Do I wake or sleep?

I'm starting to settle into my new place and establishing a rhythm of sorts. I have a couple of priorities I'm trying to honor--the main one is financial stability. After buying the new place I have a larger monthly nut than I did when I lived with Anya--the mortgage + maintenance is more (not much more but still), plus I now have twice the cable/internet bill (since I got Fios) and an electric bill (when Anya and I lived together I paid for the internet and she paid for ConEd, and we would figure the difference once a year). So for the past month or so I've been seeing how much I can cut other expenses--how much fat is in the budget? A lot more than you'd think, and I've eliminated a lot of it. When I shop for groceries now, I force myself to get *only* what's on the list. If I hang out with my soccer team afterward I get one beer and that's it. No Pinkberry, no afternoon treats at work, turn off the lights every chance I get--it's what I like to call my Nicolae Ceaucescu Austerity Program. So it's worked quite well so far! My ConEd bill went WAY down and I cut over $200 from my monthly MasterCard bill. I know I can get it down even further, but that will have to wait until the winter. Between taking Thing 1 and Thing 2 to the vet last month and this (each visit is a cool $95--yikes!), plus travel home for the holidays, plus presents and other assorted holiday expenses, I'm hit a little hard the next couple of months.

It's difficult for me to earn much more money than I do right now unless I get a raise or an outside job (both possibilities) but there are other sources for funds. For one thing, my income tax refund in the spring which is usually pretty sizable. Another is the cash rewards program on my credit card--it is tallied every month and awarded to me at the end of the year. Since I pay my balance in full every month, I don't pay interest so that's free cash, as it were. Not a lot, true, but every bit helps!

The money I'll be saving goes to two purposes--1) paying down the mortgage faster (I'm adding extra money every month toward the principal) and 2) savings (not that it's doing anything there, rates are so low right now). Although I think some of that will also go toward my Roth IRA--I'd like to up my monthly allocation.

Holy crap! GOOG is going through the roof today, up 12%! (I've been tracking this stock obsessively since splurging on it a few weeks ago.)

So I finished reading (finally) Larry McDonald's A Colossal Failure of Common Sense. I'd put it aside last summer after reading about a third and was then reminded of it in May after watching the movie Too Big to Fail on HBO at Lori's place. (Which--by the way? AMAZING movie. Just fantastic and well worth watching. Really captures the terror of those weeks in the fall of '08.) Anyway watching the movie I was reminded of the McDonald book, especially because 2Big similarly pillories Dick Fuld, who comes off as a criminally self-absorbed, in denial, petulant jerk. Think Nixon in finance, the kind of guy who holds grudges and makes terrible decisions because he can't stand to be seen as "less than" in any way. So I went back to Failure and found it much faster reading this time--apparently I'd absorbed the concepts. It's a great book for a non-insider--there is a certain amount of lingo to master but he does a pretty good job of breaking down exactly how this mess came about. There is a slight implicit political bias to it but I can get past that. When you realize how it happened, you start shaking your head, like WHY did anyone think saddling poor people with unworkable mortgages was a good idea? This isn't just the very commendable goal of trying to help poor people (aka subprime borrowers) by navigating the mortgage process, or reducing the interest rates for them or whatever--this is setting them up to fail by signing ANYONE and everyone, no matter what*. There were all sorts of terrifying loan structures like NINJAs (No Income, No Job or Assets) and ARMs (Adjustable Rate Mortages--people would sign a loan thinking their payments would be, say, $2000/month and then after 6 months--WHOOSH!--they went skyward, to $3500 or more). Honestly, I can't place blame on these borrowers--it's an article of faith that owning your own home is the American dream. Furthermore it's a fundamental tenet of financial solvency that it's better to buy a home and earn equity than to rent (which earns you no equity and of course you don't own anything after finishing a lease). If someone comes to you offering you a loan, when up til now people like you are denied access to loans (either due to racism or just financial common sense), wouldn't you assume they know what they're talking about? Why would they set you up to fail--whom does that help? It just makes no sense.

*These subprime loans were then collectively bundled into bonds (RMBS--Residential Mortgage-Backed Securities), and sold all over the world. So part of the problem of sorting out this mess is that no one knows who actually owns the titles to some of these properties. (Which actually helps some of the defaulting borrowers--can't kick someone out and sell their home from under it if you can't track down the owner because it's actually some bond customer in Norway or Japan. Hence some people have defaulted and just stayed in their homes.) Traditionally the bank that held your title was your local bank, just like traditional vetting methods for getting a mortgage include face to face meetings (no autobot and a careful assessment of your credit history, and assets and income.

One of the great features of the McDonald book is how he makes these concepts manageable and comprehensible. Partly this is because his prose is hardly eloquent! But this is mostly a strength--he writes like he talks. He brings a face to this process--he first introduces the legions of predatory lenders by talking how "trends tend to start in California" and describing a new kind of "banker," mortgage salesman who live in California and are incentivized to sign up as many mortgages as possible and who revel in their success with their Jags and Mercs and hit the gym and the tanning booth a lot. He calls them the bodybuilders.

Here is a fantastic article in New York magazine about predatory lending. Depressing as hell, but it helps you understand how the bulk of the blame lies with these lenders who lied to everyone just to line up loans they knew the borrowers couldn't repay. In this poor woman's case, she was scammed by her churchman (I use the term "bishop" advisedly--I doubt he's ordained with any kind of reputable denomination, he's a "bishop" like Al Sharpton is a "reverend"--he just uses the title without having earned it. And I love that the writer of the article actually tracked down this scammer at his house). I feel so terrible for this poor woman--she is genuinely trying to do the right thing, she's trying to fix this and seems like a hard worker and a self-improver who was treated very badly. She doesn't deserve this.

ETA: McDonald's book makes me want to start shorting stocks (i.e., betting they'll go down instead of up)--I bet I could do okay in distressed debt! Sadly, because of where I work, I'm not allowed by law. I have all sorts of restrictions about how I trade because of my job.

Taxes, so tedious. But this year I got smart and started a spreadsheet and entered the receipts as I generated them. In categories. I know, right? That's 8 hours of toil saved right there (well, not really saved, I just did it in bits and pieces over the past year--but that means I get my refund THAT MUCH FASTER. Woo hoo!

Because ladies and gentlemen, I am extremely poor. Really, really poor. I am now on the Nicolae Ceauşescu Austerity program to Pay Off Romania's foreign Clara's school debt. No going out and dropping $20 on drinks, no impulsive sushi purchases, no *sob* impromptu dinners at Indian Road Cafe. Cannot. Afford. It. Srsly. All socializing will have to be done at someone's apartment, or at the park or something. Maybe a splurge of a cup of coffee, but it won't be Starbucks.

Speaking of which, our start-up again of Drunken Knitting this weekend was so much fun--love to do it again soon! See, you can have a good time without dropping lots of money! Let's think about another one in a month or so.

Had my first class today--woo hoo!