Monthly Archives: January 2011

Earnings vs. income

Lifestyle seems to grow to accommodate the income available. For most people that means that as your paycheck goes up, what you expect to be able to buy or do keeps pace as well, resulting in a new norm that closely matches current earning capability.

Newly middle class people choose middle class cars, houses and name brand clothes. Why is this? Why don’t they stick with the same types of things they had and did before their income grew, often things less extravagant? Why not keep shopping in thrift stores, driving that older car and getting inexpensive haircuts?

Instead of paying off debt, investing or saving, many will choose to commit the extra funds towards purchasing a big ticket item such as an automobile or a house, perhaps one they’d consider more suited to their new position in life. My family fits into this category (though I wish I could say we didn’t).  Somehow, we got along just fine when we had a much lower income. Our house had as much square footage as our current accommodation, at a lower mortgage cost. But then we decided we needed to trade up. We had some legitimate reasons for seeking a new place, and had a lot of housing options available to us that fit our general criterion for size and location. We could have found some something around our same mortgage rate and still have gotten all the major things we wanted.

So why’d we instead choose one that was quite a bit more expensive? Why do most people? Because they can. We saw something and liked it. We could do it, so we did. Hardly rational or long term thinking at work, or at least that’s how it appears in hindsight.  (Though I am very grateful we didn’t borrow as much as the bank was offering to lend us at the time!)

A family of four could choose to live in a three bedroom apartment within walking distance to a park, or alternatively a three-bedroom house with well landscaped yard, both within the same neighborhood and school district. The impact on the number of friends their kids make, what the family eats or hobbies they take up should be minor, but the decision will make a huge difference to their overall financial outlook, especially when considered over the course of a lifetime.

This difference could easily be enough to finance a round-the-world vacation, private school, early retirement, or some other dream. However if asked, most would say they can’t afford those kinds of things, and don’t really feel like they have a choice in the matter.

Most likely their spending has grown to match their earnings, and they don’t see the choices there anymore because they’ve settled in with the new norm. And this shift just seems to happen gradually, without much thought going into the matter.

One thing that keeps getting brought up over and over in conversations about our economy is that less than 1% of the US population controls almost 40% of the country’s wealth.  It’s also often pointed out that the gap between the rich and the poor is widening, not only in America but across the world.  While the poor often struggle to get enough good food to eat, or keep roofs over their heads, those in the middle (and sometimes the top, too) struggle to keep what they’ve got and hold on to their mortgages. But would they still be struggling if they hadn’t extended beyond what they really need? Had they gone for an adequate 1500 square feet instead of an extravagant 4500 would so many still be facing foreclosure?

People elsewhere in the world manage to live on a few dollars a week. So why do we need hundreds or thousands just to pay for our existence? Don’t kid yourself that our quality of life is so much better, or that we’re happier, because it’s simply not true.  If you look at anything that measures global happiness and wellbeing, we’re up there, but nowhere near #1.

In the US we’re obsessed with wealth. We imitate those above us, get jealous of what they have and hope to win the lottery so we can join their club. I’ve decided this is not something I want to care about anymore.

My family is working hard this year to eliminate debt to help further our long term plans, plans that ultimately do not focus on how much money we can earn, or what kind of stuff we can buy, but rather on the experience and enjoyment of life and what we want to do with our time.

Unfortunately, this means that in the short term we have to focus on money more than ever in order to dig ourselves out of this debt as quickly as possible. We’ve made the conscious decision to focus on short term inconvenience for long term gain.

Look for more posts to come on the topic of lifestyle design, a term that basically means taking charge of your life, figuring out what you want it to look like and making it happen. There are a lot of great authors and bloggers out there focusing on this topic, and much of what they say makes a lot of sense to me so far. I’ve just scratched the surface, but I’m eager to learn more. Anyone have any recommendations?

It’s time to make some changes and we’re already on our way.


How rich are you?
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Security theater

I wrote this piece back in late November and forgot to post it.  I still agree with what I’ve written, so decided there’s no reason not to just publish it now.

I learned a new term yesterday- security theater.  A phrase coined by Bruce Schneier, security technologist and author, it’s something that only serves to make people feel more secure without doing anything to actually improve security, much like the TSA security measures for screening of airliner passengers.

While I understand that some form of security is necessary to protect travelers, the methods currently being employed are beyond acceptable in my eyes.  I cannot envision permitting our young son to go through either the full body imaging scanner or the more aggressive pat downs that have recently been put in place.  I’m thankful we’re not set to fly somewhere already, as it would be a hard to face the loss of the money spent on tickets, but I think at this point foregoing the flight is something I’d do.

It’s beyond imaginable to me that people would even begin to think the aggressive behaviour that constitutes the advanced pat down is OK when in any other context it would be a crime. Modesty aside, the safety of the scanners is unproven in my mind, considered by many scientists to be potentially dangerous.  Yet, I hear coworkers defending the practices, and passing it off as no big deal! It can only be fear talking, the traditional technique used to elicit such a response.

When writing this post, I tried to examine many sides of this issue and look at my personal fears on the topic. What I found was that it’s more like indignation than fear in my case.

One one hand, you have the issue of being forced to  submit to the full body scanners, a multifaceted problem. Even if you ignore the part about some stranger viewing pictures of your naked body, there’s still the problem with the radiation from the scanners.  Of course the TSA says they’re safe, but that’s with limited testing and when they’re operating within normal limits.  But what if they’re not operated correctly (as happens even in the medical world where people are very well trained and paid, and that’s not the case with TSA workers) and are giving off more radiation than they should? And what effect does it having on growing kids brains? And since this is in addition to the radiation received in flight, what effect does the cumulative exposure have on health? Does it make one more likely to get cancer? Just so many unknowns!

On the other hand, you have the fear of humiliation, coupled with outrage and indignation about personal bodily integrity.  I firmly believe that the government should not have the right to control what we do with our bodies, that it  should be left up to the individual (and parent).  In the western world, we value our right not to have our bodies touched without our consent.  In this case, there is no other option. Sure, you can choose to go through the scanners, but even after doing that you may be forced to go through the pat down process.  While I may decide that this trade off makes sense for me, I just cannot put my son through that.  Just how does one explain to a child that a random low-level security guard is on the list of people that should be allowed to touch their genitals? You can’t; it’s just not justifiable.

Have you seen the video of the young boy being strip searched? What about the one where the disabled passenger’s urine bag is broken? While it’s good for people to see these things happening, for all to be aware of just what’s going on, it also adds to the growing level of fear of what will happen if we do implement the procedures. And I don’t even want to think about what happens when they encourage the use of this technology for all forms of public transportation!

I think we’d be hearing less public outrage, if we knew the new measures were effective. But that’s the point of security theater– effectiveness is not the goal.

According to Schneier, our current response to terrorism, “relies on the idea that we can somehow make ourselves safer by protecting against what the terrorists happened to do last time.”  And this is so true!  Terrorist will always evolve to incorporate the most recent changes into their plans. If you do look at 9/11, the example brought up by so many in defense of the TSA practices, you’d realize that the same attack would not be allowed to happen today, irregardless of the right of security personnel to touch your “junk”. Cockpit doors have been reinforced and passengers are now willing to fight to make sure planes aren’t being used as weapons.

Scnheier also argues that there’s no need to subject citizens to increasingly invasive search methods when, “the best defenses against terrorism are largely invisible: investigation, intelligence, and emergency response.”  I really agree with Scneier, and also loved his piece in the New York Times debate on the topic of body scanners making us safer. It’s one of the only sensible things I’ve read on the topic over the last few days.

So what’s the cost of all this security theater? Millions of taxpayer dollars, loss of bodily autonomy, increased public fear. People are willingly submitting to be harassed in order to visit their family members or go on vacation.  Some would argue that it’s just the price you have to pay if you want to travel via air. I’ve decided that price is too steep for my family to accept. For the unforeseeable future, we’ll be avoiding flying.