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Stop Calling It “Personal Finance”

By Frugaling 9 Comments

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Personal finance change

No one thought the poor more undeserving than the poor themselves.
–Matthew Desmond, Evicted: Poverty and Profit in the American City

Frugaling is fast approaching its third anniversary. Three years of articles, debates, conversations, comments, and millions of visitors. It’s been a humbling journey, but I’ve struggled with a concept at the center of my writing: “personal finance.”

The term grew in popularity in the early 1900s. It was primarily deployed and embraced by the middle classes of America. To scrimp and save was seen as virtuous. You could take nicer vacations, save for retirement, or give more to charity by budgeting better. Undoubtedly, all good things.

“Personal finance” has allowed many to live a fuller life, but also placed much of the burden and responsibility on individuals. Unfortunately, little has changed in nearly 100 years of regular use. Amidst record breaking income and wealth inequality, we seem frozen in time — continuing the use of this term without reservation or thought.

We must ask ourselves some questions about financial education and planning: Are people able to scrimp and save like years prior? Does personal finance capture the economic hardship many face? Is this the best advice we can offer after 100+ years of collective financial experience?

The answer is no, no, and no.

When I break from the 100-year-old script of personal finance and call out the tragedy of income and wealth disparities, people tend to invoke the personal responsibility argument. In response, I receive comments and emails from devout readers who balk at my hesitation to call out financial errs and place more emphasis on society. They tend to ask, What’s the point of saving and making more money if people aren’t personally responsible? They suggest that finances are personal and failure is on the individual.

Over time, I’ve grown increasingly more resistant to the term. For the oppressed, try as they might, their budgets do not add up. They must seek social assistance or face dire consequences (i.e., hunger, eviction, and homelessness).

Whether we know it, prefer it, or like it, personal finance alludes to personal responsibility for errors and successes.

Fail? It’s your fault.

Succeed? It’s your smarts.

Can’t we do better than these oversimplified, overused assumptions? Fortunately, we have an opportunity to approach finance in a new way. It starts with a reinvention of terms. As inequality has worsened, the term has become antiquated and inaccurate. We need to shift to something more appropriate, which captures the diversity of responsibility.

Today I propose we seek a new term and call it: “social finance.” Whereas personal finance places the burden solely on the individual, social finance highlights the environmental, societal, and governmental consequences to an individual.

With social finance, we understand that budgeting will be more difficult for African American men than White guys like me. Why? Because I was afforded great privilege. For instance, one-third of African American men will go to prison in their lifetime. Word to the wise: it’s not because black men are more predisposed to crime than white men.

With social finance, we understand that making money will be more difficult for women than White guys like me. Why? Because I continually earn more than women; not because I work harder, but because society pays women 64% of what I make as a man.

With social finance, we understand that intellectual and physical disabilities affect earning potential — not temporarily-abled White guys like me. Why? Because persons with disabilities are prejudicially fired, refused work opportunities, and the first to lose their jobs to automation and outsourcing.

Personal finance fits well within Western culture. We value hard work, ethic, and personal responsibility above all else. The idea of social finance will be challenging for many, but I believe we can do it. What do you think?

Filed Under: Social Justice Tagged With: Capital, Capitalism, Eviction, Finances, Income, inequality, Personal Finance, Social Finances, Social Responsibility, socialism, Wealth

Public-Private Partnerships Pillage Graduate Students’ Fixed-Income Stipends

By Frugaling 2 Comments

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dailyiowan

Graduate students are a vulnerable population

This has been the craziest two weeks of graduate school and it all started with a blog post I wrote on Sunday, November 29. It was entitled, “How Leases Trap College Students.” Therein, I talked about my graduate student housing on the University of Iowa campus. When I first arrived, it was $435. But then, a private company, Balfour Beatty, came in and demolished the subsidized housing. They built a lavish, $31 million complex.

Since then, the prices have skyrocketed about 130% since the university – a public institution – sold off the rights to build and manage a property to a private company, Balfour Beatty. Next year’s 1-bedroom leases are now going for $999. You can get better prices in New York City. The company has published all sorts of reasons and information for the prices and increases, but they never talk about the big difference: profit motive. Now, graduate students cannot afford graduate student housing.

How do graduate students contribute on campus?

Graduate students often teach, research, and assist universities. For example, I teach two undergraduate courses, conduct research, provide technical assistance, and work on special projects with faculty in my college. These efforts – for 20 hours per week – allow me to receive a tuition scholarship and stipend. After taxes, that stipend equals about $18,720.

Despite the need for graduate students and an economic engine for doctoral graduates, housing them doesn’t tend to be a moneymaker. With only $18,720 per year, they’re limited as to where they can live without taking federal aid (student loans). Most schools have used affordable graduate housing as a benefit for incoming students. Like any incentive package at work, low-cost housing attracts the talented, financially sensible, and respects the dignity of those who contribute to the milieu.

How much money can you make from grad students?

While the University of Iowa certainly has a drive for income, profiting off of graduate students isn’t the purpose. When they managed their own properties, they made enough to maintain the property. With this private company on campus, the paradigm has shifted. The profit motive was back with a vengeance.

This move towards privatization on college campuses is little highlighted or understood. Frankly, I don’t know anyone who’s talking about it – or knows about it. But the reality is that more and more public institutions are deciding to parcel out their public resources – taxpayer funded – to an elite group of market barons.

Today, I wanted to take an opportunity to break down this problem and explain how students are financially affected by privatization using Balfour Beatty. Over the next decades, if universities continue to embrace privatization, students will be holding record levels of debt. For graduate students, it all starts with their rent/housing.

Lease public resources, make it someone else’s problem profit

Unfortunately for universities, graduate student housing isn’t a moneymaker. They are hard to maintain, keep risk on the table, and place debt liability in the hands of administrators. On campuses nationwide, universities are beginning to “lease” their land to private companies, as they cannot sell public resources. These leases can be signed for decades and lead to magnificent profits for companies involved.

When a private company comes in to build new residences, building, etc. on public universities, the two organizations are signing what’s called a public-private partnership. I’m getting sort of wonky today, so bear with me. A public-private partnership is when a “private party provides a public service or project and assumes substantial financial, technical and operational risk in the project.”

Effectively, public universities who embrace this model are offsetting their risk onto a private partner. They can suddenly fire handfuls of expensive employees who provide public services. These employees ordinarily require pensions and other retirement benefits, quality healthcare, and reasonable paychecks. The replacement is simple: smaller staffs, fewer benefits, and pay cuts. It’s all for one goal: maximize profits for a select few and pillage the fixed-income graduate students.

Administrators love public-private partnerships!

Many administrators say that graduate student housing isn’t a core mission, but undergraduate housing is a core mission because universities make boatloads of profits off undergrads. Here’s a University of Iowa administrator excitedly explaining how university-managed residence halls make sense (but not graduate student housing?):

“Stange said the Petersen Residence Hall, a $53 million, 10-story building under construction and scheduled to open in time for the fall 2015 semester, will house about 500 first- and second-year undergraduates.” (source)

Despite 90% occupancy rates and a population in need (many of which were people of color, international students, young families, and people with disabilities) in old, university-controlled graduate student housing, administrators decide to spin the story:

“Hawkeye Court is at the end of its useful life,” Stange said. “They were well-maintained as best as they could. They just were not meeting needs of our current population.” (source)

Worsening the problem is the added classism and gentrification risk to these privately constructed and managed apartments. Poor people need not apply:

These buildings are intended to create “an exclusive community designed to meet the lifestyle needs of today’s student.” (source)

Calling attention to the pillaging of graduate students

For a 1-bedroom at the “exclusive” Aspire at West Campus at the University of Iowa — remember, intended for graduate students — you’ll spend $1,000 per month. Over the course of a 5-year Ph.D. (some take longer), you’d be spending around $60,000 on rent along — if prices stayed consistent. Again, that’s a generously low total.

With my graduate student stipend of $18,720 per year, I’d be spending 64% of my income on rent alone. That’s why I’ve decided to move out for the coming year. But the gentrification and heartbreak to those looking for affordable housing has been finished. The University of Iowa signed a bad deal with no deal to renegotiate. Heck, administrators didn’t even know how much the private company would charge for rent!

Now, graduate students are stuck with bill or forced to get out. That’s just not right. The university messed up.

Spreading alarm and stirring up media attention

Four days ago, when a group of us affected students began emailing and contacting administrators to tell them they have a major problem on their hands, they told us to go away. They told us it wasn’t the university’s problem; in fact, we needed to bring our concerns to the private company, Balfour Beatty. Here’s what one administrator said:

“I can sit down with [the students], but the strongest voice will come from the people who will or won’t rent from [Balfour Beatty] based on rates.”

What that administrator seems to be implying is that he would sit down with us, but we might as well talk to the company. Picture that: a bunch of students marching into a multinational company trying to negotiate. That’s ridiculous.

Well, we weren’t particularly happy with that answer. So, we kept writing statements to politicians, lawyers, administrators, the president’s office, media outlets. In three days, we had three front page stories in three separate newspapers.

IMG_1323

IMG_1330

Suddenly, the University of Iowa administration had a PR disaster on their hands. And magically, that tone of changed among admin/staff at the highest echelons of the university. Now, the president wanted to meet with us because he cared about this issue. My how they reversed their tone rapidly!

But taking it from PR nightmare to significant change is a different story. While the administration debates their next actions, this story has massive implications.

When prices skyrocket, that means students with disabilities must bear the costs. When young families with children feel the cost, they must move further from campus. When international students trust the university’s marketing of this on-campus housing, they find an awful price and unmanageable lease.

Balfour Beatty has a reputation for profit over people

The company’s buildings have gone viral — trumpeting their privately constructed and managed properties across the country. Just look at where they’ve gone beyond Iowa:

  • University of Houston-Victoria
  • University of Nevada-Reno
  • Georgia State
  • Temple University
  • George Mason University
  • Texas A&M
  • UNC-Charlotte
  • University of Sussex
  • Tarleton State University
  • San Diego State University
  • Florida Atlantic University
  • Winston-Salem State University
  • Appalachian State University
  • University of South Florida-Tampa
  • Cornish College of the Arts
  • University of California Riverside
  • George Mason University
  • University of Texas-Dallas

Every place they go, an area is gentrified, low-income students are forced out and a community is transformed. When the profit motive takes over non-profit campuses, the results can be harrowing. In fact, students at the University of Nevada, Reno tried to rebel against Balfour Beatty once before, but the company wasn’t willing to renegotiate. The solutions are murky once a contract is signed, too. Only one thing can be done: universities must resist the drive to privatize public resources and everyone should know that market barons like Balfour Beatty don’t represent students’ interests — they represent their own.

Now, hundreds are awaiting the University of Iowa to respond. Thousands are affected. And tens of thousands are seeing the consequences of short-term economic gains that have long-term effects on students.

University of Iowa, we are waiting for your answer. We will be civil, but never silent.

Filed Under: Social Justice Tagged With: graduate students, Income, iowa, media, money, newspapers, Profit, public resources, public-private partnership, Salary, stipends, university, university of iowa

How Many Hours Per Week Could You Work?

By Frugaling 16 Comments

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Finding balance on the ferris wheel of life

Reviewing the average workweek

There are 168 hours in a week (unless you live on Mars). If you sleep an average of 7 hours per day (49 hours per week), you’re left with 119. After sleeping, work usually takes the second most amount of time at 40 hours. That leaves 79 hours to shower, eat breakfast, read the news and your favorite book, travel to work, see friends, spend time with family, cook dinner, and get ready to repeat it all day after day.

Let’s take a look at my schedule, as an example. Monday I work about 8 to 9 hours, and when I come home I usually need to put in another 30 minutes. Let’s call Monday 9 hours on average. Tuesday I work about 7 hours — that’s an easy one. Wednesday is a 10-hour day. Thursday is an 8-hour day. Then, Fridays are reserved for meetings, appointments, interviews, etc. It’s a “free” day, but I tend to fill it with work. Let’s call it 5 hours. The weekends tend to be dedicated to grading assignments and working on materials for the courses I teach. That takes up about 2-3 hours. Additionally, there are often homework assignments to be completed. That ranges from about 3-6 hours a weekend. If my math is correct, that means my workweek (including weekends) equals about 45 hours.

The variable graduate school schedule

There are peaks and valleys in graduate school schedules. Over the last few weeks I was working nearly 60-70 hours per week to write my dissertation proposal and complete all the homework assignments. As I previously mentioned, that pressure and intensity felt fantastic. I was energized and passionate. I cared about the final product.

On average, I’m looking at about 74 hours of non-scheduled time. Now, a lot of that gets lost on tedious chores and cleaning. One thing I’ve noticed about living frugally is that I need to account more time for cooking and cleaning. Eating out really is more convenient from every standpoint. By eating in, I control my spending far better and usually reduce expenditures by hundreds of dollars, but there’s added time expenditures.

Then, there are the trips to the grocery store. Errands like these eat up quite a lot of time, as the stores are large and quite a distance from where I live. It’s easy to spend about 30-45 minutes per week in the store. Slowly, as these tasks add up, my schedule gets eaten away. For the most part, it works though. I have time for everything I need to do, and usually can sit back and watch a TV show every now and then.

Upping the commitments, time at work

Now, I’m contemplating adding some commitments. Over the last few weeks I’ve been pursuing, applying, and following up regarding various work opportunities. There’s a little debt left that I need to clear out to be completely clean when I graduate, and I’m eager to get rid of it. And there are some fantastic opportunities to do just that.

In the spring semester, I could potentially increase my income by $10,000 through two additional responsibilities. But I’m struggling to wrap my mind about the loss of time. One would require a full day — 12 hours, and the other could potentially be 6-8 hours per week. Together, they might add 20 hours to my current schedule. As in, my regularly scheduled routine would now be about 65 hours per week — scheduled.

Balance between life and money

To all the doctors and entrepreneurs out there, you might know these hours exceedingly well. But as I contemplate taking on these added commitments, I can’t help but think, what will be the quality of my life? Will I actually have time for those I care about? Will I be able to complete everything that’s asked of me? Will I be able to spend time on what I’m most passionate about?

The financially minded side of me relishes the prospect of extra funds. That kind of money would revolutionize my budget and jumpstart my retirement savings. Similarly, the activities could bolster my work experience, which would help for future applications. With dollar signs in my mind, I can’t help but think these are opportunities I cannot refuse. But at what cost to my sanity?

Time and money are intriguing variables. On one hand I preach the importance of fulfillment and moderation in work. I believe that life shouldn’t be all about work – it becomes somewhat empty if that’s the case. The other side makes me think money today means less work tomorrow (should I desire it). Compounding interest and savings can turn 40-year into 30-year plans for retirement. The initial time lost could be replaced by time gained in later years.

Today, I don’t have a decision to declare – only questions about the balance between work, life, and money. How many hours per week do you work? If you were faced with the opportunity to pad your wallet at the expense of your balance, would you do it? What would you consider?

Filed Under: Make Money Tagged With: balance, hours, Income, Life, money, time, Work, workweek

Lose Track Of Time To Find Your Career

By Frugaling 6 Comments

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Looking out at my future

Graduate school consists of a series of races – from place to place, hour to hour. Today, I was a student, counselor, teacher, and technical assistant. Every day requires a series of hats, as I run from activity to activity. Sometimes my mind feels like it’s in a million different places at once. It’s hard to slow down.

Thankfully, I’m nearing the end of my tenure as a doctoral student, and ready to think about next steps. I’ve segued to future-oriented questions. The most important one has been: How can I make the greatest contribution to society, while continuing to be excited to work each day? This question propelled me in the first place to study counseling psychology and acquire a Ph.D. But next steps beget a reevaluation of how I can best make a difference. I can’t stay in graduate school forever!

As a counseling psychology student, I have the privilege of multiple career paths. Some go directly into private practice (seeing clients), hospitals, teaching at universities, researching psychological concerns, and/or informing public policy. Alone, any one would be nightmarish; I’d get itchy, looking for diversity in my daily routine. Doing a sole activity all the time scares me. I don’t want to become an automaton. Frankly, I’ve envisioned being most happy with a blend of research, teaching, and counseling.

Questions abound: Would I like to be a university professor? How about a counseling psychologist at a VA? Will I work at a community college or research institution? How much of the job will include teaching, practice, or research? Where will I find a new home – East, West, Central, another country?

Answers are nearly impossible to find, as the job market is constantly in flux and increasingly competitive. I won’t magically be handed a career because of my advanced degree. Surprising as it may be, having a Ph.D. only gets you into an interview – not in the door.

Future career prospects are also tempered by concerns of stress and overwork. In this field, I’d venture to say many academics put in 60 to 80-hour weeks. There are numerous employers that work people mercilessly. Too many treat their employees as replaceable “human capital.” These practices leave individuals prone to burnout and contribute to this country’s greatest killer: heart disease.

Where does that leave a soon-to-be Ph.D.? Like much in life, I’m seeking a balance between my wants and needs. The 30-hour workweek for an academic probably doesn’t exist unless you’re near the end of your career. But 80 hours per week for years frightens me to the core.

The secret for me is pursuing passions, which can often result in “flow.” This psychological concept centers on how “just-manageable challenges” tend to make employees feel purposeful and needed — in between anxiety and boredom. When this state occurs, people become hyper-focused, productive, and generally happy. It’s a mutually beneficial state for employers and their underlings, but not often made possible due to overscheduled weeks or monotonous responsibilities.

Researchers have presented six symptoms of flow:

  1. “Intense and focused concentration on what one is doing in the present moment.”
  2. “Merging of action and awareness.”
  3. “Loss of reflective self-consciousness”
  4. “A sense that one can control one’s actions…”
  5. “Distortion of temporal experience.”
  6. “Experience of the activity as intrinsically rewarding…”

Essentially, people are focused, active, forget their struggles, feel autonomous, lose track of time, and are internally motivated. From artists to scholars to writers to mathematicians, flow is an incredible place for creativity and excellence.

The greatest moments of my life have been here, when I lose track of time and become engrossed in an activity. For instance, when I started an endowment, Frugaling.org, and wrote my dissertation proposal, each were madly written, advocated for, and created. Despite the time to establish each, the pleasure of feeling purposeful made the hours fly by. They didn’t feel like work. I lost “reflective self-consciousness” and became the activity at hand.

While constrained by a society that values money over health (again, look at our health costs associated with being overworked and underpaid), I have the opportunity and privilege to pursue my own route. As I envision my “perfect” career, I imagine a series of part-time style gigs. I want a sprinkle of supervising counselors’ work, seeing clients, conducting research, and teaching future generations. The hours might become irrelevant when I’m tested, pushed, and encouraged to focus on helping others.

Two Novembers from now, applications will be due. I have time to find the right home, but I’m eager to fulfill the values gained over 26 years of my life. Right now, it feels like a professorship, but I’m open to change. I need to find my flow; without it, any job would be unbearable long term. Additionally, I need to be able to shape ideas, work, and daily activities in a manner that helps others directly.

How will you find your flow? What activities make you lose track of time? When do you feel purposeful, action-oriented, and passionate? Could these activities ever become a part of your work?

Filed Under: Make Money Tagged With: Autonomy, balance, Career, counseling, flow, Income, jobs, Life, professor, time, vocation, Work

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