Sunday, January 30, 2011

How to Tighten Your Belt The Texas Way

As states (especially Texas) madly struggle to balance their budgets, a lot of rhetoric revolves around the idea that the government needs to operate like families during tough times: they tighten their belts, cut out unnecessary spending, etc. As mentioned in a previous blog, Governor Rick Perry (Republic of Texas) and other conservative legislators seek to balance the budget without raising taxes and without touching the 9 billion dollars in the rainy day fund. (That is not a misprint. Yes, a 9 followed by 9 zeroes. Just sitting there. Doing nothing.) So I thought it would be useful to study how a family should operate during tough times under these standards.

I convened a panel of misers, I mean Texas conservatives, and posed some real life examples to them, with Dick and Jane as the parents of two children. Dick is an electrician while Jane stays at home to take care of the kids. They have scrimped and saved through the years and have a healthy “rainy day fund” of $10,000 in a savings account.

Scenario 1: One day, their 1987 Chevy Nova breaks down. The transmission is shot and total repairs will cost $2000. What should they do?

A. They should tap into the rainy day fund to fix the car and replenish the fund when they can.
B. Dick should work overtime and maybe pick up a weekend job to raise the money for repairs.
C. Jane should get a part time job to help buy a new car.
D. They should not touch the rainy day fund, skip a few meals to save money, sell the old car for parts, and buy a used bicycle to replace it.

Panel’s Response: Answer: D. You don’t want to use 20% of the rainy day fund because you never know when times are going to get desperate. There isn’t a worse feeling than having $8,000 in the bank when you know you could have had $10,000. It will be impossible for Jane to get a part time job because she will have to home school the kids once we close all of the public schools in Texas. And how can Dick get a part-time job without a car? So the obvious solution is D, get a cheap bike.

Scenario 2: Remnants of a hurricane pass through the area causing a massive flood that leaves a foot of water in Dick and Jane’s house. They only have one room that is livable. Since they don’t live in a flood zone, they have no flood insurance and Governor Perry does not declare it a disaster area because it was only the remnants of a hurricane as opposed to a real disaster. What should they do?

A. They should tap into the rainy day fund to find better housing or make necessary repairs.
B. Dick should work overtime and maybe pick up a weekend job to get more money.
C. Jane should work harder to clean the house.
D. They should buy a Coleman camping stove, and everyone should live in the one tiny bedroom. They can all take baths in the living room since it is flooded.

Panel’s Response: The correct answer is D, but it’s a stupid question because an electrician obviously knows how to fix stuff. He’s probably been stealing supplies from his company for years because that’s what everyone does, so fixing the house will be virtually free.

Scenario 3: Dick and Jane get into a big argument one day. Jane storms out and does some “therapy” shopping and runs up $3,000 in credit card debt. What should they do?

A. They should kiss and make up, use the rainy day fund to pay off the debt, then cut up their credit cards.
B. They should return everything and get the credit card refunded.
C. Dick should file for divorce and make Jane keep the debt in her name.
D. They should make the minimal monthly payment on the credit card for the next 43 years.

Panel’s Response: Answer D. By now everyone is acutely aware that some companies in America are too big to fail, notably banks. By making the monthly minimal payment, you keep the economy humming by helping the bank’s bottom line while saving some of your own monthly budget. When banks are sound, America is sound. Also they should make up to 10 transfers back and forth between their savings account and checking account so the bank can make a monthly charge on their account. Come on, the bank needs to be making a little something with all that rainy day money they have there.

Scenario 4: It’s the week before Christmas. Dick and Jane’s house is all decorated with several presents already under the tree. One night while the family is at church, thieves break in and steal all of the presents. What should they do?

A. They should tap into the rainy day fund to ensure the children still have a memorable Christmas.
B. They should all volunteer at the local homeless shelter so the kids can see they don’t have it as bad as others.
C. Dick can give everyone supplies he stole from work as Christmas presents.
D. They should tell the kids Santa knows they’ve been bad, and he took the presents back.

Panel’s Response: This is a trick question. A is not an option but B, C and D are all pretty good even though they ignore the moral dilemma. Most people would argue that Santa Claus is the ultimate capitalist with his contract: if you’re good, he’ll deliver. It’s totally fair and would hold up in most courts. However, we all know Santa Claus does not exist. Hence, it’s up to the parents. How many parents do you know that actually withhold presents because the kids are bad? Zero. And that makes Christmas a socialist practice. So the correct answer is: you shouldn’t celebrate Christmas at all. Unless you’re communist.

Wednesday, January 19, 2011

Governor Perry Predicts Doom for Texas

Like most states, the Great Republic is trying to come to grips with a drastic revenue shortfall from the recent economic slump as the legislature attempts to complete a balanced budget for the next two years. According to democrats, we’re “zillions upon zillions of dollars short.” Governor Perry, on the other hand, says “we’re about that close” while holding his thumb and index finger half an inch apart. That may be right . . . assuming that half inch of space holds a stack of billion dollar bills.

However, the future looks bright, as Texas has saved its money for just such an occasion. Starting in 1987, the state started stuffing money under a really large mattress and called it the “Rainy Day Fund.” With great foresight and brilliant conservative thinking, the fund now holds about 9 billion dollars. This would be enough money to fix a large portion of the budget shortfall.

Unfortunately, it turns out the Rainy Day Fund is more like a giant safe . . . buried somewhere in North Korea. Under a volcano guarded by flying monkeys, trap doors, voice recognition gates, and an oracle who will ask visitors three challenging questions about cricket. In Klingon. Backwards. And your answers must be in the form of a question. Yup, that’s right, Governor Perry and his conservative lawmaker brethren have decided we can’t touch the Rainy Day Fund.

I’m all in favor of fiscal conservative policy, but miserly-to-the-point-of-starvation policy? Let me ask you this, Mr. Governor: as you debate the budget, will you be burning large bundles of cash from the fund to keep the capitol warm? Or on the first day, perhaps every legislator gets a blanket full of bills to keep himself/herself warm at night? Or maybe you’re practicing origami in order to make umbrellas out of bills so the legislators don’t get wet when it rains?

I can picture a gaunt, shoeless child approaching the governor next year:

“Um, Mr. Governor sir, can I have a dollar for my school lunch? Wait where are you?”

“I’m over here,” a Rick Perry-ish voice says.

“Oh, I can’t see you behind those stacks of money.”

“It’s my fort. In case it rains. And in case the roof leaks.”

We’re in the worst economy since the Great Depression and the governor can’t even feel a sprinkle. Maybe he’s waiting for everyone to get struck by lightning first. Or swept completely away in the downpour. Maybe we’re saving it for the day Oklahoma springs a surprise nuclear attack on us. Then we’ll be able to rebuild the state or at least the Cotton Bowl so we can keep playing Oklahoma in football.

Governor Perry is quoted as saying, “Why in the world would we want to spend dollars just because they're sitting there…” Oh I don’t know, BECAUSE THEY’RE TAX DOLLARS and that’s what you do with tax dollars. Or you can give it back. At least the federal government spends the money we send it. (And then some.).

In fact, I would expect that to be the conservative argument: “We’re going to spend it on the budget or give it back.” But no, it’s “We’re going to cut your services to the bone while we build a giant cash playground in the Capitol that we can play in all day.”

Since Governor Perry refuses to touch the Rainy Day Fund, I can only conclude that he thinks Texas is in for a doomsday scenario so scary we can’t even picture it because to do so would sear our eyes and cause mass death and destruction.

Seriously, what’s the use in having a Rainy Day Fund if you don’t believe in rain?

Friday, January 14, 2011

Back Office Stick-Up

So I’ve had quite the holiday hiatus. In honor of the new year, I am kicking off the blog with a public service announcement. But first, a little background:

Last August, St. Pauli Girl was the victim of a hold-up. Except the thief didn’t have a mask or weapon and St. Pauli Girl never even met him. The thief was a large financial corporate institution we’ll call Rancid, Inc. (Times must be really, really tough.)

St. Pauli Girl withdrew a small sum from her retirement account held by Rancid, Inc. A couple of weeks later she received a call from the personnel office of her former employer: High Plains Drifter College. They told St. Pauli Girl they had received a $10,000 check made out to the college and referencing her name. The college had no idea why they received it and mailed the check to St. Pauli Girl.

St. Pauli Girl went online to check her account and noticed that the day after her small withdrawal, a $10,000 withdrawal had also been made. So despite now having the un-cashable check in her possession, her account was still missing $10,000.

Her retirement plan is a 403B plan which can best be described as the female equivalent of a 401k because it’s more complicated and has lots of “fine print” you ignored when you signed up. Plus it’s regulated by each individual state which means companies like Rancid, Inc. have to be able to handle these accounts in 50 different ways.

Surely a phone call would straighten things out? Well, here’s how that played out:

St. Pauli Girl: Can you tell me why $10,000 was taken from my account and sent to my former employer?

Rancid Operator: That check was requested by the college.

St. Pauli Girl: No, it wasn’t. I talked to them.

Rancid Operator: It’s standard procedure that a college requests the unvested amount of your investment when you leave their employment, and that’s what Giddyup College did.

St. Pauli Girl: Wait, Giddyup College? I haven’t worked for them in over ten years, and that was mostly part-time for just a few years. Almost all of my retirement investment is from High Plains Drifter College, where I was full-time for many years.

Rancid Operator: Well, when you change employers, you rollover what you had and the previous employer requests the unvested amount.

St. Pauli Girl: I changed colleges ten years ago! What took so long? Isn’t there a statute of limitations?

Rancid Operator: Let me ask a supervisor.

(20 minutes and 9 Musak songs later)

Rancid Operator: Yes, Giddyup College requested that money.

St. Pauli Girl: But you made the check out to High Plains Drifter and mailed the check to them.

Rancid Operator: Yes, hmm, well there goes my computer . . . sorry…. Let me ask a supervisor.

(20 more minutes later)

Rancid Operator: Ma’am? We mailed the check to High Plains because those two colleges merged.

St. Pauli Girl: What? Are you crazy? That sure will be news to them! Let me speak to your supervisor.

Rancid Operator: She just went to lunch. And I’d better get going too. Thanks for calling.

St. Pauli Girl tried numerous times to call back, but the Rancid operators put up a strong defense, and she couldn’t get past them. She tried to call the investment advisor listed on her statement, but he wouldn’t return her calls either. (Apparently he only returns calls when a commission is involved.) She called Giddyup College, and they verified they did not request a check . . . nor had they secretly merged with High Plains Drifter College.

We did extensive research and concluded no one was entitled to the money except St. Pauli Girl. We then mailed a formal letter to Rancid protesting her most recent retirement account statement and demanded the money be restored. (If this didn’t work, I knew where to find the A-Team.)

Finally after receiving our letter, a Rancid representative called to tell us there had been a mistake and the money would be restored by the end of the week. (It may have helped that in our letter we used words like “fraudulent,” “usury” and “chicanery.”) But no one ever explained the mistake. After $10,000 disappeared, no one could tell us how or why.

It was probably a computer glitch, or perhaps the fact that even minor employees have to know 50 different ways to handle retirement accounts. But in a large company like Rancid, no one is going to notice a missing $10,000. Luckily the HR person at High Plains Drifter College did notice.

So my public service announcement:

Balance your checkbook!

Always carefully read any investment statements!

Carefully review all bills, credit card statements and especially little charges on your phone bill!

If an ATM declines your withdrawal request, always check your statement and make sure the ATM didn’t take the money from your account anyway!

Times are tough; you never know when a company like Rancid, Inc. is going to keep a little something for themselves.