A recovery unlike any other


In order to start this little essay, I need to establish a foundation. We’re going to go shopping… with a child.

If you’ve ever been around a child with money, you probably know the drill -- they believe ten dollars will buy the world. It’s an honest mistake… especially when we are talking about the ages of 4, 6, 8, and such.

Ten dollars might be a video game… used or discounted or if nothing else at least suitably entertaining for kids.

Ten dollars might be a toy.

Ten dollars might be a movie… a hat… a stuffed animal… a puppy! Ten dollars might be a puppy!

And as adults we shake our heads and smile. Because even if that ten dollars could be a puppy, the reality is it won’t be a video game AND a toy AND a movie AND a hat AND a stuffed animal AND a puppy.

It will be one of those things.

And then it will be spent.

I would argue it’s not that children don’t understand the value of money (although I readily admit that is part of it). Instead, I think the major portion of it is that they don’t understand the permanence of spending money. In other words…

You only get to spend that ten dollars once.

Folks… we can discuss and debate and consider the ideas of saving money, investing for the future, making wise purchases with thorough research, and any other concept you want… the idea I’m trying to establish for us and this essay is simple -- when money leaves your wallet for a purchase, you don’t get that money back.

(And now we can move one step further up the ladder.)

Several years ago… and I do mean ten-plus years ago… I made a fancy observation about finances. Well, maybe it wasn’t that fancy. But it was, I thought, a really good observation. I’m going to make it again here… with a slightly different example…

So, you want to stop the school bake sales? I may not agree with you -- at all -- but I understand what you are saying. Some kids have allergies… and good lord we can’t have our children buying cupcakes and eating unhealthy snacks. Stop the bake sales! Got it.

Now then… the money raised with those bake sales might have been used to pay for uniforms for school’s athletic teams… might have been used to support field trips… purchased new equipment… supported the yearbook… and so on.

No more bake sales.

Got it.


How are you planning to pay the costs that once were covered?

Action… reaction. That’s the result of my fancy observation. No bake sales… need to bridge the revenue loss.

Don’t get me wrong folks. I’m not telling you to have the bake sale. That isn’t a must for me. I’m just saying that, in my opinion, if you want to be active and vocal about the need to get rid of the bake sale then you need to be accountable and responsible for what comes next.

The results.

There will be no banning brownies and then complaining when your child needs an additional $10 to go on the annual trip to the local museum.

(Moving along to the next rung.)

An article from Carl Richards. (Link from the finance area of yahoo.com, no longer active.)

It’s about saving money and investing and… well, it uses that great old example of giving a penny on day one and doubling it every day for a month and ultimately realizing amazing results.

Overall I like it. There’s some good, solid advice in there. And it isn’t presented in some amazingly complex or totally out-of-touch way.



“Let me give you a real example: Say you have Sarah, who decides at 25 to save $1,000 a month. She does that for 10 years.”

(And now, with that line, we’ve completed the foundation and reached the top of the ladder. I can begin the story about how difficult this economic recovery is, and why so many people seem lost about what is going on.)

Let me give you a real example. (Because, frankly, I don’t know many people that have the resources to save $1,000 a month. Great in theory though. That said, this is an example. It is meant to portray a situation we can all picture, and does not reflect one specific family. Ok? Good…)

Ten years ago, a family with a fairly low income liked to gather everyone together each night at the dinner table. (I know… I promised a real example… just stay with me.)

It’s a family of four. Mother. Father. Two kids.

And every Friday, they order a special take out dinner as a treat, rent a movie, and settle in to spend some time together.

It’s quality stuff.

But times change. The company where mom and dad work have started taking $5 extra each week out of one of the paychecks to cover the medical benefits.

So nine years ago, the family adjusted Friday night. Gone was the full meal with breadsticks or extra egg rolls, and in was a pizza.

But times change. The cost of cheese and other ingredients go up, and a large pizza from that great place down the street is no longer $10.

So eight years ago, the family adjusted Friday night. They still order the pizza, but they couldn’t rent a movie and had to cut back on their cable package, so they began a family game night.

But times change…

Now the family is getting bills from the routine doctor visits. (Nothing amazing folks. Just basic annual visits for mom and dad and the kids. There are co-pays that are going up… and changing costs of medication… and some procedures are no longer covered on an annual basis.)

The price of gas has skyrocketed. Which in turn not only means more dollars for running the car, but also an increase in the costs of heating the house.

There are no annual raises at work… the cost of living doesn’t care.

Our same family of four is no longer gathering once a week for a little treat while setting up a quiet and fun evening together. Instead, mom and dad are trying to figure out how to pay the mortgage, send a check for the bill for their portion of a tonsillectomy or colonoscopy, and put oil in the tank before January arrives.

At this point in our story, we look at the media. They are offering up some coverage of a comedian, in prime time, that says to the audience something like this (my words, but you all can recall this): “To get through these difficult financial pressures, all of us need to pull together and make some sacrifices.”

Of course, I don’t believe “comedian” is the technical term for that person asking us to get ready and expect tough decisions and sacrifice. Officially, I think the person was called a candidate.

Another little problem is easy to spot… especially if you read my real example and nodded about how costs have been rising in all areas for our real family. And that is -- most people don’t have much left to sacrifice. By the point this comedian is relaying the “news” that we all need to make some tough decisions, most of us have already made tough decisions and sacrificed.

Let’s look at the foundation I was creating. (Remember the foundation?)

You have ten dollars in your wallet. You spend ten dollars on something. You no longer have ten dollars in your wallet.

Many people in this country aren’t looking to trim unnecessary expenses. They’re debating which credit card bill is the most important one to pay because they can’t send legitimate checks out for all of their necessary household expenses.

I won’t pretend to know all parts of the Affordable Care Act. There are likely some previsions in it that I’m missing. But let’s move along to the bake sale part of my progression… you know, now that we’ve established that no one has any money to spend.

The government is requiring companies to provide medical benefits to employees or pay a fine. (Yes, there are provisions for small businesses… but we’ll just keep moving along as if the business in question is required to provide those benefits.) As I understand it, there are two conditions involved…

(1) If not providing medical benefits, the company would be subject to a fine of $2,000 per employee.

(2) The employee in question must work an average of 30-hours or more each week.

Ok… let’s get the funny thing right out of the way. According to most estimates I’ve seen, the average annual cost to an employer for providing medical benefits is -- any guesses? -- more than $5,000. Not that this is going to happen, but let’s go to the ridiculous extreme -- as an employer, what would you rather pay… $5,000-plus per employee or $2,000 per employee?

Right. So now you see where it can be absurd. The less funny thing… many companies are already adjusting the scheduling of their employees to -- yeah, you got it -- less than 30-hours per week.

(Hold on… hold on… you mean now we’re headed toward a destination where many people are not only being asked to sacrifice well after their ten dollars was taken, but might have to do it on 75% of their paycheck? If you think that’s mind-numbingly hysterical, get ready, because it gets even better. You could be held accountable for not having medical benefits and be forced to pay for them or pay a fine. (Not a tax. No, of course not a tax. It’s a fine.) And, you may have noticed that without raising taxes… the comedians promised we average folks wouldn’t have our taxes raised… our paychecks have already gone down by roughly 2% in 2013.)

You know what this reminds me of?

A juggler is performing. He’s blindfolded. But the audience wants more. So he’s blindfolded and juggling three running chainsaws. Audience wants more. So he’s placed on a tightrope 50-feet in the air. More. So two more chainsaws are tossed into the routine, and the tightrope is set on fire.

After most Americans have adjusted their lifestyles and made difficult changes, we’re given the speech that sacrifices need to be made. And because we dared laugh in disbelief, the prices of gas and groceries rose, medical benefits are threatened, and paychecks cut. Basically, I hope we can all handle adding the chainsaws into our routine… because it wasn’t enough for us all to be blindfolded and 50-feet in the air. (Fortunately… we all have medical coverage.)

I don’t have any answers. Maybe this is just a rant. Perhaps just an attempt at opening eyes (and an attempt that some may have stopped reading several hundred words ago). Perhaps this is a good way to turn this observational essay toward a conclusion.

Most places I looked at said that college tuition rose by roughly 6% about four or five years ago. Most places told me that the average college graduate in 2010 had roughly $27,000 in debt just from tuition bills and loans. And, most places I found said that unemployment for college graduates has never been worse.

What does that mean?

Well… if you are graduating from college today, chances are very good that you don’t have a house or anything else tangible, but you owe more than your parents have ever paid for a car… good luck finding a job in your field, never mind finding a job at all… and, the costs of that education, for those of you with kids that haven’t reached college age yet, is growing faster than your paycheck.

You remember the paycheck, right? The one that isn’t getting an raise and has dropped in 2013 and just might be sliced by about 10-hours a week? That one.

I’m not trying to be funny here. Well… in parts I am. But I’m also trying not to be naïve. What I am trying to say is that there is a disconnect here.

While politicians are posing and debating and talking about sacrifice… and while they taunt and twirl and spin stories of their heroic activities… and, more accurately, while they watch polls and try to gauge results or factor in how opinions may change because of their actions before they do anything… I think the only conclusion is to say they do not get it. Not at all.

The media is covering stories about a coin that could be valued at one trillion dollars. We’re being given details about ways this presidency will finish its run and leave its legacy. We’ve been told that if you turn the prism of unemployment or cost of living or whatever to just the right angle there’s a rainbow to be seen.

Fine. I like rainbows. I also like lollipops and puppies. I can’t get any of those into the envelope when I pay my bills.

There’s a light at the end of this tunnel. And while some people are looking at rainbows, hopefully a few people in positions to do something about it will recognize it just might be a train.

If you have any comments or questions, please e-mail me at Bob@inmybackpack.com