Wednesday, January 31, 2007

Valentine's Day With A Heart (Fair Trade)

Have you started planning for Valentine's Day yet? Now, if you're not the type to purchase gifts for a loved one on Valentine's Day, let me commend you and your valiant efforts in the fight against consumerism. Then again, you or your sweetie may be like me-- talking tough about not wanting material goods, but then melting at the mention of chocolate. And who am I to tell you how you should celebrate the day?

What I will tell you, though, is that if you are planning on gift-giving, you have some wonderful fair trade options that I urge you to consider. I've talked about fair trade before, but basically fair trade products let you know that the people who grew, created, or manufactured them were treated justly and got a fair price for their efforts.

If you are thinking chocolate, please think fair trade. Child labor runs rampant in the chocolate industry, especially in the Ivory Coast, which supplies nearly half the world's chocolate. Fair trade chocolate is a valentine for both your giftee and the West Africans in the cocoa industry! If you buy this gift pack from Global Exchange, you get not only chocolate for yourself/your S.O., but a set of fair-trade themed valentines you can use to support the campaign to get World's Finest to buy fair trade.

If you're looking for gifts, you have so many options!

And don't forget to check for bricks-and-mortar versions of these stores (Ten Thousand Villages, especially, is everywhere), or other places (Whole Foods, among others) which sell things like fair trade chocolate (this PDF lists stores that carry Divine Chocolate, from an awesome cooperative in Ghana).

Any other good options you've come across?

Tuesday, January 30, 2007

Submit to the Carnival of Ethics, Values & Personal Finance!

The 2nd Carnival of Ethics, Values and Personal Finance will be hosted by Tired But Happy this Thursday (February 1), so get your submissions in here!

(The first carnival was here, and this post is where to learn more and sign up to host!)

Sunday, January 28, 2007

When's it time to "grow up" and upgrade your stuff? (& does it have to break the bank?)

"Keep living like a college student after you graduate" is one of the best bits of frugal advice for twenty-somethings, and one I've taken very much to heart. But recently I've begun to wonder: how long is that supposed to last? Once you reach a certain age, how do you figure out what's frugal and smart-- and what's putting off "growing up," to your own detriment?

Very soon it'll be three years since I finished college, but you would never know it from visiting my apartment. The furniture is nothing much to look at: not high-quality, rather mismatched, all used and well-worn (in some cases visibly so). The decor isn't elegant, and leans more towards posters than art. The apartment itself is small-- a decision I'm happy with and don't plan to change, but one that certainly doesn't help the other factors.

Most of my friends are a) laid-back and b) younger than I am, so I've never been embarrassed to invite them into my place. But lately, after hearing the "This looks just like a college student apartment!" remark one too many times, I'm rethinking a little.

See, I don't mind the status quo for my own sake. I know some people really enjoy living in a well-put together, elegant home, but that's not a top priority of mine. But as I get older, as I make new friends, as I become interested in maybe hosting acquaintances, colleagues, etc. at my apartment, I don't really want my place to shout out "Penny's just a sloppy, mismatched kid! Please don't respect her as a mature adult!"

So I am really interested in hearing from those of you who are around my age, and those who are older and wiser, about how you handled this stage. How important do you think it is to upgrade the way your apartment looks? Is there a certain age at which people start really wrinkling up their noses at an adult sporting a college-student style? Or is this just another situation where being a good frugalite means not buying into the pressure to be defined by your material possessions? Did you ever find yourself feeling the way I do, and how did you approach it?

I'm sure plenty of you will say "You can be smart about having a sophisticated-looking apartment on a budget!" Well, your suggestions are greatly appreciated! Do you have tips for putting together an elegant style on the cheap? Are there certain approaches that have the most bang for the buck? And damn, most furniture is expensive, and hunting down bargains is not conducive to having pieces that match! Is there any way around that?

Sorry, no answers today, just questions!

[Update: Check out this followup post with highlights of the wonderful comments and suggestions I got!]

Saturday, January 20, 2007

Martin Luther King on Frugality and the "Drum-Major Instinct"

While I was putting together some quotes from MLK on economic justice for last Monday's post, I came across his wonderful 1968 sermon, "The Drum-Major Instinct." In it, he talks about our need to feel important, special, better than other people-- addressing how it affects our lives in a lot of ways, devoting a significant amount of time to it in the context of frugality and personal finance. It's a really insightful exploration of some of the reasons why we spend instead of save, and how we can channel those impulses in a more positive way.

He starts with a Bible story about James and John, who asked Jesus if they could sit at his left and right hand, "in thy glory," and were rebuffed. Then he says:

Before we condemn them, let us see that we all have the drum major instinct. We all want to be important, to surpass others, to achieve distinction, to lead the parade. Alfred Adler, the great psychoanalyst, contends that this is the dominant impulse. Sigmund Freud used to contend that sex was the dominant impulse, and Adler came with a new argument saying that this quest for recognition, this desire for attention, this desire for distinction is the basic impulse, the basic drive of human life, this drum major instinct...

He talks a little about how this leads us to seek praise, and to join groups and try to rise in them, and to like seeing our names in print. Then he gets to the meat of the discussion about personal finance, frugality, and keeping up with the Joneses:

Now the presence of this instinct explains why we are so often taken by advertisers. You know, those gentlemen of massive verbal persuasion. And they have a way of saying things to you that kind of gets you into buying. In order to be a man of distinction, you must drink this whiskey. In order to make your neighbors envious, you must drive this type of car. In order to be lovely to love you must wear this kind of lipstick or this kind of perfume. And you know, before you know it, you're just buying that stuff. That's the way the advertisers do it...

You know, economists tell us that your automobile should not cost more than half of your annual income. So if you make an income of $5,000, your car shouldn't cost more than about $2,500. That's just good economics. And if it's a family of two, and both members of the family make $10,000, they would have to make out with one car. That would be good economics, although it's often inconvenient. But so often, haven't you seen people making $5,000 a year and driving a car that costs $6,000? And they wonder why their ends never meet. That's a fact.

Now the economists also say that your house shouldn't cost—if you're buying a house, it shouldn't cost more than twice your income... Well, I've seen folk making $10,000, living in a $40- and $50,000 house. And you know they just barely make it. They get a check every month somewhere, and they owe all of that out before it comes in. Never have anything to put away for rainy days.

But now the problem is, it is the drum major instinct. And you know, you see people over and over again with the drum major instinct taking them over. And they just live their lives trying to outdo the Joneses. They got to get this coat because this particular coat is a little better and a little better-looking than Mary's coat. And I got to drive this car because it's something about this car that makes my car a little better than my neighbor's car. I know a man who used to live in a $35,000 house. And other people started building $35,000 houses, so he built a $75,000 house. And then somebody else built a $75,000 house, and he built a $100,000 house. And I don't know where he's going to end up if he's going to live his life trying to keep up with the Joneses.

He talks about how the drum major instinct can distort people's personalities if it's not harnessed: people who boast and puff themselves up, who lie and name-drop, who push others down to make themselves look better, who engage in criminal activities to get attention and feel important, who are snobbish and exclusive. Then he brings that back around to race:

Do you know that a lot of the race problem grows out of the drum major instinct? A need that some people have to feel superior. A need that some people have to feel that they are first, and to feel that their white skin ordained them to be first... And think of what has happened in history as a result of this perverted use of the drum major instinct. It has led to the most tragic prejudice, the most tragic expressions of man's inhumanity to man... [And] the poor white has been put into this position, where through blindness and prejudice, he is forced to support his oppressors. And the only thing he has going for him is the false feeling that he’s superior because his skin is white—and can't hardly eat and make his ends meet week in and week out...

He also talks about how it connects to foreign policy ("Nations are caught up with the drum major instinct. 'I must be first.' 'I must be supreme.' 'Our nation must rule the world.' And I am sad to say that the nation in which we live is the supreme culprit. And I'm going to continue to say it to America, because I love this country too much to see the drift that it has taken.") Then finally he goes back to the Bible story he started with, where James and John were asking Jesus to sit at his right and left hand:

[Jesus] said in substance, "Oh, I see, you want to be first. You want to be great. You want to be important. You want to be significant. Well, you ought to be. If you're going to be my disciple, you must be." But he reordered priorities. And he said, "Yes, don't give up this instinct. It's a good instinct if you use it right. It's a good instinct if you don't distort it and pervert it. Don't give it up. Keep feeling the need for being important. Keep feeling the need for being first. But I want you to be first in love. I want you to be first in moral excellence. I want you to be first in generosity. That is what I want you to do."

And he finishes up by talking about himself:

If any of you are around when I have to meet my day, I don’t want a long funeral. And if you get somebody to deliver the eulogy, tell them not to talk too long... Yes, if you want to say that I was a drum major, say that I was a drum major for justice. Say that I was a drum major for peace. I was a drum major for righteousness. And all of the other shallow things will not matter. I won't have any money to leave behind. I won't have the fine and luxurious things of life to leave behind. But I just want to leave a committed life behind.

That idea of the drum-major instinct really hits home for me. I do very much want to be special, to be noteworthy, to be recognized. And I can see how that strong desire can be very problematic if it's not carefully watched and appropriately channeled. I can see where it causes me problems in non-financial ways, and even though I think I have it mostly in control regarding spending on myself, I think it probably has a bigger effect on my spending on friends and family than I'd like to admit. But I hope on the whole that I'm using it in more positive ways than negative ones.

What do you think? Was King on target here? Do you see the drum-major instinct at work in your finances or those of others around you?

Monday, January 15, 2007

Martin Luther King on Economic Justice

True compassion is more than flinging a coin to a beggar; it is not haphazard and superficial. It comes to see that an edifice which produces beggars needs restructuring.
-- The Rev. Dr. Martin Luther King, Jr.

Today, as we celebrate the life of a great man and the movements he was a part of, most of us probably know him through the canned, packaged story we're told about what he stood for and advocated, told in a way that makes us feel safe and proud of our country's progress because the problems he fought are all in the past, right?

But Martin Luther King actually had some pretty phenomenal, radical things to say in a lot of areas, things that may surprise you, things that we still need to hear today because they're as meaningful and relevant as ever. And as much as I'd desperately love to share all of it with you, I'm going to restrain myself and only focus on his words about economic justice (and encourage you to dig deeper on the rest of it yourself, especially his speeches and sermons against the Vietnam War and for a peaceful, just foreign policy).

Now, throughout the civil rights movement, activists had always been engaged with economic issues, from using economic tactics like the Montgomery bus boycott and the boycotts of places like Woolworth's that accompanied the lunch counter sit-ins, to economic demands (the '63 march at which MLK gave his "I Have A Dream" speech was called the March on Washington for Jobs and Freedom). King himself began to focus more strongly on economic issues in the last few years of his life. In 1966 he began working in Chicago and other northern cities to address housing and employment discrimination, and in 1968 when he was killed, he was working on organizing the Poor People's Campaign, bringing together poor people of all races in an attempt to win an "economic bill of rights" of anti-poverty policies.

Here are some quotes from three of the Rev. Dr. King's great speeches and sermons late in his career. The first, Beyond Vietnam-- A Time to Break the Silence, was given on April 4, 1967 and is an incredibly powerful speech that I would recommend everyone listen to (there's an audio file at that link) or read. I'm only excerpting a small section near the end:

A true revolution of values will soon cause us to question the fairness and justice of many of our past and present policies. On the one hand we are called to play the good Samaritan on life's roadside; but that will be only an initial act. One day we must come to see that the whole Jericho road must be transformed so that men and women will not be constantly beaten and robbed as they make their journey on life's highway. True compassion is more than flinging a coin to a beggar; it is not haphazard and superficial. It comes to see that an edifice which produces beggars needs restructuring. A true revolution of values will soon look uneasily on the glaring contrast of poverty and wealth. With righteous indignation, it will look across the seas and see individual capitalists of the West investing huge sums of money in Asia, Africa and South America, only to take the profits out with no concern for the social betterment of the countries, and say: "This is not just." It will look at our alliance with the landed gentry of Latin America and say: "This is not just." The Western arrogance of feeling that it has everything to teach others and nothing to learn from them is not just. A true revolution of values will lay hands on the world order and say of war: "This way of settling differences is not just." This business of burning human beings with napalm, of filling our nation's homes with orphans and widows, of injecting poisonous drugs of hate into veins of people normally humane, of sending men home from dark and bloody battlefields physically handicapped and psychologically deranged, cannot be reconciled with wisdom, justice and love. A nation that continues year after year to spend more money on military defense than on programs of social uplift is approaching spiritual death.

America, the richest and most powerful nation in the world, can well lead the way in this revolution of values. There is nothing, except a tragic death wish, to prevent us from reordering our priorities, so that the pursuit of peace will take precedence over the pursuit of war. There is nothing to keep us from molding a recalcitrant status quo with bruised hands until we have fashioned it into a brotherhood.

In August 1967, the Rev. Dr. King spoke to the Southern Christian Leadership Conference in a speech called Where Do We Go From Here? Here are two excerpts:

The problem indicates that our emphasis must be twofold: We must create full employment, or we must create incomes. People must be made consumers by one method or the other. Once they are placed in this position, we need to be concerned that the potential of the individual is not wasted. New forms of work that enhance the social good will have to be devised for those for whom traditional jobs are not available... Work of this sort could be enormously increased, and we are likely to find that the problem of housing, education, instead of preceding the elimination of poverty, will themselves be affected if poverty is first abolished. The poor, transformed into purchasers, will do a great deal on their own to alter housing decay. Negroes, who have a double disability, will have a greater effect on discrimination when they have the additional weapon of cash to use in their struggle.

Beyond these advantages, a host of positive psychological changes inevitably will result from widespread economic security. The dignity of the individual will flourish when the decisions concerning his life are in his own hands, when he has the assurance that his income is stable and certain, and when he knows that he has the means to seek self-improvement. Personal conflicts between husband, wife, and children will diminish when the unjust measurement of human worth on a scale of dollars is eliminated.

Now, our country can do this. John Kenneth Galbraith said that a guaranteed annual income could be done for about twenty billion dollars a year. And I say to you today, that if our nation can spend thirty-five billion dollars a year to fight an unjust, evil war in Vietnam, and twenty billion dollars to put a man on the moon, it can spend billions of dollars to put God's children on their own two feet right here on earth...

I want to say to you as I move to my conclusion, as we talk about "Where do we go from here?" that we must honestly face the fact that the movement must address itself to the question of restructuring the whole of American society. There are forty million poor people here, and one day we must ask the question, "Why are there forty million poor people in America?" And when you begin to ask that question, you are raising a question about the economic system, about a broader distribution of wealth. When you ask that question, you begin to question the capitalistic economy. And I'm simply saying that more and more, we've got to begin to ask questions about the whole society. We are called upon to help the discouraged beggars in life's marketplace. But one day we must come to see that an edifice which produces beggars needs restructuring. It means that questions must be raised. And you see, my friends, when you deal with this you begin to ask the question, "Who owns the oil?" You begin to ask the question, "Who owns the iron ore?" You begin to ask the question, "Why is it that people have to pay water bills in a world that's two-thirds water?" These are words that must be said.

Now, don't think you have me in a bind today. I'm not talking about communism. What I'm talking about is far beyond communism... What I'm saying to you this morning is communism forgets that life is individual. Capitalism forgets that life is social. And the kingdom of brotherhood is found neither in the thesis of communism nor the antithesis of capitalism, but in a higher synthesis. It is found in a higher synthesis that combines the truths of both. Now, when I say questioning the whole society, it means ultimately coming to see that the problem of racism, the problem of economic exploitation, and the problem of war are all tied together. These are the triple evils that are interrelated.

And if you will let me be a preacher just a little bit. One day, one night, a juror came to Jesus and he wanted to know what he could do to be saved. Jesus didn't get bogged down on the kind of isolated approach of what you shouldn't do. Jesus didn't say, "Now Nicodemus, you must stop lying." He didn't say, "Nicodemus, now you must not commit adultery." He didn't say, "Now Nicodemus, you must stop cheating if you are doing that." He didn't say, "Nicodemus, you must stop drinking liquor if you are doing that excessively." He said something altogether different, because Jesus realized something basic: that if a man will lie, he will steal. And if a man will steal, he will kill. So instead of just getting bogged down on one thing, Jesus looked at him and said, "Nicodemus, you must be born again." In other words, "Your whole structure must be changed."

A nation that will keep people in slavery for 244 years will "thingify" them and make them things. And therefore, they will exploit them and poor people generally economically. And a nation that will exploit economically will have to have foreign investments and everything else, and it will have to use its military might to protect them. All of these problems are tied together. What I'm saying today is that we must go from this convention and say, "America, you must be born again!"

And on March 31, 1968, less than a week before he died in Memphis (where he went to support the city's garbage workers on strike), he spoke at the National Cathedral about the changes going on in the world, the challenges and opportunities they presented, and about the Poor People's Campaign he was part of organizing, in Remaining Awake Through A Great Revolution:

There is another thing closely related to racism that I would like to mention as another challenge. We are challenged to rid our nation and the world of poverty. Like a monstrous octopus, poverty spreads its nagging, prehensile tentacles into hamlets and villages all over our world. Two-thirds of the people of the world go to bed hungry tonight. They are ill-housed; they are ill-nourished; they are shabbily clad. I’ve seen it in Latin America; I’ve seen it in Africa; I’ve seen this poverty in Asia...

As I noticed these things, something within me cried out, "Can we in America stand idly by and not be concerned?" And an answer came: "Oh no!" Because the destiny of the United States is tied up with the destiny of India and every other nation. And I started thinking of the fact that we spend in America millions of dollars a day to store surplus food, and I said to myself, "I know where we can store that food free of charge—in the wrinkled stomachs of millions of God’s children all over the world who go to bed hungry at night." And maybe we spend far too much of our national budget establishing military bases around the world rather than bases of genuine concern and understanding.

Not only do we see poverty abroad, I would remind you that in our own nation there are about forty million people who are poverty-stricken. I have seen them here and there. I have seen them in the ghettos of the North; I have seen them in the rural areas of the South; I have seen them in Appalachia. I have just been in the process of touring many areas of our country and I must confess that in some situations I have literally found myself crying...

This is America’s opportunity to help bridge the gulf between the haves and the have-nots. The question is whether America will do it. There is nothing new about poverty. What is new is that we now have the techniques and the resources to get rid of poverty. The real question is whether we have the will.

In a few weeks some of us are coming to Washington to see if the will is still alive or if it is alive in this nation. We are coming to Washington in a Poor People’s Campaign. Yes, we are going to bring the tired, the poor, the huddled masses. We are going to bring those who have known long years of hurt and neglect. We are going to bring those who have come to feel that life is a long and desolate corridor with no exit signs. We are going to bring children and adults and old people, people who have never seen a doctor or a dentist in their lives.

We are not coming to engage in any histrionic gesture. We are not coming to tear up Washington. We are coming to demand that the government address itself to the problem of poverty. We read one day, "We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain inalienable Rights, that among these are Life, Liberty, and the pursuit of Happiness." But if a man doesn’t have a job or an income, he has neither life nor liberty nor the possibility for the pursuit of happiness. He merely exists.

We are coming to ask America to be true to the huge promissory note that it signed years ago. And we are coming to engage in dramatic nonviolent action, to call attention to the gulf between promise and fulfillment; to make the invisible visible...

One day we will have to stand before the God of history and we will talk in terms of things we’ve done. Yes, we will be able to say we built gargantuan bridges to span the seas, we built gigantic buildings to kiss the skies. Yes, we made our submarines to penetrate oceanic depths. We brought into being many other things with our scientific and technological power.

It seems that I can hear the God of history saying, "That was not enough! But I was hungry, and ye fed me not. I was naked, and ye clothed me not. I was devoid of a decent sanitary house to live in, and ye provided no shelter for me. And consequently, you cannot enter the kingdom of greatness. If ye do it unto the least of these, my brethren, ye do it unto me." That’s the question facing America today.

Friday, January 12, 2007

Socially Responsible Investing/Socially Conscious Finances: Tough Questions

There are a lot of questions and critiques of socially responsible investing (SRI) and other socially conscious financial approaches, and I don't want to run away from them because I think there are good answers (or at least a good discussion to be had) for most. Here are some tough questions I've heard; feel free to tack on your own in the comments if you think I've missed any.

This is Part 4 of a semi-organized series; see also Part 1 (the basics), Part 2 (some specific SRI options), and Part 3 (the diverse motivations for SRI).

Don't you end up financially worse off if you're a socially conscious investor?

  • Maybe yes, maybe no. Socially conscious mutual funds get roughly the same returns as other mutual funds, although obviously there's wide variation, and it's more challenging to diversify if you're SRI-only. (Here are some studies on the question.) Community development banks typically provide lower returns than conventional banks, but the margin varies from very small to significant.

Why not try to end up with as much money as you can and then give a lot to charity?

  • This is a personal choice, but there are a couple of reasons I do it.
    • Some are more philosophical and general: I believe in the fundamental concept of involving social values in financial decisions, and I think we'll all be better off if that approach grows.
    • But I also believe that in some cases, especially with options like community development banking, participating may actually provide greater benefits than giving to charity. For example, say I have $10,000 in a community development savings account/CD/money market account at 2%. (My MMA, at Domini, is actually over 4%, but not every option is that close to the highest rates.) I could put that $10,000 in an high-interest online savings account and make 5%. Over the course of a year that's a difference of $300. Is there more benefit in giving that $300 to charity, or making $10,000 available to be invested in financially under-served communities? On the one hand, one has to be repaid and the other doesn't; on the other hand, we're talking 33 times the amount of money.

You buy stock from other shareholders, not the company, so why would the company care whether you own their stock or not?
  • The CEO, top management, the board, etc. have lots of stock options, so even if the "company" doesn't care about the stock prices, the actual people running it do!
  • The company's responsible to shareholders for results-- ie, higher stock prices.

Well, I don't believe that avoiding bad actors' stock even affects the prices at all-- so many investors are out there that when socially conscious investors avoid a stock, others will see a great bargain and snap it up. So what social benefit would there be to get involved in SRI?
  • Shareholder advocacy! If you own stock in a company, you can vote on proxy resolutions that urge companies to be more socially responsible. Socially responsible mutual funds, backed by the strength of how many shares they own, can enter directly into dialogue with companies to effect change.
  • Building awareness and affecting others. The more people participate in SRI, the more friends and family and neighbors and coworkers will hear about it, and the more news coverage and blog posts there will be about it.
  • An SRI effort to avoid a company often leads to bad PR (which no one likes!) And that bad PR might lower the stock prices indirectly, even if your socially conscious avoidance of the stock doesn't do so directly.

Don't many SRI mutual funds invest in companies that are pretty lousy? Aren't they just picking the lesser evils?

  • Basically, yes. It's hard to get away from this. If you look at any SRI fund's holdings, you'll probably find at least a few companies that make you gasp and cringe.
  • But the one benefit of owning stock in questionable companies is the aftermentioned shareholder activism-- the leverage to push them to change. Take a look at the work the mutual fund is doing to improve the problem issues with that company before you decide to write the fund off. Then if you still feel uncomfortable, you can try to find a better one. (Good luck! And I mean that in all earnestness!)
Doesn't SRI just help corporations "greenwash," by pushing for and praising small changes and therefore deflecting attention from deeper problems?
  • This is the eternal question/dilemma, and it's bigger than SRI. Do you encourage and reward small steps because they're movement in the right direction, or does that just lower the bar and decrease the chances of bigger change? There's no easy answer.
  • I can say that although this is probably true in some cases, there are other cases where serious, substantive change has occured thanks to SRI. The biggest and most often cited is ending apartheid in South Africa, which SRI divestment campaigns contributed to. But there are many other examples that are real and meaningful if not so dramatic.
  • In the end, it comes down to what you feel comfortable with. As for me, I'm alright with "some progress," at least for now. And I'll work towards the bigger, deeper changes through methods outside of my financial decisions.

What if I don't believe in corporations and the stock market at all? Corporations have a singular focus on profit to the exclusion of all other values. And instead of siphoning off profits for distant stockholders, that money should go to the workers and/or lowering prices for consumers. Why should I participate in a system I oppose?

  • Maybe you shouldn't. There's a lot to be said for keeping your financial decisions consistent with your principles, regardless of whether that accomplishes anything or not. And although just one person avoiding the stock market won't cause it to collapse, every movement and social change is made up of a lot of individual choices building on each other. (The stock market isn't the only form of socially conscious investing, though-- take a thorough look at community development financial institutions.)
  • That said, I happen to agree with the hypothetical "you" asking the question, and yet I still own mutual funds invested in the stock market. I do feel conflicted about supporting systems I oppose. Here are the reasons I do it anyway:
    • Having my retirement savings in the stock market means I'll end up in better financial shape. To some extent, this is just personal "selfish" materialism; however, I also think about it with the rationale that the more secure my retirement becomes, the more freedom I will have to do the work that I feel is most meaningful and makes the most positive change in society, regardless of how well it pays. (I've explored some of my thoughts and feelings about this here and here, on whether this is a rationalization and a cop-out or a valid approach. No answers yet!)
    • The mushy middle. I'm in the stock market for retirement, but not for my sizable medium-term savings. I invest in mutual funds, but ones that have higher fees/expenses thanks to their social screening and shareholder advocacy. I'm torn by conflicting desires to make more money and be consistent with my values, so I stake out turf in the middle.
    • I also believe that, as a matter of practicality, it will be easier to convince the general population to integrate social values into financial decisions than to toss out corporations and the stock market altogether; my participation in socially conscious stock-market investing helps promote the former approach whereas avoiding investing altogether promotes the latter. (Of course, there's certainly a case to be made that developing a more "palatable" corporate/stock market system helps shore up the system even more and actively works against broader, deeper change. But I personally don't buy that comprehensive changes are likely anytime soon regardless.)

What if I believe that "the social responsibility of business is to increase its profits" and that social values just don't belong in these kinds of financial decisions?
  • Then I guess we disagree entirely, and I haven't the space or inclination to argue the point here. I would be more than glad to do it another time, though, if there are any takers-- we could have a thorough back-and-forth, posted on my blog (and yours if you have one).

So, what have I missed? Any other tough questions to throw at me?

Friday, January 05, 2007

Charging yourself a "luxury tax," for charity

I recently came across this Boston Globe profile of a Bostonian who's into socially conscious finances. The whole article is interesting, but the one part that really struck me is that she "taxes" herself-- for every dollar she spends on entertainment, eating out, etc, she donates another to charity.

What a terrific approach! It's a way to simultaneously discourage yourself from too much "luxury" spending and encourage yourself to give more to others. And I like the idea that it links personal indulgences with the needs of others in your mind-- not to discourage you from ever treating yourself at all, but just to remind you that while you ought to have some pleasures to enjoy, others who are less fortunate ought to as well. You could probably adjust the ratio, too, depending on the ratio between your average or goal for entertainment spending and your average or goal for charitable giving; you could give 25 cents or 50 cents or $2 for every dollar spent on luxuries, instead of $1.

Despite how much I love this idea in principle, I don't think it's right for me, because a) I am terrible at keeping exact records of how much money I spend on what, and b) I like to give a set dollar amount equivalent to a certain percentage of my income. But I still think it's an awesome idea, and I implore you to try it out and then tell me all about it!

What do you think about this idea? Do you have any gimmicks to help you cut your spending and/or give more to charity?

(There's some other good information in the article related to Susan's Money Makeover-- assessments of various SRI funds, and smart tips like "If you have a mix of people and non-profits as your beneficiaries for retirement accounts, life insurance, etc, leave the tax-free accounts to people and the taxable accounts to the non-profits since they don't have to pay taxes.")

End-of-Year Financial Totals

I've fallen way behind in doing financial updates-- this is my first in three months! Although I'd like to be more disciplined about it, the benefit is that my increases look so much bigger...
Savings: $30,238 (up $7,542 or 33.2% since October 4th)
Retirement: $16,157 (up $1,722 or 11.9%)
Debt: $13,645 (down $150 or 1.1%)
Net worth: $32,750 (up $9,414 or 40.3%)

Giving as percent of 2006 goal: 86%

The good:

  • My net worth is over $30,000! It was only around $10,000 a year ago, so it's neat to watch it grow so fast.
  • $16,000 in retirement savings before my 25th birthday isn't shabby.
  • I have $30,000 in savings! That's a lot! It makes me feel like I have so many possibilities-- from actually for real buying a house, to quitting my job and moving to Latin America, to lending my parents the money to pay off their debt in one fell swoop and saying "Oh, just pay me back when you get around to it." In reality I'll probably just continue to be practical with it, but it's exciting to have the possibilities-- and a little incredible to think about how many people in the US and abroad never in their whole lives have as much money to spare as I do at 24. Man, I'm privileged.
The bad:
  • I am currently $425 short of my 2006 giving goal. (I'll try to get that donated soon, and I won't start counting donations towards my 2007 total until I hit my 2006 mark.)
  • I'm way behind on Roth IRA contributions-- I've only put in $1,500, so I need to add $2,500 more by April 15th. Theoretically I try to do $1,000 every three months, which means I'm $1,500 off-pace.
But even if I adjusted my net worth $1,925 because I'm behind on giving and on retirement contributions, I'd still squeak by above $30,000 net worth. And I know I'll catch up on those things sooner or later (hopefully sooner!). So on the whole I'm satisfied.

Thursday, January 04, 2007

Carnival of Ethics, Values & Personal Finance #1!

I'm so pleased and excited to be hosting the first-ever Carnival of Ethics, Values and Personal Finances! I must admit, I was a little nervous that no one would submit, but I was bowled over by all the great submissions the Carnival received-- 27 in all!

If you're just hearing about the Carnival for the first time, here's the quick rundown:

How do your values affect your financial decisions? Whether it's what you buy, where you invest, or where you work, when and how do your beliefs and ethics play a role? And, most importantly, are you ready to blog about it? The Carnival of Ethics, Values and Personal Finance is a space to come together and share thoughts and experience as we navigate the challenges of integrating our money decisions and our broader values.

Usually when I'm hosting a carnival I'll pull out a few of my favorite posts and highlight them up top. But there are way too many great posts here and it's impossible to choose. Instead, I split them into a few categories, and I hope you'll read them all! I also included all submitted posts (except for a couple that were multiple submissions from the same person), although there's a handful where I can't quite figure out their connections to ethics/values, and those are in the bottom category.

Locally-Owned Businesses





General personal finance (these are posts where I couldn't figure out the connection to ethics and/or values; in the future, I'll ask people to explain better in the notes):
Thank you so much, everyone, for participating! The next edition will be Thursday, February 1 at Tired But Happy. Please let me know if you're interested in hosting future editions! And here's the link for submissions.

Wednesday, January 03, 2007

Don't forget to submit to the Carnival of Ethics, Values, and Personal Finance!

Today's your last chance to submit to the Carnival of Ethics, Values, and Personal Finance-- the very first edition goes up tomorrow morning, right here. I'm so excited about the great submissions we've got so far, but there's always room for more! Read about it here, and use this form to submit.

Monday, January 01, 2007

What to do with those unwanted holiday gifts

'Tis the season to be staring at a pile of gifts that make you go "Huh?" or "Ugh!" If you're like me, they're usually destined to end up in a bag or box or the top shelf of some closet getting dusty, to be forgotten or ignored save a cursory look-through in Decembers to come. But this year I'm trying to be proactive, so I'm thinking through the best ways to deal with unwanted gifts:

  • Return them. The lines may be long, but if you know where your gift came from, you can trade in that odd-looking sweater for one you'll actually wear, or switch the 4-in-1 gadget for something you might use. And if you have a gift receipt (or get lucky at a store with a generous return policy) you can even get cold, hard cash in return. Just be careful to check the return policy at the store in question-- it's tempting to wait and skip the post-holiday returns rush, but there may only be a limited window in which returns will be accepted (especially if you don't have a receipt).
  • Regift them. Ah, re-gifting, a frugal favorite. But unless you have a wonderful memory, now is the time to write down who gave you what this year! It's sad but true that in a year's time, when you're sorting through your regift stash and thinking, "Oh, this doohickey is just Cousin So-and-So's taste, she'd love it," it's probably because Cousin So-and-So was the one who picked it out for you. If you mark the names down-- use Post-Its, make a list, whatever-- then you'll know not to give the gift back from whence it came, and you don't have to deal with either a) the embarrassment of a mistake or b) the nervous brain-wracking-- "Did Grandma give this to me or was it Jane, or Chris?"-- that holds you back from regifting the items to anyone at all.
  • Sell them. I've never tried this myself, and I'd hate to get caught by the giver, but I hear that there's a growing trend of selling unwanted gifts on eBay or other auction sites.
  • Donate them. Instead of or along with the above, there are of course many fine charities that will appreciate many of the things you'd like to get off your hands. For example, I don't know if I'm the only one who gets endless bath-and-body sets at the holidays, but there are many girls and women out there who'll get much more pleasure and use out of them than I will, so I can direct them towards low-income families, imprisoned women, domestic violence shelters, or elsewhere. Maybe the decorative tchotchkes could brighten up a shelter or the home of a dislocated person. Clothing is always a great donation, especially when it's brand new. And places like Goodwill will take all sorts of things.
(Of course, ideally you should stop the problem before it starts by talking to repeat offenders about ending your gift exchanges altogether, or communicating your preferences and tastes more clearly. But you probably agree that it's a lot easier said than done!)

What do you do with unwanted gifts? Do you have any good tips on trying to avoid getting the darn things in the first place? And if you have any funny stories about terrible gifts or regifting gaffes, leave them in the comments and we'll all enjoy them!