Is grad school worth it in This Economy?

It's not breaking news that (in general), if you get a higher education degree, you make more money. But a writer over at Slate decided to test this theory recently by taking her reporting to the masses of 20-somethings who are contemplating whether or not going to grad school is worth it in This Economy. What she found is that though more school is usually an unbeatable bet in the long term, it is not looking that way to a lot of students in the here and now. One respondent, in particular, wrote to her with:

"I have a B.S. in sociology, and its value bears a strong similarity to its initials."

Ouch. Then again, what do you expect when you major in sociology? (Kidding, kidding.) According to the article, it seems plenty of students appreciate school as a refuge from the dreaded job market but are wary of the immediate payoff.

Look at student loans, the opportunity cost of taking two (business) or four (law) or eight (medicine) years off of your working life, add in a horde of other people with the same qualifications as you who are competing for a handful of available jobs and it's easy to see just how much the job market in these professions looks like a bubble that is about to burst. [Actually, law school is three years.]

To be fair, the story does mention that economists across the board dispute these points. "When things recover, it's going to be the highly skilled who are still in greatest demand (as has been true for the last three decades)," David Autor of the Massachusetts Institute of Technology tells Slate. "So, for someone considering engineering, medicine, computer science, economics, law, biology, etc., I would say 'go.' ... The recession makes education look like a better deal than ever because the opportunity cost of investing in your human capital has not been this low in quite some time."

But even the traditional safe havens in the job market, like becoming a lawyer, aren't so safe anymore. (Love complains about legal layoffs across the U.S. on a weekly basis, and let me tell you people, from all the info he shows me, it's a scary, scary time to pursue a legal career.) According to the Slate reporter, she "also heard from law school graduates with $200,000 in debt who wonder what they were thinking as firms downsize and implode." MIT's David Autor response? "As for the law degree being underwater: Lawyers may get their shoes wet during the recession, but high school grads can't even see the surface they are so far down," he says.

So the question remains: Is higher education still worth it? I'm of the mind that education cannot hurt you. I have my Master's and although I'm sure I could have gotten as far as I am in my career now without the higher education I traversed through, my degree is an added perk on my resume and in the training that's gotten me to this point; therefore, I have no regrets. It may be harder to find a job now for someone with, say, an MBA (students on a budget can consider an MBA online to an affordable degree) or degree in a tech-related field, but once This Economy turns around, I do think the highly skilled/educated folk will be the first to cross the threshhold into the new job landscape.

Do any of you have your graduate degrees and wish (at this point) that you could just give them back? If you went on after college, did you think grad school was a waste of time? If you opted to not pursue a grad program, what was the biggest reason?

Stores liquor you up to increase your spending

Free champagne at Nordstroms sounds simply divine, doesn't it? Purchasing $1,000 handbags, $300 designer scarves and obscenely priced cosmetics may not be what you're used to ... but would you feel differently after five glasses of champagne? Would your frugal tendencies be a little more uninhibited with all those wonderful little bubbles going straight to your head, clouding any budgetary judgement you've tried sticking to?

Stores like Nordstroms have been doing this for awhile (you need to be one of their "2nd level shoppers" or whatever it's called, yours truly is in the club), but it seems that offering alcohol to shoppers is a growing trend by retailers to decrease your rationality, increase your impulsivity and at least make you linger longer than normal.

In a Wall Street Journal article specifically dealing with male shoppers, "The recession is driving stores to search for anything that gives them even a small edge over rivals. And generally slower traffic gives sales staff more time to offer drinks and talk with shoppers."

According to one storeowner quoted in the story, "Offering alcohol puts men at ease. I wanted it to be like you're going to your best guy friend's house, a guy friend who has great style." Um, yeah, but your best guy friend isn't deceptively making their home more inviting so that you'll shell over $300 for a new pair of jeans. If so, then that's one expensive drink.

FYI, the cost of purchasing alcohol for stores is minimal, especially compared to other brand-building efforts like advertising, so I get it, it works. And I really can't complain when someone offers me a free cocktail, but it's just something to be mindful of if your spending is already out of control.

As Love said (after reading the WSJ article): "If I only had $200 for a pair of jeans, then I too could have a beer (wait a minute . . . )".

New unemployment data takes us back to the 80s

Still got your job? Lucky you.

The Bureau of Labor Statistics reported today that the economy lost 663,000 jobs in March, bringing the total amount of job losses to 5.1 million and the unemployment rate to 8.5 percent, the worst since 1983.

Yup, 1983, when I was but a wee one-year-old youngin', grooving to Culture Club's "Do You Really Want To Hurt Me" in a babyseat in my parent's yellow Volkswagon bug (we're from California).

The Labor department reported today that had part-time and discouraged workers been factored in, the unemployment rate would have been 15.6 percent in March, which would have been the highest on record since 1994. And move over France: Today's report also highlighted that the average work week in March dropped to 33.2 hours, a new record low.

Mark Zandi, chief economist at Moody's Economy.com, told the Associated Press: "It's an ugly report and April is going to be equally as bad." Time to brace for those April showers in more ways than one.

Oh and if you want to be Debbie Downer and drop a little unemployment trivia tidbit at your next cocktail party: Since the recession began in December 2007, two-thirds of the 5.1 million jobs in total that have been lost have occurred in the last five months.

SNL solves the economic crisis

An oldie but a goodie. Oh Steve Martin. Given the right material, you've still got it. Especially when it comes to espousing money-management wisdom.

"Recessionistas" need not wear jellies

Sigh. Just when I thought the Today Show "fashion on a budget" clip with Bobbie Thomas wasn't bad enough, we now have another video clip from Mtv's new House of Style, hosted by my former sophomore year high school crush's (Leonardo DiCaprio's) current girlfriend, Israeli model Bar Rafaeli. If you haven't seen it yet, don't bother setting your DVR, as it was so much cooler in the '90s. But I digress.

In this clip, aside from learning that one of the "must haves" this spring are $175 high-heeled jellies (yes, jellies), there's a segment where model Jessica Stam takes you shopping in her closet to teach every recessionista how to get the most out of what you already have. Sounds good in theory, except Jessica's closet is a little different than the average girl's. Her pointers? Set up a bag swap, where you and your friends can trade $1,500 handbags (like the Marc Jacobs one she is holding) betwixt one another. Fun!

Other tips include:

• She "loves" white t-shirts, and suggests pairing them with black skirts. Groundbreaking.
• "Hitting up" your brother and/or dad's closets for baggy flannel shirts you could wear as jackets in the summer. (The last time I wore flannel was when I pined after Jordan Catalano, endlessly listened to Nirvana and thought it would be so cool to move to Seattle and learn the intricacies of brewing good coffee. This was junior high, 1994, people. Needless to say, I'm not a fan of the flannel comeback, and there's really no reason to wear your father's and brother's clothing.)
• Cut your jeans into shorts (i.e., cut-offs). Revolutionary (and tacky).

I'm still waiting for a really good segment on dressing well on a budget. So far I've been disappointed with what I've seen. Kind of the same feeling Angela Chase had when she found out Jordan cheated on her with Rayanne Graph. Okay, maybe not that disappointed, but you get the point.

To see the House of Style clip, visit Jezebel.

Hypocrisy thy name is denim

According to the Wall Street Journal last week, "If there is a silver lining to a financial crisis that threatens to leave the entire country dressed only in a barrel, it is this: At least we won't be wearing denim." Oh really?

Never has a single fabric done so little for so many. Denim is hot, uncomfortable and uniquely unsuited to people who spend most of their waking hours punching keys instead of cows. It looks bad on almost everyone who isn't thin, yet has somehow made itself the unofficial uniform of the fattest people in the world.

Um, insensitive much? Although I prefer wearing dresses and skirts when the weather permits, I like wearing denim jeans (dark bootcut or skinny 7 for all Mankinds, thankyouverymuch), and I'm not "fat". (That is unless a size 6 is now the threshhold marker between "small" and "large".) The WSJ columnist has a problem with denim, but I think he comes off as elitist and snobby. Not everyone looks like a farmer in denim, unless of course you're wearing overalls (a la Tai in Clueless), which is always a big no-no.

If hypocrisy had a flag, it would be cut from denim, for it is in denim that we invest our most nostalgic and destructive agrarian longings -- the ones that prompted all those exurban McMansions now sliding off their manicured lawns and into foreclosure, dragging down the global financial system with them. Denim is the SUV of fabrics, the wardrobe equivalent of driving a hulking Land Rover to the Whole Foods Market. Our fussily tailored blue jeans, prewashed and acid-treated to look not just old but even dirty, are really a sad disguise. They're like Mao jackets, an unusually dreary form of sartorial conformity by means of which we reassure one another of our purity and good intentions.

Obviously there is a time and a place to wear jeans, but I think this is almost offensively melodramatic. What do you think? [WallStreetJournal.com]

One list you don't want to be on

When I arrived in Vegas last week for a 4-day romp of pina coladas, dancing and pathetic gambling attempts at the nearest slot machine, the one thing I didn't think was "Man, Vegas feels...empty." Maybe it was because I didn't stray far from the strip, or maybe I was too preoccupied with all the divine shopping and food (dinner at Tao = fabulous!!). Regardless, at the end of the day I was yet a lowly tourist, passing through to enjoy the best of what the city had to offer on one street. If you take into account what's going on outside of the Luxors and Bellagios, though, the state of things isn't so rosy and pina colada-tinged.

According to Forbes, which released a list of the 15 emptiest cities, ones central to sagging industries are suffering the most. This is obvious, especially with cities like Detroit, where automakers (and all the other industrial companies that depend on them) are struggling to stay above water. But cities like Miami and Chicago also made the list, which surprised me. Number 2 on the list? Yup, that'd be Las Vegas, which I assume depends heavily on tourism and company conferences and events to bolster the local economy.

Being "on the list" is something all of us usually strive for (oh how very VIP sounding it is), but this is one list I wouldn't want to be on, as the likelihood of finding employment is bleaker. I'm curious: Are you on the list?:

Detroit, MI
Las Vegas, NV
Atlanta, GA
Greensboro, NC
Dayton, OH
Phoenix/Mesa/Scottsdale, AZ
Orlando, FL
Kansas City, MO/Kansas City, KS
Indianapolis, IN/Jacksonville, FL
Miami/Ft. Lauderdale/Miami Beach, FL
Chicago/Naperville/Joliet, IL
Tampa/St. Petersburg/Clearwater, FL
Bakersfield, CA
Charlotte/Gastonia/Concord, NC/Cincinnati, OH/Middletown, KY

If so, how has it affected community morale?

The young and the jobless

The recession may be a reason to cry into your flan for some, but for others -- especially those in "my" generation (Gen Y) -- could it be the best thing to happen to us?

Yeah yeah, we all know the economic pressure has changed many psychological habits, i.e. saving and spending behaviors, but on a larger scale, does it buttress what Generation Y is all about? That is, our collectively lackadaisical care to put forth real effort into anything? The generations before us were all about ignorance or materialism, but according to a new article in The Big Money, we're all about "devastating unseriousness" -- and the offshoots of a terrible economy, such as high unemployment, may seem to work quite nicely with the average Gen Yer's behavior. Translation: Why work when you can collect unemployment?

One unemployed Gen Yer is living out a life dream, traveling India and paying for hostels with unemployment checks. A particularly desperate male had to actually move back into his parents' beautiful two-story house in Connecticut and is on a weekly allowance from the state.

One mid-20s male in Los Angeles that the article came across "was trying to find another job, but was being very selective." He was, "admittedly, being a pompous prick."

Why the inherent urge to laze rather than labor? Consume rather than produce? Isn't that the whole point of looking forward to retirement? The article attributes that to how life was for Gen Yers pre-2007 recession:

Everyone on the Forbes 400 list was a billionaire and The Apprentice was beginning its sixth season. How could there be anything but a thin awareness of real financial
hardship? Go down the list of the things that occupied the cultural imagination during these decades. Start with Baby Jessica and stop when you get to Ritalin. The reality today is not ignorance or even materialism. It's merely a potentially devastating unseriousness, like listing lying as one's favorite activity on Facebook.

Of course not everyone is lazing around, sipping mojitos and collecting unemployment, but the story does seem to bring up a valid point. The lack of urgency in many Gen Yers eyes is what is most startling but may soon change as progress into the next couple of years.

For now, the arrangement seems to be working to many's favor:

"So many people are getting laid off that are married with kids. I'm getting laid off because I hate my job and in the process, I get severance and I get unemployment," says one mid-20s male who lost his job this month. "It's crazy if you think about it, that I qualify for the same thing."

[TheBigMoney]

Recession-proof your credit

Picture it: You're so dreading (or behind) on making your next credit card payment that the mere mention of anything related to money makes you want to hunker down on the couch, watch Bridget Jones Diary and lose yourself in a bowl of raw brownie batter. "Call me when I've won the lotto," you think, a helpless look in your eye and a glob of brownie batter on your chin. Who knew it would come to this? Just breathe. It will be okay.

There are two pros to this situation: 1.) Your form of escape (albeit just as caloric) doesn't involve four cocktails and subsequent sobbing through an awkward drunk dial to an ex about how your life is so screwed up, and b.) Now is the perfect opportunity to reevaluate how you got into this mess and take steps so that you won't fall even more behind.

Instead of letting the recession get you down, take charge and get yourself under financial control. Dig yourself out of the ditch, so to speak. For most people in financial distress and falling behind on credit card payments, the natural response is avoidance. (Hello late night Bridget Jones marathons.) But putting it off until later won’t make it go away. Instead, the long-term effects are stress and damage to your credit history.

If you are having difficulty making your monthly credit card payments, address it right away – before you miss payments and your account is reported as past due to the credit bureau reporting agencies. Once your account is reported, it could negatively impact your credit rating, which may then affect your ability to get additional credit in the future. Citi Cards offers some fantastic tips on how to get your payments back on track:

Talk it out. Financial troubles can happen to anyone, so don’t be embarrassed to explain your situation – honestly and immediately – with your credit card company. The sooner you talk to them, the better they’ll be able to help you get your finances under control. From what I've heard from friends and other bloggers, credit card companies are more than happy to work with you on payments, rather than receiving no money or explanation from your side, which leads me to the next tip ...

Work it out. Most credit card issuers want to work with you to come up with a payment plan to keep your account current. Many people experience tough times, but no two situations are exactly alike, so work with your card issuer to see what temporary payment options may be available to you, such as:

• Lower monthly payments
• Reduced interest rate
• Waived late fees and over limit charges
  

Keep track of your account -- automatically. Once you’ve set up a payment plan, help stick to it by signing up for free online tools offered with your credit card. For example, automatic alerts notify you via e-mail or text message about important account activity such as due dates, current balance or payment notifications. Additionally, some issuers offer customers an "auto pay" feature ensuring that you’ll never miss a payment.

Stay the course. Once your payments and account are back on track, resolve to use credit wisely. Easier said than done, I know. But next time you're fantasizing about a new pair of Stuart Weitzman heels, take into account of whether you have the cash, and not the credit, to back up such a purchase, and where that purchase falls within your list of priorities. Do groceries or plane tickets to visit family over an upcoming holiday come before shoes in your life? Be honest with yourself and evaluate your impulse.

Economy rocks it like it's 1997

Stocks went into freefall mode again today (this is becoming so cliche), dropping to levels last seen in 1997 -- the same year we were awkwardly coming out of our "ugly duckling" phase freshman year of high school, obsessed with unattainably hot guys and thought "Daria" was the coolest show, like, ever.

The Dow fell 3.4% to close at a staggering 7,114.94. For those unfamiliar with this hodgepodge of numbers, last year the Dow was at a healthy 8,000+. At 7,500 last week, the last vestiges of still-employed investment bankers were retching into their cubicle trashcans. At 7,114, well, let's just say it ain't pretty -- and word on the streets is there's still room for it to get worse.

Enter the Treasury Department. Today the Treasury announced it will launch a new, revamped bank bailout program that would include the option of allowing the government to increase its ownership in financial institutions. Translation: The government wants more of a say in how banks are run, because they are (obviously) doing a crappy job thus far. As you can see by today's steep stock market slide, this news did little to bolster investor confidence.

But there's a difference between the government running a bank, and the government having a say in how it runs itself. The first would be nationalization (which was a hot stock market rumor last week, but turned out to be false when the Obama administration said there would be no bank nationalization and that "private banking is the way to go").

The Treasury said today that beginning on Wednesday, the 20 largest U.S. banks will be required to undergo a new “stress test," which will determine whether each institution has enough capital to survive any further economic spirals.

More details surrounding the stress test will be released on Wednesday by the Treasury, though it did divulge today that if any banks fail the test, the government will require it to raise capital from private sources. If any bank is incapable of raising the money, the bank will be required to swap out the government’s existing, non-voting preferred shares and replace them with new preferred shares that are convertible to common stock with voting rights. Um, what? Basically, as I said earlier, this will give the Obama administration a say -- and not complete governing power -- in the business of each bank, if it comes down to that.

Spend, don't save!

You know what's ironic? All those people who lived outside of their means for the better part of the last couple decades (you know, buying homes and other luxuries they couldn't afford but were so easily attainable with "magic" cards and loans) are only now learning the virtue of hunkering down and saving . . . but only because they've been backed into a corner. Had they lived day-to-day somewhat modestly (no need to live off ramen, here), then the recent dizzying debt spiral wouldn't have unwound so rapidly in all of a few mere months. But that's not what's ironic.

What's ironic is that to fix this problem, those people are going to have to stick to what they're best at: spending. Or so says The New York Times:

Enough already with the saving that many of you have suddenly begun doing. This very moment, Congress and President Obama are preparing to send you a tax rebate, to inspire you to stimulate the economy. So go out and stimulate. Spend as if the future of your country depended on it.

Come again? The idea is that now of all times is not the time to save. It may be okay for you as an individual, but it is ruinous for our collective economy. If there ever was a time to spend, then that time is now.

Essentially, this phenomenon is called the "paradox of thrift," created by 20th-century economist John Maynard Keynes, and suggests that when a person does what they believe is "rational" (i.e., saving money) during hard times, it could be ruinous for an entire economy. Eventually, many of the savers may end up out of work because everyone else is saving, too.

Although spending is highly condoned, there's a fine line between blowing your entire paycheck at DSW and spending some of it on fancy footwear. The key is to know how to spend money now to save money later — a phenomenon that could lift the economy today and help individuals cope with their battered finances in the long run, says the NYT, who (like moi) thinks people do not do a good job of planning for the future.

[People] eat just one more doughnut and put off exercising until tomorrow and tomorrow and tomorrow. They fail to set aside enough for retirement. Again and again, they choose a bird in the hand — be it dessert, convenience or a little extra cash — over three or four in the bush. Most people could save themselves a good bit of money by giving proper respect to their future self. They could spend a little now and save a lot later.

[New York Times]

And now, a word from the economy

Investors have waited with baited breath the last few days to hear of what will become of the bank bailout plan. A go? No go? Give us something, government! All eyes were on Treasury Secretary Timothy Geithner this morning, when he took the podium and delivered the highly anticipated bailout details.....aaaaaand the stock market plunged. Watching the indexes alternate between tiny rises and lower drops as Geithner spoke was like watching a heart monitor tied to an ailing pulse. Just. beat. harder. It turns out there is no quick fix or bandaid, and the fact that the process -- like most processes, actually -- won't be fast and easy dented the market today. If you missed Geithner's press conference, or started spacing out on his pointy, elf-like ears about three minutes into the speech, here's a quick runup of his solutions:

• The creation of a "bad bank": A joint Treasury and Federal Reserve program, insured by the FDIC and financed by private investors, that will buy up cruddy mortgage-related assets from banks.

• Expanding the Federal Reserve's existing $200 billion program to between $500 billion and $1 trillion in order to unfreeze the credit market. I smell higher taxes!

• Using the remaining $350 billion from the Troubled Asset Relief Program to inject ailing banks with capital, which, while it seemed like a bad idea on the first go-round, has become necessary since the banking system is basically insolvent.

• A $50 billion initiative aimed at stemming home foreclosures, the details of which will be announced later in the week. [Reuters via Daily Intel]

All of a sudden my "crazy" idea of moving to Italy and selling flowers out of a cart doesn't seem so crazy after all, hmm??

A "kinder, gentler" IRS?

Call it a reflection of the times, but the New York Daily News is reporting that the IRS has promised to go easy on the nation this year in relation to filing taxes. Seems like a first, but we like firsts -- especially during the recession. The words "IRS" and "kind" have never been synonymous. The stereotype of the hard-as-nails, unmerciful IRS agent exists for a reason, after all.

It turns out the IRS actually does have a heart, and understands what the majority of U.S. citizens are going through, what with so many layoffs and foreclosures budding on a daily basis. No they aren't forgoing collection of taxes this year (wouldn't that be grand?); instead, they'll be more flexible with tax collection to help easy the fiscal burden that's cloaked the shoulders of so many of us.

The only catch is that you have to ask for help if you need it. Though the IRS may have gone the way of the Tin Man, it doesn't mean it's also gone the way of the all-knowing Oz. Struggling to pay your monthly bills and need a filing extension? Just lost your job and have no savings to pay taxes? Ask and you (probably) shall receive help.

The Mail reports that among the changes this year:

• IRS employees will have greater authority to suspend collection actions — such as tapping your bank account — in certain hardship cases.

• If you already agreed to an installment plan with agency and have been paying on time but now face trouble, the IRS might allow you to skip a payment or pay a reduced monthly amount without voiding the agreement.

• If you thought you weren’t eligible for a so-called offer in compromise — in which a taxpayer and the IRS agree to settle a tax debt for less than the full amount — you may be now. In the past, if you had enough equity in your home to cover your tax debts, you may have been turned down. But given the downdraft in real estate, the IRS is willing to take a second look.

The IRS' website (www.irs.gov) has an excellent list they call the "What Ifs of an Economic Downturn." On the list are many common hypothetical questions posted to the bureau, and their answers to each. Questions include: What if I lost my job? What if my income declined? What if I sell my home for a loss? What if I can't pay my taxes? Scary questions, but the IRS is anticipating them being asked and have answers for all of them. It's an excellent resource to tap in to if you're freaking out about tax season and feel fiscally pinned against a wall.

If these "What Ifs" don't answer your questions though, IRS.gov also has a phone number you can call for help (1-800-829-1040) and a list of tax assistance offices that you can visit in person.

The bright side of recessions

Here's a guest post from my friend, freelance writer Trisha Wagner, on the hidden benefits of the "R" word. Enjoy!

Hidden benefits of a recession? What could possibly be good about a recession you might ask. I'm fairly certain I am not alone in being dreadfully tired of hearing all the dooms day speak about the economy, bailouts and all the other negative information floating around on the Internet and other news mediums. For a change of pace, let's take a look at how a recession can lead to positive benefits or at the very least, favorable outcomes.

People become less wasteful.

Thank goodness! We are a society of consummate consumers to the detriment of our planet and in some cases our moral integrity. Ok-that might be an over dramatization but I don't think it is too far of a stretch from the truth. When the economy is good and people are thriving financially there tends to be less interest in living a sustainable life and people become very careless with how they use and dispose of objects as well as money. When the economy takes a turn for the worse, people tend to step back and rein in their spending and try to make their money and “objects” last longer.

People get back to the basics.

Along the same road as being less wasteful a recession sparks long buried instincts in families. People tend to refocus on the importance of loved ones and appreciate what they have due to the fear of an uncertain future. Families may be forced to cut some social activities which can result in a renewal of familial relationships. Dinner might again be served at the family table instead of everyone grabbing something after work or school as they rush around filling social obligations. In addition to reconnecting with loved ones most people take the time to sit back and re-examine their lifestyle. A recession is an excellent time to remember the difference between the “needs” and “wants” in our lives.

People get creative.

Have you heard the saying “necessity is the mother of invention”? Truer words could not be spoken during an slowing economy. What used to be a “given” in our lives is no longer so. Unemployment is rising at a rapid pace, homes are in foreclosure and retirement accounts are taking some hard hits. For some people recovery will seem impossible, others will dig deep and discover ways to not only survive the recession but come out ahead.

People NEED a wake-up call.

It would be ideal if people could learn about good financial planning another way, but the fact remains for far too long our society has become used to overspending. For some people the last few decades have been spend living beyond their means. Consumer debt, huge houses, new cars and keeping up with the Jones' have left many families holding the short straw in the current economic climate. A recession will remind people about the importance of living within or below their means as well as having an emergency fund for unexpected expenses.

Trisha Wagner is a freelance writer for DestroyDebt.com, a debt community and debt forum. Trisha writes regularly on the topics of getting out of debt and personal finance.

It's (not) beginning to look a lot like Christmas

Everyone in the blogosphere (especially the personal finance blogosphere) seems to have a post by now dedicated to Christmas shopping and how to harness fabulous deals. I usually love money-saving tips -- bring them on!

Lately, though, I'm tired of scanning these gift-giving pointers -- perhaps because most are inanely obvious and repetitive in nature. Yes, I know that if I make the presents myself I can save more money, or if I shop deals online versus in-store or wait to give gifts a day after Christmas, I can save big. Sigh. I think there's a bigger picture issue that's apparent this year aside from finding the cheapest Wii or flat-screen TV. Maybe it's that so many of us are unemployed this year, or maybe it's that those of us who still have jobs are struggling financially, but to paraphrase Love from the other day, "It just doesn't really feel like Christmas this year."

This sentiment truly hit me when I stood en masse on a crowded escalator yesterday, nothing but a small pin prick on a nameless mall map, peering over the revolving handrail at the mall Santa below (spitting image of the real thing, by the way). I felt ... numb ... and had an epiphany. Had I become a modern-day Ebeneezer Scrooge?

Yes, it's 2008 and times are tough, maybe not as tough as a Dickens novel, but the joie de vivre that usually encircles mall Santas and excessive amounts of eggnog thus far is completely lost on me. This holiday season, I've felt an encroaching sense of acerbity about the whole affair, and if you can believe it, it's not the "gift giving" aspect that bothers me. After all, it's usually what conjures up a bitter tang on most people's palettes.

I'm not exactly sure why this year feels so different, but my guess is that for many there isn't that much to be cheerful about. It's one thing to read daily statistics about those who have been laid off across the country or have lost homes, but it's quite another to be able to count those close to you who barely have enough money to pay their cell phone bills.

The fear and uncertainty in the air is palpable. Many are hanging on by a frayed thread, thankful just to get by these days, much less to replicate a Normal Rockwell painting set around a cozy Christmas tree buttressed by piles of beautifully wrapped presents.

In recent years past, those that struggled were in the minority. Since the early '90s, the United States has seen enormous gains based on mortgage-backed securities -- our finances expanded by people packaging and selling them to other countries. Now, there's a fear that all those gains we've built in that last 20 years will simply vanish. The giant strides in growth we've seen are crumbling as I lament about the very problem, and just when we think we've hit a bottom, that things have to bounce back, they in fact get worse.

And forget it only affecting the finance sector. Sure, hedge fund managers, investment bankers and the Gordon Gekkos of the world may have had their 15 minutes of fame nancing down Wall Street in private towncars and Armani suits, but they're just the first domino to topple the rest in this scheme. Now thousands, in all sectors, are feeling the heat. Tourism, hotels, automobiles, manufacturing, education, anything related to real estate (including construction), leisure, restaurants, marketing/PR firms, publishing. There isn't one entity that hasn't been touched on one level or another by the crash of dominoes as they continue to fall across the country.

Sure, we'll eventually pick up the pieces as a nation and begin back where we started, before we enjoyed and expected lives based on unrealistic illusions. But the reality is oppressive and heavy, and it's unsettling that we're on the precipice of a possible deflationary cycle -- that all the money many have put into homes as equity will disappear, and that just when we think things will turn around, they don't.

I guess it's the Scrooge in me that's unable to accept this holiday season. Surprisingly,
this motivates me more to buy gifts for all the people I care about. In the past I always bought more for myself than others. I know, it's selfish, and while I did buy people things, it was always a one-for-them,-three-for-me scenario. "Christmas isn't about giving gifts, that's so materialistic," I would pontificate between episodes of Sex and the City. Riiiiiiight. . .

Now that I've found myself in a better financial position than most, it makes me happy to be able to brighten someone's day with a present that they wouldn't (or couldn't) otherwise buy. In fact, I get ten times more happiness doing this than buying anything for myself. I guess that's what it takes to find the true spirit of the holiday season. Yes, it's about giving -- within your means, of course -- and making others happy, even if you can't give a lot. Cheesy? Maybe. But it's interesting that it takes a collapse of fantastic extremes to be able to truly evaluate the state of things and cut away all the muck and static that usually blinds so many of us at the end of every year.

Wake up and smell the economy

"It's the end of the world as we know it," or so sang R.E.M. back in the heyday of the '90s -- pre-tech boom, credit crisis and the Pussycat Dolls. While Americans bought their first computers, CDs were still the way to buy music (iTunes, what iTunes?), and the ubiquitous Freddie Prinze Jr. was everywhere, was R.E.M. onto something with their prophetic lyrics?

Yes they were, according to a new paper soon to be published by Robert Seaberg, head of the wealth planning group at Citi Global Wealth Management, who hypothesizes that very few people believed the current financial disaster could actually happen.

In a recent New York Times article, Seaberg is quoted as saying that the rich were fixated in recent years on the great wealth-generating possibilities of concentrated stock positions; derivatives created from the very mortgages that, it turns out, others couldn’t pay; and hedge funds that locked up their money to take huge bets on the economy. The collapse of the housing, employment and financial markets, coming at once, was more than a shock to the system. Like so many others, many of the rich have gone back to the drawing board.

Seaberg’s new paper, entitled “A Flock of Black Swans,” (haha) says various advisers failed to impress on their clients the need to consider the possibility that highly unlikely events — so-called “black swans” — might indeed occur. The rich may not have done anything different, but at least they would have been aware of the risks they faced.

Seaberg's point is that because everyone was riding high, they didn't have to worry about "the basics," such as saving and budgeting, and instead had fun playing with high and ultra-high net worth. Although many of us know this is one of the reasons that led to the current fiscal crisis, it's always nice to get some affirmation from a legitimate economic source -- especially when that affirmation involves "the basics," which this blog knows and loves!

According to the Times, Seaberg has singled out four areas where investments were hit hardest and where they should be adjusted to ride out any future economic storms. Even though his points directly apply to those at the top of the wealth pyramid, I think people of all sized pocketbooks could learn from his tips:

Redefine a safe investment. Until this year, safe investments included U.S. Treasuries and bonds. Even though Treasuries are still safe per se, they aren't the greatests of investments right now because the yields (or money you earn back for making the investment) is almost nil. Translation: You could become that oft-posed cliche and stuff your money under mattress -- you'd get the same results.

Investment-grade corporate bonds, Seaberg tells the Times, are still trading but their yields are down, hit by the Lehman Brothers bankruptcy and AIG's struggles. Basically, this all means that the definition of a "safe investment" has become very narrow, mainly Treasuries.

Diversify more broadly. (Ed. note: If you're not sure what diversification means, read my post about it here.) Investments have increasingly shifted from just stocks to real estate, hedge funds and private equity, so-called alternative assets with higher returns for those willing to lock up their money for long periods of time. Seaberg says the problem is that many of these investments depend on borrowing, which means their values have plummeted as credit conditions tightened.

He says that in order to diversify your investments, you should look outside the U.S. and Europe to emerging and frontier markets, such as India or China. (These countries, global crisis aside, have begun to spend massive amounts on their infrastructure, so industrial companies benefit.)

Consider tax consequences. When the value of every investment was increasing, the portion lost to taxes on every gain wasn't a big deal. Gains far outstripped the tax elemtn. This isn’t the case anymore, Seaberg says. In an environment of lower returns, the after-tax piece is going to matter more. He points out that municipal bonds from cities and states that can meet their obligations are one lower-tax alternative.

Be more realistic on housing. Seaberg says that the era of the house as a constantly appreciating asset is over. In the last two years, the average house in America has dropped 20% in value, according to the Case-Shiller Home Price Index. This means people are going to be staying in homes longer, or will hold on to them longer as investments, versus selling property fast to make a quick buck. Seaberg says that should be a signal for homeowners to make sure they have the right insurance, i.e., theft, fire. and natural disasters such as hurricanes, floods and earthquakes. Although I see Seaberg's point about property owners holding on to their homes longer because of decreasing values, I don't fully agree that the era of the house as a good investment really is over. I think much of that depends on where you live (homes in rural West Virgina, versus say the Bay Area, obviously aren't congruent in value.) To make a broad-based assumption that it doesn't work anymore is too generalized. As a homebuyer who hopes to build equity in a home, you need to be realistic about the current and future states of employment, location, and property values in your individual zip code.

Seaberg tells the Times that in a recent internal memo, Wells Fargo gave its private bankers a checklist of questions that they should have been asking all along. The first question was, “Are you clear with regards to what is your true appetite for risk?” It is followed further down with, “No matter what, always live below or at your means” and “Are you saving enough?” Um, why were they not asking these questions in the first place? Oh wait, that would have saved us all this financial strife in 2008! Silly me.

Fortunately, there is an upside in all of this, according to article, in that it helps people understand the need to assess their true risk tolerance. That soul-searching, done amid the possibility of lower returns in the near future, could alter spending and saving patterns over the long term. That's a great thing. “Without a sense of abundance, people are going to be more careful,” Seaberg says.

Unemployed with no job in sight? Here's help

If you've just gotten notice via a dandy little pink (it used to be your favorite color) slip that your services won't be needed any longer, then here's a reason why those long, depressing Dr. Zhivago-esque unemployment lines may be a nice respite from the me-and-half-of-America-has-been-laid-off storm.

How? (Aside from providing the much-needed $350/week sustenance until your career is back on track.) Well, at the end of November, Dubya put a new act in the books to lengthen the period of financial assistance that every laid off worker in the U.S. is entitled to in the current market, which (as you all know) is devoid of many job prospects.

The Unemployment Extension Act of 2008 extends benefits for the unemployed by seven weeks in all states, and extends them for another 13 weeks on top of that in states with unemployment rates that have averaged 6% or higher over the most recent three months. Yippee? According to the Bureau of Labor Statistics, those who live in a high unemployment states will receive a total of 20 more weeks and nearly half of the states fit that criteria as of October. (If you're not sure where your state stands, visit the BLS website.)

Here's the 411 on the act:

How you qualify: To be eligible, you must be unemployed through no fault of your own and be actively seeking work. Requirements vary from state to state. Generally, wages earned and time on the job determine if you qualify and the level of assistance you will receive.

For example, In Washington you need to have 680 hours of employment in your base year - which is the first 12 of the last 18 months of work. In Nevada, a person must have earned at least $400 in one quarter of the base year to get help.

What you get: States have their own formulas for determining how much you will receive and for how long, but a general rule of thumb is that you will get half of your last paycheck for 26 weeks, explained Andy Stettner, deputy director of the National Employment Law Project.

In most states that is based on what you earned over your base year - up to a certain amount. Every state sets its own maximum, based on that state's average income. The average unemployment insurance benefit is $292 a week according to the Department of Labor.

When you get it: Experts recommend filing for unemployment on your first day out of work. It generally takes two or three weeks after you file a claim to receive your first check. In most cases there is then a "waiting week," and then you will receive your first unemployment insurance check the week after that.

What impacts your benefits: If you work part-time or freelance while you are collecting unemployment that will most likely reduce or eliminate your benefits. The same is true for severance checks in some states. You could still get a partial unemployment check but the formula for determining what percentage of your benefit you could still receive differs by state.

How to get in on the extension: In most states your unemployment insurance will be automatically extended if the Unemployment Compensation Extension Act passes. But to be sure, Stettner recommends calling your unemployment office to ask what you need to do to qualify. [CNN Money]

What are you thankful for?

As I prepared our turkey this morning -- well, technically I made Love prepare it, I can't stand touching raw poultry -- I realized that another year has come full circle. And what a fast year it's been. Although it's hard (at least for me) to concentrate on being all warm, fuzzy and giddy over cranberry jelly, what with what's happening in India right now, it's still important to ruminate on the past year and reflect on what you're thankful for. Perhaps some spiked cider would help.

Ever since the beginning of this summer, most of us have been bruised by the limping economy, by either losing our jobs or seeing friends who've lost jobs (I've seen 4), struggling to pay back debt (whether it be credit cards, student loans or house payments), or perhaps even seeing our homes foreclosed. Those of us who were frugal to begin with now just find our "talent" at finding the best deal or best coupon that much more in demand. All of sudden, a personal finance blog is the trendy must-have accessory in 2008, like a BMW or "it" bag was to 2005. Google searches for such terms as "Bahamas cruise" or "2008 Audi" have tapered like an out-of-fashion 80s jean, now more people Google "how to save my 401(k)," "tips to beat the current recession," and "save money on food." Ah, it's like 1929 all over again. (Cue big band music.)

At least there's solace in the fact that we're going through these damaged financial times together, and (hopefully) learning from them. Like I've said before, we're not alone in the struggle and we're all affected by some degree. Case in point: My love affair with free samples and coupons? Never would have been lit without the kindling of current fiscal malaise.

That's one thing I'm thankful for -- that I've learned the full value of being frugal and routinely using store deals to my benefit. Sure, I've always shopped around before to find the best bargain, but now my searches are more magnified and more well-researched.

Other things I'm thankful for:

• That I'm very healthy, and everyone I care about is also healthy. (Except my grandfather, but I learned he just opened his eyes from his coma-like state yesterday, which is very promising.) No amount of bargain-hunting, coupons or money can buy you good health.
• I'm married to a fabulous guy who wants the same things out of life as me, shares my sense of quirky humor, and balances me out in a way that no other guy could. Where I'm emotionally impulsive, he's solid and rational, where I'm "crazy," he's even-keel and sensible. We bring out the best in each other and feed off one another's energy. It's all so "Barefoot in the Park."
• I have a marvelous job that I love, am paid very well for and allows for somewhat flexible hours. (I get to work from home in the mornings and come in around 10:30 am everyday.) I feel like I have good job security and am rewarded well with solid raises.
• Love and I don't have to worry about money that much. Granted, we are living solely off my salary while he is in law school, and we do watch our spending to a certain degree, but I don't feel like it's a struggle. When I want something I usually buy it without having to save up (lavish trips and cars aside), and I can still buy as much two-ply toilet paper as I want, which I've amusingly gathered is a good gauge as to whether one is "struggling."
• We don't have that much debt to tackle, except for Love's law school tuition, which won't be knocking at our door till after he graduates and gets a litigation job, which should quell any strife over paying it back.
  
• Now is a fabulous, I repeat, fabulous time to get into the stock market if you're a newbie to the investing scene. We have not seen these kind of discounted prices since, well, the good ol' Great Depression, and might not see them again in our lifetime. For someone who wants to retire early (read: me), now couldn't be a better time to carpe diem and plan for a luxe life where I can plant the seeds of early retirement in discounted stocks, take my earnings later and invest in the greatest of investments: real estate in the Bay Area.

What are you thankful for this year?

I will survive (the recession)

It's no secret that many of us are freaked about the "state of things." The economy is tanking, we may never be able to buy a house, and even worse, we may lose our job and be forced to eat McDonald's for breakfast, lunch and dinner sans any gym membership to work off the saturated fats in our Egg McMuffins. I've written before about surviving a recession, but to assuage your fears further, I've compiled even more tips to "survive." Hey, if Gloria Gaynor can survive, than so can you. And not just in a karaoke bar.

• Assess your job situation. In a recession, no one is immune from layoffs. Today, anyone in housing, real estate or finance is especially vulnerable. And your job doesn't directly have to be "real estate agent" or "hedge fund manager" to feel the burn. Anyone in home furnishings, retail, construction and interior decorating, among other related fields, is subject to being laid off.
• Pay off credit cards. It's sad to say, but many people "use their credit cards as a rainy day fund," Golden Gate University professor Kit Yarrow tells the SF Chronicle. If you pay off your balance now, when you can, you will be able to borrow more if times get tough (assuming your credit score doesn't deteriorate). Paying down debt will help improve your credit score.
• Don't dismiss retirement. Continue contributing enough to your retirement plan to get the full employer match, but consider putting any extra savings in your emergency fund until it is sufficient.
• Consider a home equity line of credit. If you have enough equity in your home, think about opening a line of credit while you still have a job. As long as you don't borrow against it, you won't incur interest charges and there's usually no fee. If you do lose your job, you can use it for emergency funds. You generally can't open a line of credit when you don't have a job. These lines can be dangerous, however. "The problem is, every six months my bank sends me checks and reminds me I can write a check up to X, Y or Z," money manager Jeff Lancaster tells the SF Chronicle. "You need to be very disciplined" and resist the temptation to use it for nonessentials.
• If you are laid off, file immediately for unemployment benefits. In California, you must file by phone or online and you can't begin collecting benefits until one week after you apply. To be eligible, you must have lost your job through no fault of your own, be able to work and be looking for employment. Weekly unemployment benefits range from $40 to $450 depending on your earnings.
• Investigate health care options. If you lose your job, you usually can remain in your former employer's group health care plan for 18 to 36 months, but you generally pay the full cost plus an administrative fee. There may be cheaper options, such as adding yourself to a spouse or domestic partner's plan.
• If you must raid your retirement plan, know the rules. You can withdraw money from an individual retirement account for any reason. If it's a traditional IRA, you will owe income tax on the withdrawal plus (if you are younger than 59 1/2) a 10% penalty. (Different rules apply to Roth IRAs and nondeductible IRAs.) Many 401(k) plans allow withdrawals if you can prove a financial hardship, but you will still owe income tax on the withdrawal plus (if you are younger than 59 1/2) a 10% penalty.
  If you leave your job and roll your 401(k) plan in to an IRA, you will have to wait until you turn 59 1/2 to take a penalty-free withdrawal. [SFGate.com]
• Just Say No to Credit Cards. Credit cards, my friend, are a drug to some of us. The thrill of charging a new plasma television may indeed exceed the thrill that some experience when taking illegal drugs. Because of that, we have to learn to say no.
  Even if your credit card habits aren't that bad, you could probably use a bit of "reigning in" and learn to avoid making unnecessary purchases. Even if you pay cash for your "splurges" save the cash and put it toward paying down your debt. With the economy hit so hard, you want to have as little debt as possible weighing your finances down.
• Fall In Love with Coupons. If you haven't yet discovered the wonder of coupons, it's time you get acquainted with the little bits of paper that can save you hundreds (or even thousands) of dollars each year. For the little bit of time you spend clipping coupons and planing to shop the best sales, you'll have a much fatter bank account to show for it.
• For those of you who are homeowners, now may be the time to refinance. If you have an ARM (if you don't know what that is, read my breakdown of mortgages here), now may be the time to refinance into a fixed-rate mortgage. Mortgage rates are lower than they've been in a long time. Adjustable rates can go up and you may find yourself in a bind if you can't make your rising mortgage payments. With a fixed rate, you won't face that dilemma.
• Save for an emergency fund, as you're paying down debt, of course. [Consumertipreport.org]