Food Industrialization: Cheaper but quality lacking

I’m an advocate of living frugally, within one’s means.   I work hard to reduce expenses where possible.  But an area where I’m “not cheap” (or “thrifty”) is food.

In Michael Pollan’s In Defense of Food: An Eater’s Manifesto, he compiles a lists of “do’s” and “don’t’s.”  For example, he advocates avoiding food products that make health claims; have a glass of wine with dinner; cook, and if you can, plant a garden [something I did this year – the garden part], and pay more, eat lessThat last nugget of advice touts buying organic.

Some of you are thinking, buying organic is too expensive.  That may be true but Americans must stop focusing exclusively on price.  Quality does matter.

Yes, McDonald’s menu is inexpensive, but eating that food every day will have negative consequences on your health.  Don’t you remember Supersize Me?

The movie, King Corn, noted a corollary between the introduction of and increased used of high fructose corn syrup (such as in sodas) and obesity levels in the United States.  Companies used to sweeten their drinks with sugar.

It’s smarter for your health and, in turn your finances, if you eat right and exercise.

So, it’s best to eat those fruits and vegetables.  But  industrialization has even  negatively impacted our produce.

Today’s Wall Street Journal had an article written by Anne Marie Chaker entitled Before the Mac, Vintage Apples.  This article mentioned some negative consequences of the industrialization of food.

Heirloom apples were regionally popular for generations but have ceased to be cultivated commercially.  From the 1950s on, mass-production farming favored reliable apples that could stand up to shipping, and stores have been dominated by apples from fewer than a dozen familiar types, including McIntosh, Red Delicious, Fuji and Granny Smith.

The heirlooms, in contrast, with freckles, stripes and other visual peculiarities, buck the modern idea of what an apple looks like.  Often priced in the $3.99-a-pound range, they can cost up to twice as much as common apple varieties.  They are coming back  strong nonetheless, as the increasing numbers of people who cook and eat at home seek out novel ingredients.

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Prof. Nablan, who studies farming and culture, says 15,000 different apples were once grown and eaten in the U.S.  Today, he says just one-fifth that number are available from nurseries and other sources, and most are at risk of being lost to commerce or disappearing altogether.

Apple orchards were once fixtures of American communities, typically growing varieties that were well-adapted to local conditions.   With the consolidation of farming and the advent of better ways to ship, many small orchards disappeared in the decades after World War II.  Slow Food USA’s catalog of 200 endangered foods, “The U.S. Ark of Taste,” lists seven endangered heirloom apple varieties, including Granite Beauty and the Newtown Pippin (http://www.slow-foodusa.org).

Today, the U.S. apple-industry is concentrated mainly in Washington and New York states.  Modern varieties are bred to be tough travelers, easily packed and good-looking on store shelves.  The upshot, some experts say, is that the modern apple has sacrificed a lot of flavor.  In contrast, heirloom apples – once popular for pressing into cider, or for their ability to hold up in baking and cooking – have a range of flavors, from tart to sweet to spicy and aromatic.

The cover of today’s WSJ caught my eye because I recognized two of the apples – Winesap and Stayman.  This time of the year is the best time to  purchase apples.  A farm called Twin Springs Fruit Farm in Pennsylvania, sells a variety of heirloom apples.  Once you ‘ve eat heirloom apples, the apples sold at the grocery store just cannot compare in quality, taste, texture.

industrialization of food  has provided benefits to the American economy, but as noted above,  consuming industrialized food may not always be the healthiest option.

And what about supporting local businesses?  You can do your part by shopping at local farmers’ markets!

Remember, don’t cut corners when it comes to your health!

Austerity Measures

Am listening to On Point.  The discussion is about the austerity measures (rather dramatic) implemented in Britain.  Slashes in government agency jobs by 20% (except national health care) equate to about 500,000 jobs.  Those cuts apply to the military as well.  Can such measures be implemented here in the United States?

My answer – NO, NO, NO.

There are too many special interests, too many lobbyists to effectively implement such austerity measures here in the United States.  And there is  too much polarization politically to get anything done. 

Is it right to implement such austerity measures during a recession?  Let’s think about this one point:  unemployment is presently close to 10% in the United States.  If 20% of federal government jobs were slashed effective January 1, 21011, employment would increase to 20%, possibly (okay, I’m not a mathematician).  Those are depression era statistics.

So 20% of federal government jobs are slashed.  What are the ripple effects?  More home foreclosures [how many individuals have 6 months, 8 months or 1 year’s worth of living expenses?], reduced consumer spending, more individuals seeking assistance from government, churches and  non-profit groups, more individuals falling behind on debt such as credit cards, student loans and auto loans, more autos repossessed, and more crime.

But you may be thinking, we will have to either pay now or pay later.  That’s correct.   The United States must face the music sooner or later.

Just understand there will be ripple effects.

I’ve been personally living under such austerity measures since August of 2006.  That’s when I returned from my vacation in Northern California (haven’t taken a vacation since then).  I had an epiphany while sitting on the tarmac in Sacramento, waiting for the plane to depart.  That epiphany was I had allowed my personal finances to disintegrate since purchasing my home in January 2005.  I outlined what I had to do to return to financial sanity.

Four years later my financial portfolio has improved tremendously.  But I still have two other financial hurdles to overcome before I feel more secure.

Because of the polarization politically in this country, austerity measures should BEGIN with individual Americans.  In time our political leaders will see the light (hopefully)  🙂

What money?

Last Friday I called my insurer, USAA, to inform the company that I had paid off the condo.  The USAA representative responded “congratulations.”  She then stated, ” now since you’ve paid off the condo, have you considered investing that money with USAA?”

I replied, “what money?”

Yes, I paid off my condo.  But I still have expenses.  A little over half of the monthly rent pays the condo fee.  So, yes, no longer having a $652.31 monthly mortgage payment, I do have money.

But, there are other expenses.  I now must set aside money to pay property taxes twice a year (March & September).  And to operate my condo as a rental property, the government of the District of Columbia requires that I have a basic business license (& of course I pay a fee to maintain that license).

I’ve been renting my condo since 2005.  The business has operated at a loss, in the red.  Because of the operating loss, I owed only $100 annually when filing taxes as a sole proprietor.  Only this year will the business have a profit, operating in the black.  I’m excited about the debt free property and the profit, but I can tell you, the Treasurer of the District of Columbia is even more excited.  Why?  Because the annual taxes my business will have to pay will definitely increase.

And, with any rental property, upkeep is important.  In 2008 I had the bathroom completely renovated (unfortunately I didn’t have enough cash so I had to take out a home equity loan; thankfully I paid that off in May 2009).  I recognize, in the next five  years, the kitchen will need a complete renovation.  I don’t want to incur any more debt.  So I’ll be saving money to pay for the future renovation with cash (do I hear an applause, Dave Ramsey?).

As I thought about all of these ongoing and future expenses, I chuckled and told the USAA representative, “I won’t have any money to invest any time soon.”


Inside Job

A new documentary about the financial crisis of 2008 opened at the local Landmark Theatres  in the Washington, DC area on Friday.  My brother and I attended the matinée showing ($8.00 – good deal; esp w/ gift card) this morning at 10:05 a.m.

First, let me say that this documentary is almost 2 hours long (1 hour, 48 minutes to be exact).  The length didn’t bother me.

Second, this documentary is COMPREHENSIVE about how, why, who, what led to the financial crisis in 2008.

The director, Charles Ferguson, interviewed many key players (though a number of them declined to be interviewed including Former Secretary of Treasury Hank Paulson, Former Fed Chair Alan Greenspan, present Secretary of Treasury Tim Geithner,  and present Fed Chair Ben Bernanke

As you watch this documentary you will be outraged (seething, but controlled) about the financial industry.  At times you can’t help but laugh in disbelieve as some interviewees won’t acknowledge certain facts).

The film is excellent.  It should be required viewing for EVERY AMERICAN age 18 years and older.

Although Director Charles Ferguson takes a complex topic and distills information in digestible chunks, I’m not sure if the average American would willingly watch the documentary.  Americans loved to be “entertained” and this documentary may be “too cerebral” for some.

Further, some of the terminology, collateralized debt obligations (CDOs) and credit default swaps, may be too incomprehensible for some viewers, even though the documentary explains clearly and precisely what they are and how they were used.

Bob Brinker of the radio program, Money Talk, often states “that the United States Government is the best government money can buy.”  You undoubtedly have heard the expression, “the proof is in the pudding.”  Inside Job is the pudding of Bob Brinker’s opinion. When you watch this documentary you learn that the financial industry has essentially bought both political parties.

There are many moments in this film that just are just mind-boggling, in terms of the greed, the excess, the warnings made by highly qualified individuals which were ignored.  But one moment in particular sticks in my crawl.

Hank Paulson, before becoming Secretary of the Treasury, was the chairman of Goldman Sachs.  Several years ago there were rules (yikes, REGULATION, OH NO) limiting the amount of risk investment banks could take.   Investment banks wanted the gloves taken off, so they could essentially gamble as much as they want [that’s what they were doing, gambling with us, the peons or serfs).  Hank Paulson lobbied for the limits to be removed and the SEC (Securities & Exchange Commission) complied.   What’s ironic, as the documentary shows, was this removal of limits on leveraging by investment banks ultimately resulted in the global financial meltdown of 2008.

We, the peons or serfs, must NEVER FORGET that those piggish, greedy Wall Street types were responsible for a near collapse of the global financial system.

Why it’s a WASTE OF MONEY paying for your credit score

The last time I applied for credit was in February of 2008 when I obtained a home equity loan for my rental property (thank goodness that loan is history).  Anyway the credit union (after I requested the three major credit reporting agencies temporarily lift my security freeze) obtained a credit score from TransUnion (I believe).  My score was good enough to obtain that home equity loan at the best available rate [since the condo is a rental property, the higher “commercial” rate applied].

During this process the loan officer told me my score.  It was above 800.  I was excited initially until I discovered TransUnion uses a different scale than the familiar FICO range of 300 to 850.

Earlier this week I received the November 2010 issue of Consumer Reports Money Adviser.  On page 5, toward the bottom right of the page, there is a box entitled, How will you be scored? The contents of this box follows.

Here’s one more reason it pays to shop around for loans and insurance: Lenders and insurers use different credit-scoring systems to judge your creditworthiness, and some view you in a better light than others.

“FICO scores are the credit scores most lenders use to determine your credit risk,” boasts the website myFICO.com, which sells a consumer version of FICO scores at $15.95 a pop.  What myFICO doesn’t tell you is what Judy Wooding, a FICO senior scoring consultant, told us two years ago: Lenders often base their decisions on specialized FICO credit scores that you can’t buy or see, and they produce different results than the scores consumers pay for.

For example, mortgage lenders usually buy FICO Mortgage Scores, while auto-finance and credit-card lenders use what’s called proprietary Industry Option FICO scores.  Those scores give added weight to how you’ve handled certain types of loans  and are tailored to the needs of those creditors.  Next-Gen FICO scores are used to qualify subprime customers, and FICO Expansion scores use data from sources other than credit bureaus to rate people with no credit history.  The scoring scales for those other models, ranging from 150 to 950, are also different from the basic FICO range of 300 to 850, which consumers rely on.

To complicate matters further, some big lenders, such as auto-finance companies, have developed their own scoring formulas, and big insurers use their own credit-based insurance scores.  Still other companies sell consumers Vantage scores, PLUS scores, TransRisk scores, and CreditXpert scores.

The bottom line: Don’t rely on any single credit or insurance score as the definitive measure of your creditworthiness.  But don’t buy all the scores you can get your hands on.  You’ll determine your true credit standing for free when you shop multiple lenders and insurance premiums.  The companies that charge you the lowest rates are the ones using scoring formulas that work in your favor.

This is worthwhile information.   So, the credit reporting agencies sell you a credit score, which essentially, is USELESS information, since the lender relies on a specialized FICO score that the consumer cannot buy or see.

Thanks for the information, Money Adviser.  But, I differ with your bottom line.

I recommend individuals obtain a free copy of their credit report from three major credit report agencies annually.  You want to make sure the information about your various accounts is reported ACCURATELY.  If you have filed for bankruptcy or have had a judgment entered against you or have had your house foreclosed or sold your home “short sell”, this “information is viewed negatively and will cause your score to drop.  If you are habitually late in paying your credit card bills or have had several lines of credit sent to collection agencies, also expect a lower credit score.

But don’t SPEND money to obtain your credit score.  Based on your credit report, you should have a good feel about your likely range of a score.

I personally believe the SMARTER move is, when you apply for a line of credit, you REQUEST a copy of the credit report the lender obtained.  That credit report will contain that “specialized FICO score.”  And if the lender protests, remind the lender that you PAID FOR THAT REPORT and thus are entitled to a copy.

No COLAs for Retirees

For the 2nd year in row, there will be no cost of living adjustment for retirees receiving social security benefits.  Senior citizens are not surprisingly upset.  Cost of prescriptions continue to escalate.  Food and energy prices have increased.  Interest rate (for savings accounts or other investments) remains at rock bottom levels.  But because inflation is drastically low (thanks to the Fed), no cost of living adjustment.

I heard news reports regarding a proposal of a one-time $250 extra payment to individuals receiving social security benefits next year.  $250 extra, FOR THE ENTIRE YEAR.  Okay, frankly, that doesn’t seem like much.

I stand back and think what has happened since the Great Recession began in December 2007.  Individuals in the private sector have lost jobs, or have had their paycheck reduced or the hours reduced.  Individuals working for the government at the state and local level have been furloughed and/or not received ANY pay increase.  I’ve discussed the plight of retirees above.

In contrast the federal government has not (maybe except certain NASA employees) laid off workers, furloughed workers,  or reduced workers’ hours.   Federal employees, despite the Great Recession commencing December 2007, have received COLA increases yearly.

Individuals on fixed incomes received no COLA but federal government employees receive COLA.  Not right!

Except for military members or civilian employees serving in hazardous locations overseas, no civilian employee should receive COLA next year.   It’s only fair.

And, federal government employees, you (and I) would still have jobs. It could be worse.  We could be in the United Kingdom.  Close to 500,000 public sectors jobs are being eliminated there.

Back on Track: Saving for Retirement

On October 5th I paid off my condo.  I paid off that mortgage in less than a year in part because I suspended contributions to my retirement account.  In reviewing my records on 2 June 2008 I submitted the paperwork to stop my contributions (it was effective mid June 2008).  It took slightly more than two years to accomplish the goal of a debt free rental property.  Since my mission was accomplished, I needed to resume my retirement contributions.

Having returned to work yesterday after some time off, I submitted paperwork requesting 10% of pay be set aside as retirement contribution.  So my take home pay will now be smaller.

And it will be even smaller because of other moves made yesterday.  In an effort to ensure I paid off that condo mortgage by mid October, I increased my federal withholdings from six to nine and my District of Columbia withholdings from two to six.  With the condo now debt free, I reduced my federal withholdings from nine to four and my District of Columbia withholdings from six to one. With these moves, my next paycheck will be significantly smaller.

Resuming my retirement contributions was a priority.  I debated starting off with a 5% contribution (to receive the match) and then, in the new year, increase to a 10% contributions.  But, I finally recognized that I had not contributed at all for such a LONG TIME that I needed to bite the bullet and start that 10% contribution ASAP.

What also motivated me to resume my 10% contribution ASAP was a recent letter I received in the mail which stated in part,

According to our records, you are one of about 400,000 FERS [Federal Employee Retirement System] participants not currently contributing your own money to the TSP.  This concerns me because it means that you are not receiving the valuable Agency Matching Contributions that, over time, could significantly boost your financial security in retirement.

I had a sound reason for suspending my retirement contributions.  But with the mission accomplished, I no longer have an excuse.

Printer & Ink Cartridge: The True Costs

I purchased a new Dell printer more than a year ago.  I was excited because I got the All-In-One Printer (printer, copier, scanner & fax) at a great price, $99 before tax.

Well, of course, I’ve paid twice that much since then paying for ink cartridge.  That’s how these companies make their money (I don’t begrudge them for that; as a consumer, you must be aware however).

And why do I, as a consumer, and you as a consumer, use so much ink so quickly?  Besides the usual stuff (letters, photos, articles online, etc), there’s a trend with big corporations and even government agencies – shifting the cost of print to the consumer or citizen.

As an example I recently received the following Notice 1400 from the Internal Revenue Service

Tax Package Information for Individuals

With the continued growth in electronic filing and to help reduce costs, the IRS will no longer mail paper tax packages that typically arrive in January of each year.  If you still wish to use a paper form, the IRS has several options available to help you obtain paper copies of individual forms and instructions, including:

* Accessing our forms and instructions online at IRS.gov.  You can quickly download the latest products from our site.

During the same week I received my quarterly statement from PepsiCo.  Included with the statement was the Shareholder Newsletter.  That newsletter stated in pertinent part

In line with PepsiCo’s sustainability commitments, we will no longer mail a copy of the bi-annual shareholder newsletter.  Shareholder news will be located at http://www.pepsico, in the “Investors” section under “Shareholder Information” beginning next year.

I applaud PepsiCo’s sustainability commitments.  If I am one of those really interested shareholders and wish to retain a copy of the “news” I read on the website, I’ll print that shareholder newsletter.

I think we all want the government to reduce its expenses, so the IRS discontinuing sending paper tax packages to individuals is a great idea.  And, printing the forms and instruction booklet from the website is not the only option for obtaining the tax packages.

I raise this issue because the “cost” of paper and postage, though no longer on the books of PepsiCo and the IRS, doesn’t disappear into thin air.  There is still a “cost.” It has been shifted from the company or government to the shareholder or citizen.  A reason why consumers are using more ink.  (I know I am.  Visited Staples today to buy black ink cartridge.)

$36,302.61 paid off in 9 months, 5 days

Yes, I did it.  I’ve paid off my condo mortgage (rental property).  I now own the condo DEBT FREE!!!!!!!!!!!
It’s a wonderful feeling. But it was hard work.

This was a 15 year mortgage which I paid off in 7 years, 20 days.  The original amount of the loan was $60,000 (so yes, I paid slightly more than half in less than a  year).

How did I do it?  I used Dave Ramsey’s Debt Snowball, but not in a manner Dave Ramsey would approve.

Dave Ramsey wouldn’t approve of me paying down the rental property debt before paying off the debt of my personal residence.  Well, the debt on my personal residence is at least three times the debt level on the condo.

On May 15, 2009 I paid off the home equity loan I obtained to have the condo’s bathroom completely renovated.  I then shifted to building up  my emergency fund.

In September of last year I couldn’t decide which debt to focus upon next:  the condo’s mortgage (approximately $40K) or the 2nd trust on the house (approximately $64k).  The interest rate on the condo mortgage was lower (4.625%) than the 2nd trust (7.490%).  The deciding factor for me was paying off the debt in a year or less.  I knew I could do it if I focused with “gazelle intensity” on the condo mortgage.  So I opted to pay down the condo mortgage first.

I simply applied the “Debt Snowball” to my mortgages.  I paid off the smallest amount first (the condo’s home equity loan – which also had the highest interest rate) and then moved up to the next smallest debt (the condo mortgage).  The remaining two mortgages on my “Mortgage Debt Snowball” are the 2nd trust and 1st trust for my personal residence.

But, how did I pay off such a large amount in a short period of time?  Most of the time I made methodical extra principal payments each pay period.  On three occasions I made substantial lump sum payments.

My combined federal and state tax refunds totaled $10,121.  I applied the full amount of the federal tax refund and state tax refund to the condo mortgage.

Since I received a sizeable refund, I increased my withholdings so I began receiving more money in my paychecks.  The increased amount I applied to the condo mortgage.

When I received reimbursements from my health insurer or my dental insurer, I didn’t view it as “free money.”  I applied the amounts in full to the condo mortgage.  No reimbursement was too small.

I also emptied my pocket of coins.  Once I collected enough quarters, dimes, nickles or pennies, I would place them in a coin wrap and make a principal payment on the condo mortgage.

With my gas bill, I paid above the minimum monthly payment [I’m on the budget plan].  I had built up a sizeable credit with the gas company.  Starting May 2010, I directed my gas payments ($175) to the condo mortgage as a principal payment.

Finally, today, a one year CD matured.  I applied about $5,800 of the CD to the condo mortgage.

That, in a nutshell, is how I paid off the condo mortgage.  It definitely wasn’t easy but it feels GREAT now!!!!  All the sacrifices were worthwhile.

Pay Days: Biweekly

When I was in the military I was paid twice a month, on the 1st and 15th.

In my present position I’m paid every two weeks.

I like the bi-weekly system because, twice a year, you receive three paychecks a month (instead of just two paychecks).

Today was payday as well as one of those triple payday months.

It feels wonderful to have that extra paycheck, but it slips through your fingers before you know it.  Car insurance, car registration, principal payment on a mortgage quickly slashes that extra paycheck.  Then those recurring expenses (food, transportation, car maintenance fund) don’t disappear and must be satisfied.  [Interestingly, the financial burden of car ownership is readily apparent.]

Look forward to a day in the future when the extra paycheck received twice a year can be devoted entirely to spending as I please.