Wednesday, December 26, 2012

Looking Forward

This is the magical time of year when we get an opportunity to reflect on the year that  is ending and plan for the year ahead. I love this time of year. I reflect on what we did right and what we didn't do so well. With all of the trouble in the world today ,both economically and socially, the time to be as self reliant as possible has arrived.

It astounds me how many people out there think everything is fine. Even our President has said that the economy is doing well. Really? All of the people that think everything is great are not paying attention. Vice President Biden said that when a friend or neighbor cannot find a job it is a recession, and when you cannot find a job it's a depression. Using this definition we are all in a recession and some are in a depression.

The way we calculate the unemployment numbers has not always been done the same way. Right now the official unemployment rate is over 7%. This number does not include all of the people who have stopped looking for work. Let me say that again -this number does not include those who have given up. If you include these people, the real unemployment rate is at least 15% and some sources say it could be as much as 22%.  The highest unemployment during the Great Depression was 25%. So depending on the correct current rate ,we are nearly at the same level as the Great Depression. I for one believe that the worst is yet to come.

Ok, so now that all of the bad stuff is out of the way, let's get to the good stuff. I am beginning to get my gardening catalogs in the mail. It is great to look and make lists of all the things I want to plant next spring. I only plant heirloom varieties. This enables me to save seed from new things every year. Each year there are fewer things I have to buy so I am saving money each year. I also keep a garden log so I know what works and what doesn't.

I have made several goals for the coming year. 1) I am going to be expanding my garden and setting aside sections of the garden for my children. They can raise anything they want and after the family gets what it needs from their crops they can sell all of their excess. This will help teach them a work ethic and a lot of financial lessons as well.

2) Expand our compost pile. It doesn't matter if you want to be like me and do the whole organic thing or you just want to reduce the amount of fertilizer you have to buy. Composting is a good practice. All soil types benefit from compost. The best part about compost is you can do it to any scale. Just use the leftovers that you throw away. Do not use meat products in the compost mix.

3) Skill learning. I have quite a list of things I want to learn this year. I am making a carving set( knife making). A friend is going to teach my stepson and I how to make a bow. My wife and I are going to learn how to knit. A man I met at work is supposed to teach me how to make a wooden boat. I also want to learn more about canning, planting a fruit orchard, wine making, and even sling shot shooting. Some are just for fun,but most are for money savings. Remember, a penny saved is a penny earned and who knows? Some of these skills could turn into a business.

I would like to challenge all of you to set a goal of learning a new skill or two this next year. If knowledge is power,then skills would be assets. Join me in the learning.

Remember to Keep It Rural.

Saturday, November 17, 2012

The Personal Economy

We had a birthday party for my mother in law just the other day.  Her sister was in attendance, she lost her husband to cancer in February.  Some ,hopefully, well meaning friends are basically trying to take over her finances and trying to make decisions on her behalf when it comes to the possessions of her late husband.  She is really torn up emotionally over selling his car and now they are pushing her to sell other personal items that he held dear. One of these friends has even gone so far as to take items and have them appraised, without her permission.

The advice I gave her was this. When you get ready to start selling or giving away your husbands things, I don't want you to just let people take them. I want you to take each item in your hands, physically touch each piece. Then ask yourself these questions; do I need this, do I want this, will I be sorry if this is gone? If you cannot answer no to all three of these questions, you are not ready to give up that item yet.

Talking to her got me thinking. Why don't I modify these questions and apply them to my everyday life. The modified questions would look like this. Do I need this? Do I want this? If I want this why? Will it improve my quality of life or make me more productive? Will this thing make me more secure? If I cannot answer yes to at least two of these questions I will not purchase the item.

We are not prone to overly wasteful purchases. Our last fairly large purchase was a tablet for my wife. She researched for about three weeks. She was having trouble justifying a nearly $300 purchase. If she had just wanted the tablet because it was the latest and greatest I would have agreed with her, but she uses it for school, scheduling, eBooks, and music. I use it from time to time and the kids use it while traveling. We have lots of files on it, in short turned out to be a very good purchase. Honestly, if we all ask ourselves these questions how many things would we not purchase? How much better would our personal economies be?

Remember to Keep It Rural.

Saturday, November 10, 2012

The American Nightmare

While having a conversation at work ,the idea was floated that a guy who appears to never be happy at work or at home, was living the American Dream (sarcasm). Someone in the room said "It sounds more like a nightmare". That got me thinking. What was the original 1950's American dream? I will tell you. It was a nice but small home, a dependable car, the bills paid, and food in the fridge. All of this was done on one paycheck. How different is this from today? Well it is different in a lot of ways. We will go over several of the differences.

Our appetites for the latest and greatest has grown out of control.  It seems like the Apple company is releasing new iphones as often as I buy new pants.  We as a nation are no longer satisfied with a small nice house, we want what would have been considered a small mansion. If a car is more than a few years old or has started having mechanical problems, we want to trade it off. People are judged by the clothes they wear. We have been trying to "keep up with the Jones" only one problem. The Jones are up to their eyeballs in debt and if either of them lose their job they would quickly be bankrupt. These are just a few of the behaviors that have brought us here.

What can be done to turn the tide back in the direction of personal responsibility? Well I have said some of this before, but here goes. 1) Learn to repair many of your items yourself. If you have any mechanical skills at all most folks can take something apart and put it back together.  I had to stop in the middle of this article to fix the vacuum.  It was really stopped up and the belt was broken.  Good thing the replacement belts come in packs of two. 2) Grow some of your own food.  This can be done anywhere. Even in an apartment you can have a window box and grow some cooking herbs.  Herbs are fairly expensive and if you have never cooked with fresh herbs you do not know what you are missing.  3) Learn to compare unit cost. We as a culture think the bigger the container (the value packs) the better the deal.  I have found several things lately that this is not always the case.  For meat compare price per pound, for everything else learn to compare price per ounce.  This can save you a nice amount on grocery day. 4) Wear it out before replacing it. I have three different types of pants; dress, work, and around the house. There are several more but this is a good start.
While there is some good news out there it is not as encouraging as it should be. The national debt is at 16.24 trillion, that is $51,624 per every man, woman, and child or $141,680 per working person and going up by the minute. Personal debt is going down across the nation. People are realizing that they are just one or two paychecks out of the poorhouse. This trend must continue.

What are the challenges that we face? 1) National debt. If you pay attention at all you know that several countries around the world are in serious financial problems, Greece is the poster child of what can go wrong. 2) Personal debt. Personal debt is crippling each families abilities to deal with problems when they arise. If a family is making just enough money to pay the bills and feed the family, when something breaks the only option they have is to borrow money to fix the problem. 3) Taxes. Whether you realize it or not everyone's taxes will be going up January 2013.  Many people may not even realize the change until tax returns they get in 2014, but it will be a lot smaller return. 4) Unemployment. The official unemployment rate is 7.9 percent, but this does not include people who have stopped looking for employment because they have given up. Some reports say the real unemployment rate is somewhere between 15 - 20%. If you are working you may not think this is a big deal, but it is.  If you are not happy with your job, it is more difficult to find a better job.  According to recent reports there are 3.2 people who need a job for every job that is opened. We just had an opening in my department at work, we had 23 applicants that made it through the computerized screening for one position. A friend of mine said that there was a high paying  position open at his company and there were over 1400 applicants for one position.

Many Americans are critically close to the American dream becoming a nightmare.  Many more people are already living the American Nightmare.

Remember to Keep It Rural.

Tuesday, July 24, 2012

It is cheaper to repair than replace?

At one time the statement "It is cheaper to repair than replace" was true about almost everything.Not so anymore. Why is that?

Prior to the 1980's we repaired almost everything. There wasn't a large community that did not have a radio and television repair shop. I remember taking things to be repaired and walking around looking at all the tubs and even a few solid state boards. I even dug a couple trenches for the satellite lines, for the dishes, the really big ones.

Some time in the late 70's or early 80's there was a paradigm shift. It was slow to take over and actually started much earlier. People stopped going to the shoe repair man. Most shoes were no longer made to last. The tops wore out way before the bottoms. The components of electronics cost more than the product itself. If your television went out you bought another without any thought of having it repaired.

Slowly the shoe repair shops, the watch and clock repair shops, and yes the radio and television repair shops started closing. These small business owners are all but extinct. Recently I had a window air condition unit go out. I reacted the way my grandfather would have. I started calling repair shops. I left a message on every answering machine asking if they worked on window units. I called nine shops. Only one called me back. I explained and asked if he would work on a window unit. He said he would if I would bring it to his shop. I told him that was what I expected.

When I unloaded the unit, we started talking. He said that he didn't see very many window units but was willing to try. He checked out the unit and found that the control panel had gone out, so he pulled out a catalog and looked for the the part and found that it would cost $275 to repair. When he told me that, I asked what the most expensive part was and how much it cost. He looked up the compressor and it also was around $300. The unit only cost about $298. We rigged it to work and it works great.

The generally accepted principle is when the cost of repair is 50% of the cost to replace, you would replace. Keeping that in mind when the cost of repair is 90% of the cost to replace there is no reason to even take repair into consideration. This is a truly sad state of affairs.

Now my question is, how does a single part cost as much as the whole? Answer: It isn't possible. That tells me that the culture has had such a violent change that no companies are producing aftermarket parts. This is an intentional move to push people to more consumerism. Diminishing our ability to be frugal and encouraging credit use. Think about what you do and remember to "Keep It Rural".

Wednesday, July 18, 2012

Victory/War Gardens revisited

First a rural economist definition - supply and demand - the more of something people want available for sale, the lower the price. Conversely, the fewer of an item people want to buy, available for sale the higher the price. This is an over simplified definition. I have left out several considerations, but it is sufficient for the discussion here.

If you have anything to do with the grocery shopping in your household, you know how much food prices have gone up. Even if you have nothing to do with the grocery shopping you may remember the news story a short time ago about the price of peanut butter going up 50%. I just heard this week that corn will be going up 4%. This means that everything from corn flakes to beef will be going up as well. While at the grocery store the other day, I was looking at the steaks and was surprised that T-bone steaks were $11.79 a pound. After seeing that I did some research and found an average of $11.68. That was astounding. I being a bit of a nerd decided to do a little math. A person making $35,000 a year after taxes, insurance, and a small 401k contribution around here brings home about $10.84 per hour. That means that this person would have to work 1.07 hours just to pay for a single pound.

With the increase of food imports we are once again weakening ourselves. We are putting our health and well being in the hands of others. We have gotten to the point where we do not know what is in our food. Genetically modified foods are growing. More harsh pesticides are used in other countries. Different herbicides are legal for use in other countries.  We really need to regain control of our own food supply.

Now I can hear a lot of you thinking what does all of this have to do with a Victory/War garden. Well here we go. The National War Garden Commission and campaign was launched in 1917 by Charles Lathrop Pack a multi- millionaire timber man. The reason war gardens were commissioned was because  food production had fallen dramatically. Men who would normally be working the fields were out fighting the war. The idea was that food production could be increased without having to utilize existing agricultural land, labor, and without additional use of transportation.  This campaign promoted the use of private and public lands. The result was over five million gardens. Estimated food production of food stuffs exceeded $1.2 billion and accounted for 40% of food production during the wartime years.

Admittedly the government has not been advertising, encouraging people to use what land they have to produce food, but there is a growing undertow of using available land for food production.  Today we would not call them war or victory gardens.  Today we would call them survival gardens.

There are community gardens springing up all over the nation. I just heard today that Baltimore is making over 20 acres of vacant lots available for food production.  The growth of locavors (we will discuss this more later) is extremely encouraging. The more we can produce for ourselves the less we will have to rely on others.

It does not take much to understand that everything you grow you do not have to buy. The more people that produce part of their own food the lower the demand on the food industry therefore the prices will go down. Savings for you and your family and eventually for everyone. Plant what you can where you can.  Find a local community garden.  Buy food at your local farmers market. Support your neighbors, community, and country.  Let us "Keep It Rural"

Sunday, July 8, 2012

Why The Rural Economist

I have been facinated by economics since in high school. I was blessed to have an excellent teacher. He took what many people think to be one of the most boring subjects and made it very interesting. Thank you Mr. Green.

When ever you talk to most people about economics they think about money, the government, and trade. Some people even think that economics doesn't really affect their lives. This is not these people's fault.
The Mirriam-Webster dictionary defines economics as a social science concerned chiefly with description and analysis or the production, distribution, and consumption of goods and services. the science that deals with the production, distribution, and consumption of goods and services, or the material welfare of humankind. the social science that deals with the production, distribution, and consumption of goods and services and with the theory and management of economies or economic systems. the "dismal science", according to Thomas Carlyle, a 19th-century writer. It has been described in may ways, few of them flattering. The most concise, non-abusive, definition, is the study of how society uses its scarce resourses.

The last definition is the only one that does not scream money. All of these definitions are at least partially correct, but all seem so far away. I have found if something is not interesting, or if I do not see a clear connection to me or my family I am not interested. I believe many of you are the same way.

Of the definitions above the last one is my favorite, but I would like to expand that definition a little.

The Rural Economist definition of economics: the study of how and why an individual, family, group of people, city, county, state, or nation utilize their available resourses.

All of your resourses no matter if it is money, time, effort, talent, or thought, are economic resourses. All resourses are mutually exclusive. To explain, if you have $10 and you decide to use that money to buy ice cream, that money is gone to you, you can no longer use that money for anything else. Everyone would agree that what a person does with $10 is an economic decicion. The same thing applies to time. You have a day off; you have a decicion to make. You could go swimming, biking, work in a garden, fishing, or watch tv all day. Once you use that time you can no longer get it back. While swimming and biking have a physical benefit and gardening and fishing can have a positive impact on your grocery bill, all of the possibilities are economic choices. This is using your resources, this is an economic decision. Which ones are benificial are dependent on the individual. This is individual economics. When you increase the population reviewed, we can create a clearer picture of economics. I believe the more people that understand these principles, the more power we have over our own situation.

That is why The Rural Economist. Please check back. I will be covering divers topics from a rural economic point of view. Thanks.