I’m going to stop feeling guilty about buying shoes I actually need.  This is my eighth year of not owning a car.  That more than makes up for a pair of good shoes every couple of years.

I walk exactly three miles to work each day, and sometimes I also walk home. With the commute and other walking (like going outside at lunch, walking to and from stores and restaurants), I put in three to eight miles almost every day of the year. That’s a lot of wear on shoes. I know most people don’t literally wear through the soles of their shoes but I have, many times. And yes, I get them re-soled when that happens rather than buy new ones. But… even some of the insides wear out after a time, and replacements are in order. I’m going to have some make re-categorizations in Mint: that Zappo’s order is officially a transportation expense.

Since I recently applied some Christmas money and almost all of my personal emergency fund (except $1,000) to my student loan debt (reducing it by almost $19,000), I thought that the approaching one-year debt snowball-aversary was a good time to add up how much debt I’ve paid off since this time last year.

As noted in the title of this post, that number is $50,427.  My take-home pay after taxes is less than $90,000/year.  I’m feeling pretty proud – and simultaneously trying to gear up for the final push toward that $45,397 hanging out over there on the right side of the page.

I’m doing well on needs, which are now $100 less (per month) than 50% of my income.  I’m happy with this, given that we live in San Francisco, a very expensive area of the U.S.

The problem is that I will only be able to make my desired monthly minimum student loan payment of $3,000/month if I use all but $300 of my 20% for savings AND 30% for wants.  Not only is it not sustainable but, as Warren points out in the book, if you can’t afford some fun, you can’t afford your life.  And $300/month for incidentals, travel home to see family, and the occasional morning coffee or glass of wine with a friend isn’t going to cut it.

This realization, along with re-reading Warren’s section on debt, is really making me think that I should just take $15,000 of my $17,025 emergency fund, throw it at that last remaining student loan, and just be done with it as soon as possible. It’s not rational to keep it.  With almost no savings rate and an interest rate of 4.25% on that loan, I’m just losing money by keeping that money in the bank.  As Warren points out on page 146, “…there is no saving for the future when you are carrying a load of… debt.  If you are in debt, and you think your savings account will keep you safe, you are kidding yourself.  You are installing smoke detectors in the hallway while there is a grease fire blazing in the kitchen.”

I’m also getting impatient seeing that big number hanging out there on the right side of the page.  Though a student loan isn’t, in Warren’s terms, “Steal-from-Tomorrow debt,” having it bothers me.  She suggests paying the debts that bother you most.  Since I only have two, and the student loan bothers me a lot more than the second mortgage (given that my condo is so underwater, I’m loath to throw any money at it), that’s the one I’m paying first.

I guess feeling impatient about it, and literally hating the debt, is a good thing.  Far too many people aren’t bothered nearly enough by student loan debt.

I’m also feeling a little more secure in other ways.  My husband, for instance, has saved $35,000 in our joint emergency fund in the past year, so (provided he doesn’t leave me this year, which I don’t anticipate) we do have that on hand should something happen in the next 6-12 months.

Hmm.  Tempting.  Think I may just write that big check and get 2012 off to a great debt-free start.  I’ll mull it over for a few days.

In taking two hours, this mundane activity became tedious but also surprisingly powerful.  The way I felt during and after doing it was unexpected, enlightening, and telling of the subtle but deep ways in which marketing works.

Click “unsubscribe,” do something else… and I felt bothered, and I noticed it, and I asked “Why is THIS bothering me?  This tedious task, of all things?”

Because, though I am ashamed to admit it, it felt like deleting aspects of my identity, like deleting very specific signs of who I used to be, things I’d forgotten until I opened a newsletter in order to click on a tiny text link.  It was much like finding receipts and how those very specific hooks of an object, a currency, a date, a place can bring a flood of associations you didn’t even know were there back.

And I had to admit the marketers had gotten me, much as I like to think of myself as a person who successfully resists them.  They may not always get my money, but they’d gotten my neurons.  And that’s the real success of marketing and advertising, when you identify with a product or think that a brand signifies something, anything about you as a person.  Reader, I actually felt less cool because I was unsubscribing from fashion newsletters, which was all tied up with concern that I used to care more about how I looked (and spent more money on it, too), which quickly morphed into “I used to look better.”

Reality and logic weren’t present, momentarily.  I know that I didn’t love most of the clothes I used to buy, evidenced in the fact that I gave most of them away long ago.  I know that most were made by slaves hidden from our eyes in overseas hellholes but, somehow, that temporarily gave way to the notion that I used to be more “up” on fashion (to the degradation of my wallet and the planet).  I know this, but I still felt a twinge as I cast that off.

It was the same thing with concert tickets.  “I used to be cooler when I went to lots of live shows all the time!” I thought (and spent far too much money doing so, and even more drinking beer and buying t-shirts at said shows).

It wasn’t pretty.  I felt embarrassed, as I do when some of my female friends, now mothers and now in their 30s and not yet sure of who they are now that they’re not a culturally approved and celebrated sweet young thing, tell drunk-at-the-bar stories as if they are the highlight of their lives.

As we all know, it’s all tied in with a fear of getting old; a fear that the person I am today is — of course! — not the person I was in 2001 when I subscribed to most of these newsletters.  In an American-and-increasingly-global culture that values youth above all else (because youth is easiest to market to), the loss of “who we were when we were young” is to be much lamented in order to create a desire to get back to something to which we can never return – but definitely requires spending money trying.  Money spent on cosmetic products and procedures, gym memberships, hair dye, dietary who knows what, and of course, youth-inspired fashion and all the other signifiers of youth, whether gadgets or snarky tees or whatever iTunes track.  And because it’s unattainable, we must spend ever more to keep trying to attain.

That thought felt very familiar and I couldn’t figure out why until it hit me this morning: I’d read something like it recently from Rev Billy: “The mono-culture of Consumer Society – this corporate economy – can only be created by threatening us with loss of our good looks, status, youth and power. They want us to quietly believe that without their products we will suffer the annihilation of our personal identity.”

Because I’m aware of consumerism, I really thought I was exempt from it.  Fool!  I was not.  In deleting myself from the Patagonia email newsletter, I actually thought that something about my rock climber, outdoorsy identity was going away – though I actually climb rocks every week, at least!  I AM a rock climber!  But do I sufficiently look it?  Do I convince?  Might I miss the release of a new carabener, a new nano-puff?  The answer doesn’t matter so much as does the fact that the thought even crossed my mind.

Scarier still was evidence that products have become associated with other people in my life, people whom I love and miss.  I unsubscribed from Nau and thought fondly of my friend Janet: “Oh, Janet has that Nau coat, and Nau sweater…” and right there was a brand paired with a friend, a feeling of love and familiarity and missing her because she lives in Europe now.  Maybe I’ll buy something Nau while I’m thinking fondly of Janet, or maybe a gift for her, or for both of us – WAIT!

Stop.

I’ve congratulated myself, perhaps smugly, on shopping less and shopping more mindfully – only locally sourced and made, no slave labor, what have you.  But conscious and unconscious thoughts about shopping, about acquiring, about associations between products and my identity and my friends, have occupied far more mental space than I realized before I set about unsubscribing from newsletters.

It’s time to cast out those demons, Amen?

Unsubscribe your brain.

A good reminder from my local hair salon.

* Pay off my last student loan by December 31, 2012.  That’s 12 payments of about $2,500/month, so it’s going to require even more budgetary discipline than usual on my part.  This does, of course, assume no major changes to my employment situation or pay scale.

* Raise the condo rent.  At least a little.  If I don’t short sell instead.  April will mark two years that my tenant has been in my condo and I haven’t raised it yet, while my landlady raises ours every year like clockwork.  This will involve my putting a steel bar where my spine used to be.

* Lead myself not into temptation.  I have already begun reclaiming some of the mental space I’ve allowed advertisers to steal in the past by attempting to stop the barrage of catalogs and junk mail with 41pounds.org and by unsubscribing from all but a select few email newsletters and lists.  It feels better already.  If you don’t know about it, if you don’t see it, you can’t buy it.

Today, he asked a variety of questions: If there had been other sales in the building, what the mortgage balances are, and generally just numbers-focused questions so we know what we’re dealing with.  I told him that I expected the short sale price of my condo would be $140k, which are the recent short sale prices for two other units exactly like mine (the unit next door, and the unit directly below that one).  No other units have sold, though the unit directly below mine (also identical) has been listed at $235k on and off for four years.  There have been no showings at that price this year.

If the short sale price is like the others in the building, at $140k, that would be a difference of more than $100K between the mortgage balance and short sale price.  That means I would owe the IRS income tax on a more than $100k difference between the mortgage balance(s) and the short sale price.  If that’s going to be the case, I’d much rather spend that money paying off the second mortgage and more of the primary and raise the rent over time.

But, from prior tax years, I have $65k in condo losses that I don’t get to realize (get back in future tax filings or otherwise make use of) until a “taxable event” – and a short sale does count as a taxable event.  This could mean the income tax would be on $45k rather than $100k+.  If that truly turns out to be the case, I will probably go for the short sale, since what I would pay the IRS once (the income tax on $45k) is what I currently lose each and every year I keep my condo.  The savings over subsequent years (the rest of my life) would be too substantial to ignore.

The following should not be taken as advice and is just my personal experience.

Apparently I’m a great “hardship” candidate (even though I can ”technically” afford my payments) because of my move out of state and the low rent I’m getting.  She said that, when the banks see that you’re already living out of state and no longer have any ties to the home, they more seriously believe (because it’s usually true) that the next step is foreclosure, which I’m not willing to do, but they don’t need to know that, obviously.  The usual hit to her clients’ credit is 40-50 points (just for the short sale which does not include any missed payments), which is nothing to me since my FICO is 800.

Most importantly, Sweet Husband is not on the hook for any of this because he was never on any loan.  He is 100% free and clear, they can’t look at him at all, and none of his assets, income etc. can be included or reported to the bank.  As far as they’re concerned, he doesn’t exist. Good news there!

The attorney did set expectations pretty fairly, and they’re not all pretty.  She said that, when the bank sees my income level, the bank will probably request $5k (the highest she’s seen is $10k) at closing to forgive the loan and give up any right to
sue me (worth it, I suppose, to be free and clear).  The stickiest wicket is that I probably will have to pay income tax (which at my income tax rate is substantial) on the difference between the short sale amount and what the mortgage balance is.  Given other short sales in my building, that could be a difference of $50-$80k or more.

Depending on that difference, the income tax could be $30-$50k – which is huge, and the equivalent of what I lose over two to five years at the current rental price (and I can raise the rent, and theoretically rent will only go up, even if it only increases slightly).

So, it’s balancing all of that.  The next step is to meet with my tax accountant to better understand tax consequences. Specifically, there are losses and depreciation that I wrote off in prior tax years that, in a “normal” world, would come back to me when I sold.  But I don’t know if they’d come back to me in short sale circumstances, as they would in a full-priced sale, and getting those back could make a difference (or none at all) on the income tax side.  Either way, I have to know.  I need to be dealing in reality, which is hard to figure out based on what various sites and the corporate-owned media spout on about.

I told her the earliest she’d hear back from me is after the new year and will contact my tax accountant in the meantime.  There is definitely no need to rush into such things or make poor snap judgments.  But at this very moment, if I am going to need to write a check for $55k in a few months, then losing $15k/year in being a landlord is not that much worse (because I can press the rent increase lever, and maybe also another refinance lever).  That’s another thing I plan to do: contact the credit union that holds my second mortgage, tell them I’m considering a short sale, and see what they come back with because, as the holder of the second lien, they’ll get nothing in a short sale.  Bank of America will get it all and I’m sure I don’t need to convince the credit union of that.  The one thing we can all rely on is that, if given the chance, Bank of America will take as much money from us as they can.

Here is last year’s list of goods made in the U.S., and my recommendations still stand.

This year’s additions are:

• Vermont Flannel – I’ve long searched for a replacement for L.L. Bean’s flannel pajamas, which I adored as a teenager but had since become manufactured overseas when I attempted to replace them.  Vermont Flannel is an excellent quality, comparably priced alternative 100% made in the U.S.  They even offer the standard plaid patterns L.L. Bean made so popular: Black Watch, Campbell, and so on.
• Filson – Almost all of their items are still made in a union factory in Seattle, WA and are of very, very high quality.  I’ve purchased one of their wool vests for my father for Christmas.  Sadly, the U.S. company that made some sweaters for Filson went under, and their new provider makes the sweaters in China.  They are very honest about items’ origins, however, and the vast majority of their products are manufactured here.  Filson is definitely a company worth supporting.
• Pendleton Woolen Mills – Only some of their items and fabrics are made in the U.S., but there are some.  My husband has three of their wool Made in the USA shirts and wears them constantly.  I’m pleased to report that I wash them like the hand knits I make, with Eucalan, and they come out beautifully.
• Brooklyn Tweed Yarn – I’m a knitter, what do you want from me?!  This yarn is 100% sourced from U.S. sheep (Wyoming) and created at a mill in New Hampshire.  Even better, they sell patterns by real people that highlight the yarn’s unique characteristics.  Yep, it’s the single biggest threat to my budget.  :)
• DyakCraft Knitting Needles – Because they’re handmade in Vermont, you won’t be able to order them now and have them in time for the holidays.  High quality goods take time to create.  But, they are splendid and well worth considering for any knitters you love.
• Itasca Moccasin -  Think Minnetonka moccasins are made in Minnetonka, MN?  Think again.  They’re made in China.  Fortunately, there’s Itasca Moccasin, made in Lake George, MN with a far better style and color selection than other brands.  American-made shoes are especially hard to find, and these are incredibly comfortable, high quality, distinctive and affordable, less than $60 for some pairs!

A Continuous Lean has a far more comprehensive list than the one I’ve compiled.  No need for me to copy it here; just use it and refer to it often.

Happy ethical, mindful, less-stuff-of-higher-lasting-quality holiday shopping!

Banksy

The Banksy goes nicely with this NPR essay, and a November 24 essay by Rev Billy.

Excerpt from the NPR essay:
“What if you simply bought 1/2 as many gifts this year? Buy half as many gifts and see if you can find things that will last, things that are made really well. And for each gift you don’t buy, write a card to that person and tell them how important they were to you this year. If you have kids (and it’s hardest to cut down when it comes to your kids) try and get them one cool thing that relates to nature and the environment (books about tigers? Everyone loves books about tigers). If they are old enough, use that present to explain the links between our “stuff” and the natural world.”

And from Rev Billy:
“Consumerism is violent. The apologists for ads and products, life styles and brought-to-you-by media are disastrously wrong. The thousands of marketing confrontations that a person must get through daily are not persuasive, clever, or normal. The 50 foot-tall actor wearing a watch and grinning at me – is not my new best buddy, Amen? This is atmospheric assholishness…”

Praise be, Amen.