Had some difficulty with our water heater recently. I tried to see if it was something obvious, but couldn't find anything. Ultimately, I had to call our HVAC guy. He sold the heater to us and installed it.
He's never been cheap, but that's something I can live with. He's been reasonably priced, and his work is excellent. He's a one-man show and as a small businessperson, I can relate to his situation.
He ended up poking around the water heater for a little while, then discovering a loose connection that fixed the problem.
After a while, he sent the bill. It was a total of $177. That seemed a bit high to me.
The two things that stood out were that his labor rate was $99 an hour.
On top of that, he charged a $30 "trip charge".
I'm familiar with trip charges in our industry because we can charge them, too. Generally, we don't, because we don't feel that the customer should pay for us simply to drive to their house. We do have minimum service charges, but we don't make the customer pay for drive time.
We deal with all sorts of skilled trades and so far, the trip charge is the exception, not the rule.
The only time we try to use a trip charge is when the customer is wasting our time, called us out for no apparent reason, and the work we performed wasn't enough to cover the cost of gas and labor for the trip there and back.
So, I really resented the trip charge. I've never wasted this guy's time. In the past, I've bought an air conditioning unit and a water heater from him. I've paid him for every trip he's ever made to my house.
The trip charge was a sort of slap in the face to me. A way of saying, "Well... geez, if you want me to drive to your house, you damned well better pay for it."
Given that I clearly have never wasted this guy's time in the past, I was offended.
Now comes the question of his rate. In the past, I never even noticed the rate he was charging me. The bills seemed fair for the amount of work performed. Apparently, he just raised his rates to $99.
I called to ask him if this was correct and he verified that it is. He said he hadn't raised his rates in the past 4 years and decided to raise them just recently.
I don't mean to sound unsympathetic, but in all honesty, labor rates should have remained constant for about the past decade. Inflation has been pretty low. However, my HVAC guy has put in two rate increases in that time frame. Add the fact that negative wage pressure has kept most people's wages, even in nominal terms, relatively flat, and that's a heck of a ballsy thing to do: increase your rate by 12% at a time when the economy is cratered.
I am the first to admit that a trained, licensed, bonded and insured HVAC guy is a skilled person who should make more money than your average bear.
But at $99 an hour? That's a little steep. The other HVAC contractors I use bill $45 or so for their base labor rate. Granted, this guy is good, but is he twice as good? I doubt it.
I do have other HVAC work that needs to be done on the house I just bought. In the past, it wouldn't even be a consideration: I'd have hired this guy. Now though? He's put this game in play. I will be considering other providers and may find somebody else I'm more inclined to use.
This is a delicate balance for a small businessperson. When times are tough, you still need to pay bills and make money. Squeezing your best customers is seldom a good way to go about things, though.
I've always maintained that your best customers should pay your lowest rate. This is something you should manage actively.
If you manage it passively, you will end up giving discounts and additional attention to your WORST customers. The ones who gripe about everything. The ones who make you fix things that have nothing to do with your work. The ones who are angry and don't want to pay the bill.
Those customers, frankly, I've always made a point to charge for everything. Every minute, every trip charge, all at 100% cost. I don't want to keep them. I want them to look for somebody else.
The good customers? They get discounts, they get freebies. I want a long-term business relationship with them.
My HVAC guy? I hope he didn't think I was a good customer, because he has probably lost the long-term relationship he had with me.
Tuesday, April 6, 2010
Overbearing, Boorish Baseball Dad Post
Starting a few weeks before opening day, Logan's team had a lot of scrimmages. The coach and a few parents have shown concern that it looks like the team is still rough around the edges.
I can see what they're talking about, but for the most part, that's what the scrimmages are for. The season doesn't start for another week, and for the most part, all the other teams will be in the same boat.
It doesn't take much observation to realize that natural talent is the biggest factor in sports. No amount of work, effort, dedication, is going to overcome a lack of basic natural tools. (I know this from firsthand experience. 99% of an athlete's success is determined at the moment of conception, in my opinion. It's honing the remaining 1% that determines how far most athletes will go.)
Last night, we scrimmaged the other Sylvania U9 Mavericks team. The way things went, the best 12 players from the tryouts are on Logan's team. They are the "heavy" team (because our travel schedule is heavy with out of town tournaments and more games played) or the "blue" team (blue uniforms).
They played the "light" team, or the "black" team last night.
I was curious to see the level of play for the other team. After all, the two teams comprise the top 2 dozen players from a tryout of between 150 and 200 kids. I'm proud that Logan made the heavy team, but probably would have been just as happy had he made the light team.
The light team was motivated, which is to be expected. Kids are competitive, even at this age, and I figured the kids on that other team would really, really want to show that they were every bit as good as the kids selected for Heavy.
We arrived, and because of spring break, we were shorthanded. We had just 7 players.
As our players rolled in one after the other and we wondered if we would have enough to even have a meaningful scrimmage, their team was already there, looking sharp, listening to coach's directions and running through drills.
Almost any observer would have thought that they were better disciplined and simply wanted it more.
I went over to a batting cage to warm up Logan. He struggled for a little bit, then started crushing the ball. I am astounded at his progress at bat in the off-season. Last year, he had a perfectly flat swing. Better than an uppercut swing, but not quite what you want to see. This year, he has a gorgeous, major league swing. Probably the only thing he needs to work on is getting a little harder hip-turn on the ball, but other than that, his swing is a beautiful thing to behold.
When we returned, our kids lined up to warm up throwing, then line up for fielding drills. These kids have always been talented, but the off-season work and another 3/4-year of growth has produced a dramatic difference.
(We had indoor facilities to practice in all off-season and practiced twice a week.)
They were fluid and crisp in fielding line drives and their throws were remarkable. Logan has gotten to the point where, at age 8, he plays baseball better than I ever did, and probably ever could.
I glanced over at the other team and saw that they were doing the same drill, but had more difficulty fielding cleanly and making the throw.
A few of the other dads and I expressed relief that our kids were actually better. Not so much because we wanted them to be superior, but to validate that our kids belonged on the Blue team. Nobody wants to see a situation where their kid was selected, but didn't truly deserve his spot.
I think each of us had a worst-nightmare of seeing the black team and thinking, "Oh my... there's half a dozen kids on that team that should have beaten my kid for a spot on blue/heavy."
I also think that it's awesome that the rec district is sponsoring two teams, not just one. For one thing, Sylvania has two High Schools. So, they should be trying to cultivate two capable teams. For another, kids develop at different ages and breakout at different ages. So, some of the kids who are currently playing heavy might drop off and some who are playing light may move up over time.
The more participation, the better. Every one of the kids selected for Mavericks baseball should be very, very proud.
During the scrimmage, our team's skills really came through. Our pitching was faster and more accurate. Fly balls were handled routinely. The team made good plays on line drives. It wasn't perfect, but it was very, very good.
This is the 4th team we've scrimmaged, and against 3 of them our team was so far ahead of the other team, it was difficult to make a comparison.
In fact, I found myself thinking, "Wow, we should really be doing a lot better against this other team."
Really, that was the wrong emphasis. I should have been happy that our team was demonstrably better.
The only team we weren't clearly better than was the Maverick's U10 Heavy. Frankly, we held our own. They were clearly the better team, but it's not like we didn't belong on the same field. And one year, at this age, is a huge, huge advantage.
In an interesting note, we played an entire team that's playing in the U9 league, but whose players all qualify to play U8. (U9 means "under 9" and U8 means "under 8"). Our team was clearly better, but again, those kids were competing. I was thinking, "Wow... we're really not all that good... those kids are 8 years old."
It wasn't until later that I remembered that Logan and 3 other kids on his team (out of 11 players) also could qualify for U8 if they wanted to. So, it's not like everybody on our team was a lot older.
The format of these scrimmages makes it hard to tell how well/poorly the teams are doing, too. Basically, every inning, both teams bat their entire lineup. So, at the end of an "inning", we might score 6 runs, and the other team might score 1 run. However, we might have gotten, say, 8 outs during that inning where they may have only gotten 2.
So, when it seems like our kids should be doing better, the reality is that during a real game, they won't be out there facing 11 batters if they get 3 outs on the first 4. At this age, their attention tends to wander later in the inning after they've been out there for, say, 5 outs.
We scrimmage 2 more times before next Tuesday's opener. I fear that the opener will be one of our tougher games.
It is against an independent Sylvania team, the Copperheads. They played together last year. So, they've established a chemistry that our kids won't have until they've played a few games together.
To boot, Logan and a few members of the U9 Heavy tried out for the Copperheads and were not selected. A couple apparently were offered spots on the Copperheads, but chose to play Mavericks because that's where their friends play.
They're a Sylvania Team, but I don't know much about them. The kids don't go to Logan's elementary school that I know of, but Sylvania and Sylvania Township is about 65,000. So, there's a lot of folks I don't know. I think they also allow players from some of the more rural areas west of town to play.
I think our team can compete against anybody, but it would have been nice to play the Copperheads later in the season after we'd played together a little while.
Ultimately, though, I think we'll do fine. The suspense is half the fun, anyway.
I can see what they're talking about, but for the most part, that's what the scrimmages are for. The season doesn't start for another week, and for the most part, all the other teams will be in the same boat.
It doesn't take much observation to realize that natural talent is the biggest factor in sports. No amount of work, effort, dedication, is going to overcome a lack of basic natural tools. (I know this from firsthand experience. 99% of an athlete's success is determined at the moment of conception, in my opinion. It's honing the remaining 1% that determines how far most athletes will go.)
Last night, we scrimmaged the other Sylvania U9 Mavericks team. The way things went, the best 12 players from the tryouts are on Logan's team. They are the "heavy" team (because our travel schedule is heavy with out of town tournaments and more games played) or the "blue" team (blue uniforms).
They played the "light" team, or the "black" team last night.
I was curious to see the level of play for the other team. After all, the two teams comprise the top 2 dozen players from a tryout of between 150 and 200 kids. I'm proud that Logan made the heavy team, but probably would have been just as happy had he made the light team.
The light team was motivated, which is to be expected. Kids are competitive, even at this age, and I figured the kids on that other team would really, really want to show that they were every bit as good as the kids selected for Heavy.
We arrived, and because of spring break, we were shorthanded. We had just 7 players.
As our players rolled in one after the other and we wondered if we would have enough to even have a meaningful scrimmage, their team was already there, looking sharp, listening to coach's directions and running through drills.
Almost any observer would have thought that they were better disciplined and simply wanted it more.
I went over to a batting cage to warm up Logan. He struggled for a little bit, then started crushing the ball. I am astounded at his progress at bat in the off-season. Last year, he had a perfectly flat swing. Better than an uppercut swing, but not quite what you want to see. This year, he has a gorgeous, major league swing. Probably the only thing he needs to work on is getting a little harder hip-turn on the ball, but other than that, his swing is a beautiful thing to behold.
When we returned, our kids lined up to warm up throwing, then line up for fielding drills. These kids have always been talented, but the off-season work and another 3/4-year of growth has produced a dramatic difference.
(We had indoor facilities to practice in all off-season and practiced twice a week.)
They were fluid and crisp in fielding line drives and their throws were remarkable. Logan has gotten to the point where, at age 8, he plays baseball better than I ever did, and probably ever could.
I glanced over at the other team and saw that they were doing the same drill, but had more difficulty fielding cleanly and making the throw.
A few of the other dads and I expressed relief that our kids were actually better. Not so much because we wanted them to be superior, but to validate that our kids belonged on the Blue team. Nobody wants to see a situation where their kid was selected, but didn't truly deserve his spot.
I think each of us had a worst-nightmare of seeing the black team and thinking, "Oh my... there's half a dozen kids on that team that should have beaten my kid for a spot on blue/heavy."
I also think that it's awesome that the rec district is sponsoring two teams, not just one. For one thing, Sylvania has two High Schools. So, they should be trying to cultivate two capable teams. For another, kids develop at different ages and breakout at different ages. So, some of the kids who are currently playing heavy might drop off and some who are playing light may move up over time.
The more participation, the better. Every one of the kids selected for Mavericks baseball should be very, very proud.
During the scrimmage, our team's skills really came through. Our pitching was faster and more accurate. Fly balls were handled routinely. The team made good plays on line drives. It wasn't perfect, but it was very, very good.
This is the 4th team we've scrimmaged, and against 3 of them our team was so far ahead of the other team, it was difficult to make a comparison.
In fact, I found myself thinking, "Wow, we should really be doing a lot better against this other team."
Really, that was the wrong emphasis. I should have been happy that our team was demonstrably better.
The only team we weren't clearly better than was the Maverick's U10 Heavy. Frankly, we held our own. They were clearly the better team, but it's not like we didn't belong on the same field. And one year, at this age, is a huge, huge advantage.
In an interesting note, we played an entire team that's playing in the U9 league, but whose players all qualify to play U8. (U9 means "under 9" and U8 means "under 8"). Our team was clearly better, but again, those kids were competing. I was thinking, "Wow... we're really not all that good... those kids are 8 years old."
It wasn't until later that I remembered that Logan and 3 other kids on his team (out of 11 players) also could qualify for U8 if they wanted to. So, it's not like everybody on our team was a lot older.
The format of these scrimmages makes it hard to tell how well/poorly the teams are doing, too. Basically, every inning, both teams bat their entire lineup. So, at the end of an "inning", we might score 6 runs, and the other team might score 1 run. However, we might have gotten, say, 8 outs during that inning where they may have only gotten 2.
So, when it seems like our kids should be doing better, the reality is that during a real game, they won't be out there facing 11 batters if they get 3 outs on the first 4. At this age, their attention tends to wander later in the inning after they've been out there for, say, 5 outs.
We scrimmage 2 more times before next Tuesday's opener. I fear that the opener will be one of our tougher games.
It is against an independent Sylvania team, the Copperheads. They played together last year. So, they've established a chemistry that our kids won't have until they've played a few games together.
To boot, Logan and a few members of the U9 Heavy tried out for the Copperheads and were not selected. A couple apparently were offered spots on the Copperheads, but chose to play Mavericks because that's where their friends play.
They're a Sylvania Team, but I don't know much about them. The kids don't go to Logan's elementary school that I know of, but Sylvania and Sylvania Township is about 65,000. So, there's a lot of folks I don't know. I think they also allow players from some of the more rural areas west of town to play.
I think our team can compete against anybody, but it would have been nice to play the Copperheads later in the season after we'd played together a little while.
Ultimately, though, I think we'll do fine. The suspense is half the fun, anyway.
Sunday, April 4, 2010
This and That on Easter Day...
Well, I was hoping for some gigantic appliance sales in today's paper, but so far, no dice. We don't get the major blowout sales here that I see in some larger markets. That goes for cars, major appliances, whatever.
I have a plan to get a dishwasher (a cheap one, but essentially brand-new) into the house, but still need to figure out how to get a washer and dryer in there. After that, I just need to cross my fingers and pray for the health of the fridge. I figure it'll go bad one of these days, but in the mean time, the ice-maker works and the thing is still functional. If I can get a couple years out of the thing, that'll be a big help.
I am ready to submit my transfer paperwork for that Contracting unit in Fort Worth. I'm looking forward to it. I'll have to pay my own travel to and from there, and rent a car, but the Navy will pay for my lodging while I'm down there. The upside is that some of my very best friends live down there. So, it'll give me a chance to see them somewhat regularly.
They'll also allow me to double up on drills so I don't always have to fly down there every month, necessarily. That'll save me some airfare and let me work around schedule conflicts, etc.
I also really need to get a new car. I drive about 3,000 miles a month. (Don't ask me how.) My current ride gets maybe 17 MPG. Getting a 30 MPG car would save me enough money in a month to take care of the car payment and insurance. It would also put less wear and tear on my gigantic highway dinosaur. Plus, if I can't get good airfare and have to make the huge drive to Texas, I'll really be glad to be driving something that's a gas sipper versus a guzzler.
I'll still probably use the dinosaur whenever, for instance, I have a long road trip with Logan. But otherwise, I'll use the little economy car.
Right now, I'm thinking a Honda Civic.
Travel baseball is proving to be every bit the committment that I thought it would be. The regular season hasn't started just yet, but the team is doing unofficial scrimmages about once every 2 days.
I have had to learn to keep a scorebook, and although it was rough at first, I think I have it figured out, now. It's amazing how much information you can keep in those little tiny squares.
I also am doing much of the team's administrative stuff, paying the umpires (the rec. gives me a check and I pay the ump every game), managing the team's equipment (the team has 4 team batting helmets and a set of catcher's gear.) I also arrange for hotels, etc.
Basically, I'm the team's den mother. I was relieved the other day to see one of the mothers with a massive SLR with gigantic lens. So, I don't have to be the team's photographer.
Being a photographer for events would be fun, I think, but at a certain point, it really starts to interfere with your enjoyment of events. Half the time I took a camera to a social event, I knew that doing so caused me to miss out on half the social event. You can take video or pictures at a sporting event, but that's all you can do. So, with keeping the scorebook, there's no way I could get pix, too.
This is going to be pretty intense. Season starts mid-April and ends mid-July. The team will play over 50 games. It's well worth it, though. I can see from the scrimmages that we have one of the more talented teams. Stands to reason because of the tryout process to get on the team.
The guys still haven't attained machine-like efficiency, but they're just now learning to play together. And other than the two main catchers on the team (Logan and another kid named Bailey), the kids don't really have positions, per se.
I am amazed at Logan's progress at catcher. Bailey is a stud at catcher and his family has an older brother who catches and his father catches. Logan started off so far behind Bailey, that I was afraid he'd really feel bad. Now, he is getting to where he's really closed the gap.
I wasn't that excited about Logan playing catcher, but he really enjoys it and he's getting good at it. Logan and Bailey will get most of the work, but there's 3 other kids in there, too. On defense, I think catcher is, by far, the most physically demanding position, not to mention wearing a ton of equipment in the middle of Summer. So, it's important that these kids get breaks. Otherwise, they'd be exhausted in the course of a normal tournament.
I'm starting to see a strategy that could have me living in my new house pretty soon. Had a bit of an unwelcome development. The windows upstairs are in bad repair. I could probably live with them, but I think I could replace them all with vinyl clad windows relatively inexpensively. Home Depot has a line where each window would be probably $120-150 each. That's still a major chunk of change, but the house is well-shaded and I could probably get by without A/C for most of the year if I could get good enough air circulation throughout the house.
I just have to get it to where it's liveable and take on the remaining tasks one at a time.
And that's all there is on this amazingly beautiful Easter Sunday.
I have a plan to get a dishwasher (a cheap one, but essentially brand-new) into the house, but still need to figure out how to get a washer and dryer in there. After that, I just need to cross my fingers and pray for the health of the fridge. I figure it'll go bad one of these days, but in the mean time, the ice-maker works and the thing is still functional. If I can get a couple years out of the thing, that'll be a big help.
I am ready to submit my transfer paperwork for that Contracting unit in Fort Worth. I'm looking forward to it. I'll have to pay my own travel to and from there, and rent a car, but the Navy will pay for my lodging while I'm down there. The upside is that some of my very best friends live down there. So, it'll give me a chance to see them somewhat regularly.
They'll also allow me to double up on drills so I don't always have to fly down there every month, necessarily. That'll save me some airfare and let me work around schedule conflicts, etc.
I also really need to get a new car. I drive about 3,000 miles a month. (Don't ask me how.) My current ride gets maybe 17 MPG. Getting a 30 MPG car would save me enough money in a month to take care of the car payment and insurance. It would also put less wear and tear on my gigantic highway dinosaur. Plus, if I can't get good airfare and have to make the huge drive to Texas, I'll really be glad to be driving something that's a gas sipper versus a guzzler.
I'll still probably use the dinosaur whenever, for instance, I have a long road trip with Logan. But otherwise, I'll use the little economy car.
Right now, I'm thinking a Honda Civic.
Travel baseball is proving to be every bit the committment that I thought it would be. The regular season hasn't started just yet, but the team is doing unofficial scrimmages about once every 2 days.
I have had to learn to keep a scorebook, and although it was rough at first, I think I have it figured out, now. It's amazing how much information you can keep in those little tiny squares.
I also am doing much of the team's administrative stuff, paying the umpires (the rec. gives me a check and I pay the ump every game), managing the team's equipment (the team has 4 team batting helmets and a set of catcher's gear.) I also arrange for hotels, etc.
Basically, I'm the team's den mother. I was relieved the other day to see one of the mothers with a massive SLR with gigantic lens. So, I don't have to be the team's photographer.
Being a photographer for events would be fun, I think, but at a certain point, it really starts to interfere with your enjoyment of events. Half the time I took a camera to a social event, I knew that doing so caused me to miss out on half the social event. You can take video or pictures at a sporting event, but that's all you can do. So, with keeping the scorebook, there's no way I could get pix, too.
This is going to be pretty intense. Season starts mid-April and ends mid-July. The team will play over 50 games. It's well worth it, though. I can see from the scrimmages that we have one of the more talented teams. Stands to reason because of the tryout process to get on the team.
The guys still haven't attained machine-like efficiency, but they're just now learning to play together. And other than the two main catchers on the team (Logan and another kid named Bailey), the kids don't really have positions, per se.
I am amazed at Logan's progress at catcher. Bailey is a stud at catcher and his family has an older brother who catches and his father catches. Logan started off so far behind Bailey, that I was afraid he'd really feel bad. Now, he is getting to where he's really closed the gap.
I wasn't that excited about Logan playing catcher, but he really enjoys it and he's getting good at it. Logan and Bailey will get most of the work, but there's 3 other kids in there, too. On defense, I think catcher is, by far, the most physically demanding position, not to mention wearing a ton of equipment in the middle of Summer. So, it's important that these kids get breaks. Otherwise, they'd be exhausted in the course of a normal tournament.
I'm starting to see a strategy that could have me living in my new house pretty soon. Had a bit of an unwelcome development. The windows upstairs are in bad repair. I could probably live with them, but I think I could replace them all with vinyl clad windows relatively inexpensively. Home Depot has a line where each window would be probably $120-150 each. That's still a major chunk of change, but the house is well-shaded and I could probably get by without A/C for most of the year if I could get good enough air circulation throughout the house.
I just have to get it to where it's liveable and take on the remaining tasks one at a time.
And that's all there is on this amazingly beautiful Easter Sunday.
Friday, April 2, 2010
The Money Pit
This is my blog as I gradually get my money pit of a home into liveable condition. I hope to be able to figure out how to put up pictures over time. The house, itself, is a money pit, but the individual unpleasant surprises are, each, a pit of their own. So, in the interest of chronicling the home's transformation, and as a salute to all money pit owners, past and present, I am going to tell my rather lengthy, rather dramatic story, here.
I just bought a house. It needed work and I knew that. I took it into consideration when I made the offer. I didn't get a steal on the property, but I feel I got a fair price. The main thing to me was the location: within walking distance of my old house. That way, my son can walk to and from without a lot of drama.
Other aspects of the location are appealing as well. It backs up to a ravine, undeveloped woods and a view of a creek. From the back of the house, it's a perfectly tranquil setting. It's also on a cul-de-sac.
The house itself was built in the mid 1970s. It probably hasn't been updated much since then. So, I knew this was going to be an adventure.
The shame of it is that the house I'm leaving is pretty much perfect. It's well appointed. The previous owner updated the whole thing. It's got oak trim and 6 panel doors and a country style motif. I like to say that this style is perpetually one generation out of date. It never looks too dated, but it never looks like it's the most contemporary decor. In its own way, it's understated and timeless, and won't leave you redecorating every 10 years.
Pretty much everything that could have gone wrong in the past 10 years in my old house did. The refrigerator, built-in microwave, dishwasher, and air conditioner all went on the fritz. So, the few things that weren't new when we moved in are pretty much all new, now. And the very few things that needed an update, like the sink and the front door, got updated over time as well. Thanks to a cat with an aversion to the litterbox, every piece of carpet in the house was replaced, too.
I even added a huge new deck where a rotting, tiny deck had been. Although I didn't do much landscaping, I did have half a dozen really large trees removed from the property.
So, I leave a house that's pretty close to good as new. If I had to guess, I put over $20,000 into the old house in the past 10 years, and it was in pretty darned good shape when we moved in.
The new house? It needs a little updating.
As anybody who has ever bought a house that needed "a little updating" can tell you, it doesn't take long in a house to realize that the place needs a lot more work than you thought at first.
This will be my home for at least the next 10 years. I want it to be comfortable and a source of pride and enjoyment. So, it's going to be a project.
The toughest question at first was simply where to start. There's so much that's wrong or in need of repair or update in the house. Thinking about it was actually depressing. Pretty much anything in the house that isn't broken is unstylish. There is nearly no room in the house that doesn't need SOMETHING, and in most of the rooms, they need a very substantial something.
The entire house has very dark, brown trim and wood. The windows and doors almost all need adjustment or replacement. The flooring is bad in more than half the house. They did bizarre things to it architecturally.
On the bright side, it has some great features. It's 3 houses away from the old house. The back yard is every bit as serene and beautiful as I thought it would be. The house is on a cul-de-sac, so no real traffic out front. Oddly, the house is built back behind what I would think is the build line which gives the house extra privacy and an extra large front yard.
The house is also very large. It has good bones. It's structurally sound and frankly, it's not that bad. Lots of people live in houses in worse condition and if I didn't change anything, I could probably invite folks to the house without worrying about being too embarassed by the condition.
It's also big. It was listed at over 2,700 square feet and it looks like every square inch of that. It's got both formal and informal dining areas and two living areas. It also has 5 bedrooms, 4 of which are nice sized and one of which is modest, but not ridiculously small.
On top of all that, I got the house for what I think was a good price (in line with a few foreclosures in the area), and with a 30 year 4.625% fixed VA loan and zero down with seller paying all closing costs.
So, there's a lot of reason to be happy. It just needs work.
The very first thing I noticed was that the doors needed to be replaced. The door between the living room and garage wasn't even an exterior door. It was an interior door. (No insulation, lightweight, would offer no protection in the event of a fire in the garage.) Modern codes require a steel door there.
The back door has a large window in the upper half. That's a big theft risk. So, I want that replaced with a steel door as well. The basement has a walk-out and it looks like at one time there was a moisture problem down there. The bottom of the door is rotted and there's a half-window.
So, total of 3 steel doors. The front door is actually in really good shape. It has side windows to the left and right, which I'm not a big fan of, but for the mean time, it's something I can live with. The door is a very dark wood tone, though. So, I will probably do something about that.
The toughest part of living in a money pit / house that needs work, is that it's overwhelming. Every day you see something that needs fixed and most days the stuff doesn't get fixed. It wears you down.
I'm trying to focus. The place needs new paint, trim, wood, windows, flooring and a few architectural changes plus an entirely new kitchen. Yeah, did I mention it needs work?
The very first project is the living room. It was long and narrow: about 25 x 12. It was separated by a non-load-bearing wall from the informal dining area which is another 20 x 12. Then, the galley kitchen and the formal dining room.
I figured I wanted at least one room in the house that was "finished" and that I would feel good about. No way I could have felt good with the living room the way it started.
It had dark panelling wainscoting and wallpaper that was original to the house. The carpet was entirely too dark and it was both faded and stained. A thorough cleaning took care of the staining, but not the fading.
I was on the fence as to whether or not to just live with it until finances would make it easier to switch over when I noticed that the place might be dramatically improved if the wall separating the informal dining room from the living room came out.
That wall made the informal dining area sort of claustrophobic and dark. It also separated the kitchen area from the living room area, completely. I hope to entertain in the house and since the kitchen is the main place to congregate for folks who don't know where else to go, I didn't want it to be isolated from the living room (which is the main place to congregate for folks who know where to go.)
There were a couple of catches to the whole deal. The first is that taking out the wall and replacing the carpet were basically two sides of the same coin. If you did one, you may as well do the other.
The second is that there were wires, switches, thermostats, etc., mounted on and in the wall.
I vacillated on the decision a bit longer and had my guys prep the rest of the room.
They tore down the dark panel wainscot and when they did, they found an area that had moisture problems in the past and had rotted.
Money Pit #1: the rotted wall.
Fortunately, I actually own a company that fixes water damaged houses. Go figure. We tested to see if the water problem was current or whether this was something from 30 years ago that had long since been fixed. After investigating, it was clear that the moisture problem was REALLY old. They took care of it by putting gutters up on the permiter of the flat roof.
But still, it left the issue of a rotted wall. The siding would have to come off. The sill plate and the floor sheathing would have to be replaced as well as one stud and the exterior sheathing.
Not the hugest project and frankly, it turned out beautifully, but these money pits are... well... the pits. Whenever you open up a wall or pull back a carpet, you're probably going to find something in a house that's almost 40 years old.
Sometimes ignorance is bliss. Most people's homes have really nasty things wrong with them. Folks just don't know it. Trust me... I know... I own a company that fixes screwed up houses.
Well, once that was done, we also pulled back enough of the carpet to reveal stains that probably came from a pet at some point in time. So, the carpet was gone. That made my decision for me on the wall, too. It may as well go, too.
In for a penny, in for a pound. We took out the wall.
The difference was amazing, though. Brightened up the entire area and gave it a more contemporary look. Not quite a great room: it's too narrow for that, but clearly the heart of the home.
I was overjoyed. Until the next day when I got home and the temps inside were 100 degrees +.
Money Pit #2: something went haywire on the furnace, almost certainly because we took the thermostat off the wall and set it on the floor, disrupting the wires that led to the thermostat.
I disconnected all the wires: the furnace still ran. I went downstairs and flipped off the switch on the furnace. It still ran. I killed the circuit breaker. It's off, now. I probably won't need a furnace for another 7 months or so. That's probably how long it'll take me to afford to get this one fixed or replaced. The thing is 16 years old, though. I was sort of expecting to have to deal with it sometime. I don't know that the furnace is beyond repair, but it's unwelcome news, to say the least.
I sure hope the A/C still works. I WILL call out somebody to get that going if it isn't working.
Money Pit #3: the dishwasher doesn't really work. It starts... it just doesn't stop. Ever. I have a dishwasher at work that we've used maybe twice in the past 4 years. I'll have it put in, instead. It still has the protective plastic coating on the front of the door.
Money Pit #4: the old occupants left a washer and dryer. I think the washer mostly works, but I could swear the spin cycle left the clothes overly damp. I know the dryer doesn't work, though. Tried it and it sounded like a broken cement mixer and left the clothes still damp after an hour.
Not only did they leave a washer and dryer, they left 2 of each, none of which work. I really, really didn't want to have to spend money on a washer and dryer, but here I go.
Money Pit #5: the avacado kitchen sink and leaking faucet. I replaced the sink with an inexpensive stainless one and the faucet with one that didn't leak.
Money Pit #6: I need a TV for the house and was driving down the road when a local store was blowing out some Samsung 46" LED TVs for $800. That's a pretty good price. So, I bought it... one day before being given my old 52" LED. So, now I have two badass TVs. I can't afford cable, but I own two badass TVs. I also get my awesome old surround sound stereo.
Money Pit #7: I HAVE NO FURNITURE. I bought a 4 piece living room set (upholstered, sofa, loveseat, chair and ottoman) from Sam's club online, but lord only knows when it'll arrive. The room won't be ready for a while, anyway. So, no need to go nuts. So long as it arrives when promised (they said 4-5 weeks), I'll be happy. I have that and two twin beds. One for me, one for my son. That's it.
At this point, I think I can make do, but I need dressers for our clothes. I'm thinking of springing for closet organizers since the house is full of pretty large closets. No walk-ins, but the big wide ones.
So, that brings the first entry of the Money Pit Blog to a close. You don't even want to know about the projects I haven't mentioned that are coming later on down the road. Even if you did, I don't want to think about them, yet. I'm depressed enough as it is.
I just bought a house. It needed work and I knew that. I took it into consideration when I made the offer. I didn't get a steal on the property, but I feel I got a fair price. The main thing to me was the location: within walking distance of my old house. That way, my son can walk to and from without a lot of drama.
Other aspects of the location are appealing as well. It backs up to a ravine, undeveloped woods and a view of a creek. From the back of the house, it's a perfectly tranquil setting. It's also on a cul-de-sac.
The house itself was built in the mid 1970s. It probably hasn't been updated much since then. So, I knew this was going to be an adventure.
The shame of it is that the house I'm leaving is pretty much perfect. It's well appointed. The previous owner updated the whole thing. It's got oak trim and 6 panel doors and a country style motif. I like to say that this style is perpetually one generation out of date. It never looks too dated, but it never looks like it's the most contemporary decor. In its own way, it's understated and timeless, and won't leave you redecorating every 10 years.
Pretty much everything that could have gone wrong in the past 10 years in my old house did. The refrigerator, built-in microwave, dishwasher, and air conditioner all went on the fritz. So, the few things that weren't new when we moved in are pretty much all new, now. And the very few things that needed an update, like the sink and the front door, got updated over time as well. Thanks to a cat with an aversion to the litterbox, every piece of carpet in the house was replaced, too.
I even added a huge new deck where a rotting, tiny deck had been. Although I didn't do much landscaping, I did have half a dozen really large trees removed from the property.
So, I leave a house that's pretty close to good as new. If I had to guess, I put over $20,000 into the old house in the past 10 years, and it was in pretty darned good shape when we moved in.
The new house? It needs a little updating.
As anybody who has ever bought a house that needed "a little updating" can tell you, it doesn't take long in a house to realize that the place needs a lot more work than you thought at first.
This will be my home for at least the next 10 years. I want it to be comfortable and a source of pride and enjoyment. So, it's going to be a project.
The toughest question at first was simply where to start. There's so much that's wrong or in need of repair or update in the house. Thinking about it was actually depressing. Pretty much anything in the house that isn't broken is unstylish. There is nearly no room in the house that doesn't need SOMETHING, and in most of the rooms, they need a very substantial something.
The entire house has very dark, brown trim and wood. The windows and doors almost all need adjustment or replacement. The flooring is bad in more than half the house. They did bizarre things to it architecturally.
On the bright side, it has some great features. It's 3 houses away from the old house. The back yard is every bit as serene and beautiful as I thought it would be. The house is on a cul-de-sac, so no real traffic out front. Oddly, the house is built back behind what I would think is the build line which gives the house extra privacy and an extra large front yard.
The house is also very large. It has good bones. It's structurally sound and frankly, it's not that bad. Lots of people live in houses in worse condition and if I didn't change anything, I could probably invite folks to the house without worrying about being too embarassed by the condition.
It's also big. It was listed at over 2,700 square feet and it looks like every square inch of that. It's got both formal and informal dining areas and two living areas. It also has 5 bedrooms, 4 of which are nice sized and one of which is modest, but not ridiculously small.
On top of all that, I got the house for what I think was a good price (in line with a few foreclosures in the area), and with a 30 year 4.625% fixed VA loan and zero down with seller paying all closing costs.
So, there's a lot of reason to be happy. It just needs work.
The very first thing I noticed was that the doors needed to be replaced. The door between the living room and garage wasn't even an exterior door. It was an interior door. (No insulation, lightweight, would offer no protection in the event of a fire in the garage.) Modern codes require a steel door there.
The back door has a large window in the upper half. That's a big theft risk. So, I want that replaced with a steel door as well. The basement has a walk-out and it looks like at one time there was a moisture problem down there. The bottom of the door is rotted and there's a half-window.
So, total of 3 steel doors. The front door is actually in really good shape. It has side windows to the left and right, which I'm not a big fan of, but for the mean time, it's something I can live with. The door is a very dark wood tone, though. So, I will probably do something about that.
The toughest part of living in a money pit / house that needs work, is that it's overwhelming. Every day you see something that needs fixed and most days the stuff doesn't get fixed. It wears you down.
I'm trying to focus. The place needs new paint, trim, wood, windows, flooring and a few architectural changes plus an entirely new kitchen. Yeah, did I mention it needs work?
The very first project is the living room. It was long and narrow: about 25 x 12. It was separated by a non-load-bearing wall from the informal dining area which is another 20 x 12. Then, the galley kitchen and the formal dining room.
I figured I wanted at least one room in the house that was "finished" and that I would feel good about. No way I could have felt good with the living room the way it started.
It had dark panelling wainscoting and wallpaper that was original to the house. The carpet was entirely too dark and it was both faded and stained. A thorough cleaning took care of the staining, but not the fading.
I was on the fence as to whether or not to just live with it until finances would make it easier to switch over when I noticed that the place might be dramatically improved if the wall separating the informal dining room from the living room came out.
That wall made the informal dining area sort of claustrophobic and dark. It also separated the kitchen area from the living room area, completely. I hope to entertain in the house and since the kitchen is the main place to congregate for folks who don't know where else to go, I didn't want it to be isolated from the living room (which is the main place to congregate for folks who know where to go.)
There were a couple of catches to the whole deal. The first is that taking out the wall and replacing the carpet were basically two sides of the same coin. If you did one, you may as well do the other.
The second is that there were wires, switches, thermostats, etc., mounted on and in the wall.
I vacillated on the decision a bit longer and had my guys prep the rest of the room.
They tore down the dark panel wainscot and when they did, they found an area that had moisture problems in the past and had rotted.
Money Pit #1: the rotted wall.
Fortunately, I actually own a company that fixes water damaged houses. Go figure. We tested to see if the water problem was current or whether this was something from 30 years ago that had long since been fixed. After investigating, it was clear that the moisture problem was REALLY old. They took care of it by putting gutters up on the permiter of the flat roof.
But still, it left the issue of a rotted wall. The siding would have to come off. The sill plate and the floor sheathing would have to be replaced as well as one stud and the exterior sheathing.
Not the hugest project and frankly, it turned out beautifully, but these money pits are... well... the pits. Whenever you open up a wall or pull back a carpet, you're probably going to find something in a house that's almost 40 years old.
Sometimes ignorance is bliss. Most people's homes have really nasty things wrong with them. Folks just don't know it. Trust me... I know... I own a company that fixes screwed up houses.
Well, once that was done, we also pulled back enough of the carpet to reveal stains that probably came from a pet at some point in time. So, the carpet was gone. That made my decision for me on the wall, too. It may as well go, too.
In for a penny, in for a pound. We took out the wall.
The difference was amazing, though. Brightened up the entire area and gave it a more contemporary look. Not quite a great room: it's too narrow for that, but clearly the heart of the home.
I was overjoyed. Until the next day when I got home and the temps inside were 100 degrees +.
Money Pit #2: something went haywire on the furnace, almost certainly because we took the thermostat off the wall and set it on the floor, disrupting the wires that led to the thermostat.
I disconnected all the wires: the furnace still ran. I went downstairs and flipped off the switch on the furnace. It still ran. I killed the circuit breaker. It's off, now. I probably won't need a furnace for another 7 months or so. That's probably how long it'll take me to afford to get this one fixed or replaced. The thing is 16 years old, though. I was sort of expecting to have to deal with it sometime. I don't know that the furnace is beyond repair, but it's unwelcome news, to say the least.
I sure hope the A/C still works. I WILL call out somebody to get that going if it isn't working.
Money Pit #3: the dishwasher doesn't really work. It starts... it just doesn't stop. Ever. I have a dishwasher at work that we've used maybe twice in the past 4 years. I'll have it put in, instead. It still has the protective plastic coating on the front of the door.
Money Pit #4: the old occupants left a washer and dryer. I think the washer mostly works, but I could swear the spin cycle left the clothes overly damp. I know the dryer doesn't work, though. Tried it and it sounded like a broken cement mixer and left the clothes still damp after an hour.
Not only did they leave a washer and dryer, they left 2 of each, none of which work. I really, really didn't want to have to spend money on a washer and dryer, but here I go.
Money Pit #5: the avacado kitchen sink and leaking faucet. I replaced the sink with an inexpensive stainless one and the faucet with one that didn't leak.
Money Pit #6: I need a TV for the house and was driving down the road when a local store was blowing out some Samsung 46" LED TVs for $800. That's a pretty good price. So, I bought it... one day before being given my old 52" LED. So, now I have two badass TVs. I can't afford cable, but I own two badass TVs. I also get my awesome old surround sound stereo.
Money Pit #7: I HAVE NO FURNITURE. I bought a 4 piece living room set (upholstered, sofa, loveseat, chair and ottoman) from Sam's club online, but lord only knows when it'll arrive. The room won't be ready for a while, anyway. So, no need to go nuts. So long as it arrives when promised (they said 4-5 weeks), I'll be happy. I have that and two twin beds. One for me, one for my son. That's it.
At this point, I think I can make do, but I need dressers for our clothes. I'm thinking of springing for closet organizers since the house is full of pretty large closets. No walk-ins, but the big wide ones.
So, that brings the first entry of the Money Pit Blog to a close. You don't even want to know about the projects I haven't mentioned that are coming later on down the road. Even if you did, I don't want to think about them, yet. I'm depressed enough as it is.
Sunday, February 28, 2010
Ignoring the Lessons of the Great Depression
People are saying that because of the lessons learned during the Great Depression, it has been necessary to maul the American people to give trillions to incompetent bankers.
As anybody who knows me is aware, I'm not a big fan of the Bush / Obama bailouts to "save" our economy.
If this is what the economy looks like when it is "saved", I am left to wonder: what do these clowns think a bad economy looks like?
Comparisons to the Great Depression are ridiculous, though. Anybody who disagrees would have to answer one question before I'll listen to them: Do they sincerely believe that the Great Depression would have been averted if we gave 1 year loans to less than a dozen banks (a few of whom only recently became banks so they could be in line for big piles of government money), bought an insurance company, and allowed banks to borrow money at zero percent?
Of course not. This was never "Son of the Great Depression". Paulson and Giethner just played it up like that so they could steal the maximum amount of taxpayer money to give to bankers.
We ARE facing an economic problem, and there ARE some solutions in the great depression. Unfortunately, the Bush and Obama administration learned NONE of those lessons.
For instance, in the Great Depression, bankers leaped out of windows because they were ruined. In the Great Recession, they made the government cash hundreds of millions of dollars of bonus checks for them.
Which means that back then, bankers had an incentive to fix things. Industrialists all over America pledged their entire fortunes to trying to fight the depression. There was simply no way to sit on your pile of gold and watch others suffer. Everybody was in it together.
Today, they couldn't care less. They're doing great. What's your problem?
In the Great Depression, they took millions of Americans and gave them jobs producing public works that served as a foundation for prosperity for nearly a century. This gave people dignity. It gave folks good work habits. It gave folks pride. It gave them a leg-up, not a hand-out. It also gave us roads and parks and huge WPA buildings that are still standing today.
In the Great Recession, they decided the best thing to do is to pay people to stay at home... for 2 years... without working at all.
In the Great Depression, the consequences of the economic catastrophe were felt at all socioeconomic levels.
In the Great Recession, the government is making sure that only middle class and poor people suffer.
In the Great Depression, the government ensured that banks continued to lend and invest.
In the Great Recession, the government gives banks money at no cost, ensuring that banks don't have to do any actual banking in order to reap record profits.
Economists still aren't sure that any of the government programs enacted during the Great Depression helped at all. There's just as much evidence that the natural business cycle merely took a long time to recover, or that World War II, not government stimulus, is what brought the world out of the global depression.
The biggest difference, though? Back then, the government wasn't engaged in acts that were clearly morally wrong. Enhancing the financial fortunes of the very people who caused the problem? Paying people to do nothing? Setting up a "recovery" whose only real facet is the availability of free money that ensures the continued prosperity of banks, meanwhile removing any incentive that banks do anything that benefits anyone other than themselves?
If there is a way to mismanage this crisis any more than they're already doing, I'd like to see it. I fear that we are stuck with the two least capable presidents in US history at a time when it would have been nice to see somebody with some ability.
As anybody who knows me is aware, I'm not a big fan of the Bush / Obama bailouts to "save" our economy.
If this is what the economy looks like when it is "saved", I am left to wonder: what do these clowns think a bad economy looks like?
Comparisons to the Great Depression are ridiculous, though. Anybody who disagrees would have to answer one question before I'll listen to them: Do they sincerely believe that the Great Depression would have been averted if we gave 1 year loans to less than a dozen banks (a few of whom only recently became banks so they could be in line for big piles of government money), bought an insurance company, and allowed banks to borrow money at zero percent?
Of course not. This was never "Son of the Great Depression". Paulson and Giethner just played it up like that so they could steal the maximum amount of taxpayer money to give to bankers.
We ARE facing an economic problem, and there ARE some solutions in the great depression. Unfortunately, the Bush and Obama administration learned NONE of those lessons.
For instance, in the Great Depression, bankers leaped out of windows because they were ruined. In the Great Recession, they made the government cash hundreds of millions of dollars of bonus checks for them.
Which means that back then, bankers had an incentive to fix things. Industrialists all over America pledged their entire fortunes to trying to fight the depression. There was simply no way to sit on your pile of gold and watch others suffer. Everybody was in it together.
Today, they couldn't care less. They're doing great. What's your problem?
In the Great Depression, they took millions of Americans and gave them jobs producing public works that served as a foundation for prosperity for nearly a century. This gave people dignity. It gave folks good work habits. It gave folks pride. It gave them a leg-up, not a hand-out. It also gave us roads and parks and huge WPA buildings that are still standing today.
In the Great Recession, they decided the best thing to do is to pay people to stay at home... for 2 years... without working at all.
In the Great Depression, the consequences of the economic catastrophe were felt at all socioeconomic levels.
In the Great Recession, the government is making sure that only middle class and poor people suffer.
In the Great Depression, the government ensured that banks continued to lend and invest.
In the Great Recession, the government gives banks money at no cost, ensuring that banks don't have to do any actual banking in order to reap record profits.
Economists still aren't sure that any of the government programs enacted during the Great Depression helped at all. There's just as much evidence that the natural business cycle merely took a long time to recover, or that World War II, not government stimulus, is what brought the world out of the global depression.
The biggest difference, though? Back then, the government wasn't engaged in acts that were clearly morally wrong. Enhancing the financial fortunes of the very people who caused the problem? Paying people to do nothing? Setting up a "recovery" whose only real facet is the availability of free money that ensures the continued prosperity of banks, meanwhile removing any incentive that banks do anything that benefits anyone other than themselves?
If there is a way to mismanage this crisis any more than they're already doing, I'd like to see it. I fear that we are stuck with the two least capable presidents in US history at a time when it would have been nice to see somebody with some ability.
Riding the Storm Out
The economic collapse of 2008 and subsequent great recession (or whatever history will call this thing) had one early warning sign for me in July of 2008.
Things could not have been better for me. The business I started 3 years earlier was booming. Life was good. We were taking my son to a Mudhens game with about 6 of his friends to celebrate his birthday.
Just prior to leaving, I checked my bank statement online and found that checks were bouncing left and right. The deposits I'd made from my HELOC were rescinded and there was not enough money in the bank to cover the checks I'd written.
What in the world happened? It's not that I didn't have money. I had plenty. However, I was applying to acquire a second licensed territory in my business (I'm a Servpro franchisee) and was not drawing any money out of the business so we could meet a requirement for net liquidity.
Instead of drawing money from my business, I was going to live on my HELOC for a couple of months, get the 2nd license, then pay off the HELOC.
I was astounded. I hadn't bounced a check since undergrad, 15 years before. This was something that just never happened to me.
I called Chase and they explained that they had electronically re-appraised all the properties of their HELOC owners and reduced our credit lines. Apparently they sent out some notification in the mail, which I either hadn't noticed, or hadn't received. To make matters worse, on-line, they continued to show my older, larger HELOC limit.
Of course I was furious. Mostly because I had 4 different Chase accounts and had been a customer for over a decade. I couldn't believe that they didn't have the courtesy to either send me an e-mail or pick up a phone and let me know this before they did it.
She reiterated that I wasn't singled out for this treatment. She also said that this affected over 280,000 account holders and that they couldn't contact each one, personally.
I had more than enough money to settle matters. I paid off the HELOC, and closed the other Chase accounts. It had caused us to stumble, and to not-get our 2nd territory license, but in the grand scheme of things, it wasn't the worst development in the world.
Two months later, the financial markets started to unravel.
Personally, I watched with more than a little trepidation and fear. I grew up in the 70s, and joined the Army in the early 80s, which made me a recession baby of sorts. I knew what it was like to stand in line for jobs as a bus-boy with 40+ year old men. I knew what it was like to walk into a McDonalds where they had no job openings.
Those were dark times for our country and I didn't want to see them return.
The press has documented how the government made an unprecedented intervention to save the bonuses of bankers and keep the very villains who caused this problem in piles of money.
They said it was necessary to prevent unemployment from going over 8% and to prevent liquidity from drying up.
As soon as the bankers had their multimillion dollar bonuses, unemployment went over 10% and they never made any effort, whatsoever, to provide liquidity to the broad economy.
We bailed out Wall Street, but left Main Street to suffer.
For the next year, I was stunned to see my business continue to prosper while the rest of the national, and especially the local economy tanked. We were setting sales records and adding staff every month.
Then, things must have reached a critical mass, because in mid 2009, business dropped like it had fallen off the edge of a table.
Small business, especially one like mine, requires the ability to see around corners. In this regard, I failed as a business owner.
I kept my staffing up, hoping business would return. Also, hoping not to ruin the lives of my workers, who didn't deserve any of this. I burned through all our reserve cash and tapped out all available business and personal credit.
After seeing my cash position deteriorate by six figures, I was out of money. At that point, what had appeared to be a short-term slowdown was now in its sixth month. That's not a slowdown. That's a permanent change of business condition.
I started letting people go in November. We avoided any layoffs after mid-November so as not to ruin anybody's Christmas. Besides, business frequently picked up with the bad weather.
Business stayed weak, though and layoffs continued in January and February.
Personally, I'm optimistic. My company was profitable every single year of operations. We didn't lose money because the business model became no longer viable. Nor did we lose money because our volume couldn't provide for profitable operations.
My business can make money at very low volumes. We'd have to be looking at a monumental train-wreck not to have enough volume to remain a viable business. So, we didn't lose money because we couldn't make money.
We lost money because I tried to keep people employed. Both because I felt it was my duty as a human being, and because I felt it was my duty as an entrepreneur.
However, when it came to it, the choice was to reorganize as a smaller organization or risk bankruptcy. I reorganized and we should be fine, now.
Still, I am furious. Being an entreprenuer is one of very few callings in my life. It is my chosen profession. In a largely unconventional life, it is the one conventional path I took. I graduated from the best business school I could attend (Case Western Reserve University). I paid my dues in a series of jobs in Fortune 500 companies. I earned my stripes in project management and management.
I believe in the power of business and the goodness of markets.
Which is why I'm probably MORE outraged than many at what our government has done. They have literally rewarded the very evil-doers who have caused this misery and left the rest of us to rot.
More remarkable is that not only was the Bush Administration, through Henry Paulson, the embodiment of complete and total evil, but the Obama Administration, through Tim Geithner, has decided that being an abject black-hole of humanity and morality is the right thing to do, too.
A small businessperson understands: you mess up, you pay the consequences. When I keep people on the payroll, I do it with my wallet. When I take a chance, I take a chance not only with my money, but with my very future. I gamble with my son's ability to go to the college of his choice. I gamble with modest financial resources that took me two decades to accumulate. I gamble with the stakes being a comfortable retirement in Arizona, or a retirement shopping for groceries in the cat food aisle in some desolate industrial midwestern town.
Big businesspeople? Honestly, every single bailed out firm should be out of business right now. Their shareholders should be wiped out and their employees should be jobless. Why aren't they? Because the government has stolen trillions upon trillions of dollars from the taxpayer and given it to crooks and thieves.
They took my money. Money that I paid every quarter to the IRS, whether or not it was easy, or even prudent to do. They stole it. They got rich with it.
I am left with nothing but my personal resources to keep myself and my remaining employees afloat. Not only do we have to make enough money to save ourselves, we have to make enough money so the government can take it and give it to multimillionaires who are too stupid to run a viable company.
I remember seeing people like, say, Michael Moore, protesting and losing his mind over things like the 2000 election and the wars in Iraq and Afghanistan. I'd never seen people so angry. It was as if he'd lost his mind, entirely and become a being of nothing but seething, irrational hatred.
Now, I'm starting to get it. I don't agree with his stands on those issues, but I'm starting to see that what had him so insane was that his fundamental sense of justice had just been annihilated. Everything he had believed about what is good and just and fair had been assaulted.
That is how I feel about our current financial situation and the government's solution of No Banker Left Behind combined with bread and circuses for the unwashed masses.
I didn't just believe in capitalism, I devoted my life to it. I was an acolyte in its hallowed academic halls. I became a deacon of the church in my rise to management in corporate America. I became a high priest when I funded, created and ran my own business.
I BELIEVED in capitalism and I put my money where my mouth was. I believed that capitalism was not just the best way for the wealthy to benefit, but to provide a maximization of wealth for all of society so that everybody would ultimately benefit.
Just as I BELIEVE in the United States of America as a force for everything that is good and right and fair. For that, I have walked the walk, not once, but twice in my lifetime by volunteering for military service.
Now? The United States of America has represented everything that is bad, and wrong and unfair by a complete perversion of capitalism. Because of the government, all the bad parts of capitalism (collecting wealth at the top while those at the bottom suffer) are alive and well and none of the good parts of capitalism (needing to invest in business at all levels and providing meaningful work and prosperity for everyone) is working well at all.
What will happen in the next few years? Nobody really knows. Small business is an act of faith. Despite what I have seen, I have no choice but to remain one of the faithful.
For the first time in my lifetime, though, I hate my government for what they've done. I've watched them perpetrate an unmitigated evil in the name of expediency. I just don't know what to believe anymore.
So, Michael Moore, if there's any room on the stark-raving loony bench, I'd appreciate it if you could move over and let me take a seat.
Things could not have been better for me. The business I started 3 years earlier was booming. Life was good. We were taking my son to a Mudhens game with about 6 of his friends to celebrate his birthday.
Just prior to leaving, I checked my bank statement online and found that checks were bouncing left and right. The deposits I'd made from my HELOC were rescinded and there was not enough money in the bank to cover the checks I'd written.
What in the world happened? It's not that I didn't have money. I had plenty. However, I was applying to acquire a second licensed territory in my business (I'm a Servpro franchisee) and was not drawing any money out of the business so we could meet a requirement for net liquidity.
Instead of drawing money from my business, I was going to live on my HELOC for a couple of months, get the 2nd license, then pay off the HELOC.
I was astounded. I hadn't bounced a check since undergrad, 15 years before. This was something that just never happened to me.
I called Chase and they explained that they had electronically re-appraised all the properties of their HELOC owners and reduced our credit lines. Apparently they sent out some notification in the mail, which I either hadn't noticed, or hadn't received. To make matters worse, on-line, they continued to show my older, larger HELOC limit.
Of course I was furious. Mostly because I had 4 different Chase accounts and had been a customer for over a decade. I couldn't believe that they didn't have the courtesy to either send me an e-mail or pick up a phone and let me know this before they did it.
She reiterated that I wasn't singled out for this treatment. She also said that this affected over 280,000 account holders and that they couldn't contact each one, personally.
I had more than enough money to settle matters. I paid off the HELOC, and closed the other Chase accounts. It had caused us to stumble, and to not-get our 2nd territory license, but in the grand scheme of things, it wasn't the worst development in the world.
Two months later, the financial markets started to unravel.
Personally, I watched with more than a little trepidation and fear. I grew up in the 70s, and joined the Army in the early 80s, which made me a recession baby of sorts. I knew what it was like to stand in line for jobs as a bus-boy with 40+ year old men. I knew what it was like to walk into a McDonalds where they had no job openings.
Those were dark times for our country and I didn't want to see them return.
The press has documented how the government made an unprecedented intervention to save the bonuses of bankers and keep the very villains who caused this problem in piles of money.
They said it was necessary to prevent unemployment from going over 8% and to prevent liquidity from drying up.
As soon as the bankers had their multimillion dollar bonuses, unemployment went over 10% and they never made any effort, whatsoever, to provide liquidity to the broad economy.
We bailed out Wall Street, but left Main Street to suffer.
For the next year, I was stunned to see my business continue to prosper while the rest of the national, and especially the local economy tanked. We were setting sales records and adding staff every month.
Then, things must have reached a critical mass, because in mid 2009, business dropped like it had fallen off the edge of a table.
Small business, especially one like mine, requires the ability to see around corners. In this regard, I failed as a business owner.
I kept my staffing up, hoping business would return. Also, hoping not to ruin the lives of my workers, who didn't deserve any of this. I burned through all our reserve cash and tapped out all available business and personal credit.
After seeing my cash position deteriorate by six figures, I was out of money. At that point, what had appeared to be a short-term slowdown was now in its sixth month. That's not a slowdown. That's a permanent change of business condition.
I started letting people go in November. We avoided any layoffs after mid-November so as not to ruin anybody's Christmas. Besides, business frequently picked up with the bad weather.
Business stayed weak, though and layoffs continued in January and February.
Personally, I'm optimistic. My company was profitable every single year of operations. We didn't lose money because the business model became no longer viable. Nor did we lose money because our volume couldn't provide for profitable operations.
My business can make money at very low volumes. We'd have to be looking at a monumental train-wreck not to have enough volume to remain a viable business. So, we didn't lose money because we couldn't make money.
We lost money because I tried to keep people employed. Both because I felt it was my duty as a human being, and because I felt it was my duty as an entrepreneur.
However, when it came to it, the choice was to reorganize as a smaller organization or risk bankruptcy. I reorganized and we should be fine, now.
Still, I am furious. Being an entreprenuer is one of very few callings in my life. It is my chosen profession. In a largely unconventional life, it is the one conventional path I took. I graduated from the best business school I could attend (Case Western Reserve University). I paid my dues in a series of jobs in Fortune 500 companies. I earned my stripes in project management and management.
I believe in the power of business and the goodness of markets.
Which is why I'm probably MORE outraged than many at what our government has done. They have literally rewarded the very evil-doers who have caused this misery and left the rest of us to rot.
More remarkable is that not only was the Bush Administration, through Henry Paulson, the embodiment of complete and total evil, but the Obama Administration, through Tim Geithner, has decided that being an abject black-hole of humanity and morality is the right thing to do, too.
A small businessperson understands: you mess up, you pay the consequences. When I keep people on the payroll, I do it with my wallet. When I take a chance, I take a chance not only with my money, but with my very future. I gamble with my son's ability to go to the college of his choice. I gamble with modest financial resources that took me two decades to accumulate. I gamble with the stakes being a comfortable retirement in Arizona, or a retirement shopping for groceries in the cat food aisle in some desolate industrial midwestern town.
Big businesspeople? Honestly, every single bailed out firm should be out of business right now. Their shareholders should be wiped out and their employees should be jobless. Why aren't they? Because the government has stolen trillions upon trillions of dollars from the taxpayer and given it to crooks and thieves.
They took my money. Money that I paid every quarter to the IRS, whether or not it was easy, or even prudent to do. They stole it. They got rich with it.
I am left with nothing but my personal resources to keep myself and my remaining employees afloat. Not only do we have to make enough money to save ourselves, we have to make enough money so the government can take it and give it to multimillionaires who are too stupid to run a viable company.
I remember seeing people like, say, Michael Moore, protesting and losing his mind over things like the 2000 election and the wars in Iraq and Afghanistan. I'd never seen people so angry. It was as if he'd lost his mind, entirely and become a being of nothing but seething, irrational hatred.
Now, I'm starting to get it. I don't agree with his stands on those issues, but I'm starting to see that what had him so insane was that his fundamental sense of justice had just been annihilated. Everything he had believed about what is good and just and fair had been assaulted.
That is how I feel about our current financial situation and the government's solution of No Banker Left Behind combined with bread and circuses for the unwashed masses.
I didn't just believe in capitalism, I devoted my life to it. I was an acolyte in its hallowed academic halls. I became a deacon of the church in my rise to management in corporate America. I became a high priest when I funded, created and ran my own business.
I BELIEVED in capitalism and I put my money where my mouth was. I believed that capitalism was not just the best way for the wealthy to benefit, but to provide a maximization of wealth for all of society so that everybody would ultimately benefit.
Just as I BELIEVE in the United States of America as a force for everything that is good and right and fair. For that, I have walked the walk, not once, but twice in my lifetime by volunteering for military service.
Now? The United States of America has represented everything that is bad, and wrong and unfair by a complete perversion of capitalism. Because of the government, all the bad parts of capitalism (collecting wealth at the top while those at the bottom suffer) are alive and well and none of the good parts of capitalism (needing to invest in business at all levels and providing meaningful work and prosperity for everyone) is working well at all.
What will happen in the next few years? Nobody really knows. Small business is an act of faith. Despite what I have seen, I have no choice but to remain one of the faithful.
For the first time in my lifetime, though, I hate my government for what they've done. I've watched them perpetrate an unmitigated evil in the name of expediency. I just don't know what to believe anymore.
So, Michael Moore, if there's any room on the stark-raving loony bench, I'd appreciate it if you could move over and let me take a seat.
Thursday, February 4, 2010
The AIG Bonus Debacle
Like many folks, I'm outraged about the continuing bonuses given to people in the trading unit at AIG that essentially brought on the downfall of AIG and was responsible in no small measure for the global financial collapse.
There are a lot of facets to this story, so I'm just going to share my thoughts on them.
First, the Obama administration is handling this very badly. I'm not criticizing Kenneth Feinberg, who I think is, overall, doing a good job. However, the president is expressing mock outrage at the top, yet below him, his minions have been quietly working to make sure these bonuses get paid.
Senator Dodd stripped out compensation limits from the initial TARP bill at the request of somebody in the Obama administration. We can only guess who, but my money is on Geithner.
So, at the first, the administration talked one game while playing another: act outraged, but make sure the bonuses get paid.
Geithner is also hacking everybody off by saying that if we implement this tax on the banks, that the taxpayer won't have to worry that their money is being used to pay bonuses.
What this misses is that people are angry because their fundamental sense of justice is seriously offended. People who have worked hard their entire lives are now struggling or unemployed. The economy is weak and small businesses are dropping like flies. Big businesses aren't necessarily doing so hot, either.
The problem, which apparently nobody in the Obama administration understands, is that it is morally wrong to give bonuses to the people at AIG.
I'm not talking "wrong" in some worker's manifesto sense that it's wrong for one man to make more money than another. This is America. We idolize sports and entertainment figures who make more in a year than our entire block makes in a lifetime.
It's wrong because they don't deserve it. Their company is losing money. In the rest of the country, a company that loses money means pink slips. For these clowns, it means gigantic bonuses.
It's wrong because this is the very trading unit that put AIG in peril. Bad enough that their company doesn't make money, but these guys are the very type of clowns who brought on the global economic collapse.
It's just plain wrong.
Now, it is true that this happened under Bush's watch, not Obama's. Congressional Democrats brought up the idea of compensation limits as a condition of TARP.
Hank Paulson demanded that no compensation limits be enacted. His logic? That it would be too difficult.
Too difficult? More difficult than bankruptcy?
The reality is that Paulson, like Geithner, is from the culture of Wall Street and you will notice that the one and only thing in this whole economic mess that has come through unscathed is Wall Street compensation.
So, when the Obama folks say they got dealt a crappy hand, they're right. They did.
And then they played that crappy hand as badly as possible.
At this point, the contracts expire next month. No more guaranteed bonuses at AIG for a while.
The one and only bright side to all this? Feinberg has said that he will take past bonus payments into account when setting future compensation.
I know how I'd do it. I just wonder if he has the balls. Being that he's from the Obama administration, the answer is almost certainly "no" since this administration is pretty much the nutless wonder of American politics.
I would take the top 20bonus recipients. Set their compensation to about $30,000 a year. Scare the living piss out of them. They will more than likely quit.
And they'll be quitting in the midst of a very weak employment picture. Wall Street's unemployment rate is right there with the rest of the country.
Once they're replaced and operations are hitting their stride again, I'd take the next 20. Repeat the entire process until every one of these amoral jerks who accepted a bonus has either quit or is working for $30,000 a year.
Sounds mean spirited? Sounds vindictive?
These people ruined lives. And they profited immensely from it. I defy anybody to shed a tear for somebody who just got an average of about $2 million in compensation over the past 3 years.
There are a lot of facets to this story, so I'm just going to share my thoughts on them.
First, the Obama administration is handling this very badly. I'm not criticizing Kenneth Feinberg, who I think is, overall, doing a good job. However, the president is expressing mock outrage at the top, yet below him, his minions have been quietly working to make sure these bonuses get paid.
Senator Dodd stripped out compensation limits from the initial TARP bill at the request of somebody in the Obama administration. We can only guess who, but my money is on Geithner.
So, at the first, the administration talked one game while playing another: act outraged, but make sure the bonuses get paid.
Geithner is also hacking everybody off by saying that if we implement this tax on the banks, that the taxpayer won't have to worry that their money is being used to pay bonuses.
What this misses is that people are angry because their fundamental sense of justice is seriously offended. People who have worked hard their entire lives are now struggling or unemployed. The economy is weak and small businesses are dropping like flies. Big businesses aren't necessarily doing so hot, either.
The problem, which apparently nobody in the Obama administration understands, is that it is morally wrong to give bonuses to the people at AIG.
I'm not talking "wrong" in some worker's manifesto sense that it's wrong for one man to make more money than another. This is America. We idolize sports and entertainment figures who make more in a year than our entire block makes in a lifetime.
It's wrong because they don't deserve it. Their company is losing money. In the rest of the country, a company that loses money means pink slips. For these clowns, it means gigantic bonuses.
It's wrong because this is the very trading unit that put AIG in peril. Bad enough that their company doesn't make money, but these guys are the very type of clowns who brought on the global economic collapse.
It's just plain wrong.
Now, it is true that this happened under Bush's watch, not Obama's. Congressional Democrats brought up the idea of compensation limits as a condition of TARP.
Hank Paulson demanded that no compensation limits be enacted. His logic? That it would be too difficult.
Too difficult? More difficult than bankruptcy?
The reality is that Paulson, like Geithner, is from the culture of Wall Street and you will notice that the one and only thing in this whole economic mess that has come through unscathed is Wall Street compensation.
So, when the Obama folks say they got dealt a crappy hand, they're right. They did.
And then they played that crappy hand as badly as possible.
At this point, the contracts expire next month. No more guaranteed bonuses at AIG for a while.
The one and only bright side to all this? Feinberg has said that he will take past bonus payments into account when setting future compensation.
I know how I'd do it. I just wonder if he has the balls. Being that he's from the Obama administration, the answer is almost certainly "no" since this administration is pretty much the nutless wonder of American politics.
I would take the top 20bonus recipients. Set their compensation to about $30,000 a year. Scare the living piss out of them. They will more than likely quit.
And they'll be quitting in the midst of a very weak employment picture. Wall Street's unemployment rate is right there with the rest of the country.
Once they're replaced and operations are hitting their stride again, I'd take the next 20. Repeat the entire process until every one of these amoral jerks who accepted a bonus has either quit or is working for $30,000 a year.
Sounds mean spirited? Sounds vindictive?
These people ruined lives. And they profited immensely from it. I defy anybody to shed a tear for somebody who just got an average of about $2 million in compensation over the past 3 years.
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