The future of the American economy.

Everybody wonders what is going to happen next. Most want to think that the decline in the economy will be over soon. Some predict by the end of the year. Here’s my viewpoint:

Everybody, by now, has heard or experienced how bad the crisis is. With millions of homes foreclosed and huge unemployment rates The government has pumped billions of dollars into the economy to try to resolve the situation. Americans have responded in two ways. Some are taking every possible effort to streamline their lifestyle and spending and have learned from their mistakes and change their ways so that it doesn’t happen again. The others are expecting the government to fix it all and will just be happy when the hard times are over so they can get back to their old ways and forget that the problem ever happened. I suspect that this could be at least 75% of the population and includes both individuals and businesses.

Once the government money runs out I believe there will be a second and bigger downturn in the economy primarily because of the actions of the second group. It will be like the aftershock of the earthquake. Those who have refortified their lifestyle will be ok and those have not will collapse. And the collapse will be harder and bigger because all of the reserves have already been used.

This sounds like such terrible news, even as I write I think who would even want to consider that it might be true? And, who would want to believe my gut felt ideas? But, what if I told you it will probably rain? What would you do? There would be two choices. Grab a coat or go out without one. If it rains you put the coat on and be dry or you can get wet. If it doesn’t rain you can just carry the coat and you haven’t lost a thing.

Did I see the last one coming? Those of you who know me know that I have talked about it for 20 years. Am I an expert? By no means. Could I be wrong? Yes, but there is no harm in being prepared. (I guess I did learn something from my mother).

Here’s what I suggest and you can add your own ideas:
1. While the interest rates are low ask your bank if there is any benefit in refinancing. Get your payments as low as possible so that if your income drops you can still make your payment. (Watch out for scams)
2. If you rent, find the cheapest place you can. Once you save some money try to buy on a first time homebuyer plan. There are some great low down and low interest loans available right now.
3. Start a food storage program. Start building a supply until you have 6 months to a year of food. Include all bathroom, cleaning, and female products.
4. Quit using your credit cards. It’s time. Pay them off as quickly as possible. The credit card companies can continue to change your rates for another year and whatever sounds good today could change tomorrow.
5. Start saving all your change. If things ever get really tight you will have something to buy a loaf of bread without breaking a $20. This will be really important if you don’t have a $20.
6. Continually go through your possessions and sell what you don’t need. Or better yet, give it to someone in greater need than yourself. You will be able to live in a smaller home and if you need to move for a job relocation or other reason you will be more ready.
7. Make sure everyone in your family has their dental work caught up and a new pair of glasses. Then if you can’t afford it for a year or two you will be ready.
8. Think about cutting back any of your habits that cost money like smoking, drinking, the daily cappuccino. Save the money if you can,
9. Sell any cars you are not using and change for more fuel- efficient vehicles. Walk if you can.
10. Don’t get any more pets. They need to be fed too.
11. Start reading books, reading articles, having conversations to give you ideas for managing economically. In The Trenches will be out soon. Email me if you would like to receive an email when it comes out.

The economic crisis was caused nationally by the greed of our biggest corporations, putting fast profits above common sense and long term outcome, and an American public that was willing to spend and much as they had available. Although these tips are well publicized there are many of us who still have room for improvement. The goal of all this is to get your necessary expenses to under 50% of what you are now making. Yes, under 50%. Save the rest. No, not in the stock market, not in some investments that could lose it all. Just save it. If you are the kind that has a hard time saving than it is time to learn. If you still have trouble than pay three months ahead on the bills you know you will have to pay such as car insurance. Don’t go farther ahead than this because if you have to relocate or loose a job you don’t want money tied up in a specific location and want to have the cash available.

Does this all sound radical? That’s why it’s called….In the Trenches.

Originally posted June 3, 2009 - Was I close?

Keep the best. Sell the rest.

Learned this saying from a lifetime farmer and wish I would have learned it earlier. I used to raise poultry. I had up to 30 peacocks and ornamental pheasants, but, our mainstay was ducks and chickens. At one point I had about 50 chickens so I placed an ad in the paper to sell them for $8 each. A man came and I told him he could take his pick. He wanted to buy about 30. He chased and caught, chased and caught, and when he left gave me a check.

I surveyed what was left and what did I find? He had picked through and taken all the best of the birds and I was left with the too small, too old, too young birds. My prime laying stock was all gone. Of course it was! He was not stupid, I was!

Everytime I reflect on this situation I want to hit myself in the head. I had set myself up so splendidly. But, most interestingly is that we all do this to ourselves when we walk into or get put into a lower income situation and do not have a plan. We can end up loosing our best house, or best car, or best anything because we have not structured ourselves to prevent it. We either try to pay everthing and end up late on it all or we pay nothing and end up late on it all.

Doing an inventory is the first step when confronted with a downturn. Realize that everything is at risk and make some decisions up front on how you will handle it. If you need help read books, go to consumer credit counciling, talk to people over 70 who went through the biggest depression and get their advice. Their experience is priceless.

Then, keep the best and sell the rest.

Originally posted August 1 2009

High Yield Investment - Steak again?

Like most kids, mine would pound through the door and ask "What's for dinner?" After receiving the answer I would often get the response of "Steak again?"

Not too long ago I surveyed the freezer and realized that we had almost $5,000 worth of organically grown beef in our stuffed to the brim old chest model. The upright held the overflow. How much is almost 1,000 pounds of beef? We had fillet mignon, prime rib, t-bone, rib steak, porterhouse, sirloin, round steak, rib roast, rolled roast, and hamburger that was as good as steak. We didn't have to wonder how much the fat content was because there was no fat content, it had been cut off and now we had to add oil to the pan when we cooked it. It tasted as good as steak because it was steak, since we had more steaks than any person could want we threw those in also and ground them with the other cuts. All this for well under $1 a pound.

Who would argue that an investment that multiplied more than 4 times in two years was not a good return? And, no matter how the stock market bumped and dipped there was still meat in the freezer. The best news of all is that this does not have to be a deal that only country people can take advantage of though they do get the best return for the money. If you live within driving distance to a rural area a once a year trip to the country can provide many of the same economic and health benefits of the small farmer.

We have heard the horror stories of the main steam cattle feedlot and many have become vegetarians in protest of the conditions in which these animals are raised and the health issues that mass greed production has inspired. The life of small farm animal is not the same.

We raised two or more beef animals at a time. They were raised from birth or purchased at three to six months of age. From there they had all the pasture they could eat supplemented with hay in the winter months. Some farmers supplemented the feed with grain to produce a richer meat and higher fat content but we preferred the leaner less marbleized beef. Breed had much to do with the meat as well and Black Angus is known and idealized as a good breed for producing some of the best steaks. Their temperament is more feisty than others so are not often the choice for the small farmer who prefer the more mellow breeds of Simmental, Limousin, and others.

After raising a number of different animals we decided on the Dutch Belted which are pictured in the lower left hand corner. These animals are mellow and both good milk and beef stock and are almost extinct. Their origin was Europe and they were known as the breed of kings. The reason was that the belt around their middle is dominant and genetically passed on to their offspring. In this way the king was able to recognize his own cattle and punishments were stiff for those who were caught stealing them or raising them as their own. It was our hope to help increase the population of this wonderful animal who was said to be the original producer of Tillamook Cheese and Ice Cream.

So why would a city person want to know all this? Food is an investment. An investment in ourselves, our children, and our nations economic structure. Just as importantly, so that you can select the best steak you can buy from the best conditions. Some study the stock market pages whose return is risky at best, livestock on the other hand has a more expected and predictable pattern of growth and return on investment.

Brief soapbox message: I make no secret or no apology that one of the purposes that I hope to convey with this blog is the hope that the city man in the $1,000 suit will be able to interact and shake hands with the man in the overalls and that they both may be able to recognize and acknowledge the contribution both is making to our way of life and economy. To not do so is at our own peril as we get farther and farther from even knowing the source of our own food supply. By taking it so much much for granted we run the risk of having it changed, altered, or controlled without our knowledge. To learn more about agriculture and the challenges faced pick up the Capital Press and you can amaze and astound your friends. We are all on the same team striving to rebuild our nation's economy therefore it is important for the right hand to know what the left is doing or why. It's really not about politicians and Washington D.C. It's about us, the people, our way of life and country. Isn't food on the table our number 1 priority when it gets right down to it?

Back to our beef investment topic. Even if you live in a city high rise condo there are ways to take advantage of the best opportunities to invest in beef for yourself and family. Buying a whole or half a beef from a rancher will not save as much as growing your own but cuts out many of the middle men who jack up the price and often reduce the quality all along the way.

Who do you know in farming communities within reasonable driving distance from your home? Maybe this is an opportunity that has always been available you have just not taken the first step to bring it to pass. There are some restrictions that apply in buying directly from the farmer so this is something to discuss with them if you want to pursue it.

Gone Fishin'

Hi Everyone,

I will not be writing new posts for the rest of the month of May.  Will return in June with new adventures and experiences to share.  For the remainder of the month I will be sharing older posts that you may have missed or check out the blog lists on the right side for tips you might have missed from other of my favorite financial blogs .  God Bless.

Carol

In The Trenches - A Reader's Story

One of the all time favorite posts was submitted as a guest post by Linda from Practical Parsimony.  It was first posted on September 22, 2010 and it seemed like a good time to share it again for those that may have missed it the first time.  If you feel like you have it rough or need some encouragement this will give you that boost you need to keep moving forward:

One of my goals for writing In The Trenches blog has been to have a feature where readers could share their stories.  Recently I posted U.S. Poverty on Track To Post Record Gain in 2009 and one of our readers comments looked like the perfect opportunity to  begin.   I contacted Linda, the writer of Practical Parsimony , and she agreed to share her thoughts and family experience of the Great Depression and the impact it has had on their lives. Here is her story:

I write Practical Parsimony, a collection of miscellany about my thrifty ways. Much of my thriftiness or frugality comes from my parents who lived through the Great Depression. Carol has graciously invited me to write a guest post. If you like the guest post, please visit my blog.

From my present perspective, my parents told me little about the Great Depression. But, I cherish what I know. Of course, when I heard about it through their eyes and filtered though their experiences, I did not have the questions I do now. I just listened. Okay, maybe they told me things I forgot or just ignored. It’s too late to ask.

My mother, Tommie, was born in 1921 and graduated from high school in 1938, one month after she turned seventeen. She talked about their life—three children (she was the youngest of four) living with her widowed mother, Ruth, and her grandmother, and my great-grandmother (Sally) during the Depression. Less than a year before my grandfather was shot and killed, my grandmother gave birth to a son that died within a few months. Six months after my grandfather, Tom, was murdered, my mother was born.

My mother never knew her father since he died before she was born. Yet, two women kept them all together and well-fed on a 90-acre farm in north Mississippi, affectionately called “the Old Home Place,” even to this day. My great-grandfather, Eli, came across the mountains from North Carolina and bought the land and built the home my great-grandmother, grandmother, and my mother lived in all their lives.

By the way, my great-grandmother, Sally, was college-educated in a time when not many women went to college. She entered college in 1870. I have copies of the college opening sessions for four years, all with her name in the student list. Eventually, she bore 12 children and raised 11. The legacy of education can still be seen today in the speech, lives, and mannerisms of the family even now, one-hundred-forty-years later.

I can only aspire to be as self-supporting as they were during the Great Depression on their Mississippi farm. Think about it—there were no unemployment payments, no food stamps, no social security payments, and no disability payments. Would we band together today as they had to? On the other hand, how many people who needed help back then were neglected?

They lived on a farm they had to plow, often without a mule. My mother agonized over the sight of her own mother pulling a plow while her small son (my uncle and my mother’s brother), guided the plow. I could tell by the quiver in her voice and the dimpling of her chin as she pressed her lips together that over 50 years later my mother was wounded still from the memory of her mother’s inhuman toil.

They raised meat, chickens, and crops and had plenty of milk and eggs. (Mama still could wring a chicken’s neck, dress it, and have it in a frying pan for us to eat.) I never heard of them getting any help from anyone, but surely the community shared resources.

When my mother (called “Cotton Top” because of her white hair) was six-years-old, she was walking through a field. A rattlesnake bit her on the leg. She ran home and told her mother and grandmother. No one believed her even though she was persistent. Finally, they believed her when her leg was double the size of the other. She spent a week in a hospital, near death for part of her stay.

When she was thirteen, she went to the spring for water. As she lowered her hand, holding a dipper near the water to dip water into a bucket, a Cottonmouth Water Moccasin bit her. She ran home and was immediately taken to the hospital for another stay.

You noticed? In 1936, they still carried water from a spring, their only source of water. A dipper was used to dip water from a natural spring, and put it into a bucket to carry to the house for any water need.

Memaw (my grandmother Ruth) worked in the school cafeteria and was allowed to bring food home at the end of her day. Mama said they needed the food. Sometimes, the food supplemented what little they had, especially in the late winter, I imagine.

By the way, my friend from Kansas thought lots of grandmothers were given the name—“Memaw.” She was so surprised to find out that is just what some of us call our grandmothers in the South. “Memaw” is not a given name. My grandchildren call me “Memaw.”

My grandmother sewed for people during the Depression and was paid little. When Mama was a senior in high school and wanted a new short coat as was the newest fashion, my grandmother showed Mama how to shorten it, a tailored coat with lining and lots of detail. My mother passed the skill and love of sewing to me. I have supported myself sewing at times.

Mama started school in a one-room schoolhouse. In the first grade she learned all the second-grade lessons and completed all the second-grade homework and class work after she finished first-grade work, so the teacher promoted her to third-grade.

Mama said she wanted to go to college in 1938, but could not afford to attend. People offered to pay her tuition and help her go away to college. She did not think she had the right clothes, so she just would not. This, she said, was the worst mistake of her life. She regretted her decision, and told me to attend college, no matter what I had to endure. I did.

Because she so desired to “learn more,” she enrolled in the twelfth grade for a second time. My mother’s cousin told me that other kids in school thought my mother was crazy to want to attend for another year after she graduated. My mother’s reply was, “I want to learn more.” My mother’s eighty-nine-year-old cousin remembered this statement and related it to me four years ago.

Mama said the only thing her family ever took from the government was one pair of shoes for each of the three children. She implied that others took what was offered. That was a source of pride for my mother who felt the lonely, outsider state of fatherlessness more acutely than did her older brother and sister. Other people in the community needed and received more from the government. Or, maybe they were just too proud to take anything else and took less like my mother’s family did.

My aunt, Ganelle, my mother’s sister said none of them suffered in their community because they were all poor before the Depression and stayed poor. They lived in the land of Faulkner and in his time, so if you have read his novels, you might know how life was in the stories I have heard of my family in the nineteenth century. Faulkner and my grandmother were born and died within a year of each other and about ten miles apart. Not much changed in the early twentieth century.

When still a young eighteen-year-old girl, Mama moved to Memphis, TN, and worked in a Ford automobile plant that had been converted to a “war plant” to make airplanes for the war. Her job was to make ball bearings. Out of her check, she rented an apartment with another girl from the same town, supported herself, and sent $6 each week to her mother back in Mississippi.

Mama did not go to college, but she joined the Women’s Army Corp in 1942, serving in Des Moines, Iowa. Of course, the Depression had ended in 1941. Even though the Depression ended, the effects lingered.

I was born September 11, 1946, one of the first Baby Boomers. Knowing my great-grandmother attended college and hearing my mother’s anguish over her lost chance, I was driven to attend college, eventually earning two B.A.s, an M.A., and a teaching certificate. Through great personal adversity, I prevailed in my quest for education. I only lack the Ph.D.

My parents taught me things that were necessary skills in the Depression. That is another tale to tell. Mama could “make do” with the best. She taught me how to look around and find a way to make things we needed. Now, I am still frugal. I “use it up, wear it out, make it do, or do without.” Okay, I am not as parsimonious as I could be. But, I am definitely a product of the Depression since my parents came of age during that time.

Thanks Linda!

If you have a story to tell I would love to hear from you and share it with our readers.  Whether it is a brief "how-to" of something you have learned through the experience, memories of stories passed down through the generations, a recipe, or a picture, these stories and images serve to encourage us and bring hope to those now going through financial hardship, transition, and change.  Email me your story at inthetrenches {at} live {dot} com.  It is my hope that we can make this a regular feature as it is the fabric from which this country was and now is woven together.  Carol