money

The taxman cometh. I just forked over about 52% of my total take-home income from the past year to the federal government and state of California. This is where having a business that works out becomes painful, though I can’t help but think that a more devious accountant (yes, more devious than a ninja) could have done at least a little bit better.

In many ways the deck is stacked against us entrepreneurial types. We’re taking advantage of the simplest and most flexible business structure, the LLC. We still pay self-employment tax, and our desire to build up the business and hire people means we’re leaving money in the bank that we could be taking for ourselves, yet the IRS considers that as profit from a business and personal income whether we draw it or not.

So in an effort to expand we knock ourselves up a couple tax brackets without increasing our take-home pay a cent. I’ve been saving for it since last fall, but it still feels mightily deflating. No refund for me.

Oh well. First-world problems. If you’re on the other side of the great class divide and wondering what to do with your Bush Money, here are some neat ideas.

Well, I’m glad I got out of debt, but I’m also glad I didn’t do it early enough to sink any money into “the market.” While I’m sure many funds will still do well and long-term investors have little to fear, the current economic trajectory is pretty ugly. The dow is headed towards 52-week lows, and there’s more bad news to come.

This is what happens when you run things like the Soviets. It’s increasingly obvious that our economy, beyond being unsustainably debt-based, is also build on a series of consensual hallucinations that don’t map well to reality. Because our made-up-prowess is in “financial products” rather than steel and wheat production, we can get by for longer than they did in the USSR — and we get hit with mortgage defaults rather than breadlines, which is an improvement — but the books are no less cooked, and CNBC is a propaganda outlet, not a news channel.

The Big D may indeed be coming, although a new bubble/rally may emerge around alternative energy and infrastructure instead. Here are the fundamentals:

• Most major banks and financial firms are facing serious losses of capital and credibility as a result of the housing bubble. The “correction” for this will go on for several years, and though the effects will likely be mitigated by a bailout and other activity, the bottom remains a ways off.
• Consumer spending — which is to say people buying shit — has been the main thing keeping the boat floating, but has been based on second-mortgages and credit card debt.
• The falling dollar has been boosting exports, but is also driving inflation and exacerbating energy costs.
• The occupation of Iraq probably prevents any meaningful Federal action, cost-wise. It’s also not doing anything to help out with the energy cost situation.

A boom in infrastructural renewal based around a new energy policy could turn things around (possibly generating another bubble in the process), but it’s still kind of unlikely in my opinion, even with the odds favoring a Democrat as president next year.

Regular people are starting to come around — last year, the Toyota Prius outsold the Ford Explorer — but in general consumers are tapped-out, and anyway not in a position to drive significant changes just by altering day-to-day purchases.

Depending on how things shake out, a little economic slowness could be just what the doctor ordered. People work too hard for too little in this country, and the pie is really inequitably divided. Maybe this crunch will reverse that trend.

As the end of the year approaches and various spreadsheets are compiled, I am increasingly forced to face the uncomfortable reality that unless something changes I will soon cease to be legitimately bohemian in economic terms. Affluence awaits. While I’m sure this is the sort of thing that parents love, and people less fortunate hate to hear me bitch about, it actually does provoke a significant amount of anxiety for me. Hence the blogging.

Clearly, I don’t buy into conventional American moires about what’s polite to discuss, and I frequently carry on about religion, politics, sex, drugs, and all sorts of other topics that people tend to avoid in polite company. However, aside from the details of my own romantic life, money is probably the thing I’m most trepidatious talking about. Seems like a good way to give offense and/or invite ridicule. Nevertheless, it’s on my mind and I feel like getting it out in the open, so here goes.

If I Had Money I’d Buy A New BMX
I grew up, for a number of reasons, with a certain amount of classism, although I wasn’t too conscious of this until I went to NYU. There was always some vague resentment towards “rich kids” and a general anti-capitalist attitude (some of which still persists), but it wasn’t until I got up-close to the children of idle wealth that I realized how much it set me off.

Part of this is justifiably utilitarian — waste is bad and a lot of people are unreasonably extravagant — but there’s a difference between inequality/decadence and being financially successful (c.f. Warren Buffet). I’ve come to see Classism as no different at heart than any other -ism: a prejudice; something to be overcome.

Luckily for me, over the years I’ve met some really awesome people who also happen to be in that tippy-top income bracket, and it’s helped me transcend most of my initial negativity towards wealth. I tend to expect more from these people, but all things considered I think that’s fair, and the important thing is that I’m no longer intrinsically biased or negative towards people who happen to have money

The Road To Douchebagdom Is Paved With Rationalizations
However, the prospect of leaving the lower classes myself puts me back at square one. It feeds into the overall identity issue I have — where do I fit in? what is my purpose? — and gives fuel to the crisis of meaning. Posessing an actual “net worth” seems weird and scary. What’s next?

Self-loathing seems to be a recurring theme these days, and this feels at least as psychologically complex as living in the thick of North Brooklyn while still hating on hipsters. I made out ok with that though, and I’m pretty sure I can keep my soul and self-respect even if I do start having real money to spend. My own decadence is already cause for concern, and moving on from simple luxuries like Laphroaig will be tricky, but I think I’m up to the challenge.

The truly pressing concern about changing socioeconomic class status is the socio part. Overall I’m finding the gradual and seemingly inexorable spread of dear social relations out across the country and world — what Bill calls “continental drift” — making me sad, and I worry that this gulf of experience will only grow wider and harder to bridge if class becomes a factor.

For instance, while on the one hand I really enjoy not worrying about how I’m going to pay for rent and food — ascend the pyramid, bitches! — and I also really enjoy being able to buy beers and shit, I also find it hard to relate to other people’s financial problems, both in scale and in attitude. $500 doesn’t mean what it used to, and more critically there’s a shift that’s taken place such that I no longer look at money as an oppressive force with power over me or the world. To the extent that solidarity in the face of this is something people bond over — and I think it is — I’m on the outs, and I fear that’s only going to be more and more the case.

For a boy already feeling semi-isolated and estranged from his peers, losing this connection is scary. It gives rise to semi-rational responses like bailing on my job or engaging in radical strategies of divestment and bumdom.

Believe In The Divinity Of Yr Forward Momentum
It seems unlikely that I’ll stay poor though, barring a concerted effort or significant calamity. Much as I believe in holy poverty, I bend towards the seductively pragmatic notion that I can do more with more. That and I also want to have a family, and it helps to not be a bum when trying to raise children.

The obvious course of action is to invest in the people and things I believe in, and use the leverage of my newfound financial clout to help address the problems of continental drift. At a minimum, I can afford to travel and see people more often, and beyond that there should be lots of opportunities to put ducats to work helping to connect and integrate my world, rather than letting class-difference drive it apart.

I’m not sure exactly what that means, but I think it has its long-term manifestation in real-estate…

In the shorter term this figures in to my current quest for self-love (embrace your earning power, Koenig) and it probably means I should start getting a little more intentional and precise about how I spend my cashola. For the past year while I’ve been earning a good salary and enjoying cheap rent, it’s been all about paying down debts and not worrying how much the groceries cost. Getting out in front of this stuff seems to demand a bit more rigor, and probably also means finding ways to justify having pure fun.

Man, I loved that little bit from Idiocracy That’s what I’m talkin’ about! Lol. Anyway, uhhh…

Wake up, Wake up, Wake up
It’s the first of the month

Well, as alluded to below with work seeming to progress well, I’ve reached another milestone in my quest for financial freedom. I’m square with the tax-man, the last big fiduciary obligation. My bank account is low, but I’m free and clear of serfdom: it’s all gravy from here on out!

Translated to more realistic terms, that means I’m now in the novel situation of having only low-interest consolidated student loans as debt, and consistently (reliably?) earning more a month than I need to survive.

I feel like quoting Deadwood — Ellsworth’s line — “I’ll tell you what: I may have fucked my life up flatter than hammered shit, but I stand here before you today beholden to no human cocksucker.”

Part of me wants to take this opportunity to settle things down, cut down on my bills and cut down on my work too. The hippy thing: simplifyyyyy. But I think for now this is unlikely.

I’m too ambitious for that just yet, not ready to take the “one big score and I’m out” thought into action. It seems much more likely to try to work a simplicity/tranquility component module into a more complex life. Like building a cabin on top of a mountain in Lawless Trinity County and keeping my home-base in Westhaven while holding down an apartment in the Bay. These things can be done, if I want to do them. I could also make other choices.

Freedom; terrible terrible freedom.

Giving free reign to my inner project-manager voice for a moment, let’s take stock of things.

• Sticking with Chapter Three as my #1 project.
  • After sinking a year into it, we’ll be in a position to try and do some really interesting things.
  • All partners remain critical. If any of us walk away, it all comes to naught.
  • Staying in California for now: I’m too entangled the state/business to move elsewhere without a really good reason.
  • Have to make regular appearances at the office, if not making it a daily thing.
• Trying to find a “bigger picture” goal to pursue.
  • The part of my being that’s been fed in the past by art and politics is getting to be famished.
  • Is this something that can be satisfied through my work?
  • If not, can I curb my workaholism to allow sufficient time and space for something else to emerge?
  • And what the fuck will I actually do? Writing? Performing? Something totally new???
• Growing and nurturing my intentional community/family-of-friends as a more conscious project.
  • Dauter returns from Germany in October.
  • Brie in NYC now.
  • Must visit Frank and Laura in STL ASAP.
• Girls Girls Girls
  • Attempting to take the zen-like “when the student is ready” attitude, without letting the workaholism become a catch-all excuse not to engage.
  • Need some kind of context (e.g. the coffee shop worker women down the block may be gorgeous and may ride fixed gear bikes and may provide service with a smile, but this is not really likely to work out and everyone knows it).
  • Getting out of the comfort zone.

So, it feels reasonable to me that I can take things up a notch, and make progress on all fronts. I have a somewhat similar list in my private paper journal from early 2005 that’s full of things that didn’t necessarily transpire — what is a plan? A plan is just a list of things that don’t happen — but were important in an aspirational sense. You’ve got to put it out there, you know? Believe in the divinity of your forward momentum and all that jazz.

Looking to the past is interesting. Here’s a video I made one year ago:

A lot of things have changed up there (I’ll do another when I’m back next week), but it’s also interesting for me because watching that takes me back to the mental state of that day, which is quite a ways away from where I am now. Feels good.

This past trip ‘round the sun has been what most sportscasters would call “a rebuilding year,” and all things considered it was quite successful. Certainly it’s been more lonely and slow-going than I’ve liked at times, but I think holing up in the woods and living a life of (relative) quiet and chastity has been valuable in helping me grow up. I also wouldn’t be out of debt today without the low low cost of living to augment my newfound financial clout.

The question is now that I’m coming down off the mountain, so to speak, what’s the big plan?

Feels like maybe my summer project is to figure that out.

The taxman cometh, and he requires of me about seventeen thousand dollars. Yeah, that’s right. I grossed a little over fifty G’s last year, and because I ride that crazy “self employment” train the IRS wants a big piece of the pie. It’s no biggie though: compared to, say, Bank of America, the Internal Revenue Service is a paragon of reason, patience, and customer service. Plus, their juice is only six percent.

The truth is that I sunk all my spare income over the past year into starting a new business and in paying off my high-interest credit card debts. That this now leaves me with a massive tax liability and no savings is a little annoying (Redman wants out!), but it’s a much better position compared to being square with the government, but without a growing small business and eight or nine grand in hock to the corporate shylocks.

Hell, by the time I pay this off — I’m guessing the end of the year or so — we might even be on our way out of Iraq, so maybe I can think of it as a kind of war-tax resistance.

That said, I’m actually fine with paying taxes. I don’t want to pay more than I have to, but I tend to think that for all its faults this old US of A has some pretty good perks. Freedom isn’t free, bitches. Besides, a bigger portion of the money I owe goes towards Social Security (which I believe in) than the Pentagon anyway.

Here’s to funded retirement and an end to empire!

Well, it looks like two of my favorite peer-level politics organizations are making a run at financial independence. This is a great thing, as one of the major lessons I’ve learned over the years is that the Revolution cannot progress on an allowance from daddy.

I’ll write a real blog about this for Future Majority at some point soon, but for now here are some links if you want to get on the bandwaggon:

First there’s Chris and Matt from MyDD, who provide some of the most diligent, honest, insightful and inspiring political blogging around, and who I sort of think of as comrades. I just sent them $50.

Then, a bit more ambitious, Living Liberally, an organization which has build real social capital all over the nation, is turning pro and running as an LLC. I like the enterprising angle, and will be giving them money as soon as I figure out how deep I’m in hock to the IRS and what I can affort.

If you feel moved, you can give as well. I’ll also post a link to my piece on FM explaining why this matters whenever I get around to writing it.

We’re hiring at work. If you want to work for me, you should apply.

In seriousness though, I’m really hoping we can find a couple people to grow with. Thus far things have been going pretty well, and we’re looking at a very good prospective fiscal quarter. Plus, it would be nice to have some dedicated developers in the house.

Part of the fun of being a web application professional is bitching about crappy online services I’m stuck with on my work blog.

UPDATE: Wes schools me. B of A and MBNA ROCK!

UPDATE TWO: In the spirit of fairness, and because this blog post is apparently somewhat popular, I should mention that many of the points in my post have been addressed in terms of BofA’s user experience.

Lots of wrangling around bills lately. Starting this new company (and having about five grand in back-pay outstanding at my old gig) has left me close to tapped out. I’m also switching banks — no Citibank in the HC — and I just realized I hadn’t paid one of my student loans. Time to take stock:

Accounts Payable

Low-interest student loans:         $12,086.78
High-interest plastic debt:         $9,454.02
Unknown medical bills from 2005:   ~$2,000
Unknown back taxes from 2002-2003: ~$5,000

Accounts Due

Summer back pay:      $5,125
Oct salary:           $6,300

Looming Expenses/Purchases

Monthly minumum bill load:            ~$1,100
Travel to LA for niece's Bat Mitzvah: ~$800
New lappy:                            ~$1,800
Xmas Gifts/Travel:                     $???
Automobile:                            $???
2006 taxes:                           ~$6,000

At the moment my cash on hand is healthy though most of that is in the new bank account for which I don’t yet have a card or anything. But that should work itself out. I don’t anticipate having to beg, borrow or steal to make ends meet.

This is actually looking pretty good, all things considered. Chapter Three should be cash-flow-positive through the end of the year, meaning I’m optimistic about paying my Oct, Nov and Dec salaries. If my back-pay from this summer comes through I’ll be sitting pretty. If not, I’ll still get by.

I can be very austere if I need to. My general cost of living really can be as low as $1100 a month, including debt maintenance. I can live without a car for a few more months, and the laptop (while necessary in the next year) isn’t needed right this second. If it all goes wrong, I’ll survive with my credit rating intact.

On the other hand, with a possible ear-end surplus, it seems wise to start knocking off those debts. The CC money has got to be the first to go. It’s such an albatross ‘round my neck, and it eats $350 a month with very little to show for itself. Next after that would be back taxes and then the unspecified medical bill from my ambulance ride and stitches after bike wreck 2005.

I started off this year with the idea of being more or less debt free at the end. I’m not going to get there. Working half-time for the summer and deciding to go start a new company have laid that ambition low, but I don’t regret those choices (or really care about debt that much), and anyway I’m more or less on-track to be there soon. Feels good.

That car thing is the big black spot on my mind. I really have no idea what to do. Should I try and buy a used car outright from some dude? A used car dealership? “Certified pre-owned?” A lease? I’m way out of my depth here…

Today’s the last day that a contribution to a candidate running for office will make any real difference. If you’ve been thinking about kicking down, now’s the time, and even $20 can help.

Last night I went out with my partners for a Larrupin’ dinner, and this morning I dropped the same amount on Jerry McNnerney who’s down South, a PhD in Math, a Wind-Power expert and running against greasy-oilman Dick Pombo. That $200 contribution (ouch!) is enough to get me on the FEC’s lists. Yeehaw.