The Writers Coin

I’ve been reading a lot of this lately:

The American Dream has been shattered. It used to be that a hard-working person could pretty much bank on getting a job after school. And if they worked hard at it, they knew they would make enough money to buy a home and support their family. They would have insurance, they would be able to provide the things the family needed, and they would be able to have a comfortable retirement. Now the housing bubble has burst, unemployment has spiked, and the American Dream no longer exists. It is gone.

Is that really the American Dream—that if you worked hard at your job you would pretty much have a guaranteed “decent” lifestyle with a comfortable retirement?

Because I always thought the American Dream was this notion that anything is possible. That if you work hard and give it your all, you might hit the jackpot and become very successful. I thought the American Dream was that notion of potential. Of possibility.

That it was possible, not guaranteed.

Nothing is guaranteed—regardless of how hard you work—except for the chance at living the good life. In other countries, a large swath of the population never even gets a lottery number—they don’t get to play. But that’s how I always viewed the American Dream: everyone has a shot at it, no matter what.

It got me thinking about old-school industries like the car industry. There used to be factory jobs where people showed up to work, put in their 30 years or whatever of hard work, and then were taken care of for life. Sweet retirement pensions meant that their future was guaranteed.

Now we know that this type of perk is unsustainable. That a company can’t carry all that shit on their books and stay profitable—it doesn’t make sense. This isn’t the death of the American Dream, it’s more like the awakening of reality. A pension sounds great and all, but to expect a guarantee like that seems unrealistic to me.

Maybe it’s because I’m from Guatemala. Nothing is guaranteed down there. You might have all your savings in a bank and then poof—turns out someone stole all the money and you’re never getting it back.

Ever.

Go to court to get it back? Please, you’re wasting your time. Press charges? Wasting your time and whatever money you have left.

Nothing is guaranteed down there. People work their asses off and they know that everything could be taken away tomorrow. It’s happened in past and that’s the shadow that everyone lives in. Everyone: rich, poor, middle class. Doesn’t matter.

That’s why Guatemalans save money, unlike Americans (until recently, anyway). They’re constantly worried about what might happen tomorrow so they save money or buy land—anything that might seem like a safer way to hold value.

There are no guarantees. It feels like this country is starting to get the gist of this idea and it’s a rude awakening.

But the American Dream? I don’t see that changing one bit…this is still the place where anyone can make it. Right now it’s just harder than it was before. But just because nothing is guaranteed, it doesn’t mean the dream doesn’t exist anymore.

This post was included in the MoneyCrashers Personal Finance Roundup.

A couple weeks ago we noticed our brakes were making a weird sound, so we took it to two different shops. And we got two quotes, which is the responsible thing to do.

But what do you do when one comes back at $420 and the other at $3,500?

You take it to a third shop, which charged us $240 for the job.

I learned a lot about the right things to do (get as many estimates as you can) and what not to do (never take it to the dealership). On my way, I found 6 Sites Every Car Owner Needs to Bookmark Now.

The Problem With Car Repairs

Ignorance. Most of us don’t know a damn thing about cars, so we need to find someone we can trust. Otherwise we’ll feel like we’re getting ripped off, which we very well might be.

While we were debating all these different quotes and estimates, I decided I couldn’t take it anymore. I needed to educate myself so I didn’t have to rely so much on someone else telling me what was wrong with my car. I decided that I’m going to learn the basics of how cars work, their parts, and so on.

But who has time for that? Now that the car is fixed, guess what happened? I don’t feel the urge to pick up Car Repairs for Dummies anymore. The car works and that’s all I need to know.

My tips to you?

• Get as many estimates as you can.
• Visit Repairpal.com and get an estimate there.
• Check out Yelp and ask your friends on Facebook if they have a shop they trust.
• Go with the place you trust the most, it will make all the difference.
• Stay on top of your maintenance!

And if you don’t have a car, stay tuned for a piece that should be up soon on the different car-sharing services out there.

Image by Dr. Keats

Last week the AP ran a story on the California Public Employees’ Retirement System (CalPERS) and how they were issuing bonuses to their employees despite the fund losing so much of its value. The first paragraph set the tone right away, as any good piece of journalism should:

As its investment portfolio was losing nearly a quarter of its value, the country’s largest public pension fund doled out six-figure bonuses and substantial raises to its top employees, an analysis by The Associated Press has found.

That tone I was talking about? It’s trying to rile readers up by implying bonuses were handed out improperly because some people were getting paid while the fund lost “a quarter of its value.”

I’ll be honest: when I read that first line, I was ready to shake my head and start wagging my finger at yet another group of people that are getting paid even when they don’t deserve it. I was fired up. A few graphs down, the fire is stoked:

Virtually all of CalPERS’ investment managers were awarded bonuses of more than $10,000 each, with several earning bonuses of more than $100,000 during the 2008-09 fiscal year. The cash awards were distributed as the fund lost $59 billion.

But read the rest of the article and you’ll realize there isn’t much to get indignant over—the way CalPERS doles out bonuses is actually really smart and really fair. Another quote:

CalPERS spokesman Brad Pacheco said bonuses are based on the fund’s performance over five years, not just the year immediately preceding the bonus, in order to encourage managers to seek long-term investments rather than short-term gains.

Brilliant! This is one of those major criticisms of certain investment funds: they’re so focused on the short term that eventually they crash and burn because they were only paying attention to making the numbers for the next quarter, not the next five years.

And in this case it means they get decent bonuses because the performance of the fund over the past five years was pretty good, despite the recent meltdown. Seems fair to me, especially when the fund outperformed the S&P during that time:

The Standard & Poor’s 500 index declined by 14.8 percent in 2007-08 and 28.2 percent in 2008-09, while CalPERS’ overall value dropped by 5.1 percent and 24.8 percent respectively.

Give them their bonuses and stop complaining—they earned them!

P.S. This reminds me of the ING bonuses and how I felt they shouldn’t have to give them backAfter all, a contract is a contract, right?

How much money do you need to call yourself rich? Thanks to Obama’s tax proposal, we don’t have to wonder much longer. His plan is to make the Bush tax cuts permanent for everyone except the “rich.”

So if you make $200,000 or you’re a couple that makes more than $250,000, congratulations! You’re in the top 2% of earners in this country and that means you’re rich!

Unfortunately, that means the tax cuts won’t expire for you and you’re tax rate will go up to either 36% or 39.6% (from 33% and 35%).

This has been in the news a lot and apparently there is TONS of debate going on about Obama’s plan. As usual, it has to do with party lines. Democrats say that the national debt is so out of control that this needs to be done. Republican think that the tax cuts should be extended for everyone, even the top 2%. They say that small-business owners will be affected and the economy as a whole might lurch (even more) due to the tax increase.

And I just don’t get it: why is this such a big story when so few of us are impacted?

From the NY Times:

Analyses from the Joint Committee on Taxation and the Tax Policy Center, a nonpartisan research organization, show that less than 3 percent of filers with small-business income pay at the top two income tax rates, and many of those are doctors and lawyers in partnerships.

I’m not naive, I know that these types of studies and committees can be very biased, but even if that number is 10% or 20%, that still means that a small minority of Americans will have to pay more taxes. And not just higher taxes—just what they used to pay before the tax cuts were put into place. So it’s not like taxes are going up for them, they’re going back to where they were.

As you can tell, I don’t make anywhere near $200,000 (though I’m working on it), so it’s easy for me to dismiss this whole issue and act surprised that it’s such a big deal.

What I don’t understand is how this isn’t a much simpler issue. If you had Americans vote on it, I would expect this to be resolved rather quickly. Everyone that makes under $200,000/$250,000 would be like “yeah raise taxes, I don’t care” and that would be the end of it.

Right?

The government needs money to run itself and the national debt is getting out of control. We need more money so why not take it back from the people who have oodles of it in the first place?

Which way would you vote? I’m curious if people out there not making “rich” money would still vote to keep the tax cuts for the rich. If so, I want to hear from you. Why? Is it because you think you might get to that level at some point and don’t want to pay those taxes? Wouldn’t you be so thrilled to get to that tax bracket that you wouldn’t care about paying a little more in taxes? I remember when I moved up from the lowest tax bracket to the next lowest and I was all excited: more money meant more taxes, sure, but it still meant more money.

I really want to hear from people on this because my goal is to understand. If you’re going to spout Democrat/Republican party lines, please don’t bother me. If you want to try to explain it to me like I’m a five-year old, then please do because I’m stumped.