Random Thoughts

Be forewarned: This is likely to turn into a rant. I should have probably blogged about this sooner so I wouldn’t be so aggravated about the constant media barrage telling us we’re all one (slippery) step from living in a cardboard box down by the river. I’ve been thinking a lot about this over the last few weeks, and there are a jumble of thoughts in my head. Hopefully by the time I’m done, this will make sense.

First, a reality check. While it’s impossible to pick up a paper, read an internet news site, watch TV or talk to another human without being told that unemployment is soaring through the roof and we’re approaching another depression, the fact is, we’re not. At least not yet. Let’s look at the facts. The last time I checked (about 3 days ago), unemployment was at 6.7%. Of course, the media (almost gleefully) predicted that it’s rapidly heading toward 6.8%. Yet here’s another statistic they never, ever mention; 4-5% “unemployment” is considered full employment. That’s because there are a lot of people who don’t want to be employed, are taking a break or whatever. It’s pretty darn near impossible to get to 100% employment. So when we factor the statistical full employment figure into the unemployment figure that’s causing widespread panic, we see that true unemployment is about 2.7-3.7%. Now, I don’t want to make light of those who have lost their jobs, because that does suck, seriously, we’re running off the cliff because fewer than 4% of us are out of work?

And let’s not forget that under the media’s darling, former President Clinton, unemployment peaked at 6.7%. They never mention that for some reason. Under Reagan, it was even worse, getting close to 10%. Still, that means that 90% of the people in this country had a job. 

And it’s not like being out of work for a little bit puts you out onto the street in this country. Despite what the media keeps telling us, we have a pretty great safety net here, especially compared to the rest of the world. It should also be noted that unemployment rates of 30-50% are pretty common in other parts of the world, so let’s keep it in perspective.

The next thing we see causing panic is that retailers are in a tizzy because Christmas spending is down this year. Again, I hate to sound calloused, but maybe that’s not a bad thing. Again, compared to much of the rest of the world, we Americans live lives of wretched excess. We have almost as many TVs as we do people; 3/4 of us have cell phones; we need to keep buying bigger and bigger houses just to store all of our crap, and when even that is not enough, we rent storage units to store even more crap. So yeah, maybe it’s time we backed off the excessive, wasteful spending that’s put us in the hole for so many years. They say that the savings rate for most American’s is near 0%, which means that we spend every last dollar that comes into our hands (and then some, because few of us can go for long without breaking out the credit card…). 

Maybe it’s not a bad thing that instead of continually filling our too-big homes with more stuff, we keep a little of it in the bank for a bit. Which brings me to my next point. We received a prayer request at church today about a woman who is worried about losing her job (and she’s worried about her boyfriend, who works at the same company). So I have some hard news for you. And I say this with compassion, as someone who has spent some time out of work, and had 2 companies collapse around him; your employer is not responsible for keeping you employed–you are. For some crazy reason, many, if not most, people cling to the antiquated notion that just because an employer hires you, they owe you that job for as long as you want it. If you find something better, of course, you’re free to leave (with 2 weeks notice–or less). However, we expect our employers to see to it that our jobs are safe forever. Rubbish. 

If you’re worried about losing your job, polish up your resume, get your ducks in a row and start networking with people. Go find another job before you lose the one you have now. Even in a down economy, employers are always looking for good people. But there’s the rub, you have to be good. And that’s the problem. Most employees are lazy. They show up at work, give a half-hearted effort to their job, then leave. Should they be let go, they act all incredulous about their downsizing. Look, rarely are entire companies shut down. When layoffs come, the really good people are retained. This is not always true, but most of the time it is. So you need to be good. You should be so valuable to your employer that they will figure out a way to keep you around even if your entire department is shut down. And if they can’t, you should have no problem finding another job somewhere else. But that takes work, and most people aren’t willing to that. So deal.

Oh, and one more parting shot about staying employed. If you’re in an industry that’s on the decline, say the US auto industry, it might be a good idea for you to consider looking into a new line of work. And I don’t say that flippantly. I say that as someone who’s done that; 4 times. I’ve said it before, and I’ll say it again, just because you’ve worked for GM for the last 10 years, doesn’t mean they owe you 20 more. A company can only turn out substandard products that don’t compete with the rest of the marketplace for so long before things need to change. Get over it. 

Which brings me to my next point (I told you this would be a rant). This aforementioned person is also worried that her boyfriend, who just bought a house, might lose that house if he’s let go. Though my head is about to explode as I write this, I’m trying to say it with love. If you bought a house and can’t survive a few months of unemployment without risking losing the house, you should not have bought it in the first place. This circles back to an earlier point. We’re so heavily leveraged as a country, we can’t survive even temporary and short income losses. That is crazy. Really smart financial people will tell you that you should have at least 3-6 months of income in the bank at all times. The reason is simple; if you lose your job, you need some runway to find another one. Unemployment compensation should slow your burn rate enough that you have time to get another job before you run out of cash.

If these concepts don’t make any sense to you, it’s likely that you need to move back into your parents house and live with them for a while until you figure out how to live with financial responsibility on your own. It’s a sad reality that this isn’t taught in schools, and most parents shirk the duty to teach their kids to be responsible with their money. And we wonder how we got here…

If you don’t have that safety net set up, you need to work towards that, fast. And that might mean not buying two new flat screens this year just because they’re on sale at Best Buy. Everyone knows I’m a pretty big fan of Apple products. They’re well designed, work well and are just a pleasure to use. I’ve also become a big fan of the way the company has handled it’s finances. In a recent call, analysts were asking Steve Jobs if he was worried about the economic downturn. He said that Apple is currently debt-free and has $26 Billion in the bank. So no, he’s not to worried. 

Now, it’s easy to say, “Sure, he’s Steve Jobs, multi-billionaire, why would he be worried.” But think about it. If we were debt-free and had even $26 Thousand in the bank, would we be worried about an economic downturn? I think not. One of our goals here in Minneapolis is to buy a house. We’re waiting a while, however, As much as it kills me to pay rent, and even though we have enough income to qualify for a mortgage, we’re waiting until we have some money (at least $20-30K) socked away. And to get there, it means we’re living pretty lean for the time being. Instead of raising our standard of living to our current income level, I’m trying to find ways to lower our expenses and increase our savings rate. 

That way, when we do buy a house, it won’t be 99% financed from the get-go, and we’ll have some savings in case we need it. I could go on for another 1,200 words about the housing “crisis,” but I’ll save that for another time. Same goes for the Wall Street “collapse.” All I’ll say here is that you can only sustain artificially inflated values for so long before they have to come back down. I mean, seriously, a 60-year old, 1,200 sq. ft. ranch (or “rambler”) here in the Twin Cities selling for $250K? Right. Call me when you get to $150.

All of this sounds rather harsh when I look back on it, but I wanted to inject a dose of reality here. First, we need to keep in mind that even though things are slowing down here, we still have it pretty darn good compared to much of the world. So chill. Second, we need to turn off the negative voices. If it bleeds it leads, and that’s what we get from the media. So ignore it. And don’t listen to the politicos, either. And pray they don’t try to “fix” it. Every time the government gets involved with “fixing” the economy we get the shaft. Sure, some AIG execs get to go on a nice vacation in the Caribbean, but we’re stuck with the tab. 

Stop asking for handouts and do something for yourself. One of the reasons our family as never ended up on the street is that I’m always “worried” about losing my job. Even though my job is somewhat secure for the time being, I’ve already updated my resume, I’ve been doing some networking and I have a new website ready to launch (and I continually update it off-line) the day I hear my job is being cut. Will it be cut? I don’t know. But if it does, I won’t be caught off guard. We have enough cash in the bank right now to survive for several months with minimal pain. So am I worried that when Upper Room moves I won’t be working there? No. I’m prepared, and I’m being realistic about it. If the budget gets cut, and my job goes with it, I’ll be ready.

And that’s why I’m focusing on doing the best job I can possibly do right now instead of worrying that I’ll be unemployed in 3 months.

That’s it. End of rant. Please excuse me while I update my resume with my most recent accomplishments and prepare my new website…just in case.

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