Sunday, February 23, 2014

Gap Takes the Lead

Gap announced that they are voluntarily raising the minimum wage for their employees so I felt the need to shop there today to show my support for their effort.  Way to go Gap!

Tuesday, February 18, 2014

It’s the Little Things

On the heels of reading that we spend roughly 18.6 Billion Dollars on Valentine’s Day I can’t help but think that more than one person missed the message that we can’t buy love. Whether we’re talking about romance or how we spend our money, it really is the little things that matter. Making the bed, doing the dishes, an “I love you” out of nowhere…all free but meaningful. But with money it’s the little things that sink our ship. $5 for a drink each day adds up to $1,825 over the course of a year. And many of us have little expenses that add up to much more than that. Ben Franklin was right when he said “Little Leaks Sink Great Ships.” And I’m right when I say it’s the little things that matter in a relationship.

As a challenge, take the time to track your spending each day as you’re making each purchase. And while you’re at it try making an extra effort to do at least one thing to make your partner or the person closest to you feel loved and valued. Being thoughtful in our relationships and with our spending will offer a great return on the effort.

Extra love to everyone out there who needs it…and who doesn’t?!


PS – This is one of many priceless gifts from my family.

Here’s the link to a story that ran on CNN about Valentine’s Day Spending:

Thursday, February 6, 2014

Late Fees as a Measurement for the State of our Economy

The U.S. Treasury Department monitors our economy by using several measures, none of which include something as telling as the percentage of people who are behind on their utility payments. Why utility bills? Why not look at overdraft fees and late payments on credit cards and cell phone bills that are likely to be substantially higher than late fees from utility bills?

Why care about late fees? Because American consumers spend billions of dollars every year due to the setbacks we face combined with the mistakes we make. And among the greatest expenses are fees and fines from late payments.

I’d love to be able to back that statement up with more national data. Unfortunately, banks and cell phone companies won’t share what percent of their revenue comes from fees and fines. You can’t even find it in their annual reports.

But thanks to the Freedom of Information Act a municipality is required to provide this type of data. And it’s not pretty. If the powers that be want to know why consumer spending is down then they should take a look at the statistics on late fees for utility payments as a window into the health of the American consumer.

I had a moment of enlightenment about the significance of utilities last April when our town, Naperville, Illinois, was hit by massive flooding. My family wound up with so much water in our crawl space that our furnace was destroyed. Our home had no heat or hot water and it was freeezzzing. After spending one night in a hotel it dawned on me that we still had power and we could use space heaters to stay warm. And we could take showers at our local fitness center. Having electricity was what made us able to stay in our home.

So it must be the darkest of financial times when we become so broke that we can’t pay our utility bills. Thanks to the fallout from the Great Recession we now know we can stop paying our mortgage and it could take months, maybe even a year before we’re evicted. If we can’t afford groceries we might qualify for food stamps, or we can possibly turn to our local food pantry, maybe even fall back on our days of living on Ramen Noodles. But it doesn’t take long for utilities to be turned off for lack of payment. And going without electricity and water would make life pretty unbearable.

I asked the City of Naperville Utilities Department for data regarding late fees on utility payments over the past ten years. The answers are staggering. Historically about 2 percent of Naperville households paid their utility bills late.  And then the number spiked to 10 percent. That means five times as many people struggled to make their utility payments thanks to the Great Recession.

Affluent Naperville had always been thought of as recession proof, but no more. A utilities representative said that what surprised her department the most was the number of people living in expensive homes who had their utilities disconnected for non-payment. She said it used to happen only to people from some of the relatively modest homes. Now people representing every demographic in our town were struggling.

So what would this statistic look like at a national level? The population of Naperville is roughly 144,000. To put it in perspective, you can multiply that number times 2,181 to reach the approximate number of people that make up the entire population of the United States. That’s 314 million people.

So how much do you think residents pay the City of Naperville in fees and fines because they are late in making their utility payments which in our town include water and electricity? People from Naperville spent nearly $454,400 in fees and fines to the Utility Department of in fiscal year 2013. If that same rate held true for people around the country it would mean that nearly $990,000,000 is spent on fees alone for not paying electric and water bills on time. As a disclaimer, I’m not a trained economist so if someone would like to create a better measurement to make my point, please be my guest.

It seems that $454,400 is a lot of revenue for the Naperville to lose if people paid their bills on time. Wouldn’t they miss that money? But it’s not a source of excess revenue. It simply covers the added expense of city employees handling disconnects and reconnects as well as the manpower that the city expends dealing with people being late in the first place. They would much rather have people pay their bills on time. 

And—economic “recovery” notwithstanding--the problem is getting worse. In just the first 7.5 months of the current fiscal year, which ends April 30, disconnects have nearly doubled from the prior year. People are having an even harder time paying water and electric bills on time, so imagine the fees they’re racking up for everything else. Heat, phones, credit cards, car payments, rent, mortgage, student loans, overdrafts, etc.

We’re easily talking about more than a Trillion dollars (with a capital T!) going out the door with nothing to show for it. It all goes to show that the latest reports that the economy is improving aren’t accurate when it comes to what’s going on in the lives of the average American.

Treasury Department statistics are used to create and implement meaningful policy changes to stimulate or stabilize our economy.  It seems that providing access to jobs that allow people to maintain a functioning household should be a national priority. And perhaps it is. But let’s use household utility payments to help find out if we’re on track to having a truly stable economy for the little guy.