involved in 5 - yes 5 - holiday celebrations (all but one is varying branches of family).  Gift exchanges have just gotten a little out of control for us, so much so that I was thrilled when my great aunt, who typically goes overboard with her generosity, announced she was only giving to children in the family, and my siblings and I decided to use the same approach.  Slowly but surely, both from other's actions and our own, we're trying to pare down the sheer number of gifts we give and receive.  

Instead, we're trying to give the gift of time and energy, by inviting friends over for dinner, doing an activity together, and so on.  The key here is talk early and often....and stand your ground when you make a decision about who and what to give. Change is hard for people, and opting out of a gift giving tradition or scaling it back may take time and gentle persistence to accomplish.  

So if you have always spent $100 a person and want to only spend $25, start talking about it in say, January.  And if there's a negative response, the best answer is "Of course, you must do what you want, but this is what I/we are doing.  I'm sorry you aren't happy about it, but this is the right decision for us".  And remind that person that the $ amount spent doesn't equal the amount of love you have for them.  

2. Time
I know I'm not the only one out there who has shown up for a family holiday function and received a guilt trip about not being around more, or staying longer.  Boy does that make the holidays extra fun, no?  While I typically come up with a fairly pacifying response, what goes through my head is more like "Oh yeah? Really?  Well perhaps you would like to maybe go to work for me for a few weeks, or come clean my bathroom so I have more free time!  Between errands, housework and commitments on our time, I can't even find time most weekends for a nap, or to just sit and veg out for an hour!  So thpppppt!"

Of course, saying things like that is completely nonproductive.  Most of the demands come from the sheer desire for more time with you, which means you matter quite a bit to that person.  So a gentle response of "Look, I know you would love it if we spent more time, but right now we're doing the best we can, and while you probably don't mean to make me/us feel bad about what we can give, that's what is happening, so I/we wish you could just enjoy the time we do have together."  This is one of those 'lather, rinse, repeat' statements that may need saying far more than once.  If that doesn't work, a more pointed conversation about how the guilt trips make you want to actually limit your time with that person and are completely counterproductive may be necessary.  Above all though, try not to feel bad.  Most of us have limited free time - there's nothing to apologize for if you don't have more to give.

3. Commitments
Yeah, so everyone and their grandmother's uncle's next-door-neighbor is having a holiday gathering, party, gift grab or potluck dinner.  Oh yeah, and then there's the work stuff - not mandatory, per se, but sure as heck expected.  The holidays start to seem like a treadmill you can't get off, and in your head runs the thought 'Great, so now I've made everyone happy, except I'm exhausted and miserable.  Bah humbug.'

There's a great response to this one "Sorry, I/we can't make it."  Simple, straightforward, and to the point.  No excuses for someone to poke at.  Pick and choose the activities to attend.  I set the expectations at work that I have a limited number of 'Kitchen Passes' to choose from - so if the after-hours gatherings are too frequent, I go to some, but not all.  After all, my home and husband are important too.  

Same with holiday parties.  This year we were invited to a neighborhood party - we would love to attend and meet some of the neighbors that we haven't met yet, but since it falls on the same day as I've scheduled my annual baking day with  good friend as well as a family dinner, squeezing in a 3rd event is just not possible.  So a polite decline along with 'but we'd love to meet you all, and hope we can find another time!' fits the bill.  It's true, too. 

It's very freeing to learn that you can, in fact, say no.  A holiday where everyone but you gets to be happy is no good holiday at all.  

4. Travel
Whether you live 15 minutes or 15 hours from your family, the travel question gets tricky.  I was 33 years old before I got to spend a Christmas day at my home and stay in one place the whole day (divorced parents and expectations of visits from grandparents and other family).  I remember all too vividly how awful it was to rush from place to place, trying to stuff in yet one more bite of my second Christmas dinner in 4 hours in order to please my parents or someone else.  Quite frankly, it sucked, and for years I hated Christmas - because again, it was about making everyone else happy at my siblings and my expense.  

So a couple years ago, my husband and I created our own tradition.  We'll travel for any other holiday, but Christmas is at home.  Whomever wants to come to us is welcome, be they family or friends.  I cook, we open gifts, all is well.   Is this a hard and fast rule?  Mostly.  We may consider the occasional not-at-home Christmas over the years, but we're not committing to anything, especially now with Baby MoneyPenny on the way.  If we do decide to, it will be the exception, rather than the rule.  I learned it was okay to make the holidays fun for me too.  

That's not to say that making extended family happy isn't important, or that no one should travel on the holidays.  Some people feel it isn't the holiday unless it's spent at Mom's or Grandma's or wherever.  Fine.  But do yourself a favor and limit it to one locale and one holiday dinner, unless you and all the other people in your immediate family (spouse and kids) absolutely and unhesistatingly agrees to do otherwise.  No one will die if you see them on the 26th instead of the 25th, or if you spend most of Chanukah lighting candles and making latkes in your apartment with friends.  Sure, change is hard, and it's important to be fair to everyone.

But that includes you too.  I once read the statement 'traditions are great, everyone should get a chance to make some', and I think it's a good way to look at things.  And if someone is mad at you for changing theirs, ask yourself why it is more honorable for them to be happy, even at your expense, than for you to be?  

I love the holidays - but in many cases that's because I've learned, over time, what I am willing and able to give.  Do I always get it right?  No (see the thing about the 5 holiday gift exchanges above).  But I try - to do it right for family, my spouse, and also myself.  I'll happily meet the expectations I can meet, but I've given up (mostly) on guilt for those I can't meet.    I hope you can do the same.

So enjoy those holidays.  And when someone asks you to bring cookies or an appetizer to a function, it's okay to buy them if you don't feel like baking.  

Or volunteer to bring the wine.  Unless you live in Sonoma, it's unlikely that anyone will expect you to have pressed the grapes yourself.  


Sunday, November 2, 2008

About those HENRYs

Last week, CNN and Fortune Magazine, published a fascinating article about the 'HENRYs' - a demographic of High Earners, Not Rich Yet people.  These are folks with high incomes, sure - $250k to $500k, but interestingly, none of them consider themselves rich.

The article caught my attention on a variety of levels.  First, because it came out just a short time before election day, and something I hear over and over again is discussion about 'real Americans'.  This is often used in the context that both high earners, or those coastal-state latte drinking liberal elitists don't represent 'real America'.    And if they are one and the same, they certainly can't be 'real Americans'.  I'm not sure what that makes people who fit that bill, but we'll get to that in a minute.  

It also fascinated me, because, while not HENRYs, my husband and I do earn well above the median, and our habits were well represented in some of the featured families. In other words, our spending and lifestyle habits do somewhat mirror the HENRYs.  Not entirely - private schools are not on our list for one, but somewhat.  

Lastly, it's because of the label 'rich' and how I define it - not by earnings, but by net worth. This too, mirrors the HENRYs beliefs. So I thought I'd take some time to explore my thoughts on the article.

I'll start off by saying anyone in that earning category who describes themselves as struggling is not using their resources wisely.  If you can't make ends meet on $500k a year, you are probably overspending on big ticket items, like housing, cars, and so forth.  But there's a huge disparity, between what $250k can do for you in say, Moline Illinois, vs. Manhattan.  There's also far less likelihood that you'll make that $250k in Moline.  

So why don't these people think they are rich?  Top of the list is taxes.  As of 2006, the data cited in the article, a high wage earner in this bracket, who averages $287,000.00 a year gross pays $57k in federal taxes.  If you live in a state that also taxes income, take another 5-8% of that, or between $14, 350 and $22,960.  Add to that Social Security taxes, medicare taxes, and you are talking about $90,000 of that $287,000.00 average earnings gone before you see these folks see a paycheck.  Yep, almost a third of their average earnings goes out the door.  And in most cases, due to the AMT, or Alternative Minimum Tax, these folks never see it back, not even in the form of the deductions that so many of us view as standard to tax payers.  

So it's pretty understandable how the HENRYs get a little resentful when politicians talk about them paying more taxes.  After all, they pay a tremendous percentage more of their incomes in taxes than those 'real Americans' already.  And because the primary tax base is on income rather than net worth, folks like Ross Perot average just 7% of their wealth in taxes, vs. the 30+% cited here for these high earners.  In other words, we don't tax the rich in this country, we tax the high wage earners.  Warren Buffett keeps a huge part of his money safe, simply because he isn't pulling it out of investments.  

In fact via taxes, the HENRYs are subsidizing the lower earners in many government programs.  Is this fair?  Well, yes.  And no.  Barack Obama is right - when wealth is spread, everyone wins.  Rising tides, correctly managed, raise all boats.  Unfortunately, over the last 25 years the disparity in taxation means that the HENRYs have actually born a greater tax burden, percentage wise, than the conspicuously rich Paris Hiltons of the world.  

And that's just taxes.  Add to that the simple math that higher income earners often enter their fields after prolonged education, and there can be a fairly large bite of their income going to student loans.  If a law student graduates with $100k in loans, hardly unheard of, that's about $1000 a month just in loan payments.  

Higher earners also are often congregated in higher cost of living areas - those coasts full of us latte drinking liberal elitists.  This means that housing costs are higher, as are the costs of some things like child care.  In my area, near Boston, the monthly cost of  daycare runs about $1200-$1500 per child, and this is the average, not the high side.  For some folks with multiple kids, it can be cheaper to get a live-in nanny than to pay $3000 or more in daycare each month. And that federal dependent care credit is what, about $4000?  Gone in 6 weeks for a family with 2 kids in these areas.   

Let me also toss in another couple variables.  Sure, the HENRYs save a lot for education, especially college for their kids, as well as large amounts for retirement.  But they also can expect little back in the way of assistance - they will probably not be eligible for much beyond loans for college for their kids, and they plan for what my generation mostly expects - that Social Security and Medicare will be means-tested by the time they retire.  Meaning they will foot the entirety of their retirement by themselves.   

Because politicians and the media get a lot of mileage out of pitting the well-off against the not well off, and because there's no small amount of misunderstandings and even jealousy from the have nots to the haves, there's this idea that these people aren't 'real Americans'.  Real Americans, as we all know, wear flannel, drive tractors and pickups, and are the teachers, farmers, truck drivers, restaurant workers and small town people of our heartland.   Like Sarah Palin, right?  Except the little detail, oft overlooked,  that she, too is a HENRY.  

But where does that leave everyone else?  Let's be real here, a lot of people live on the coasts. Millions and millions of citizens. Are they not 'real Americans'?  Do they not pay taxes, raise families, work hard, donate their money and time, and vote?  I personally know quite a few people that fit the definition of HENRYs, or are close to it, and most of them work very hard indeed.   All of them love their kids, and want what's best for them.  And all of them do very much see themselves as Americans,  even if they don't regularly wear flannel.  

I know few 6-figure+ wage earners that don't work long hours, who aren't handed Blackberries to ensure they are perpetually accessible, and who aren't expected to be able to pick up and travel as required for work.  In other words, there's a trade off for that fantastic income.  Sure, they may be in offices with free coffee instead of working in the fields, but that's small consolation when you have a week full of meetings that force you to kiss your kids goodbye before they wake up and kiss them goodnight long after they fall asleep.  No one would pick that to be the case, but sometimes it happens.  And because HENRYs and similar folks are human, they just try to do their best.  I see a lot of them burn out trying to make it all work.  

I think the idea that these people aren't real Americans is pretty revolting, and does nothing but alienate neighbors and friends in a pointless class war where no one wins.  We, in our perpetual money hypocrisy in America, simultaneously celebrate the small business owners and dedicated who work hard to get ahead, and then resent the hell out of the fact that they did, in fact, get ahead.  

I think that the HENRYs have it pretty good.  Most of them aren't sweating next month's mortgage payment, or making a choice between gas to get to work and food on the table - and that makes them pretty blessed.  But I also think we need to stop seeing this group through rose colored glasses - they have some pretty big challenges too, and their taxes subsidize a lot of the support that those less fortunate than themselves receive.  

While there are people who struggle a lot more with many basic decisions, such as gas vs. food, or a parent sending a sick child to school because of a lack of paid sick time, and their needs must be addressed, the HENRYs aren't exactly popping out golden goose eggs that can subsidize all the lower wage earners needs.  We need to stop our regressive tax breaks to the truly wealthy to find some of the money that our federal government needs.  We need to get some of our corporations off welfare, and make them responsible for themselves.  We need to start looking at all our options, not just the easy targets who don't have the lobbyists to help them.  

HENRYs are that easy target.  They earn a bunch.  They don't have lobbyists and legal help to build them tax loopholes - they just aren't quite that rich.  They aren't the CEOs, they are the VPs. Or the men and women who employ some of those 'real Americans'.  

They are an integral part of America, and it's time we started treating them like it.

Want to meet the HENRYs yourself?

Saturday, November 1, 2008

Preparing for Baby Part 1

As I pass into my 23rd week of pregnancy, the need to actually prepare for Baby MoneyPenny's arrival has become more pressing.  

So far, we've managed to order a glider and ottoman (a must-have according to the many sleep deprived parents I've talked to, who have spent hours pacing with a fussy infant) for the nursery, and order some cloth diapers from  We did custom order the fabric and wood style for the glider, but the total additional cost off the base price was $7, so we figured we did okay.  

We still plan to paint the nursery, and we need some nursery furniture. While Baby Moneypenny will probably sleep in in our room for the first few months, it's my desire to have him or her in the nursery by the time I go back to work after 3 months of maternity leave.  Which means a crib will have to be obtained at some point.  

That, and we created a registry.  I always have mixed feelings about registries, including my own. They seem to have become a symbol of greed - 'buy me stuff!', and yet, true to the mixed relationship Americans have with money, "Where are you registered" is one of the most common questions I've gotten so far, and I often hear complaints about those who don't provide a registry to 'help people choose'.  So I compromise by putting nothing on our registry that we aren't ultimately prepared to buy for ourselves.  

So far, I give us a B+ on not succumbing to tons of marketing.  We have thus far avoided completely a bassinet or co-sleeper - the bassinet top of a pack 'n play will do fine, and only if it doesn't will we then go seek something else out - realistically we could always put a moses basket in the middle of our bed too, although I'm nervous of the baby in the bed with us.  I'm guessing we'll be inundated by cute clothes and toys, so we've skipped buying those, although we will probably pick something soft and cozy out for baby to come home from the hospital in, and a toy to have too.  Books are something we want to eventually accumulate a collection of, but based on my observations of neices and nephews collections, birthdays and holidays will cover a bunch of that, and then we'll add to their collection of things to read over the years.  

As for gear, there are things that are either needed or entirely useful.  A carseat &  stroller, somewhere to sleep, diapers, wipes, and so on.  A place to sleep.  Clothes.   Baby gates.  

What we don't need are items like an $800 stroller.  A decent, well rated travel system and a couple carseat bases will do just fine.  So we won't be the most stylish stroller-toting parents on the block...I'm comfortable with that.  Over the last month, I stopped a few moms to ask how they like their strollers and then Sander and I took a look around together.   We ended up picking a system that is sporty looking and handles well, but relatively inexpensive.   

Same with nursery furniture - there are sites that offer gorgeous cribs that can run into the thousands.  But a nice-looking, functional piece of furniture can be just as good, if not better, seeing as kids often practice teething on their cribs, so they can end up looking like hamster cages after a couple years of use.  

Ditto this philosophy on expensive little baby outfits and other baby accessories.   While they are adorable and tempting, and I don't know that I'll be able to completely avoid temptation after the baby arrives, I'm trying to remain practical.  

And then there's the mom costs.  Nursing-friendly clothes.  A pump, if one should so choose.  And all sorts of other gear, some of which is even a really good idea.  I resisted the idea of a pump, as they cost between $200-$300, until I was offered one free but for the cost of postage.  New hoses, etc to the tune of about $30 will make it good as new.  Some of my maternity clothes are also nursing clothes.  

Our biggest decision left is what to do about a crib and dresser.  We need one of each.  We've been offered a few used cribs, and are considering those as options, and we've seen some new that we like.  We have a tendency to like matched sets, so this is the one area where our frugality and practicality have been challenged.  Our solution has been to defer making a decision for right now - the reality is, we don't need it yet.   

It seems that this is one of the best things that soon-to-be parents can do - defer making decisions.  After all, we don't know yet what will work for this new person entering our lives, and if our child is anything like us, Baby MoneyPenny will have opinions of his/her own.   Sure,  we'll need some stuff up front.  We'll get some ourselves, and we'll register for the rest, and if we don't get what we register for we'll evaluate what we need and want as we go along.  In other words, we'll be fine either way.  

I'll add another update when we're closer - we'll see if the resolve to remain sensible holds.