Mapgirl’s Fiscal Challenge

I applied for a job there once. To give it a whirl, I tried out Second Life. I wanted to like it. But in truth, I can’t stand it. I just don’t see the point of it. I like hanging out in one specific online game and it has avatars and stuff, but really, I only log into it daily because I have a store I have to manage. I don’t even manage it profitably really, I just do it for some time wasters. My online life is only a means for enhancing my real life, i.e. I use it to communicate with people I’d communicate with anyway. (Well, except for you people reading this blog that I don’t already know in person.)

To me, Second Life will never replace real life and this article at Wired Magazine about the failure of a SL virtual bank illustrates some of why it’s not ready yet to takeover. There isn’t enough trust to operate with transparency and regulation and your money could evaporate overnight with the yank of the power supply. (That’s an exaggeration, but read the article on why solvency isn’t really going to happen in a virtual world without reality stepping in.) The whole affair sounds like a Ponzi scheme, though they insist it was a run on the bank after gambling was banned.

After reading The Tipping Point, by Malcolm Gladwell, I understand that I’m not a Maven. I’m actually a middle- to late-adopter of trends. I am a skeptic at heart when it comes a great many things, and if I am quick to embrace anything, it’s a free donut. Oops, I meant to say technology, but lately, the shine of new geek stuff has worn off and I wait for a better price point to jump it. I seek out value, so no iPhone yet for me.

When it comes to jumping on the bandwagon of Second Life, I just couldn’t do it. I don’t get that much of a thrill from a virtual community. I like real people interaction if it means irritation with traffic or the idiots at Starbucks who don’t understand that double cupping my tea means I can’t yank out the tea bags in time to avoid overbrewing. (It is the weekly bane of my existence, drinking overbrewed, astringent tea.)

Like real life, watch your virtual gold, pieces of eight, credits, doubloons, macaroons, etc. There is less regulatory oversight in virtual worlds than one would like to think. System admins and moderators are only people and stuff will fall between the cracks. Like real life, not every transgression is enforceable, so be wary of how you may be cheated out of your hard won virtual currency.

Caveat emptor. Know what you are doing and why. Online games are very real business as I am beginning to find out. (A family member works for a WOW gold trading site. Oh look at that. You can buy Evercrack gold there now too.)

No man is an island - John Donne

The Washington Post had an article this week about suburbia being a soulless place. [The link my require registration. Try Bugmenot.com for a login or register yourself.]

I kind of laughed at the people in the article. I hate the suburbs as created in planned communities around Fairfax and Loudoun counties here in Virginia. I grew up in a very old suburb of Philadelphia and our homes were interspersed with gentleman farms, dressage rings, and 8+ golf courses. (I counted it up once.) The homes were pretty modest places, 2,000 sq feet, two story colonials on 1/3 to 1/2 acre plots, with the occasional palatial home on 1+ acres.

These days the McMansions of Northern Virginia don’t thrill me with their granite countertops and cathedral ceilings. All that enclosed airspace for naught but drafts and high winter heating bills. Plus you can’t go get a cannoli in 10 minutes, or run your dry cleaning in 5 or less. (Not that I can get a cannoli in my current neighborhood, but I sure can get a bottle of soda by walking across the street or even some Thai food in a nice 20 minute stroll.)
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Occaisionally I read really geeky sites like Slashdot, Boing Boing, and Kuro5hin. Recently I found a Slashdotted (you’ve arrived when you’ve become a *verb*) article about the rising price of corn and biofuel production. It’s kind of alarming.

I’m very interested in Terror-Free Oil and greater oil independence for our country. NPR had a story on it this week. I’m a big fan of biodiesel since I live close enough to the Pentagon gas station to buy it regularly. But in the back of my head, I’ve been a little worried about ethanol production in the US. I don’t have all the facts and I find what few facts I know to confuse me.

1) The US pays farmers not to farm to prop up agricultural prices.
2) Ethanol in the US is made with corn. In Brazil, sugar cane waste.
3) Corn is animal feed.
4) Corn is human feed.

I mentioned something about the problem of corn prices rising because of the supply of corn going to make ethanol and someone at work countered with fact #1. Basically he reassured me that I shouldn’t worry about a lack of supply of corn. In the case of Mexico, as cited in the article, that could actually present a problem though. I’m not reassured at all. If we start making this transition, we’re going to end up probably monocropping the entire American Midwest with corn.

Ever read about the Irish Potato Blight and the ensuing famine it caused? Potatoes turned bad overnight in the ground. I don’t want to be chicken little here. But I think we should tread carefully and try to consume less oil overall instead of trying to figure out how to expand the supply and potentially jeoparodize our food supply. (What would I do without tasty corn-fed, feed-lot beef?)

Please don’t make me connect the dots to personal finance. I’m not sure what the configuration is just yet.

Check out this CNN/Money article on aging baby boomers and entitlement programs.

I’m sure we as an economy are doomed by our inaction.

And yet, it’s by design.

Our forefathers purposely created our form of government to be at loggerheads most of the time, to ensure that change was slow and deliberate. I see the cool logic behind it, but I’m windmilling my arms to tell you that something has to happen. There needs to be a clear mandate about healthcare reform in the US because that’s going to be the biggest expense in our old age, not our housing. By then, my housing will hopefully have been paid for, but I don’t want to have to ‘eat the walls’ of my home to pay my medical bills and doctor visits as my body degrades over time. (When will desupport begin on the Mapgirl organic product? Will I be able to recycle it with the Soylent Green process? Inquiring minds want to know.)

I’d rather do something that’s a mistake than do nothing at all. I’m a person of action and movement. No, I don’t need radical change and I’m not advocating madness but something, anything. Call or write your government officials. Advocate change.

As for myself, I’m not saving enough. I’ve known this for a while, but my new raise kicked in on Monday which will appear on my first paycheck in February. I have been thinking a lot about saving 30% of my salary and how to achieve that. Right now, I’m saving ~19% of my salary. With a small bump up in my 401k contribution, I can get to ~25% when the new salary starts. (I am including my medical FSA in this figure because even though I will spend it, once my large expenses are finished in 2008, I will be banking all of the extra without feeling like I’ve missed out.)

So the new strategy?
1) Increase 401k plan contribution by a few percentage points. ~17%
2) Continue Medical FSA savings in 2008. (Next up: Laser eye surgery!) ~7%
3) Continue automatic savings. ~2%

Little by little. Bit by bit.

Milton Friedman has passed away.

I’m not a huge fan of his. I’m not sure that the free market rules all, but I did find him very charming in a recent Wall Street Journal interview with his wife, Rose.

On a different note, I am sorry that I don’t have searchable archives posted. It’s one of the many things I am working on. (Like tagging my posts with categories. I must tell you something of which I am really proud. My sibling is a programmer and worked on a research project at Columbia University one summer. It suddenly occurred to me today that “tagging” is exactly what the project was about, so that you could search articles with XML.)

As always, go to Bugmenot for a login if you do not have one. However, I’ve never been spammed by the NYT, nor the Washington Post. Really, just get your own.

First off, a little international intrigue. I’m Korean and the man with the big hair and lifts scares the bejesus out of me. Economic terrorism in the form of mass counterfeiting sounds like a William Gibson meets Tom Clancy novel. In this case though, throw in a rip-off Irish Republican Army that has its economics wrong and you’ve got a case for money laundering on an international scale. Terrifying. And it only gets scarier when you realize we’re not pursuing it since we’ve got Daddy’s Little Oilman’s nuclear agenda to follow instead.

Second is a story about the shrinking middle class in world-class cities. I love a good discussion about regionalism and economics. This article kind of scared me though. I mean, who is going to live in cities? Rich people and their servants? That seems like a terrible imbalance. In a place like DC, I guess that means the wage taxes on all those VA and MD commuters is going to go up. Or the consumption taxes on dining and shopping. If it’s not middle class parents pushing for a better quality free education, then who?

The sad part is that I live in a city and I’m not about to leave Arlington for Washington, DC. At one time I would have, but now I don’t see any benefit for me in moving into the city. To encourage middle-class wealth building, I get a nice property tax break. I have a lot of the amenities of the city, but with nicer municipal services. I am hoping there is a tech resurgence in my neighborhood so I can stop commuting outward for an IT job. Hopefully Class A office rents are going to collapse slightly and make my wish come true. (A lot of government offices are leaving Arlington because someone in the government assessed that it could not be made secure enough post 9/11. Many of those 5-year leases are expiring now.)

Lately with the skyrocketing prices of homes in urban meccas, the thing to do has been to calculate whether or not it’s worth it to buy vs. rent. When you do that calculation, you’re figuring out opportunity costs of buying vs. renting. An easier example of this has been the price of gas. The First Fuel Bank in St. Cloud, MN, takes advantage of this. You buy gas at one price currently, with the right to getting gas at that price in the future. The opportunity cost is lost interest and the present value of that cash to you. But when you weigh that against the price of gas in the future, you may have saved yourself a lot of money.

I find the process of homebuying has an intangible element which isn’t easily quantified by worksheet calculations. Sure, you can run a set of numbers to find out if, over time, renting is cheaper than buying. Kiplinger’s has a good calculator for that.

When I asked myself the rent or buy question, I looked at my reservation price, or price point when I’m sick of paying rent and want to buy. My story is that I had a reservation price on housing at about $700.00 a month. Once I couldn’t find a place to rent in DC that I liked for that price point, I told myself I would buy a home. That’s how I ended up in Virginia, since it was what I could afford. Keep in mind, that my housing payments are actually far more than $700 per month, but I honestly felt that places I wanted to live in DC for less than $700/month were horrible hovels, or else not worth paying $800 or 900/month.

The intangible aspect is the value I placed on where I lived based on price. I loved living in Upper Georgetown where I had on-street parking, (’Doris Day style’, right in front of the house) grassy lawn, bars in walking distance, quiet neighbors, convenient bus and commute, etc. I also shared that house with 4-5 other roommates, and every once in a while, I’d get boxed out of the shower in the morning and have to go to work unbathed. It was very unpleasant to decide between a black mark for lateness, or filth. That pretty much sealed the deal. I wasn’t going to live with roommates ever again. My reservation price was the price of having a shower whenever I wanted that shower without queuing up or risking disciplinary action at work.

Owning is better that renting usually speaking, but you still have to ask yourself what you’re willing to put up with. I can’t stand having an HOA or noisy neighbors. But I tolerate it all so that I don’t have to mow the lawn. Factor all that stuff into your reservation price if you decide to set one because that does play a part in all this.

I’m not a hard and fast by the numbers kind of person. If I was, I probably would still be renting and living in suburbs closer to my job.