A Tale of Two Mortgages

Two Houses

This is a personal story of how much mortgage debt I have and how I acquired it. Ordinarily I do not post numbers about my assets or debts, but I’m comfortable making these known. I don’t necessarily intend for there to be a moral to this story; it’s just an objective tale of how I took on the debt that I still have. You, dear reader, probably have your own tale as well, and I’d love to hear it sometime.

This is a long post, so if you’re impatient, skip to the bottom. Otherwise, stay awhile and listen…. Continue reading

Your Most-Important Investment

What’s the most important investment product that you own? Shares of GE? Apple? An index or bond fund? Your house?

Nope

There’s an investment product out there that’s far more important than any of those. In fact, it’s such a monumental investment that it makes any stock certificate look like a lifeless, meaningless piece of paper (or, um, binary code). This investment has such value that trying to put a dollar value to it only serves to degrade it. Yes, Warren Buffet owns it, but so do you. Actually, you own all the shares of it that you’re ever going to get. You can’t acquire more, but you can still make those shares increase in value. Continue reading

Bill Moyers and Wendell Potter – Profits Before Patients

With all the talk about health care in the news lately, I thought it relevant for everyone to watch Bill Moyers’ interview with Wendell Potter, a health insurance insider and former executive for Cigna.

Seriously, everyone should watch it. It’s eye-opening, to say the least. Now I’m not surprised at all why Aetna (my health/dental insurance provider) recently rejected two claims from my dentist for cavity filling work. Yeah, my teeth suck, but under my dental policy, Aetna is supposed to cover 100% of cavity filling costs. I guess those greedy bean-counters just didn’t want to take a medical loss by paying what they agreed to pay, all in the name of making their stock go up a fraction of a percent. I’m sure the person who actually denied the claims will get a nice, fat bonus this year. Sheesh. Now I have to sit and wonder if my dentist will come after me for reimbursement.

For a few years I actually didn’t have any health insurance at all. Yes, I was nervous about not having coverage (I actually lost sleep about it), but there wasn’t much I could do. Health benefits were not provided automatically through my work, and choosing to opt into the health insurance plan at work would have eaten about a third of my entire salary. Ouch! The life of a doctoral student with a teaching assistant position in the Arts is not known for its lucrativeness. And no, before anyone gets all high-and-mighty on me, I did not cost the taxpayers an extra penny because I didn’t go to the doctor or hospital for any reason during that time.

It wasn’t until late 2008 that I finally bit the bullet and found a pretty cheap (but high-deductible) Aetna plan to cover me and not cause me fall behind on any other bills. Finally, I was insured and could rest a little easier at night. Or, at least I could until I saw those denial notices start rolling in from Aetna and then found this video. Think your health insurance company has your interests at heart? Think that just because you have health insurance, you’re actually covered for treatment? Think again.

I know that it’s an extremely complicated and volatile issue, but the more I learn about the disaster that is the USA health care industry, the more I think that a public option, or even universal health care, is an absolute necessity. Of course, one typical argument against a public/universal policy is that it would put a government bureaucrat between you and your doctor. Okay, that’s a valid point, but as it stands now (and as Potter explains), you already have a corporate bureaucrat with dollar signs in his eyes standing between you and your doctor.

When it comes to making potentially life-saving decisions about my health care, if I have to choose between the government and a corporation motivated by profit, I choose the government. In this case, I call it a lesser evil.

Desperately Seeking a Job (No Longer)

Note: This is a follow-up from a previous post (Desperately Seeking a Job).

As some of my readers (both of you) may remember, I’ve been on the job market for some time now, furiously and desperately trying to land my first job as a university professor. Times have been tough. My wife and I have been scraping by on laughably pitiful salaries as graduate teaching assistants while I finish my dissertation and send out application after application to any and all available positions. We watched in horror as the recession took its toll – most universities announced budget cuts and hiring freezes, and the already-dwindling number of faculty job openings in my field (within the Arts) completely dried up.

Finally, that search is over. As of yesterday, I accepted an offer for a faculty position in the great state of Texas.

If you will forgive me this one sophomoric bout of glee: OMG! Holy crap! I got a job! No more Ramen noodles and plain rice! What a monumental relief! OMG!

Ahem. Pardon me.

The Longer Story

I knew since my second day of college that I wanted to teach at a college or university. I applied to college as a pre-med major, but quickly switched to the Arts. Yes, I knew that by dedicating my life to a career in the Arts, I would likely severely limit my potential to earn income. I also knew that I would severely increase my chances at finding happiness and fulfillment in my career (nothing against the medical field, I just knew it was not for me).

A full decade has gone by since I made that decision. Countless hours of practice and study have gone by. Years of frugal and careful existence as a graduate student and teacher have passed. I’ve jumped through flaming academic hoop after hoop – all to rigorously prepare me for life as a college professor… I think.

Then I emerged at the other end, ready to claim a hard-earned job and a paycheck that totaled more than 8k a year. Yes, I’m ready to admit that now – my teaching assistantship stipend totaled an amazingly pitiful $8,000 a year. Ouch. Granted, my tuition was covered, but it’s still difficult to live on a salary that totals fewer than five digits. If you had a salary at all, I hope it was higher than mine. Though I do my best to stifle any bitterness, i confess that I feel some rising bile to think that other graduate students at my university earn upwards of four times my stipend… and complain about how low it is. Grrr!

Imagine my dismay when, at the end of my decade of toil and poverty, the recession rears its ugly head and the list of available jobs in my field disappears practically overnight. The prospect of NOT getting a job grew from a passing thought to an accepted certainty. I admit that it became more and more difficult to fend off despair. There I was, having spent (or wasted?) nearly all of my 20s in a hard-fought attempt to get an education and earn the highest degree available in my field, and for what? To watch my dreams fade beyond sight? To take a job paying minimum wage just to survive?

Don’t get me wrong – I’m certainly not above doing whatever it takes to keep the bills paid and the mortgage current, and would have gladly accepted a job stocking shelves or waiting tables just to make ends meet. If that were to come to pass, I would only wish that I hadn’t spent so much time getting an education when my Bachelor’s degree (or even my high school diploma) would have sufficed.

How It Happened

At the end of February, I got a phone call out of the blue from this university. They wanted to bring me in for an on-campus interview. What? Are you kidding?! I practically somersaulted down the stairs after I hung up the phone. The sheer prospect of actually getting a job in my field after all these years of preparation elated me.

The interview went well, obviously. I certainly enjoyed mingling with the students and faculty. My teaching demonstration was well-received, and I left the entire interview feeling like I did the best I could. I had no regrets, nor did I feel like I made any obvious blunders. 🙂

Almost exactly one week later, on Friday the 13th actually, I got a phone call. My phone did not recognize the number, and like a moron I had forgotten the area code of that city. So, thinking it was a telemarketer, I answered the phone with a coarse Hello?!

No, it wasn’t a telemarketer, and upon realization of who it was, I sheepishly and rapidly changed my tone. The following line from the department Chair made my ears ring with dulcet tones: We would like to offer you a faculty position at the rank of Assistant Professor at our university. How glorious! How wonderful!

I accepted immediately, but the department Chair chuckled and told me to take the weekend to think it over, and I could give them my final decision in a few days. I said, That’s fine, but I’m planning to accept the position. I almost guarantee it!

So, yes, dear reader. I finally landed a job, and it’s during a time when there are literally no more jobs open in my field. For the past few days my emotions have sent me on a roller coaster through glee, relief, jubilation, and humility.

The Role of Karma in a Job Search

About a month ago, when all seemed the most dire and bleak, I came to a decision. I decided that if I could not have a job in my field, I would at least try to help other people I knew in a similar situation. I started monitoring job vacancy lists for openings in related areas. Whenever I found an opening that seemed to fit a friend or colleague of mine who was also seeking a job, I sent them a link to the announcement.

This continued for a couple weeks, and I sent at least a dozen announcements to friends in related fields. Lo and behold, my phone call with the on-campus interview notification came in out of the blue. Coincidence? Yeah, maybe, but perhaps karma played a role, too.

Shortly before I left for the interview, a good friend who is also on the job market approached me and asked if I would consider writing a letter of recommendation for him. Sure, no problem. I wrote and dispatched four letters for him to various colleges.

On the same day that I received the job offer, he called and told me that one of the places where I sent a letter contacted him about an interview. Again, coincidence? Perhaps, but maybe not.

My main point here is: don’t dismiss the role of karma in a job search. Even if you don’t necessarily believe in the idea of karma, no one can argue that the desire to help others is harmful. Any act of generosity that you provide for another person will ultimately help YOU, even if it only manifests itself in a feeling of fulfillment or satisfaction. If you want to receive, be sure to give as well. Though I’ve landed a job now, I’m still scouring the job vacancy lists for opportunities for my friends.

Now that I’ve landed a job, I get to look forward to packing up and moving. There are a lot of issues that my wife and I need to cover, such as whether to try to sell or rent our house. Hmm, I suppose these are issues for another post!

Desperately Seeking a Job

I generally try to post information that is useful and helpful to other people, but now and then I need to reserve a post for an outpouring of personal information and emotion. This is one of those posts.

I admit: I’m downright nervous about jobs, or in this case, the lack thereof. As some of you may remember, I’m a graduate student at the very end of my doctorate. I fully expect to be hooded in May, and naturally that’s a cause for rejoicing! My spirits are completely dampened, however, by the abysmal number of jobs available in my field.

Since the second day of my freshman year of college, I knew I wanted to be a college professor. As a personal anecdote, I actually applied to college as a Pre-Med major, but changed my mind on the first day. Since then, I have poured countless time and energy and have dedicated my life to pursuing that goal. I took no breaks between degrees and have spent 10 years in school to earn this doctorate and finally land that dream job.

And for what?

Entry-level professorships in my field start around $40,000 per year. Doctorate required. Yeah, I’m in the Arts. Honestly, it doesn’t bother me much that the average salaries for professors in the Arts are so embarrassingly low versus other fields, especially science and math. Just don’t get me started on coaches’ salaries! 🙂

Speaking of which, I love this particular comic (brought to you by PHD Comics):phd102008s

Yep, that tiny little bump of a yellow bar that represents Grad Students is my category – except that my salary is significantly lower than the given amount. Sigh.

I knew when I went into the Arts that I wasn’t doing it for the money. I love what I do, and as long as I can survive and make a living doing it, I don’t care that my salary is at the bottom of the collegiate totem pole. No resentments here. Seriously.

The problem is that I haven’t yet landed a full-time professorship job. Believe me, I’m looking, and I don’t like what I see!

Universities tend to only hire professors once a year, and I monitored the job market last year even though I knew my dissertation would not be finished. I even applied for some openings, and despite my lack of complete dissertation, I had two on-campus interviews. I enjoyed the process, but ultimately didn’t get either job. Phooey.

No matter. My current university decided to hire me as adjunct faculty. It sounds great, and I definitely appreciate it, but the salary puts me far below the poverty line here (I’m a mere Lecturer – part time). I still have a decent chunk of emergency savings, so I can survive, but I desperately need a job lined up for the fall since my adjunct contract runs out in May.

All this brings me to the crux of the issue: there are almost NO jobs available in Academia for my field right now. Compared to last year, at best there is one-quarter the number of openings. Even that may be an optimistic observation. Of the few jobs that ARE currently available, most of their announcements have a disclaimer that reads: Position subject to budgetary approval. In other words, there’s no guarantee the University will even approve the job. Yikes.

Times are tough, no doubt. Signs of the recession are real. Perhaps most of us know at least one person who has been laid off in the last few months. I do.

Yesterday I had a conversation with a friend of mine (a math professor) at my University. The first thing he asked me was – Is the job market as bad for you as it is for my math grad students? Yes, professor. Probably worse since the Arts tend to be the first to have their budgets axed. At the end of our sober chat, he said – I certainly don’t envy you. In fact, I’m just glad to still have my job. We weren’t even allowed to replace a professor who DIED last year! Stunningly sad.

At this point in my life, I just want a job. Any job. I may be getting the “Dr.” label in front of my name soon, but I’m not above doing whatever it takes to keep my mortgage and other bills current. Yes, that includes working at any job that only requires a high-school diploma. While I hope I can land a job that can utilize my training, I’m not too good to stock shelves if it really comes to that. Hey, I’ll be the most artistic and educated shelf stocker out there! 🙂

Seriously, before I end this post in misery, there IS a little light at the end of the tunnel. Within the last couple of weeks, I’ve had two phone interviews. I’m crossing my fingers, and with a little luck, maybe one of them will hire me.

For people in a similar situation, or who have recently been laid off, I have no words of wisdom. All I can say is – don’t lose hope. Despite my current job woes, I have strong faith in the will of humanity. We’ve been through much worse than this, and we will survive. This too shall pass.

As long as I don’t have to feature myself in my own Bankrupt Man series…. :-) 

Freedom Through Poverty?

Mr. IM has a confession. For all intents and purposes, I’m unemployed. No, that’s not quite true. I’m actually a doctoral candidate at my university, and astute readers (both of you!) may remember that in some of my posts from last spring, I made references to being on a job interview. i actually had two interviews at differing universities (for a faculty teaching position). Let’s just say that I did not get either job. Wah.

While I wish someone would have hired me, I was prepared for the worst. You see, I’m currently ABD (All But Dissertation), and it’s difficult now to get hired for faculty positions without the terminal degree in hand. In a sense, I’m pleased that I actually got two interviews without having the degree! Most universities hire faculty only once a year (for fall semesters), so I’ve accepted my fate that I will live in abject poverty until the next hiring season. My dissertation will be completed by then, and the doctoral degree will be firmly in both hands! Continue reading

5 Reasons Why You Should Open A 529 Account Right Now

My wife and I are both grad students, currently without any children. Even so, I recently opened 529 plans through Learning Quest (Kansas). What is a 529 plan? Essentially, it is a tax-advantaged account meant for future expenses related to higher education.

I’m embarrassed to admit that I thought you could only open 529 plans after you had a child. I was wrong, so here are five reasons why you should open a 529 account right now if you don’t already have one:

1. You don’t need kids to open a 529 account. In fact, you can open an account for yourself, for your spouse, or for whomever you please. With a few clicks, you can change the beneficiary at any time.

My wife and I opened accounts for ourselves even though we’re both nearing the end of our terminal degrees. Essentially, I plan to “launder” money through the 529 accounts – I’ll dump in some cash, let it grow tax free, and then use it for the remaining education expenses that we have. Whatever is left in the accounts will begin compounding away for any children we might have in the future. Yes, I’m kicking myself that I didn’t start doing this sooner! 🙂

2. Money grows tax deferred at both the Federal and State levels while in the account. Provided that you use the withdrawals for qualified education expenses, the earnings are also tax free. So, what are qualified distributions? Many things, including tuition, campus fees, meal plans, room and board, books, and other required equipment. Provided you can prove that it somehow relates to education, most anything goes. Yes, a laptop computer counts. No, a semester’s supply of iced mocha lattes probably does not! 🙂

3. You may be able to claim a state income tax deduction. Some states allow you to claim contributions as income deductions. For instance, the Kansas plan that I use allows me to claim an annual adjusted gross income deduction of up to $3,000 ($6,000 if married, filing jointly) for contributions per beneficiary, per year.

So, not only do I get an upfront state tax break, provided I use the money for qualified education expenses, the earnings are tax free. It’s the best of both worlds.

4. YOU remain in control of the account, no matter the name and age of the beneficiary. Money that you contribute to the account remains YOUR money until you decide what to do with it. If the named beneficiary decides to drop out or skip college entirely, he or she cannot access the funds. The money is then yours to do as you will. Pay the tax penalty and withdraw it all, or simply change the beneficiary to another family member without penalty. Also, all funds in a 529 are sheltered from bankruptcy (in case you run into financial hardship later).

5. Low minimums, high maximums, and low expense ratios (provided you shop around). Depending on the plan, you probably won’t have to commit much money to start the account. The Kansas plan that I chose only has a $250 minimum (Kansas residents only; $1000 for outside residents), or you can open the fund with an automatic monthly contribution of $50 ($25 for Kansas residents).

Keep in mind that you do NOT have to settle for the 529 plan offered by your state. You can open or contribute to any 529 account, no matter the host state, though you may not be able to claim a state tax deduction if you do so. As a Kansas resident, I can invest in any state-sponsored 529 plan and still claim a Kansas tax deduction – be sure to investigate how your own state operates. However, if your state’s plan does not offer a tax deduction at all, please shop around to find a plan with funds and expense ratios that suit you. Speaking of which….

I was pleased to see that the Kansas 529 offering includes Vanguard funds. It’s no secret that I’m a fan of both Vanguard and Index funds, so in my case I opted for the Total Bond Market Index Portfolio, which has a total expense ratio of 0.25%. Unbelievably, this is an even-lower expense ratio than if I were to invest in the same fund from within the Vanguard 529 Portfolio itself (expense ratio – 0.55%)! In any case, be sure to consider the expense ratio (and any other fees) for any funds in your 529 account. Lower is better. The Kansas plan has no fees other than the expense ratio. If your state’s plan has hefty expense ratios plus annual fees, RUN!

Also, the maximum contribution limit for 529 accounts is quite high, usually around $300,000 per beneficiary. As a poor grad student, I can’t imagine having that much money right now, but it’s nice to know that the sky is practically the limit.

One last thing that I want to add: while I think 529 plans are great, I suggest maxing out your IRA before contributing to a 529. In other words, a student can always apply for scholarships and financial aid, but there are no scholarships available for retirement! 🙂

Further reading:

The Essential 529 Guide – http://www.savingforcollege.com

529 Plans – Wikipedia link