The Billfold » Interviews

I Made $570K Last Year, But I Don’t Feel Rich (In Fact, I Feel Worried)

Logan Sachon — Fri, 17 May 2013 17:15:05 +0000

Jake Smith is a name I’ve made up for the person who sent me this email:

I’m a physician in my early forties. I make $450-500K. I read a lot about finance and I know that technically I am in the 1%, but I don’t feel rich at all. I don’t know if it was the way I was raised or because for a time I was living paycheck to paycheck or if it’s because I have three kids (and hence, eventually will have three tuitions to pay), but I don’t feel wealthy yet. Maybe it’s because I live in an affluent suburb of a big city and most of my neighbors seem to be doing really well. I don’t know. Have you run across other folks like this?

I had not, personally. So we arranged to speak on the phone.

LS: Tell me about your money. How much do you make?

JS: I just got my tax returns back a couple of weeks ago. My total income was higher than I thought it would be—$570K. And it was pretty good last year as well. And after reading other conversations with “rich people”—one in the $300Ks, one in $100Ks, I was surprised they thought of themselves as rich.

LS: Which is insane, to me. Of course they’re rich! How do you define rich?

JS: I think of rich as not having to worry about money, not having to worry about retirement, not having to worry about saving for your kids’ educations. I have three kids and I try to save up for their futures, and my retirement, and even with my salary I don’t feel secure.

LS: Did you grow up with money?

JS: My father was a physician. I think he made a decent amount of money, but my parents never talked about it. My mom also worked. We lived in an affluent area, but my parents were pretty cheap—we never went on expensive vacations or had expensive cars. We did okay but weren’t living a lavish lifestyle. My parents were so cheap that my sister, also a physician, has rebelled against that and has a hyper-consumptive lifestyle—high-end cars, high-end clothes. I took the opposite approach and am frugal.

LS: Did your parents give you money when you were growing up? What about for school?

JS: They paid for our undergraduate educations, but I didn’t want them to pay for my medical school so I took out loans for med school. Paying for college was obviously very helpful, though when I was in college, tuition rates were much lower than they are now. I think yearly tuition and room and board at my state school was $7K. Now I think it’s three times that. But other than that we didn’t get any money from them, and I didn’t expect it. I think that’s a good thing. It allowed us to find our own way and work hard, and my parents are enjoying their retirement now.

LS: Did you go straight into medical school?

JS: I spent a year after undergrad “finding myself”—I travelled around Europe and South America, just had a really good time enjoying meeting people, experiencing new things, not studying. My parents paid for my tickets, and I mostly stayed with friends and spent money that I’d saved. Then I came back here and spent a year doing research in a lab, and then I applied to medical school.

LS: Do you still have med school loans?

JS: I do. It’s down to about $90K, which is the original amount I took out, but during residency and training, I deferred them and it ballooned to about $150K.

I was lucky enough to make a private equity investment into a health care company, and after that initial loan was paid off for this investment, it’s doing quite well and I’m making a good amount of money from that, so a lot of my income comes from that. The ROI I get from this investment is significantly higher than the 6% interest rate on my student loans. It was a calculated risk to make this investment instead of paying down my student loans, but in the end, it paid off. So now that things are going pretty well, I’ll probably pay them off.

LS: Can you explain how that investment works? Where did the money come from?

JS: I took out a business loan that I got through my practice, but I had to guarantee it personally.

LS: Where did you learn about investing?

JS: I learned from reading a lot, talking to a lot of people. A lot of the investing luck I’ve had has been being in the right place at the right time. It could have turned out badly, but it didn’t. I’ve made some investment mistakes in the past—I invested in industries that were unfamiliar to me, and I lost a lot of money. I don’t know how much—maybe a few hundred thousand dollars. I put my family through some difficult times. During that time, we were living paycheck-to-paycheck, even with my salary. I was making $200K a year.

LS: Can you explain how that works? That is so much money. Where did it go?

JS: We lived in a townhome that cost in the low $300Ks. For my salary that wasn’t expensive, but it was the losses in this business that I’d invested in that caused the situation. I was putting up a lot of my own money and then the business failed, and we had to pay back some loans, and by the time the books were all cleaned up, I was out of money.

LS: Was your wife working?

JS: She was then, but after our second kid she started staying home.

LS: Does she share your same stress about money?

JS: She doesn’t stress quite as much as I do. I’m lucky in that she’s really frugal and she’s prevented me from making a lot of dumb purchasing mistakes in the past. It’s good for someone like me to have someone like her to keep me grounded. She does worry about the money—less so now, especially since the past couple years have been pretty good. But we do worry about our children’s futures. What if they want to be a teacher? (There are a lot of teachers in my family.) The middle class is not doing well in this country, I’m not sure how they’re going to do if they decide to go into teaching.

LS: It sounds like you come from a family of physicians. Is that something you’d encourage?

JS: It’s lot of work, a lot of headaches. I love being a physician, but every year it’s increasingly difficult to deal with the paper work and the red tape.

LS: Did you choose the kind of doctor you are based on salary at all?

JS: No I didn’t. I chose my specialty because I fell in love with it. If it paid much less, I would still have gone into it.

LS: Are you still living paycheck-to-paycheck?

JS: No we’re able to save a good amount now. Since the financial collapse, I’ve become much more conservative. I’ve built up a two- or three-year cushion. I think the world economy is unstable—the impending Eurozone implosion, the asset bubble in China.

LS: Where is that money?

JS: Just in a bank account, it’s earning hardly any interest. Whatever the rate is is hardly worth mentioning. Even our financial advisor advised putting that in mutual funds or whatever, but I’m not sure what is going to happen. This way, I might lose 1 or 2% due to inflation, but I’m not going to lose 30%. Having said that, I’m going to use the next couple years to deleverage, pay down student loans, I have a couple investment properties with mortgage, and one with a high rate, so I’ll probably pay that down.

LS: Properties! Another layer.

JS: I bought the first property during my residency. We fell in love with a condo, and during the years were there, the value increased, and then we bought another condo, then another house.

LS: So your $570K, break that down from me, where is it coming from.

JS: Most of the money is from work—$320K. I think probably $50K is from our properties, and then $200K from my investments.

LS: In addition to your fat bank account, where else is your money?

JS: I don’t have an online brokerage account yet—I plan on getting one soon. But I do have a retirement account that my financial advisor takes care of.

LS: You mentioned tuitions earlier.

JS: We started a 529 about a year ago. I should have started a lot earlier, but yeah, we have that 529 for them.

LS: Do you talk with your friends and peers about these things?

JS: Yes, not in quite the detail I’m talking to you, not hard numbers, but we do talk about it. Some are doing well, some are doing worse. Many of my friends are in the middle class.

LS: Does it feel silly to worry about money when you’re making so much more than even people you know?

JS: I’ve analyzed my worry, and I think a lot of my worry is not just for myself—we’re all in this together. Maybe I read a lot. Maybe I read too much. It’s just the way things are going for our country isn’t great. I just read a good book by Mark Blythe, Austerity: The History Behind the Dangerous Idea. It explains that in the run up to the crisis, there was a lot of private sector debt, and it became public sector debt because of the bailouts, and he calls it the great bait and switch because the middle and lower classes are now paying for it through budget cuts/spending cuts. It isn’t the bankers, who caused the crisis in the first place, that are paying for it. I worry about my kids having to pick an industry where they think about how much money they’re going to make instead of something they love. If I was on an island by myself, I would not be worried. But I’m worried for my family, for my kids.

LS: Do you feel like your lifestyle reflects your income bracket?

JS: We are proud owners of new Toyota minivan, sleek and sexy. My wife has been loving the minivan, and my friends are making fun of me, calling me a loser and a hypocrite. I said I’d never get a minivan! We also have a Subaru and I have a “entry level” Lexus (It was $32K). Average cars. We have a nice home in a good neighborhood in a good school district. I think our mortgage is in the low $700Ks, which is a lot, but it’s less than double my income. If you read The Millionaire Next Door, that’s what they recommend.

I will say, once we did move to this area, there is a palpable pressure to keep up with the Joneses. When I drop my kids of at school, every other car is a Range Rover or a high-end BMW, Mercedes, Lexus. For a while I began desiring a Range Rover—my next door neighbor has one. My wife nixed that idea but I kept pining for that. Then I was like, these cars are $80K, they get 17 mpg on the highway, I don’t need it. Especially since my car is seven years old and is not giving me any problems.

I was very stupid with the Lexus. I got it seven years ago and I leased it. I was under the impression that when you got a business car you had to lease it. Then I talked to an accountant, and found out that wasn’t true, and after the three-year lease ended, I ended up buying it through the business. That was nice because it’s a tax write-off. We got a 0% loan for the mini van.

LS: How are you teaching your kids about money?

JS: Our kids are both in grade school, and we started doing allowances this past summer. The older one has a bank account, and when she’s saved money, we go to the bank. I didn’t really have that. But I’ve read in books where they recommended doing it for kids, teaching them the value of money, the value of saving, the value of not taking on debt to pay for things. It’s mostly to teach them about money.

We had credit card debt for about a year when things were tight, but we were able to pay that off. I use a credit card for everything, and we pay it off every month. We do it for the points, for plane tickets.

LS: Do you ever feel like you are over cautious? I mean, you are making so much money. So much more that the vast majority of other American households.

JS: I think the years where I was wondering if I could make it until the end of the month—I think those years scarred me. If I were single, it wouldn’t have been as bad, but there were people that were depending on me, and I felt like i was letting them down. Now, even when there is a surplus, I feel like I’m letting them down. My income is certainly not guaranteed—you hear of NFL players who are bankrupt after five years. I know it’s very easy to squander what you have.

LS: What do you feel like you splurge on?

JS: After the baby was born, our house became a center of chaos, with the older kids and school and homework and the baby requiring a lot of attention, and we decided to hire a personal chef to save us time, and it’s been great. She’s worth her weight in gold. She comes once a week and cooks three meals for us. Because she makes a lot of food, it ends up being about five dinners. So most weekday evenings, we don’t have to think about dinner, it’s prepared. It’s a little bit expensive, I’m not sure how long we’ll keep it up.

LS: How much does it cost?

JS: It costs around $300 a week. Which is a lot. I know it’s a lot. Even before the baby came, dinner was always stressful; we knew when the baby came it’d be doubly so. We don’t have a nanny or an au pair and our parents don’t help out that much—we’re mostly by ourselves. So we did some research and happened upon this personal chef. She also does the shopping. It’s only been a couple of months.

LS: What do your friends think?

JS: I think I’ve mentioned it to one or two of them, but it’s not something I would advertise. I look like an average guy and the things I do with my hobbies are not congruent with the lifestyles of the rich and famous. It’s almost out of character. But this is one thing that is a luxury, and I think it’s okay for now.

LS: When did you start reading books about personal finance?

JS: I read Mortgages for Dummies and Personal Finance for Dummies in the mid-’90s prior to buying my first condo. Because we did not talk about money in my family, I was ill-prepared to start thinking about money and investing and buying homes. So I did my homework and learned about the whole process. In grad school, I had delusions of grandeur until I read the Millionaire Next Door. That book and other books like it are great for teaching us how to live under our means and for reminding us that material things are often meaningless and that a life pursuing status symbols can often lead to a debt filled existence.

Two years ago I read The Two-Income Trap by Elizabeth Warren (now senator from Mass.), which really rocked my world. She shows empiric, convincing data on how the middle class is becoming increasingly hollowed out by the rising costs of health care, education and houses. This is the primary reason that the middle class is falling behind and not because they are overspenders. I agree with her that overspending is not the primary reason for our country’s current situation. However, I think that she does dismiss the fact that we do live in a consumeristic culture. I mean, I have known lots of people stretching to buy big homes/cars, things that they could not easily afford. (You don’t have to buy the Range Rover SUV when a Hyundai SUV will do just fine).

LS: Do you have a plan to make more money? More properties, different investments?

JS: One of the reasons I have a lot of liquid reserve is so that I can make investments. I’m doing my homework right now as another opportunity to make a private equity investment has presented itself. It will take some time to research this thoroughly enough for me to be comfortable in making the investment. The returns should be higher than the interest I’m currently paying on my debts.

This is why I’m not going to pay off my student loans in one fell swoop (though I plan to be more aggressive about paying it off this year). I will eventually open an online brokerage account so that I can start buying public equities. It will mostly be in the form of ETFs, index funds. I’m not an expert in stock picking, and so will likely pick funds that follow the broad market and buy more shares in these funds every few months or so (dollar cost averaging). I’m going to start small and slowly build this up as this is the area of investing I have the least amount of experience in. But, with all these investments, I still do not want to drop below at least a two-year cushion of living expenses.

LS: What would it take for you to feel like you were rich?

JS: I don’t know the answer to that. In college, before I had a job, before I was working, the six-figure mark was a goal for everyone. And now I’ve hit the half-million dollar mark. I don’t know if I’d feel rich if I ever met the seven-figure mark. I think the important question is, can you still be happy, regardless of your income? Maybe it’s not so important to feel rich. It’s more important to feel happy and content.

LS: But still, you’re worried. What are your feelings about the economy right now—when did you start feeling so worried for the future? What initially inspired that?

JS: Well, we’ve had quite a turbulent start to the millennium haven’t we? At least in a geopolitical and macroeconomic sense we certainly have. Look at what’s happened. We had 9/11, two boom/bust cycles, two wars, a prolonged recession that nobody saw coming, and now a growing student debt bubble. What’s going to happen next? Yes, the stock market is booming and housing is making a comeback, and there is certainly a layer of calmness at the moment. What belies all of this however is still an ocean of latent instability. We live in such a globally interconnected world that it is frightening. I’ve read Freefall and The Price of Inequality by Joseph Stiglitz. Both were very eye opening, you should read them.

On more of a personal level, this past decade has been a turbulent one as well. My best friend passed away, other friends have been laid off, I’ve had physician colleagues go bankrupt, and the recession has not been kind to some of my extended family.

Nothing is certain, nothing is guaranteed and your life and your fortunes can turn in a heartbeat. I think that’s why I’m worried—not just for me, but for my family, friends, and for all of us really. (Or maybe I’m just a closeted doomsday prepper!?)

See more interviews with people about their money

151 Comments

A Conversation With a Single Mom Living on $40,000 a Year

Mike Dang — Mon, 22 Apr 2013 17:45:32 +0000

by Mike Dang

Mike: Why don’t you introduce yourself.

Single Mom: I’m 42 years old, divorced, and a single mom of three elementary school-age kids. I work in the administration of a non-profit. I live in a Maryland suburb of D.C.

M: How much are you currently earning at the non-profit?

SM: I earn $40,000 a year, and that is supplemented with child support that I receive from my children’s dad—about $1,500 a month.

M: Do you also have benefits?

SM: I have health insurance. It was a hard decision to make on whether or not to get insurance for myself. My employer pays two-thirds of the premium, but even the one-third I pay takes a significant bite out of my paycheck. I have it for now, but I may have to drop it. I don’t have any retirement benefits or anything.

M: There aren’t retirement plan options like a 403(b) or anything like that at the non-profit?

SM: No, nothing. I work for a very small non-profit. The budget and staff are both very small so the insurance isn’t even a group plan. I had to find my own insurance and I submit my premium bills to my employer.

M: How long have you worked at this particular job?

SM: I have been there since last August. I was working in the private sector prior to that, earning a bit more in salary and benefits but I was laid off. I was unemployed for just under three months before finding this job.

M: Do you have full custody of your three children?

SM: No, I do share custody of the kids. But I am responsible for paying all the child care costs, which has translated in practice to me paying all school-related costs: lunches, field trips, equipment, as well as the before and after care costs.

M: I’m sure that’s very difficult to do as a single mother living on your salary. How do you make it work?

SM: It is very difficult. I definitely live paycheck-to-paycheck and that’s not an exaggeration. My bank balance by payday is often $0. I have no savings at all. My priorities as far as bills go are rent and childcare. I am lucky that I don’t have a lot of credit card debt, but even without that I can’t always pay all my bills. I have a very strict budget that I stick to. I can’t always pay utility bills in full, but I have figured out how much I have to pay to keep the utility companies from shutting off my service. My gas usage is higher in the winter, but goes way down in the summer so I am able to catch up on that bill by the next winter. I rent a very rundown house in a good school system and pay below market rent. Even then I have negotiated that rent to keep it low—not asking for a lot of work to be done, doing work on the house myself, etc.

I have really learned to negotiate a lot. For the summer, I simply could not afford the cost of full-time care for all three kids—it was more than I earn! So I contacted the child care provider and was very frank about my situation and was able to work out an arrangement for payment that allows me to keep them in child care. Then there are bills that I just can’t pay. I was saddled with a large debt in my divorce and I have just no money to pay that with—I know it will catch up with me eventually but for right now my priority is keeping my kids sheltered, fed and cared for.

I can’t always pay utility bills in full, but I have figured out how much I have to pay to keep the utility companies from shutting off my service.

I stick to a strict budget as far as groceries. I make menus, never shop without a list and rarely have “treats” for the kids. Our big night is when I order pizza and watch a movie on Netflix. My kids are growing so fast and I really can’t keep up with buying clothes for three of them so I have learned to swallow my pride and ask for donations. I belong to a listserv of single mothers and just put it out there that I needed clothes and received a lot of donations which got us through the winter.

I don’t take vacations—alone or with the kids. We rarely go out and when the kids are with their dad, I don’t go out. It’s very isolating because not having any “extra” money means I can’t go out and socialize.

M: Can you break down some of the numbers for us? How much do you allocate toward rent and utility bills, child care, and things like gas and groceries?

SM: I pay $1,480 per month in rent, $1,386 per month in child care, and I usually pay about $75 to gas and electric, though as I said, my bills are often higher than that. I keep my groceries to $400 per month, and that includes things like toiletries and household supplies. One of my children has some medical issues so I pay around $100 in medication for him per month, I do have Internet and phone and basic cable, which is bundled and has recently gone up in price to $130 per month so I will most likely have to cut back that service in some way..

I try not to drive too much—I take the bus and metro, but that can even be expensive during peak hours. I have a prepaid cell phone and only pay $25 per month for that. My phone is very old but I am planning on keeping it for as long as possible because the plan will increase by $10 if I get a newer phone. I pay about $150 per month to credit card debt. One is a card that I have closed and I am paying off the balance. I am almost done paying it. I negotiated with the bank that issued the card to pay a lower monthly amount in but it has taken longer to pay off

M: Do you have student loan debt or other debt besides the credit card?

SM: Well, that’s complicated. I personally do not have actual student loan debt but while I was married, my husband and I consolidated our loans with the Department of Education. Since I had the loan with the DoE, we consolidated in my name. He got his master’s overseas with private loans so he had a lot of debt. In the divorce, that debt landed with me since it was in my name. So there is a $48,000 student loan debt that I have for an education my ex-husband got. I have been able to put it in forbearance and even deferment when I was unemployed but it’s in repayment now. I have not been able to pay one penny of that debt. I have to deal with it but it seems so daunting, I am just incapable of figuring out a solution.

M: Your ex-husband is not making an attempt to pay off that loan?

SM: No, he is quite happy that he doesn’t have to pay it!

M: That’s terrible. Is the loan sitting there accruing interest?

SM: Interest and late payments. I have been getting calls from the company recently and they offer to “help” me figure out a payment, but the reality is that I don’t have anything to give them. You’ll be happy to hear that the master’s my ex got has allowed him to earn a great salary, though!

M: It’s really unbelievable. Have you looked into legal help with it?

SM: I am in the process of looking into that. I have been trying to find the a copy of the original paperwork I submitted to consolidate, which would list the loans and prove that they are not mine. I no longer have that paperwork and the loan has been sold so it’s hard to figure out where that record is. I’ve also looked into Chapter 7 bankruptcy because I’ve recently read that in spite of popular belief, it can be possible to dispatch student loans through Chapter 7. But as I said, it’s so stressful and daunting—I’ve ignored it for too long. I’ll add that I only have a B.A. from a state school.

M: I’m glad to hear there’s some hope of getting that loan discharged. What did you study, and how much was your college education?

SM: I have a degree in theater—very useful, I know. But I started college at 17 and wasn’t ready so I dropped out. By the time I figured I better get a degree, I was so close to the theater degree and, since I was paying my own way, I figured that was better than nothing. I don’t really remember how much my education cost. I got a combination of grants and loans but it wasn’t much, as I said, it was a state school and I had in-state tuition.

M: You’re living paycheck-to-paycheck now, but has it always been like that?

SM: When I was married, things were definitely better. We were pretty solidly middle class. We had our financial struggles, but were doing fairly well. I used to have a savings and a small retirement fund, but I had to cash out and spend it during the divorce.

M: And I’m sure you’re really caught up living in the day-to-day, but do you also think about things like retirement? Do you no longer believe that’s an option, or are you figuring out a way to do it?

SM: I just can’t think about it. I know that I will be one of those people who works until they drop dead. It’s just not my reality. My priority is my kids and making sure they have a better future than I have. I feel like I’ve kind of just given up any thoughts of having a better life for myself, and really just try to focus on my kids.

M: What kind of life did you have growing up?

My priority is my kids and making sure they have a better future than I have. I feel like I’ve kind of just given up any thoughts of having a better life for myself, and really just try to focus on my kids.

SM: I was raised in a pretty typically middle class environment. My siblings and I weren’t spoiled but we never really wanted for much. I have learned in my adulthood that my father was not very good with money. He spent what he had and was no good at saving, which has left my mom in a less than great place since his death. I worry that I have inherited that trait. I mean, sometimes I wonder if I should be making my finances work better—if it’s not that I have a low salary and high expenses, but if it’s also that I am just no good with money.

M: But I think raising three children on what you are earning is quite an accomplishment and deserves recognition. Do you not agree?

SM: I do feel a sense of pride that my kids don’t know the struggles I go through. I am particularly proud of the fact that they never knew I was unemployed—nothing about their lives changed.

M: After your father passed, your mom was left in less of a great place because he wasn’t good with money. How is your mother now?

SM: I mean, he always managed to pay the bills, but he was a very generous guy too—he just didn’t plan and save for retirement. So my mother, who is in her early 70s is still working.

M: Are you close with your mother? Do you talk about money with her?

SM: I am very close to my mom (though not physically—she is in the Midwest with the rest of my family). I try very hard not to discuss my financial situation with her, though it comes up because I am not able to take the kids to visit, etc. We do discuss her finances a little and I know she’s not in a horrible place but just not in great place. I don’t like to discuss the extent of my financial struggles with her because I don’t want her to worry, and I don’t want her to feel the need to give me what little she has and needs.

M: Do you also worry about her? Since she’s still working?

SM: I worry, but see some of her problems as solvable, she is just hesitant to do things like sell her house and move in closer to my sister. That would be a big help for her. She is fairly good with money. I think she just never took charge while my dad was alive, and she seems to be doing OK. I do think she would prefer to stop working and she is trying to figure out a way to make that happen.

M: You said something pretty bleak before in that you have given up on having a better life for yourself, but talking with you so far, you seem like a very resilient person. I know that your income is the biggest barrier at the moment. Are you thinking about ways to earn more money? Do you have the spare time to look for a better-paying job?

SM: Yeah, I guess I am resilient. I feel like I have to be for my kids. I am always thinking of ways to earn extra income. I have often in my working life worked a part-time job in addition to my full-time work, but that was while I was married. It’s tougher to find the time now that I have blocks of time without another parent around. I would be working just to pay for babysitting. I would love a better paying job but have concerns about my tenure at jobs. I was not at my previous job very long (about 12 months) before I was laid off, and I haven’t been at my current job for a year yet, I want to build experience and a bit of longevity because I think in the longer term, that would help me get a better job or advance my career.

M: Do you have the sense that the situation you are now is not permanent? That you believe that there will be a time when you are no longer living paycheck to paycheck?

SM: Honestly, I don’t. I think about where other people my age are financially—home owners, retirement accounts, college funds—and the amount of catching up I would have to do just seems impossible. I do tend to think of my situation as just the way things are for me—not in a “victimy” way, I take responsibility for the life choices I have made that have put me here—but I think I am just too far behind in terms of financial health to ever be in a significantly better place.

M: You mentioned that things were easier when you had another parent around to help with parenting duties. Do you think having another partner to help out in the future is something that could happen?

SM: No, I don’t. For a variety of reasons. One of which is my financial state. I feel that I would be bringing someone down if I partnered with them, financially I mean, and I don’t want to do that. I mean, there are other reasons I’m not really looking for another marriage or partner, but the financial reasons are something I definitely think about.

M: What is your social life like? Are you able to do simple things like meet a friend for coffee?

SM: I don’t have much of a social life to be honest. It is a struggle to do even little things like meet for coffee or lunch and definitely no money for a night out. I live in the suburbs and my single friends live in the city and among my friends who are parents, I am really the only single person. So I’m kind of in a gray area in terms of friends and not having the means to go out doesn’t help.

I don’t have much of a social life to be honest. It is a struggle to do even little things like meet for coffee or lunch and definitely no money for a night out.

M: Because of this gray area, does that mean you’re lacking a support system that could help you do certain things? For example, having a friend who could look after the kids while you went on an interview or a networking event?

SM: For the most part, that is the case. I do have some neighbors and friends who have helped out on rare occasions, but really no one who could help on a regular basis. I don’t have any family in the area, as I said before.

M: Do you ever consider moving back to the Midwest to have a better support system of friends and family around?

SM: I would love to! I want to! But, because of custody laws, I am not able to relocate unless I gave up custody of my kids, which I would never even consider. I would love to be in the Midwest. It’s much cheaper to live there and I would love to be closer to my family.

M: That sounds like it would be ideal for you—to be able to move to the Midwest where things are cheaper and to have a family support system and your children with you. Is there no legal pathway to make this a possibility?

SM: Unfortunately, no. And I spent a lot of time and money trying to make this happen when my husband initiated a divorce. But the laws are such that unless my ex consented, I cannot take the kids out of the area to live. And my ex will not consent so I have to stay in the D.C. area.

M: So if your ex wanted to move, he’d have to get your consent as well?

SM: Yes, that’s correct.

M: I imagine it’d be difficult to convince him that moving would be good because it’d mean providing your children with a better situation?

SM: I really tried that approach during the separation/divorce process, but he was adamant that he wanted the children to remain in close proximity to him. And I do think it is important for the kids to have regular time with both parents, so I can see the point. But it was very difficult because I didn’t want to move to this area, but did because he got a job here. I mean that while we were married he got a job in D.C., I had no desire to move here, but did so to support him.

M: It just seems totally unfair that it appears like he gets to have things the way he wants them to be (though I know you already know this).

SM: Yeah, it was an eye-opening experience for sure. I try really hard not to be bitter about it.

M: I know you have to go pick up your children soon, but I would love to know if you see some tiny bit of light at the end of the tunnel—because I do think you are resilient and resilient people figure out how to get to a better place, even if there’s a bunch of hard tiny things you have to do along the way to eventually get there.

SM: Well, I guess the light is that my kids are fantastic and I really believe that they will have great lives and do the things they want to do. I struggle a lot, I do, and I think about what might have been or what I could have done but I guess at the end of the day if all I manage to do with my life is raise great, good people, then that’s a pretty big accomplishment.

M: I’d love to follow up with you maybe a few months or a year from now to see how you are doing if you are open to that.

SM: Yeah, that would be cool. I tend to hope for the best but expect the worse—so you never know, things could be better in a few months or a year. I’m sorry that this was so bleak.

M: Not everybody’s story comes with a tidy, happy ending. This is the reality of things, and I think it’s important that we can show that. So thank you for being so open and taking the time to talk to me.

Previously: Living on $15,000 a Year

Interested in having a conversation about what you do, how much you earn, and how you make it work? Get in touch.

105 Comments

The Hustle of a Freelance Photographer

Logan Sachon — Tue, 02 Apr 2013 17:45:59 +0000

by Logan Sachon

^{“Basic City, Virginia, 2:44:54PM, Summer 2009 Cardinal,” by Stacey Evans}How Charlottesville, Va.-based freelance photographer Stacey Evans does money.

Logan Sachon: Tell me about you, Stacey Evans.

Stacey Evans: I’m a freelance photographer, and I have been for 12 years. Photography is an interesting creative practice because there is the commercial side to it with advertising, the fine art side, the journalistic side. So many avenues. But it’s very competitive, and like many things, there are a lot more people who want to do it than there are jobs.

I have three avenues of work in my business. Photography services, teaching, and then there is the fine art part.

LS: Photography services?

SE: That’s working for small businesses, doing portraits, doing editorial work, and then I also do some work for the University of Virginia. I teach in a few places. I teach at Piedmont Virginia Community College, the UVA Art museum, and then I workshops with the county school system.

LS: How did you start teaching?

SE: I went to school for photography at Savannah College of Art and Design and one of my professors said, you should find a niche—architectural, food—but I wanted to learn everything! I wanted to learn how to do a lot of different things, and I wanted to learn how to teach, too. I don’t think I realized how big a job that was, but it’s worked out well. The education part is nice, teaching is an income I can rely on. Though sometimes that isn’t a sure thing either. I’m an adjunct faculty, and sometimes the classes don’t run.

I never had a planned direction, I went with the flow. When I graduated from college in 1995, I worked for a newspaper in the photolab. I got that job because a professor knew I was graduating and suggested me for it. I’m good at meeting deadlines. When I moved to Charlottesville I went thorugh the yellow pages under “photography” and circled businesses and sent letters then followed up with a phone call. I got some assisting jobs through that, and some gigs of my own.

I don’t wait for things to come to me, but I do enjoy the serendipitous moments of life— “maybe I should do that or follow that”—rather than a rigid structure, so things are more happenstance.

^{“Deep End, California, Summer 2010, Coastal Starlight,” by Stacey Evans}

LS: So you were assisting, and then decided, I can do this, and started off on your own?

SE: I had a little stint in an internet startup, and I was laid off with 300 people between Christmas and New Years in 1999. And at that point I thought I’d try to work for myself.

I got a severance package that allowed me to have some money set aside–everyone always recommends when you start out on your own that you have three months of savings for times you don’t get jobs, so I put that money aside to access if I needed, and I also had unemployment for a little while. Then I got a parttime job with a photographer friend, and I was able to get off unemployment, which was good. So I had some part time work, and I started my own freelance work, some assisting, some of my own photography, I had a monthly retainer with a weekly for a couple years. So I was piecing it together, and still am.

LS: Is it stressful to have that many balls in the air?

SE: It’s kind of stressful. When it’s good, it’s really good and when it’s bad, it’s really bad. But we all have that roller coaster—even if you have a fulltime job there are times when you’re not happy.

There are so many people that are in the industry now, I think about, what do I have to offer as an individual?

LS: Do you ever work for free?

SE: I won’t work for free. I will occassionally work at a reduced rate for startup non-profits, but I have always said, I won’t work for free. If you work for one company for free, it’s unfair to other clients. It’s hard because I like helping people and I am good at making photographs. I do barter, right now my kitchen island is being revamped. And, I do give back to the community here and there. Those people appreciate and respect me. They give back to me when they are able.

I won’t provide my services for free. But locations for the artwork, I’m considering doing that. It’s hard to know what to do. If I get my work on a site and someone in the industry knows it’s for free, then how can I ask someone else to pay me for the work? That’s an area that I don’t know as well. The digital world evolves so quickly. I’ve never even done a Facebook page for my business.

LS: Ehhhh Facebook. I would not lose sleep about not having a Facebook page. You have a nice website. What is your work schedule like?

SE: I have to be flexible, but I do have things scheduled. My office is in my house. I get up and I have breakfast and I go to work. I have my yellow pad, my list of things to do. I have a second office that doesn’t have a computer in it, and I’ll sit and write in the morning, morning meditations, little paper studies, things that allow my brain to drift and create. That has evolved into a still life project. I don’t have a specific agenda for that work. I like to start in the morning there, and then transition to the educational or monetary space by midday at least.

^{“Woman Walking, Virginia, 10:14:55AM, Winter 2010, Northeast Regional,” by Stacey Evans}

LS: Can you tell me a little bit about buying equipment? How do you navigate that?

SE: I started my business at that turn from film to digital—I’ve only shot very few commercial jobs on film. When I started I gave myself a budget of $1,000 to buy a digital camera. In, 2000, with $1,000, you could get a 2 to 3 megapixel camera. So I would go out and shoot editorial stories for the weekly, and I learned in the moment, on the assignment. And they were small files but they worked fine for newspapaer reproduction. So I decided to budget $1,000 a year for a new camera. In 2005, I invested in a Canon 5D. it helped my business and I just replaced it with a newer model. Then there are the computers and the hard drives, the lenses, you have to keep up. The amount you can spend in photography is endless.

I used to assist this architectural photographer, and he just grabbed a credit card to start his business, but I was always scared of debt. I did take a loan out at one point for a computer, and I’ve had to use credit before when preparing for a gallery exhibition—all the framing and matting and printing costs are on you up front.

LS: Tell me about the art component of what you’re doing. I know you did a Kickstarter last year.

SE: Since 2007 I’ve been travelling the American landscape by train, photographing it from the perspective of a train passenger. I got a Puffin Foundation Grant and that paid for some of my expenses, but I’ve been paying for it mostly myself. I see it as investing my money in my own projects. When I decided I wanted to go on my biggest trip yet, I asked friends to help support me through the Kickstarter. I pitched it as, travel with me vicariously. It was a good experience. I was asking for $5,000 for the expenses of the trip to be covered. And I got over $8,000. The first day I got $1,000, and I was ecstatic. People are investing in my artwork! It keeps you motivated to work on your projects.

I’m transitioning between many different things, and maintaining a schedule, the artwork gets placed on the back burner. If I can’t see it as something that supports me, I put it on the bottom of my list. I put a priority with my clients or else I won’t have clients anymore. But I’m trying to make the space to invest in my own ideas. I don’t get paid vacations. I don’t get benefits. I do take these trips and they are an expense in the business. I think overall it’s a good investment.

LS: Do you have health insurance?

SE: When I first started, I was in my twenties, and I didn’t have health insurance. Charlottesville has a nice free clinic, and I went there for my yearly visit. So that was my health care. When I turned 30, I was caught in the middle of a dog fight and wound up with a dog bite on my face. The emergency room bill was like $500 to $1000. And at that point I felt, it’s time to get insurance. I did know, if something did happen to me, my family would help me, and that made me feel irresponsible.

I had a friend who worked at Anthem, she helped me figure out what I needed, what I wanted in a plan. And I’ve had the same plan since then. The health insurance world seems so big and daunting. It’d be nice if there was an office and you could see someone in person. But I’m still happy with what I’ve got. Between 30 and 40, I’ve spent $30,000 + on healthcare. I go to the doctor once a year. It’s a lot of money in my perspective, but another friend pays $15,000 a year for her family and business, so it’s all relative.

LS: How do you keep up with your books?

SE: I handle my business in quickbooks, and I hand it over to my accountant at the end of the year and she does the rest of the work. It’s worth it to me, so I know it’s done properly. I believe in professional services when you can afford them.

^{“Kudzu, Virginia, 6:58:09AM, Fall 2009, Crescent,” by Stacey Evans}

LS: Do you save for retirement?

SE: I have a Roth IRA that is my retirement plan. I can have that I’m self employed. You can put a max of like $5,000 in it a year. You get taxed now, but you dont get taxed when it’s taken out, and the tax rate changes with how much income you make, so it just makes sense to me now.

If I have extra money, I’ll move it into the Roth, but I havent moved anything in there in the last few years. Last year I had a good year so I have to pay more taxes. Because my income varies so much it’s hard to predict what my tax bill will be.

Last year I worked very hard because at the end of 2011 I had drained out my cushion and it scared me to death. So I said I can’t do that again, I have to work harder. Then I asked myself, how can I work harder? I’m frugal, I don’t spend much. Now I have a cushion of $6,000 in my money market account, and for me that’s big. Next, is to create the extra income to start moving money into retirement again.

I’m not my best friend who studied math, has a big house, has had job since college, two kids and 401(k). As soon as I pay off my taxes, I’ll be down again. I owe aroundd $3Kin taxes this year, over the quarterly payment I made, but at least I have enough that I feel comfortable. I’m fortunate that I have a partner, we share expenses.

My partner owns his house and I live with him. He pays utilities and I cover food and activities. It’s interesting how people get into relationships, some poeple know they aren’t going to be with someone who doesn’t have money—if you don’t have a fulltime job, you’re not secure, they dont want anything to do with you. And then some people just fall in love and you just kind of make it work.

LS: Do you ever think about having to get a full-time job? “Having to”—ha, what a leading question.

SE: There’s probably a moment every year when I think, oh gosh I’ll have to get a real job. Being self employed is a lot of work. You dont just go to an office and have someone tell you what to do. It’s always in the back of my mind—should I go get a job? But the idea of sitting in one place does not make me comfortable. I like to manage my own time. And I’ve been out of the office for so long, sometimes I wonder if people would hire me.

When I first started out I talked to a guy that helped me with a business plan. So I did go through that process—where do I want to be there in 5 years, and that helped guide me. Deciding, this percent is going to come from assisting, this percent will come from art sales, this percent will come from teaching. It was a nice formal way of doing things, and I have been meaning to revisit it. Now I have post it notes on the back of my door, and I have a 3 year plan. So I just go down the post it notes and look at them. These days, the less and less I am about a specific agenda and structure, the better I feel. Which is strange. I do believe in a plan, because if you don’t have a plan, how will you get things done? I’m trying to be less hard on myself, allow myself to do what I want not what I think I should do. I’ve been working for myself for 13 years now. I’m starting to trust myself.

The project I’ve been working on, the landscape work, the trains, I’d like to get that into collections. Maybe there’s a book at the end. I have a collection of photographs priced right now, selling in gallaries at $600 for the small ones, $1200 for the large ones. I’ve sold several prints this past winter. It gives me something to work towards. So that’s why I allow myself that time and space to explore. This morning I was having a conversation with a friend and she asked if I’d be open to sell it for corporate use. I’m open. I do play this line between commercial and fine art. If that work could start to generate reliable income, that would be my dream. John, my partner, and I had a funny exchange about musicians and commercials. Being an Gen X art school grad, we snubbed the idea of “selling out.” I asked John about his thought on musicians “selling out.” His response was, “That’s not selling out, that’s cashing in.”

I will continue to work hard forever. Will I have to worry about finances forever, is a question.
3 Comments

A Conversation with Darin Ross About How He Successfully Funded His Kickstarter Campaigns

Lindsay Katai — Fri, 22 Mar 2013 17:00:00 +0000
by Lindsay Katai
Darin Ross is better known to the Internet as “Luckyshirt,” his online handle. He’s casually amassed nearly 50,000 followers on Twitter and I don’t know how many on Tumblr because it won’t tell me and it seems rude to ask. He did this by being a person who said funny things—and that’s all. He started using the sites in the Wild West days of their beginning, when Follow Fridays and retweets and reblogs really meant something because we were all hungry for more people to follow. Back then, if you were funny and a popular friend pimped you out, you were almost sure to gain dozens if not hundreds of followers in a day.

For years, Darin’s use of social media stayed close to its origins of just being original and funny musings into the void, picking up more people and friends as he went—like a snowball or a wordy game of Katamari Damacy. Then last year, he took a break from the Internet and came back with a sprawling, mysterious art project, teasing everyone into taking part. That project was “Find the Starlight.”

I watched “Find the Starlight” roll out as a series of posts of just a photograph with two peoples’ faces blurred out in red blotches. Confused, I would click on the link and be met with cryptic messages, prompting me to be like, “Whaaaaaaaaat?” For weeks this went on. Photograph, link, cryptic thing. Photograph, link, cryptic thing. I had no idea what Darin was up to. Then, after what seemed a lifetime, a Kickstarter campaign for “Find the Starlight” began and it was clear this wasn’t a friend publicly losing his mind—it was a multimedia storytelling project. And it took off. Darin’s fundraising goal was set at $2,500 and with only 190 backers he raised $4,500 instead.

With the success of this came a second Kickstarter project, “SUPERFIGHT!,” a board game billed as Apples to Apples meets Cards Against Humanity. This time Darin’s fundraising goal was a lofty $10,000. With just over a week to go, the project already has 573 backers and has raised $27,885 at the time of this writing. With these two projects, I can’t help but think of Darin as a sort of Internet hometown boy making good. Fascinated by the turn of events, and being a backer of SUPERFIGHT! myself, I asked Darin if he’d be willing to talk to me about how this all came about. Not being a total jerk, he said yes.

So Find the Starlight—WHAT IS IT?

DR: It’s a very elaborate joke. The Starlight is just an animated gif I made of my friend’s cat.

Hah.

Even after all this time, it’s hard to explain. It’s part conceptual art project, part book series, part studio art stuff, part treasure hunt. But at its core, it’s a story—one I have been writing in some form or another for years. It’s being told by a man who calls himself “M”. M is sending weird things to people and burying them in weird places. At the same time, he is sharing parts of the overall story online. A confusing bit at a time.

Were you previously writing it in short story form?

I was writing it in novel form. At the same time, I was working on an art project that had this element of hidden things to it. Then one night in my car it struck me that they are the same story. They always had been. And more importantly, they could tell the story with one voice.

And when did it become clear you’d need to go to crowdfunding for this? (pause) Crowdsourcing? Ugh, whatever the kids are calling it.

Well, originally I had planned to sell the art pieces. I had no idea how. I will never be able to hang a price tag on anything I create in that spirit. So I was thinking auctions. But as I made them, I realized I didn’t want to sell them. At all. I wanted them to just show up places. In mailboxes, in public places, everywhere. I very literally wanted to give it away. But the auctions were going to fund the pieces. So I was stuck. Then, someone on Tumblr saw that struggle and suggested Kickstarter. Three days later, it was submitted “in character” [ed: the M character] and pending approval. It was perfect for this.

You shared the nervousness you were experiencing while waiting for Kickstarter to approve the project. Why did you think it might not be approved, when I see projects all the time for, like, “Help us drive around the country giving sandwiches to homeless people in homemade forts?”

Is that one still live, because I’m either backing it or stealing it.

No, I think it actually got removed after going viral.

I thought they wouldn’t approve it because M submitted it. And everything was very… him. The rewards were just nouns. “A Page.” “A Bag.” Things like that. And the video was a film in reverse of a box being buried under the Griffith Observatory with clues to find it there. Someone did, and it was one of the most fulfilling moments of my life. The guy who found it recorded himself finding it, and his excitement will carry me until I’m dead. So it was a project that pretty much just said, “Hey I’m weird. Give me money to be weird.” But they let it through. With one change. They wanted me to call it an “Interactive Storytelling Project.” So I did. Made it sound like some flash game for Carmen San Diego, but it got me through. Sandiego may be one word. I’D ASK HER BUT…

It is. It is one word.

Well then.

And this is a project that is simply for your joy and artistic fulfillment, right? You’re just looking to put some good vibes out in the world?

Very much so. More importantly and selfishly, it’s the only thing I have ever found that really feeds the jerk of a creative monkey on my back. It takes everything I love about creating things and funnels all of that into one story that oh by the way is an amazing story. I know how gross that is to say, but it’s easy for even me to be tricked into thinking I’m putting makeup on a toddler. The story started all of this, and I think people are going to love it. That will mostly come with the books. But there are already fans of the characters after having read three paragraphs about them. It’s crazy. All the way around.

How did you come to the amount of money you thought you’d need to get this funded? Like, one may as well ask how to crowdsource a cloud, man.

Seriously. Then add to that the part where you get nothing if you don’t make your goal, and it’s a real game of darts in the dark. So I factored in the cost of the boxes, of some of the other things coming, and threw the dart. What I love about Kickstarter, for things like mine, is you can just scale the project according to how much backing you get. So I did. It went way over, so Chapter One got way bigger. It’s the most comfortable and perfect fit for a creative person I could imagine outside of the arrival of a physically attractive fairy godmother. Don’t make it weird, godmothers aren’t always blood.

But they are always old, Darin.

In our sample size of one. Yes.

Good point.

Fingers crossed.

The thing I love about this success story, which is what I’m calling it, is that you went to a base you already had. You were “Internet popular” just on personality and then when you asked them for their help, they went above and beyond. Amanda Palmer gave a TED talk recently called “The Art of Asking” and this seems to be that all over, which is exactly the opposite of how we’re used to being advertised to.

This is a real can of bees, too. Because for years I had been making jokes and being a real mess of a single dad. Just an Internet idiot. Then I left for a few months when I realized I was wasting all of my creative energy on this “Luckyshirt” guy. People laughed at his burrito misfortune, but it wasn’t feeding the monkey. Or me. So I stopped. When I came back, I was slinging this story at them. The jokes were gone. It was weird pictures of weird things from the story. There was a complicated puzzle to solve. And people went after it. Someone solved it, and received an iPod in the mail labeled “The Blue Key”. And all it does is receive weird texts from M. Then I asked them to give me money to keep doing that nonsense. AND THEY DID. Even though it wasn’t what I had done the entire time they’ve known me. They helped me because they saw what it meant to me. And I can’t think of a more humbling or amazing thing to happen to a maker of things. And I love drinking Amanda Palmers.

Half iced tea, half indie rocker.

Hahahaha.

The whole project seems like an “If you build it, they will come” situation that I think a lot of companies just plain don’t understand when trying to build their own Internet presence. You can’t just throw up a Twitter account and expect it to sell more whatever. You have to cultivate a relationship with people on their terms. (pause) That’s not a question apparently. It’s just me going on a rant.

It’s so true. Everyone keeps telling me to reboot and start twitter accounts for things I make. To me that’s like anyone else making an account for his or her arm. I don’t want to follow someone’s arm. I want to follow them. Because of that relationship. Just be a person, companies.

So when did your other project, SUPERFIGHT!, come into being? Was it a direct result of seeing the power of Kickstarter?

It was absolutely a direct result of that. In obsessing over the Starlight project on there for 30 days, I saw hundreds of other projects. And it was just a huge bucket of inspiration at a time when I was high on validation and support. It’s like this magic island where you can go and say “HEY I WANT TO MAKE A THING” and the island just drops money on you. Except the island is amazing people thank you everyone I love you. But yeah, who would ever walk away from that? I’m going to Kickstart things until the sun burns out. Which, if you go to the planetarium show at Griffith Observatory, you’ll learn is totally happening. So yeah. All you need is ideas now, man. And amazing generous people I love you thank you.

Was this another idea that had been kicking around your head for a while?

Very loosely. For years. But it was all so complicated and foggy. Then one night I was sitting on my couch and lightning struck. Just make it simple. Just make funny things fight funny things. People like funny things and violence. And simplicity if you get it right.

People do like those things.

So I decided to give myself a birthday present, and submitted Superfight based on nothing but an idea—one I believe is solid and awesome, but still just that. And once again, people got behind it. But this one was different. Seventy percent of backers are total strangers who were just browsing Kickstarter. No relationship. They backed just for the game. It was a very different experience when compared to the Starlight project. So the ideas still have to be good. Or people just have to feel REALLY sorry for you.

With this project, you have the printing and fulfillment in place. Did you get a quote beforehand and base the backing amount on that, or was this again an estimate?

I read an interview with the guys who Kickstarted “Cards Against Humanity,” and they were super helpful. Listed everything they did. So I just followed their lead. Priced the game and its expansions the same. Stayed independent rather than selling the idea to a publisher, and got my quotes. It was risky, as you never know what you’ll get with overseas manufacturing with regard to time and communication. But so far so good. The world is a pebble these days.

Walt Disney had it right.

Did he make a card game?

No, he made a ride called “It’s A Small World.” READ A BOOK, DARIN.

Is it on laserdisc yet?

Laserdisc! So is the game done? You have an impressive number of expansion packs you’re offering to backers.

I wanted it to be customizable. So that just sort of happened. There are these stretch goals people use to bait backers into pushing the numbers up. I started that way and hated it. I unlocked them all the second day. If they are good, I’m making them. Not just if people give me more money. The game could be printed today, but I am obsessing over it in a good way. Really refining it until it’s perfect. And getting a lot of help and input from friends.

And with this game, there’s clearly joy in it, but this is a project you’d like to make a profit on someday, right?

Absolutely. Profits I’ll use to make more games, then more profits, then more things to bury in more places. Find the Starlight is my true love. This will help me get back to it more frequently.

So you’re just planning on ouroboros-ing this? Will the circle be unbroken?

Is that a Cirque du Soleil reference or a hockey thing?

Ouroboros is the snake eating its own tail, aka, the Auryn from Neverending Story.

Yes. This grants wishes.

Anyway, what I mean is, is some of the money going toward, like, your kids’ college fund, or is that pretty much covered and this is all about doing more fun stuff?

No, some is absolutely going toward living. And my kids are 99 percent of that. If I get really lucky, this thing will take care of all of that for a bit.

So is part of the plan to get SUPERFIGHT! into stores?

DR: Oh, absolutely. There is no reason this can’t make it into comic book stores and Targets. It will take time. You have to get the copies out there and let people love it. Then their friends want it and off you go. This stuff has never been easier in human history. I’ve talked to board game cafes in other countries online. There are fulfillment centers that for all practical purposes give me a warehouse and shipping fleet. And I’m just some dad.

How did you get clued into the existence of a board game cafe? Was this guidance from the Cards Against Humanity guys or your everyday Google search?

Google searching like a tween looking for topless Beiber picks. Twitter searches. Facebook searches. Reading game blogs and forums. All kinds of nonsense.

Anyone can do this then. You’re saying it’s an exciting time to be alive?

Absolutely. On both counts. It’s all just sitting there. If my last comment was to be believed, you’ll have to work your ass off before you can even begin working your ass off, but if you love making things, it’s not work.

And maybe you’ll need some nifty skills in creating eye catching graphics and videos?

And that just barely. I have loved projects that were just a person sitting there talking. Design will always matter at some level, but I’d hate to see anyone discouraged because they are conceptual and not visual artists. If people see and believe in the core idea and in you, they’ll trust you to get the help it needs.

Well, I think that’s probably a good note to end on. Believe in yourself. Make it happen.

Swim until you can’t see self-doubt. Just kidding, you’ll drown before you get there. Just take a Kickstarter boat.

Thanks, Darrin! This was fun.

Thanks for having me on my computer!

You too can find Darin on his computer at http://twitter.com/luckyshirt and http://luckyshirt.tumblr.com. Lindsay Katai is a writer/performer in Los Angeles, Calif.
0 Comments

A Conversation with Helaine Olen About the Dark Side of the Personal Finance Industrial Complex

Mike Dang — Thu, 14 Mar 2013 17:40:18 +0000
by Mike Dang
Helaine Olen spent several years as a personal finance writer and editor, beginning at The Los Angeles Times in the ’90s where she was the newspaper’s “Money Makeover” columnist. Over time, she came to the understanding that nobody in the personal finance industry really knows anything beyond very basic and common sense suggestions (i.e. live within your means). Olen says its empowering to learn how to manage our own money, but personal finance gurus like Suze Orman, Dave Ramsey, and Robert Kiyosaki, and networks like CNBC can’t tell you how the stock market or real estate will perform in the future, but are making a killing doling out conflicted advice and selling us complex financial products. This is just a small part of what’s wrong in the industry.

Olen’s book Pound Foolish: Exposing the Dark Side of the Personal Finance Industry, has been making waves since its release in January, and has received positive reviews, including praise from Jon Stewart, who had Olen on The Daily Show in February. “You guys should do an article about how Jon Stewart is the new Oprah,” Olen told me when I met up with her earlier this week. “Books really do sell. You could see the Amazon numbers after the taping—it jumped from 4,600 to number 22 in a day.” Here’s our conversation:

I thought your book was really terrific, and have been telling everyone to pick it up. I started my career covering politics in Washington D.C. and didn’t really think about personal finance until I started writing about it a few years ago. I remember picking up a few personal finance books to get myself acquainted with how it was being covered and not really being able to connect with a lot of the information. I don’t know a single person who decided to give up their coffee habit to fix their financial lives. I get a cup of coffee from Starbucks almost every day and I’m doing okay.

You know that’s part of the conclusion to the book that money advice is shrill, judgmental and absolutely oblivious. Just because David Bach can give up his lattes—which, by the way, I doubt, since he was profiled at a dinner party in 2004 ordering up food from Dean and Deluca, and I don’t need to tell you how expensive that is. It’s just oblivious.

And to be clear, you have no problem with common sense advice. Knowing how to manage and invest our own money is a good thing. But you also point out that pushing this idea that people aren’t saving enough or are spending too much money on lattes distracts us from the bigger things. For example, finding affordable housing and negotiating a bigger salary will do so much more for you than quitting your coffee habit.

What’s coming in is more important in one sense than what’s going out. We have this myth that we’re massive over spenders—and we have it for any number of reasons. I think in part because it can certainly seem that way. As I always tell people, you see me in a restaurant, but you probably won’t see me at a pharmacy getting a prescription, which is where my money is really going. It seems that way because relative to what it used to cost, things are much much cheaper. As I was pointing out to someone the other day, I don’t think in non-adjusted inflation terms that I could have gotten a T-shirt for $4.99 in 1971 down the street like I can right now. Stuff’s cheap and people buy it. And our salaries are falling—of course people aren’t saving money. There’s this whole idea that people are going to respond rationally—their salaries are going to fall and they’re going to save money. It doesn’t work that way. Certainly not in a society where your cost of health care, housing and education are skyrocketing.

Right, and the biggest reasons people get into deep financial trouble is not because they’re not saving properly, but because of these enormous costs associated with housing, education and health care, or a spiraling economy that results in job losses.

Could we all save better? We probably could. But it’s not what’s causing the problem. As I like to point out, in 1980, we had a 10 percent savings rate. I guess I find it hard to believe that in that 33-year period, we became collectively more financially ignorant and more irresponsible—that just defies reason. In fact, when you look at it, what happened was our salaries fell and our financial lives got more complicated. You hit a one, two. I was born in the mid-1960s when credit cards were less than 10 years old. Married women had no right to one, by the way, and wouldn’t for another decade. There were no retirement accounts and no ATMs. I swear, I remember when the ATM machine came to the Citibank on Nostrand Ave. in Brooklyn—it was really exciting! No gotcha mortgages—mortgages were very basic stuff. Second mortgages were not sold by the banks to people, or they were something you were supposed to be really embarrassed by because if you were desperate for money and got one, you never came out in public and said, “Hey I got this really cool thing, and look at the kitchen I redid!” It was just a different financial world.

Then there’s a turnaround where you blame people for the fact that the financial world changed on them. It strikes me as delusional at best, and outright wrong at worst. The banks had this idea that they’d invented all this stuff and gave people all these goodies, and we’re going to educate everyone on how to use them, and I actually don’t believe that. I think they know they’re not educating people on how to use their products. It’s not possible. And it became more complex, and at the same time, we needed the stuff, and by the stuff I mean yeah, people felt they needed to buy a house because they were told—well, they weren’t told not to buy a house beyond their means. Do you remember anyone saying that 10 years ago? Because I sure don’t. What I remember was, “If you don’t buy today, prices are going to go up tomorrow and you’re not going to be able to afford it, so here get this mortgage, and don’t worry, you’ll be able to refinance because housing goes up.” And this is what people were told over and over again: Housing doesn’t go down. You can go back and look at the literature. People weren’t saying, “You know, housing could go down, and it could go down by 40 percent. That nationwide crash? It can happen.” So, there’s this kind of obliviousness out there, and I think it’s in a lot of people’s interest for that obliviousness to exist.

So let’s talk about some of the financial gurus you discuss in your book. Suze Orman is one of these people who told people to run out and buy houses, and after the crash, she apologized and admitted that she was wrong. And you talk about this when it comes to people’s personal financial planners. They’re often wrong, but people will continue to listen to them. Why is that?

There’s a couple of things. These people present themselves as your friend for the most part. They’re not coming up to you and whipping you, at least, not initially. So that’s part of it—they’re going to give advice to you for your own good. Suze Orman is like the Jewish mother of personal finance. Second, we’re Americans and we want to believe! Personal finance exists in other countries, but it’s nowhere as big as it is here. And the reason is, objectively, we have some very deep income stagnation, we have huge disparities of wealth in this country, but people actually don’t know it, or don’t believe it if they’re told it. I’m sure you linked to that video last week that was on the PBS News Hour last year. And people don’t believe it. They think we’re Sweden, when in fact we’re actually Argentina or Chile. People are really sold on this idea that we are individuals in this society and that individuals can make it.

So, there’s this kind of obliviousness out there, and I think it’s in a lot of people’s interest for that obliviousness to exist.

We’re not making it. So this culture of shame develops where people don’t want to admit that, “Oh I was born lower class and this is where I’m likely going to stay,” or “I’m really wealthy because I was born in Chappaqua”—to use a Bill Ackman example—and obviously he did a lot better than his parents, I feel sure about that, but he’s nonetheless, starting from a pretty high base to begin with. And we don’t like to admit to that in our country. So this industry really comes in and preys on that and the idea that we’re all individually responsible for our fate. We believe the myth of Horatio Alger in this country, but Horatio Alger wrote fiction. So it becomes this whole ideology where we’re sold on this idea that we can do it and we really believe this. We take a look at the economic situation out there, and we objectively know it’s pretty bad, but we internalize it as our own fault—and, because it’s our own fault, we’re pretty sure that there’s someone out there whose got the answer.

A number of people I interview in the book just fell for things again and again because they were so sure they could trust that somebody had the answer. I remember talking to one woman who was up in New Hampshire where she was just recounting to me these things: “Well, we were doing this, and then we went to this salesman at this free lunch and we hear that, so we put our money in that. And that didn’t work out.” And the advisor fired her after she started asking questions. And then they go to somebody they met through a church, and that doesn’t work out, and so on down the line. The reason it doesn’t work out is because if someone had the financial answer, would they come to either Mike or Helaine who could pay them maybe a couple thousand bucks, and say, “Hey, I got it!” or would they go elsewhere, say maybe Bill Gates, or even better, screw him entirely, get on a boat, hang out on the Caymans and start trading away happily because they don’t have to pay any taxes or tell anyone what they’re doing? So the idea that anybody out there is selling you the secret is absurd on its face. But we believe. And then we have things like CNBC, whose entire being is to convince you that they have answers. As I say in my chapter on CNBC, if Jim Cramer were saying, “You need to get out of the game!” they’d have no business model.

Another thing about “gurus” like Suze Orman and Dave Ramsey, as you point out, is that they’re trying to convince you that they were just like you once, and look at how they’re doing now! Suze Orman was once a waitress, and as the story goes, she really had to fight her way to success. Dave Ramsey bounced back from bankruptcy. And as you say, Orman and Ramsey did not become wildly successful because they saved better or invested smarter than everybody else—they became wildly successful because they were able to sell themselves and their products to people.

The whole genre of self-help depends on the story. It’s like almost being born again. You know: “I had my moment.” Suze has her moment with a waitress when she realizes the waitress is richer than her, and Dave Ramsey has this moment when he has to tell people that debt is bad. They’ve got the story, and people like that moment. And so we don’t ask the questions. And Suze Orman, to be fair, was a successful financial planner. She obviously had an ongoing business. Dave Ramsey was definitely in bankruptcy when he started. But we want to believe. And one of the things I find fascinating is the conflict of interest in their work. I work in a field where if I accepted coffee from a source, I have editors who could get quite angry at me. But people will say, but Suze and Dave need to make a living. First of all, do they have the right to make a living selling you conflicted advice? And second, Suze Orman’s got $30 million, doesn’t she already have enough of a living? What are you talking about? Dave Ramsey is worth lord alone knows what. It’s a conflict, and a basic conflict, and I don’t think they cop to it. Certainly Ramsey doesn’t. He still goes around telling people that you could still get 12 percent annual returns in the markets, and if you want to know how to do that, Dave has his “Endorsed Local Providers”, and you can go to them. I mean, you’ve got to be kidding. There’s no way to do that, that I’m aware of. There wasn’t a way to do that back in the ’90s during the bull market. You might have a year here, and a year there, but to plan on that is just absurd. And it’s not right. But people are scared, and they want to believe.

And to be fair to Suze and Dave, they’ve actually helped a segment of people who needed to be taught how to live within their means.

Yes, because certain people do need to be told very basic things. But that’s always true. I find it hard to believe that wasn’t true in 1980 or 1960. John D. Rockefeller’s father was a deadbeat, go look it up. So was Charles Dickens’s father. We’ve always had this issue, right? Mary Lincoln spent a lot more money on clothes than she should have when her husband was president. We’ve always had a certain percentage of people who do this. I don’t believe we have more than we used to. To the extent it’s easier—there’s credit—but that doesn’t mean that we’ve suddenly all lost it. And I think what these people are cautioning, is that that’s indeed what happened.

That we’ve somehow lost our way.

We lost our way. We used to live like the Waltons, and we had a house together. But the fact is that old people had this distressing tendency to end up in poor houses. And people who lost a parent were often placed in orphanages, and that was common basically up until Social Security. We have this false image about the past. Things like Social Security developed for a reason. They happened because we needed them. Someone didn’t wake up one day and say, let’s let people be irresponsible and not let them save for their retirement.

Let’s talk about retirement. The way we save for retirement now is a pretty modern invention in that it’s something we’ve tried doing just in my lifetime. As you mention in your book, with the 401(k) we sort of lucked out that it came into being during a time when we had a market boom in the ’90s, which generated an extraordinary amount of money. And then the crash happened, and people who were about ready to retire lost an extraordinary amount of money in their 401(k) accounts, which really shook our faith in the 401(k) system, which may not have been what it was if not for how the markets were when we started it.

It’s one of the great imponderables: Would this have happened the same way? You don’t have the answer and I don’t have the answer, but yes, it coincides with the great bull market. So you see this: “You know my little 401(k) is going to make me a millionaire, it’s the Little Engine That Could. Just keep putting your money in and—ka-ching—40 years later you’re going to be fine.” But there’s no comprehension that first, half the population didn’t have access to any of this stuff, that second, this wasn’t inevitable, and third, people believe this contradiction that market gains are inevitable and that their investing genius is responsible for their success, which of course made no sense.

And yet, this is the world I was brought into as a working adult: Hope that your 401(k) does well, and hope that your company offers you a match. What’s the alternative? Is there one?

If I knew the answer, I wouldn’t be writing this book. But there are a lot of different ideas out there. And I think, for me, this is why it was so important to talk about it. Because the conventional thinking right now is, well, we’ll go with the 401(k) because the pension system didn’t really work because a lot of people weren’t eligible for them, and companies were going bankrupt offering them anyway. Ellen Schultz actually disproved that one in her book Retirement Heist, which if you haven’t read, you should and do an interview with her.

Second, just because something didn’t work doesn’t mean the thing we have now that’s not really working should be kept, is my position. And you have to start from that premise. Most people don’t want to start from the premise that if something doesn’t work, we’ll just say we don’t have anything better. The first step to getting something better is to say it’s really not working. Suze Orman could probably tell you this. You have to have this moment when you recognize what’s going on. My moment is realizing that this is not working. We’ve had 30 plus years—if it was going to work, we’ve would have figured it out by now. And we’re starting to see things like the guaranteed pension plan, which is what California is looking into a version of now. You start to see things like in Australia where there are mandatory 9 percent contributions and employers are also responsible. England is moving in a similar direction. We’re concerned about fees, and well, England is banning commission sales, which is one way to knock out a certain percentage of conflicted advice. We need to start asking, “This isn’t working. What else is out there?” That’s the first step, and you go from there.

And that’s the thing Occupy sort of got, whatever people think of Occupy, and obviously I was a supporter to some extent, but they kind of got this idea that you have to get out there and say what’s going on. They were the first group that I know of in 30 plus years to take this instinctive leap that nobody else seems to have made. It’s astonishing to me. It was like, “Hey you have student loan debt, my house is being foreclosed on, he’s about to go bankrupt from his wife’s medical bills—maybe we’ve got a problem here.” And that was an amazing leap. And we’ve seen a change in the political discourse since that’s happened. It was extraordinary. A problem was being articulated. And of course “the 99 percent vs. the one percent” was just brilliant.

You need to begin to talk about this, and say what is right and not right. And what’s not right in my view—and I say this as someone who generally doesn’t like to judge money—is this idea of hectoring people about what they’re doing wrong. It falls into the, “if it was going to work, it would work.” It’s also offensive. There’s this disconnect where you see these people on television, where they’re wearing designer suits and they look quite wealthy, and they’re lecturing people on having smartphones. Smartphones have become the latte of our time, I’m convinced of that. Smartphones and premium cable channels are the new latte factor! It’s this bizarre combination of this Ayn Rand self-determination, “well, I made it, I’m better,” followed by this weird Victorian morality trap. There’s an oblivious factor, and it’s kind of offensive. I always think of the scene in Jane Eyre where she’s at the orphanage, and a guy comes in dressed to the nines and he’s bitching out all the little girls because all their hair are done up. It’s the same sort of thing, and yet we read Jane Eyre, and think, “Oh this is terrible, we’d never do a thing like that.” And of course we do it. We all do it, by the way, none of us are immune.

There were a lot of surprising things for me in your book, but one of the biggest surprises for me was discovering that financial literacy does not work. Let’s teach people when they’re young how to stay out of trouble! But as you say, the data shows that it’s just not working. One of the reasons why it’s not working is because financial literacy is usually supported by the financial services industry, which sounds good at first, until you realize that the financial services industry also lobbies against legislation that would make their products easier to understand by consumers.

The chapter on financial literacy broke my heart. The whole chapter started from one sentence from my book proposal: “I think in discussing some of the financial gurus—there is this explosion of information—yet the survey data shows that our financial knowledge had not moved the needle. What was going on?” I didn’t answer it in the proposal—I thought there was an answer! I start looking into it and thought, “Helaine Olen is going to discover why financial literacy doesn’t work—hah!” Well, yes, I did, and so did other people, and the answer is: There was no financial literate time, there was just less financial knowledge to be had. So by definition, a lot of people seemed a lot more financially literate in 1950 when you didn’t have to know what a gotcha mortgage was, or, to use a stupid example, you didn’t need to know how to use an ATM, so you didn’t need to know not to take out too much money from an ATM, because it didn’t exist. There’s no Golden Age of financial literacy.

So we’ve got this whole establishment saying, “Oh we’re going to teach people financial literacy.” And to be fair, hey, maybe there’s some way to do it at some point, but as of right now there hasn’t been any evidence that anybody has been able to do this. If you look at the data for other countries, the differences are marginal. There’s no country out there where you’ve got this incredibly financially literate population. That should probably tell you something right there.

…a lot of people seemed a lot more financially literate in 1950 when you didn’t have to know what a gotcha mortgage was, or, to use a stupid example, you didn’t need to know how to use an ATM, so you didn’t need to know not to take out too much money from an ATM, because it didn’t exist. There’s no Golden Age of financial literacy.

Second, there’s a cluelessness factor—most people aren’t terribly interested in this stuff and are never going to be terribly interested in this stuff. It’s like going to a party and you run into a train aficionado (which I am) and they start talking and talking and your eyes begin glazing over, but they’re convinced if they keep talking to you you’re going to understand why it was really important that the Q train used to be called the D when Helaine Olen was growing up in the 1970s and the 1980s—and of course, you’re never going to give a shit. And people think because money is more important than that that it’s going to work, but guess what, it doesn’t.

And you have another problem coming in which is the most insidious of them all, which is who is supporting all of this? And the answer for the most part is not nice, general disinterested parties. This is an industry that is brought to you by the financial services sector. And you’ve got to think at some point, wait, so if this isn’t working, what’s going on here? And well, if you can say, “I can educate people to read a complex mortgage application, and maybe I won’t have to give them a plain vanilla one like they tried to get into Dodd-Frank,” which got rejected by Congress. So who is financial literacy really working for? Of course, if you want to be really cynical, financial literacy works quite well for some of the parties promoting it, but not for the reasons you think.

The final part, is that it sounds wonderful, right? How can you be against financial literacy? It’s like coming out being against teaching math, or apple pie. And the answer is on one level, if you want to teach it, whatever! We get taught all sorts of stuff in school. But that’s not what’s going on here. What they’re saying is that they’re going to teach it and it’s going to solve all this other stuff, and that’s just not true. The idea, in fact, when you think about it, that you could teach somebody about all of this stuff and assume that 20 years out they can read the prospectus for a product that might not have even existed at that time—it is absurd. And even if it did exist, it’s borderline absurd because think of all the stuff we learned in high school that we have no memory of now. The example I like to use is, “Tell me what the French and Indian War was and why it was so important to the American Revolution.” And everyone gives me these blank looks. If you’re not going to remember the Pythagorean theorem, how much will you remember of financial literacy? It just doesn’t work. I wish it did. The world would be a much better place if it did. And I feel like such a crank saying that.

Because the financial services industry has convinced us that we can only manage our money if we know how to use their products. And it starts right when we hit college.

I moved a couple of months ago and found this huge stash of files that we had to trash from the early 1990s, and we had all the checks to the supermarkets in Los Angeles. Because the supermarket didn’t take credit cards! And if you didn’t have cash, or the ATM was closed, you had to write a check. It was a different world. There’s no reason why people in college need credit cards.

But the financial services industry wants to convince them that they do, because they show up at college campuses, put out their tables, and convince you that you need to start building credit.

Why do you think they do that? That’s what I mean! And I feel like the meanest cynic in the world sometimes. So again, legislation is a huge thing. You probably also need campaign finance reform. And that’s one of the things I have in the book. You’d find these people, and they’d be fighting against quite reasonable reforms, and then you go look to see who was giving them money at Open Secrets, and you go, “Huh. How intriguing.” Of course that’s part of the problem. The financial services industry gives huge amounts of money to people in Congress.

Let’s talk about women and money. You have a chapter dedicated to the way women are specifically marketed to, and how they’re convinced they need help with their money to make their financial lives work. “Stop shopping so much!” they’re told. And again, that kind of discussion distracts from the big picture, which is a lot of the problems women have around money are because of things like pay inequality, or a lack of employer-supported maternity leave.

First of all, women are presumed incompetent and men are presumed competent. You look at the data and there’s really no difference: Both sexes are really equally financially incompetent. The kicker to this by the way is that men tend to get into more trouble because people who think they know more than they do actually are more likely to get into trouble. Women tend to ask more questions which seems to help them.

But women’s financial issues can really be explained not by the fact that they’re financially ignorant and going to the Barney’s warehouse sale. It’s because women earn less, have more responsibilities and live longer. One. Two. Three. There’s no epidemic of single dads out there. Nobody’s talking about, “Oh my god, these irresponsible single dads—how did they get themselves into this?” Women, by definition, even if they’re the most fiscally righteous person—they’re going to have a harder time pulling this off than men. If they’re earning less, have more responsibility, and living longer, this is not a point of contention. But it is. So the financial services industry has this issue about how they’re going to market to women, and so they say it: “You’ve got all these responsibilities and you work so hard, but you need to save more money, and then come to us and we’ll help you.”

Women’s financial issues can really be explained by not the fact that they’re financially ignorant and going to the Barney’s warehouse sale. It’s because women earn less, have more responsibilities and live longer. One. Two. Three.

The other part of this with women is there’s this weird language—it’s almost like simultaneous empowerment and infantilization. Men are presumed competent, but they’re also—just so you don’t think I’m overselling this—they’re also presumed incompetent and get sold on all the shit like The Money Show, and day trading schemes, futures trading, etc. This is a man’s world, and it’s not good stuff for the most part—understand that. Most people would be better off shoving their money into an index fund and moving on with their lives. But women are presumed incompetent, and it’s just not true. The data on women as spendthrifts is pretty nonexistent. Women do spend more money on clothes, but then on the other hand men spend more money on liquor and electronics and cars. We don’t talk about that.

And as some of the data shows in your book, it’s not that women aren’t fighting for themselves in the workplace. Women who ask for bigger salaries can be penalized by not being hired. It can be a very difficult thing to navigate.

So, after you wrote this book, did you change anything in your life?

Yes and no is the answer. I tend to get more enjoyment on what I spend now. But on the other hand, you think, oh god, you wrote this book, you either pulled all your money out of the stock market and buried it in the backyard. No. Or you’re really saving for retirement. And I am, but no more than before. It left me with this appreciation of how short life can be and how you do need to plan and be responsible—things don’t always work out. And, that had a more powerful impact on me than the fear of living in penury when I’m 90. I might not make it to 90. And I might regret that when I’m 90. And here’s the difference between me and Suze Orman: I understand this. I get the tradeoff I’m making here.

It didn’t change me as much as I might have thought. It gave me an appreciation of how uncertain things are. One of the things I really did learn that surprised me was that this whole idea of the stock market as this sort of guaranteed idea, for lack of a better phrase, which might not be true. Which makes instinctive sense. If you ever go to a geneticist, for example, about issues, they will tell you that they cannot be sure—at least this was true when I was looking at stuff when I was pregnant—if something really runs in your family for up to five generations. So why should someone be able to tell you about any certainty in the stock market? Just because you roll the die and keep getting double sixes, it doesn’t mean it’s going to happen the next time. That surprised me a lot, but it didn’t really change what I did.

I also walked away with this fundamental understanding that just because the stock market can crash tomorrow—and of course everyone thinks the stock market it going to crash tomorrow, right, it’s the recency effect, we all think history is going to repeat itself—one of the things being sold to people is—say that guy over there is a stock broker—”he’s got the secret.” Right? What he doesn’t say is that he could lose you more money that the stock market could lose you. We all assume if we’re going to buy it, we’re going to be the ones who figure out the trick that makes more money, so if the stock market loses 40 percent, we’re going to be fine when in fact, you can invest with a guru who loses you 80 percent. That doesn’t often occur to you because again, Americans are optimists. We don’t think that way. I think that way. I decided I’m going to stick with index funds.

This has been a fascinating discussion, and I really don’t want it to end. But one final thing. The last chapter of your book is about how we need to talk about our money. Occupy was one way to talk about it. Our entire site is devoted to the idea that we need to talk about money—all the good things and bad things and really ugly things. We encourage everyone to share their stories. And we post things like videos of Elizabeth Warren really going after the banking industry. And then—what comes next? What can we do in the face of these injustices? I suppose call and write to our politicians?

I say speak about it. Write about it. Talk about it. On a minor level, people ask, what can you do for you finances when you go to a financial advisor? Here’s a really easy one: Ask if they have a fiduciary duty to you. And people are like, “What are you taking about?” Ask if they have a legal duty to act in your best interest. Most people won’t do that. And people ask, “That a step?” Yes, it’s a major step because the industry is fighting really hard that they don’t need to have that for you. 401(k)s have fiduciaries. IRAs don’t always. Brokerages and broker dealers almost certainly do not. Basically, you’ve got to ask. That’s something you can do on a personal level.

On a bigger level: Be angry, be out there. When Occupy happens again, show up because it might help. People don’t know quite what to do. I guess I have a lot of faith that if you keep putting videos up like that, and I keep talking about this, and other people start talking about it, then something will eventually change. Because if enough people start talking, the status quo won’t hold up under those circumstances. I don’t know how it will happen. And I’m not a social activist in that way—I tend to be a very analytical person to a fault, and I admit that. That a lot of people realized that there is a problem after reading my book, that’s a step. People realized they had a problem, but I think they used to think it was an individual financial problem, and it’s clearly a collective one.

If you liked this discussion, you’ll love Helaine’s book, so pick up a copy, or borrow it from the library. (Find it on: Amazon | Indiebound)
20 Comments

Dodging the Question

Mike Dang — Thu, 21 Feb 2013 20:05:31 +0000
by Mike Dang
The Financial Times said that you’re the perfect dean for N.Y.U.’s Stern School of Business because M.B.A. students are “clamoring” for coursework to help in “reducing world poverty.” I thought people got M.B.A.’s to make themselves boatloads of money.
You can actually make a lot of money and do a lot of good in the world. I don’t see those things as being in opposition to one another. I never have.

Then can you name a Stern graduate who is making a ton of money and also saving the world?
With 90,000 alums, I won’t point to any one person. I love all my children equally.

Oh, but I wish you would point to one person (or more than one person!) Peter Henry, dean of N.Y.U.’s Stern School of Business (we like specifics). You have to admire his idealism, though.
6 Comments

The Hustle of a Doll Maker: A Chat with Cinnamon Willis

Maria Aspan — Wed, 12 Dec 2012 15:30:53 +0000
by Maria Aspan

Cinnamon Willis makes wonderfully demented clay dolls. They look almost traditional at first glance, wrapped in pretty dresses and topped with shiny hair—until you notice their sad eyes and frowns, or a devil’s tail under a blue dress, or a blood-spattered mouth above a delicate flower. She calls them “Melandollys” and gives them titles like “Zombies Have Feelings, Too.”

Cinnamon, a former coworker of mine, started making dolls over two years ago. She works out of her Bronx one-bedroom at night, after coming home from her full-time graphic design job. I first saw her dolls in person this month, at the opening night of MF Gallery’s annual Toys Show. (Cinnamon arrived late, having spent the afternoon manning a table at a six-hour craft fair in Harlem, before returning her crafts to the Bronx and then heading to Brooklyn for the show.) The appointment-only exhibit is up through Dec. 23 and full of twisted toys that Tim Burton could have commissioned; I especially liked the Frankenstein-esque paper dolls pieced together from pictures of other people, like photographic ransom notes.

Last weekend, I met Cinnamon in the East Village to discuss how she deals with gallery costs, why she hasn’t sold more of her dolls yet, why Etsy has its drawbacks and how she balances her passion with paying her bills.

Can you start off by telling me a little bit about how you started making these dolls?
It was August 2010. I saw a doll online and went, wow, that doll looks really sad. And I wanted to buy it; then I saw it was maybe $500, and I’m like, I’m not spending $500 – I don’t have $500 to spend on it. … I said, well, maybe I could start making some sad dolls, or something with the same kind of feel, and that’s pretty much how I started. I just emulated what I saw.

Once you knew you wanted to do that, how did you go about deciding, “This is how I’m going to make them,” and “These are the materials I’m going to use”?
I’m still figuring it out. Like, I’m still trying to figure out what kind of clay to use, because I had oven-bake clay, and I was just really testing a lot of different kinds of things, and I just realized that certain things don’t work, while others do. So now I’m using air-dried clay and it doesn’t break as often as the oven-bake clay. And then whatever else is pretty much in the house. I’ll have random clothes that I don’t want anymore, and cut them up. Sometimes I’ll go to the fabric store and buy some fabrics, but a lot of the time I’ll end up using stuff that I have. And I’m always in the hair-supply store because I’ve got to get hair – I don’t have that stuff just lying around!

You’ve said you have a lot of dollmaker friends on Facebook–did you know other people who made dolls before you started doing this?
Absolutely not. I made a totally different Facebook [profile] just to find dollmaker friends, because I wanted it to be a separate identity from me. So I just started seeking out people, and after I started putting pictures up of my dolls, people started requesting me. I’m up to maybe 1,100 friends now, and the majority of them are dollmakers.

Do you feel like you get any sales or other opportunities through Facebook?
I just use Facebook to really put the word out. I didn’t really put my dolls up for sale; I have maybe two dolls up for sale out of all the dolls I have, because I’m really trying to focus more on galleries now.

How did you get into your first gallery?
When I was speaking to those people on Facebook, I just asked them, “Hey, I see you’re in a lot of galleries, how did you get in?” Someone told me about MF Gallery, the one I’m in now [and in the same show last year]. She said, just email them some pictures, and they’ll probably get back to you and ask you for a doll. They’re pretty laid back. … There’s not a whole lot of red tape you’ve got to go through if you want to get into that gallery, it’s pretty straightforward, as long as it’s in their same style. I have two different styles of dolls that I make – the ones I call the Misfits, because they’re a little dark, and then I have the really cute, sweet dolls. I would never send them a sweet doll. You kind of have to tailor your work to certain people.

How many dolls have you sold so far?
Just two.

So you said you’re focusing on galleries now. The show last Saturday – do you put your dolls in that gallery expecting or hoping to sell them?
Not necessarily. I just pretty much want to reach the community of doll collectors, to let them know, “Hey, I’m making dolls, come to my site.” And maybe one day I’ll get it nailed down, where I’m really cranking them out as much as I’d like to, so I can start selling them. I’m still willing to sell them.

Have you sold any from the show?
Not that I know of – they’ll usually let you know a couple of days afterwards, but being that they’re appointment-only, it’s most likely not. The most sales they’ll do is opening night.

Your dolls in the show cost about $400 to $500 each. How did you decide how to set the prices for them?
Pretty much just watching what other dollmakers put their prices at for certain dolls that they have. And I’ll say, oh, that doll is kind of the same size or maybe has the same kind of stuff going on, depending – because some dolls, they’re using animal skulls and other crazy stuff, and that’s not cheap. So I know not to put my prices in that type of price range.

So with the zombie doll, which I loved. That was clay and paint and hair and a dress—
And a flower.

And a flower. How much did that cost you to make?
It’s nothing. I was buying the clay at maybe $10 a package, but now I have like 15 packages I got at a bulk price for maybe $70, something ridiculous. If anything, I’m paying more for the clay than for anything else, which isn’t really that much now since I got it so cheap. The fabric, it depends. I’m kind of a hoarder now. When I do go into fabric stores – I’m not buying yards, it’s maybe one yard, because my dolls are really small, about 15 inches, so you can get by. Per doll, [it costs] maybe about $10 to make it. You’re really charging more for the time that you’re putting into it.

And you said the gallery takes a cut of any sales?
Depending on what gallery you’re in. That gallery in particular, they’re taking 50% off the top.

Is that standard?
Every gallery’s different. Another gallery that I had in Long Island City was 35%. The galleries, they pretty much do whatever they want. Then there was another gallery in Greenpoint, they didn’t take a cut but they wanted $5 per piece that you put in the show.

So you had to pay upfront?
Yeah, some galleries, they want money upfront. The one in Long Island City, even after they want 35% of your sale, they actually wanted $100 [upfront].

Wait, so 35% of any sale plus—
Plus $100, because it’s for “promotional fees,” for them making flyers and stuff like that. I did it at first, because I was like, well, I want to put my dolls in a gallery, but now I’m not paying upfront anymore to be in a gallery. It’s just crazy. The gallery percentage – that’s understandable, because they need to have the gallery open, they have to make money somehow and not just have your stuff for free. They still have to pay for rent and everything else.

At MF Gallery, if you don’t sell anything, do they get anything from you? Will you have paid them anything for displaying your doll?
No. Galleries, the ones that I’ve dealt with, they haven’t asked for anything like, “Oh, you didn’t sell, you owe us this.” They haven’t done that, but you do have some of the galleries ask you for something upfront, which is a little shady, and you shouldn’t do it. But a lot of times it’s kind of hard to get into a gallery when you’ve never been in one. It’s almost like you’re trying to get a job but you don’t have the experience yet. … Once you put it on your resume, “I’ve been in this gallery, that gallery,” it kind of opened up the door for me to get into a different gallery – a better gallery. One that doesn’t need funding from the artists right away.

Will those galleries take anyone who pays or is there still a selection process?
No, there’s still a selection process.

I wanted to ask you about Etsy. You’ve sold some doll magnets and other accessories there – do you like using it?
I like it in terms of, they don’t charge that much. They take maybe 2.5% of your sales. The storefront’s free, and you get to list an item for four months for 20 cents; that’s compared to eBay, where you spend like a dollar, depending on how many photos you’re using, for a week. So that’s like me having five Etsy items for four months compared to one item for a week. So yeah, their prices are really good. And then eBay wants 10% off the top of whatever you’re selling. And Etsy’s 2.5% or 2.7%, something really low. I like Etsy in that sense, but people don’t find you on Etsy. They’re trying to make it better, doing search optimization, and now Google’s picking up the store, but I still don’t think that people are finding people on Etsy. … Etsy also has certain people that they favor, and they’ll have certain sellers that they put on their home page all the time. They’re supposedly rotating, but I’m like, no, this person was up there with this same item two months ago, you’re not rotating.

And do you sell your crafts on eBay?
At one time I was. But a dollar a week, it’s kind of steep. And then they want 10% on top of whatever you sell. And then PayPal wants a percentage, so it’s like I’m pretty much giving stuff away. I didn’t really sell any dolls on eBay – I also decorate hats, I was selling a lot of random stuff like that. And when I did post a doll, it didn’t sell.

So you’ve said a couple of times that you’re not in it for the money right now. What’s your end goal? Do you want to get to a point where you’re, as you said, cranking them out and selling them at a profit?
I would definitely like to do that. Now it’s just more that I need time. I’m not going to quit my day job for it because we don’t know where this is going yet. Especially now, I don’t have a solid plan or focus or, “Oh, I have to use this material because of this.” I don’t know anything off the bat right now. I don’t know what’s really working and what’s not.

Are you getting feedback from anyone in particular or do you have any mentors who are helping you figure out what’s working and what’s not?
A lot of my friends on Facebook, they became my friends because I would ask them questions like, “Hey, I see this doll moves like this, or I see you did this with a doll, how did you do that?” They’re really good at giving back feedback and information and saying, “Oh, you shouldn’t do this, you should do that.” They’re really good at giving advice. And a couple of them I actually met. The first time I went to MF Gallery, I met two dollmakers there. And that’s how I got into a show in Canada, because I actually met the person that owns that gallery.

How much time do you spend on every doll?
It depends. It’s pretty much whatever time I can get. A lot of times I’ll stay up till maybe two o’clock in the morning, adding hair onto a doll. It really depends. There have been times when a doll’s been laying around for about three months, because today it has legs, and that’s about it. And maybe next week I’ll get back to it and paint a face on it. …. A lot of times I’m up working till two, three o’clock in the morning.

Do you work after your day job or do you wait until the weekends?
Most of it’s at night. By the time I get home, it’s like eight o’clock, and after I do stuff around the house … then I’ll come out and say, ok, I guess I’ll do a doll tonight, and I’ll do maybe three aspects of it. I could sit up and do a doll straight through, but you know, it’s not good for you. I’d be up till seven o’clock in the morning. I guess I could finish a doll in one day, but it never happens.

Do you ever think about going part time, or doing a part-time day job?
I think about it all the time. But I need to pay my bills. It’s like, do I want to keep my apartment or do I want to play around with dolls? I’d love to play around, but I can’t.

This interview has been edited and condensed for length and clarity.

Maria Aspan is the national editor for American Banker. She writes about movies, science fiction and bad Jane Austen covers on her blog.
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The Hustle of a Singer-Songwriter: A Conversation with Matt Duke

Julie Beck — Tue, 04 Dec 2012 18:35:49 +0000
by Julie Beck

I met Matt Duke at a concert venue in my college town, cornering him so I could take a picture for the student website I worked for. Several years later, he has three records and one EP under his belt from working with record labels, and is now self-financing his next record on a Kickstarter, which, full disclosure, I contributed to. I cornered him at a show again, and he amiably agreed to speak to me over the phone about his struggles with record labels, the costs that go into self-financing, and why going on reality shows can be a good career move.

You started off on a record label and now you’re self-financing. Why make the switch?

In terms of budgeting for records and how they were allocating what they were spending on the record, it was sort of being mismanaged. There was a lot of turnover. And when there were so many different people coming and going, nobody got all that familiar with the stuff that I was doing. It was either a waste of money, or money wasn’t being well spent in other places where it should’ve been. We had an amicable split over a year ago. As much as I love the president of the label—she’s unbelievable, she’s been such a huge supporter of mine—it just wasn’t working. And I was getting frustrated not being able to control the decision making as far as where the money was being spent and how much we were spending. So that’s why, once I went completely independent, I was excited to try self-financing my new album.

How did you come up with the $10,000 figure then for your Kickstarter? Can you give me a breakdown of what costs go into making an album and why you picked that amount?

Sure. I started with $10,000 because with the Kickstarter thing, it’s not like you’re necessarily selling yourself short, but you set a realistic goal for something that you know that you can get. You obviously want to make more than that. So in my mind, the magic number was hopefully actually going to be $15,000. We set it at $10,000 because the last record that I made through [my label], Rykodisc, was somewhere around the $7,000-$10,000 range. After years and years of playing music I’ve established relationships with engineers and producers and mixers. There are people who are interested and wanting to work, in general, for a lot cheaper than they usually would. I know that we can do the same quality product for less. We’re not going to exceed $10,000 to make a record, but we could probably keep it somewhere in the $6,000-$7,000 range. Kickstarter takes a percentage off the top of whatever you make, so you have to keep those things in mind too.

But after that, it’s making sure that there’s a little bit of money to be able to pump out merchandise, including the physical product itself. It’s going to be different for me this time because I get charged a lot for my back catalog, because of how much the record labels take per copy of the record. This time around, it’s going to be exponentially less, which is great. The money leftover, a lot of that is post-production, advertising, speaking to people about radio, finding somebody to do press. Once the record’s finished, you want a window of two or three months to be able to get all the good press out. You also want to make sure that you have a little bit of a safety net, a little bit of extra money, just in case you hit snags. So those are the very nebulous metrics of what it is that we’re going to be doing.

Are you planning on having it all being funded by the Kickstarter or do you think that anything might end up coming out of your pocket?

I would be naïve to say that I think it could all be accomplished through the money that we get from the Kickstarter—I’m hopeful that we can. The management team that I have and myself, we’ve got a plan in place. We all know what happens to best-laid plans. However, as long as all the right people are in place to do it, we can do it for what we’ve got. I’m prepared to still spend a little bit more out of my own pocket if I have to. That really won’t be the end of the world for me. I feel a lot better in my life at this moment, to spend a little bit of my own money to make this happen as opposed to having the strange bureaucracy of the record label industry manage that and dictate what they’re going to do for me.

All the costs that you were talking about, the nebulous costs, those would be covered by a record label if you were on one, right?

Yeah. They would be covered and ultimately they would be rigged through all the millions and billions of records that I would have sold. It’s all, like, liquid. That’s part of the problem, too. Here’s the difference between myself and the business side of the record label: I’m strapped. You know what I mean? I work very hard. We’re going to be penny pinching [making this next record]. And that’s a good thing. It’s going to put under a microscope absolutely every move we make in order to have this record be as successful as humanly possible.

At the label they can look at old models and plans that they had dating back even as far as the ’80s and say, “Well we threw this much money at this and that worked before, so it must work again. Once we throw all that money, ultimately the artist is going to be responsible for paying at least half of that back, so we don’t necessarily need to talk about how much it is we’re spending, but it’ll come out of his pocket anyway.”

Again, as much as I loved the people that I was working with, it’s irresponsible. And it sucks. However, it’s sort of like shame on musicians sometimes for signing these contracts. You go in with the high hope that they will be able to manage it a lot better than they ultimately do.

That’s something I wanted to ask you too, because I don’t know. How does compensation work when you get a record deal?

As per my deal, as it stood before I left, they had me for a number of records and after that they had a couple of options. It’s up to them whether they want to keep me or not, but obviously you can sit down and renegotiate. Every record that I’ve made, the advances got a little bit bigger. Were they substantial numbers? Sure. But in my case, too, because of how small the label was, we ended up having to restructure to try to make things work. My advances went down, actually, significantly. That was part of the decision-making process that I was a part of and I was willing to forgo X amount of dollars off the advance to try to make this work and pump that money back into the record.

When it comes to mechanical royalties, I get a small percentage of the sales in terms of the records sold, songs sold on iTunes and things like that. The records that I made from 2011 dated backwards, they have control of those records for maybe another seven plus years or so. There’s a record that I had that I think is owned in perpetuity actually, by a student-run record label. Which is kind of a drag, but when you’re 19 years old, you’re not exactly thinking of business economics.

So, the royalties are a little small, the advances can be big, but ultimately, it’s still money that you will be paying off. Depending on what kind of percentages they are taking from you, you’ve got to be very smart with how you’re investing that kind of money. If it’s not going right back into the record making process, you better be putting it somewhere, because that might be all you get. If you’re an unsigned artist in your development mode, you have to be very very very very very careful about what you sign. Mine fell in the middle between a good deal and a bad deal.

Were you able to live on that, on your advances?

Oh, no. No. Absolutely not. Oh God, no. [Laughs]

I don’t know if you saw that Grizzly Bear article a few weeks ago. The Internet was all in a tizzy about it for a while because they’re a relatively big name, playing Radio City, whatever, but some of them still don’t even have health insurance.

Being a signed artist to a label, or just being a musician in general is not an easy road to follow. You don’t think about these things, because the dreamers that we are, as artists and musicians, our hopes are so high for every record. Your expectations are so great that things are going to work out exactly the way you think they can: “I’m going to work hard, this record is going to be fucking incredible, people are going to love it, I know that I can find my voice and exactly where I need to go.”

Then when you start thinking that way, when you start thinking with your heart instead of your head, these deals are a lot easier to scribble and autograph your name to, and then you are left with these really shitty advances, and you’re left with really bad percentages. You get a check maybe once every six or seven months because they’re behind on their accounting, or because they don’t necessarily need to get you a quarterly check. I completely feel for them. Because you can be in a position where you’re playing a really big stage and everybody looks at you and says, “Man, those guys made it,” and in reality you are just kind of scraping by.

The health insurance thing is a bar. There’s a great program called MusiCares, but that’s in the event of really extreme circumstances, like you have hospital bills that you can’t pay. They come in and they try to help you out when you need it, like FEMA. It’s like fucking FEMA for your health.

It’s funny, because I think a lot of us laypeople see it as “oh, you’ve got a record deal, you’ve made it.” Obviously, there are different degrees of making it, but I feel like most people would define it as supporting yourself doing what you want to do. But it seems like signing to a label doesn’t end that struggle at all.

No, and the funny thing is, that if you were privy to conversations between musicians as you’re touring around and you’re palling around with a bunch of artists, when you start to meet other guys and you find out that they’re signed, the conversation is never, like you said, “Oh, you’re signed? That’s incredible!” The conversation is more like, “Oh. What was your deal?” You’re almost like, “Oh no, are you okay? Is everything okay?”

A buddy of mine was just on the show “The Voice,” Tony Lucca. He just signed with Adam’s label [Adam Levine of Maroon 5, Lucca's coach on the show] and he was in a position where he was rolling the dice with the show. If you were to be in the top four, and especially if you were to win the whole thing, Universal Republic could pick him up for a record deal. Because he placed where he did [3rd place] and because he made the connection that he did with Adam, that worked out really well because he didn’t have to do the Universal thing, but he made this incredible connection. Here’s a guy who’s got a lot of clout, as far as the industry is concerned. The dude is sort of a mastermind, he’s got his own label and he’s got the money to be able to finance and promote an artist that he really truly loves, which is Tony. That’s a good situation to be in.

However, with that said, you still go in with a little bit of trepidation. There’s always the “hopefully,” like “I hope that Adam is as invested as I think that he is, I hope that it’s going to pan out exactly the way that we think it could.” So we’re always taking a gamble no matter what we do. The business is trying to protect itself from you, the artist, in case you bomb, and you yourself have nothing to protect yourself with, you’re at the mercy of these labels. And that is the way it’s always going to be, unless you’re Bruce Springsteen and you’ve already sold a shit ton of records, and you walk into Columbia and jump up on the desk and say “I want an advance of $60 million, or I’m not signing.”

I was watching The Voice when Tony was on it, and I remembered him from when you two did TFDI together. It’s surprising to see people that you’ve heard of before auditioning, who’ve had record deals and they’re on there saying “I can’t support my family, I need to do this show.”

You’re looking for the next big break. I felt like it should go without saying, but I’ll have to say it because I feel like this has become a bitchfest on my part about how tough it can be, but we’re so lucky because we do still make money. We can survive. You go month to month sometimes, well, a lot of the time, but we still get to play music and we get to do something that we love, which not a lot of people can say that they get to do. Not a lot of people are that fortunate, in fact there’s a lot of people who just don’t have jobs, period.

I don’t blame anybody for wanting to audition for those shows. It’s always worth a shot. If anything, you can at least ensure yourself a little bit of exposure, maybe give yourself a little bit of a kick start. Why wouldn’t you be hopeful that things could be great? That a record label that you had to sign to because you won a TV show could maybe really help you skyrocket? They’re lofty expectations but those are the expectations that they set on that show. So I don’t blame anybody for wanting to do that kind of thing.

But it’s just like we were talking about, everything is changing. The labels aren’t nearly as important anymore. They’re just not. The money is important, to deal with clients and get these things to happen, but if you’re savvy you can do those things yourself without having to give up a whole lot.

When you were on your label, did you ever have conversations with people there about how they could help you earn a living?

Yeah. The woman in charge was so great, and she wanted to see me succeed. She was trying to do everything in her power to get me opportunities and to put me in places where I could be successful. But there were a lot of people in that company, there was a lot of turnover. When she would look down, all of a sudden, every face was different. Another four or five months would go by, she’d look back down and they were all different again. People weren’t familiarized with the record enough. They put her in a precarious situation. We would have a conversation and she would be sympathetic, like, “I know you’re not earning what you deserve to be earning and I know that it’s really tough, but if you could just hang in there, we’ll try to work this out and then hopefully we’ll get that big moment where things are just going to turn around.”

Unfortunately, that’s not good enough for both sides anymore. We can’t afford to do that. I’ve been working odd jobs for the better part of this past decade, trying to supplement income to make sure that I can continue to pursue my dream of playing music. The best part, though, now, is that without the label it is actually a little bit easier. I’ve got more control over what it is financially I get to do. That gives me peace of mind. Maybe that’s something that’s actually worth a little bit, at the end of the day.

What kind of odd jobs have you been doing?

I garden. I love gardening, actually. I used to work other jobs, too, like picture framing, or waiting tables. You do whatever. But this last job I’ve had for the past four years, and it’s worked out nicely. The thing was, with this woman who hired me, I told her, “Listen, the only caveat is that I might need to disappear for long weeks at a time to go on the road, and I don’t know how flexible you are.” She basically just told me right then and there, “Any time you need to leave to go on the road or go record, or do any of that, you can do it. Absolutely. And any time you’re home, there will be work for you to do.” I scored the best job ever. I’m in a good spot where none of that gets in the way of what I want to do. There’s a lot of other people who have a more difficult time being able to manage their time between having to make steadier income to survive while also pursuing music.

Do you have any worries now that you’re striking out on your own? Is there more pressure?

It’s the same anxieties that anybody will get. I’m 27 going on 28, and you hope that you can achieve some kind of consistency, some financial stability. If I was worried about anything, it’s always that the project could fail. But to be honest with you, what outweighs that is that I think it could be really fucking great. And that’s why I keep doing it. I can deal with month to month if I really think that I can make this work. And I do believe that I can achieve something closer to financial stability, that it can be more consistent than it is now. But yeah, like I said, same anxieties as anybody else. Outside of that, I’m in a pretty good spot. I’m happy that I get to take the reins on this.

This interview was edited for length and clarity.

Matt Duke is a musician in Philadelphia. He likes the smell of cut grass.

Julie Beck is a writer in Chicago. Every plant she has ever owned has died, even the cactus.

1 Comments

Going Back to the Land: An Interview with the Stewards of the Shii Koeii Community Farm

Olga Kreimer — Tue, 27 Nov 2012 18:35:10 +0000
by Olga Kreimer

I spent a summer bathing in cloudy creek water, battling pugnacious roosters with self-defense techniques meant for dark city streets, and making goat cheese pretty much directly from the udders of two stubborn mama goats. When it was over, I realized that it’s not farm life that sounds crazy—it’s the city.

A week after coming home to Brooklyn from a tiny southern Colorado farm (where the amount of rainfall can practically be measured in buckets, and the weather forecast for tomorrow can determine how much juice you’ve got left in your wall sockets to watch that next episode of Lost tonight), I found myself in a cab speeding up FDR Drive, gazing at the sunset reflected from a million glass-fronted skyscrapers and wondering what brilliant set designer had created this sci-fi skyline. After getting used to seeing the sky fade to black behind mountains, it was surreal to watch the sky go from blue to orange, never really fading at all.

The culture shock I felt coming back to a “normal” of Starbucks on every other corner, ubiquitous flushing toilets, and everybody wearing shoes all the time made me wonder what it really takes to live differently—not as an intrepid summer tourist, but for real. Sure, the crazy goat farmer is an easy joke, but with each recent event proving more and more emphatically that even our Toms-wearing, thermos-toting, small-batch-chocolate-eating lifestyles are unsustainable, the joke gets less funny and setting up shop on a distant hillside sounds increasingly more practical.

I emailed with Mark Schneider and Val Phillips, resident stewards of Shii Koeii, the farm I got to help tend for a few weeks this summer, and asked them how the sausage gets made and about living sustainably. Take notes now for when the Internet collapses.

Let’s start at the beginning. What is Shii Koeii?

Mark Schneider: “Shii Koeii” means “the people’s water” in Jicarilla Apache, the people that have lived in this valley for a long time. Shii Koeii is the actual name for the river that goes through the land here (Europeans called it the Huerfano river). We began living as stewards on this land in the spring of 2008. We formed Shii Koeii Community Farm with several other people, though Val and I are the current full-time resident stewards.

Fundamentally, Shii Koeii Community Farm is about relationship. Relationship to each other, to the land, to all of the creatures that live here, with the weather, the stars and the spirits. We need to create a relationship with this place. Long-term, for the future generations that live here. They need to have a relationship to this place. This is where their language, culture and spirituality will come from.

What does it cost to run Shii Koeii? What does that budget support?

MS: Including income and donations, our annual budget is around $20,000. For this year, we hosted more than 30 interns to learn relationship, community and sustainable skills. We provide vegetables, eggs, raw goat cheese, raw honey, and homemade natural beauty products to our local community via local farmers markets we helped start. We provide 75 percent of our own food for all stewards, interns and guests. We host a young girls’ youth group to learn sustainable skills. We provide free non-profit training in grass roots organizing and fundraising. [Half an] acre of land is cultivated with vegetables and orchards. Our three goats (Maple, Willow, Redwing) are wild pastured and milked twice a day to produce raw milk, yogurt and cheese for the community. About 30 chickens are wild pastured and provide daily fresh eggs. Four top-bar honey bee hives provide raw honey to the community. We wild gather fruits and nuts (piñons). We maintain the buildings of the community, all built with straw bales and earth plaster.

Our education program is the biggest expense, followed by maintenance and building expenses, food, the gardens, husbandry, transportation, and resident steward benefits.

What were your starting costs?

MS: Start up costs include purchasing the land [and] building the structures (85 percent materials, 15 percent labor). All of the buildings at Shii Koeii, including the main house, barns, shed, outdoor kitchen, and all of the plumbing and electrical, including the off-grid energy system, have been less than $100,000. The land cost just under $70,000, for 75 acres.

Val Phillips: We are extraordinarily privileged in that when our community began we had sufficient savings to purchase the necessary equipment to set up an off-grid electrical system, fueled by solar and wind power, which we have in abundance in the Huerfano Valley. I mention this with some hesitation as an aspect for sustainable living for two reasons: Being able to live like this requires money/privilege, which means it’s not an option available to most people in this country (or on the planet). To be truly sustainable, our options must not be limited to a particular class. [And] long-term, even wind and solar are not truly sustainable. It takes an inordinate amount of embodied energy to create solar panels and wind towers, not to mention the considerable toxicity of batteries. Ultimately, each facet of such a system will have to be replaced, which will require still more energy infusion.

What have been unexpected expenses since then?

MS: Lots of small things. The biggest, however, was in building the house. A friend of ours who builds straw bale houses in a county without building codes made us believe it would cost maybe half less than it ultimately did. For instance, because of codes we were required to do things like put in a thousand extra special screws on the roof; each screw cost $1. Each year we’ve been able to reduce our budget for ordinary expenses by 10 to 20 percent.

What are your goals for expansion? What will it take to achieve them?

MS: When we started out, we had a five-year time plan. We thought we’d build most of it in the first two years. We’ve achieved nearly all of it now in our fifth year. We’d like to have a cellar or above-ground earth cool to store vegetables, jars and cheese. We’d like to offer a radical artists’ retreat space in the cold months. A permanent outdoor shower would be helpful. If more resident stewards joined the community, we could add onto the main house, though adding a simple 300 square foot addition would cost at least $25,000.

The cellar we could build for less than a $1,000, but we need the time to do it. The outdoor shower we could do for less than $200, again with a bit of time. The artist retreat space, unless we could get a variance, could cost several thousands of dollars to get it up to code.

Fundamentally, what is necessary to do any of these projects and other dreams is having more long-term interns or resident stewards who could share the responsibilities and management of the community.

Your income has increased over the last year, with additional products (Goat cheese! Honey!) and new markets—I got to see some of the growth this summer, which was really exciting. Where does that money go?

MS: Our budget last year was almost $25,000, and the farm income was just under $4,000; donations made up the rest. Our budget this year is closer to $20,000, and our farm income will be closer to $12,000.

VP: Last year we had to fundraise the remainder of our budget, but the reality is, we didn’t even come close to doing so. We made up the difference from what was left of our savings, which is now nearly depleted. As with starting any business, it takes time to become self-sufficient. This year, as you saw, we are doing much better in terms of farm income, but we will still need to raise $8,000.

MS: One of our goals is to become as cash self-sufficient as possible, though not at the cost of our education programs. If we were strictly a business and profit-oriented, we’d grow only certain crops that would cater to wealthy people and we’d do very little education. We sell our produce at affordable rates, we accept food stamps, we take our time and train young people on living sustainably. Our mainstream culture doesn’t value time like it should or used to. For instance, in July we harvested chokecherries and made syrup for the community. It’s much cheaper to get a cash job and buy fake maple syrup than to hand pick chokecherries, cook them, and jar them. Simple good things take time, and that should be valued.

How did you guys make the decision to live the way you do? It’s clearly a challenging lifestyle, so it must have taken a great deal of conviction.

MS: When I was a teenager, I read about Mohandas Gandhi’s ashram in India. It was a place he lived among others simply, but also a base of social and political organizing for the larger culture. I knew then I wanted to be a part of such an endeavor. It took me nearly 20 years to realize the commitment I needed to make to be a part of such an intention. I’ve lived in urban intentional communities but often dreamed of living in a rural community.

In 2004, Val and I decided to quit our nonprofit jobs in the city and take steps to find Shii Koeii. We had become disillusioned with how people we knew in the city simply move away to another city or were unable to create intimate mutual relationships and community with each other. We wanted to either join or help create a community to heal the relationship with the natural world and each other. We’ve taken some risks. Not all of them have worked out. What we hold onto is faith. Faith in the natural world to heal, and, faith that other people will feel like-minded and either join us or start their own similar projects.

Most people want the “freedom” to move around, travel, and not be rooted in a place. The irony is this “freedom” is all within the confines of what capitalism allows and imposes on you. Living in a distinct place, building an intimate relationship with that place is fundamental to our freedom from domination and control. Most people don’t realize this. So, psychologically it makes it hard for people to even consider joining Shii Koeii—we are a foreign, almost exotic, experience for many people. When actually most of the “third world” lives like us, rooted in land where all of their culture comes from.

What successes have you had in the last 4 years of operation that have made you look around and acknowledge that you’re successfully living an alternative lifestyle?

MS: Most of our food comes from the land. You are what you eat. We’ve built shelter for us and the community’s animals and gardens made from mostly local ingredients. We’ve hosted hundreds of interns and visitors to share and learn. Each year we lower our cash needs, becoming less dependent upon capitalism and the state. Fundamentally, we’ve begun building a relationship with this place—Shii Koeii. This land is not a commodity and we are not commodities. We plan to stay and join this place.

VP: We are truly blessed in that the community’s home—which was built by more than 300 people’s hands, hearts, love, sweat and tears—is intentionally designed to make use of the ecosystem in which we live, the organic materials at hand, and an aware relationship to the sun and seasons for our heating and cooling. In the summer, as you noticed, with no air conditioners or fans, the passive solar design of the house and the straw bale insulation renders the house 10-20 degrees cooler than the hot weather outside. The house stays a very livable temperature even on the hottest days. Similarly, in the winter, the house never goes below 55 degrees, and usually stays a very comfortable 70 degrees, without any energy being required. The sun heats up the adobe floor, and this in turn radiates heat throughout the house all night as the earth cools down. Only after two or three days straight of clouds (something that is very rare in this bioregion) do we need to supplement with a bit of wood fire. And that is only to be “comfortable.” Survival is never at stake.

Can you talk about your plans to set up a nonprofit? Why is this important to you?

MS: We want the land [to be] owned by a nonprofit collective and not ever be privately sold. Long term…we want people to have a relationship to this place that goes beyond a piece of government paper. The nation-state and the idea of property, historically speaking, has been a brief affair. Land is not a commodity. Land is a right, and people have a natural right to live mutually with that land. That is what we strive for.

Technically, we’re not certified organic; we are all natural, with no chemicals or artificial fertilizers. We want people to build a relationship with us and not trust the government’s label.

I have heard you guys mention living in solidarity with the poor as an intentional goal. Where did this goal come from, and how is it implemented?

MS: For several years, I volunteered and lived at the Denver Catholic Worker house of hospitality. We lived a life of service to “homeless” people, which is a misnomer—most people just lack community and family. Living in solidarity with the oppressed, living sustainably from the land, sharing spirituality, living simply and being politically active for social change. These are the values that influenced me.

In this individualized culture, we are trained to only think of yourself, to get rich and build your ego. This all comes at the expense of others. We stand with those oppressed to reclaim what they deserve. Look around the world at oppressed people, and you discover what they want is to be able to live on their land and not be invaded, manipulated or controlled. We try to live as simply as possible, importing as little as possible into the community, to not amass cash savings, to live in precarity.

Plus, life is easier when you try to be simple. For instance, middle class people with all their stresses and worries about hoarding for retirement, their fixation on amassing capital and then how best to spend it on expensive gadgets. We have none of that. While we do worry about when we’re older and how we’ll make a living, we have faith in relationships for that, not capitalism.

How has engaging with a mostly bartered labor force of interns fit into your vision for Shii Koeii?

Mark: Each year, we’ve hosted 25 to 30 young folks to intern at Shii Koeii and learn about sustainable living and living in community. These folks have been fundamental to our survival and thriving and so we are very thankful. Part of our vision is to be a model for others to learn from and get inspired from. While we do appreciate the labor of the interns, we mainly appreciate their company, their time with us. Many times in our world, it’s easy to feel let down by people. Corporations often let people down, and there are human faces of those corporations that let us down. When we host interns at Shii Koeii, we’re constantly reminded of the goodness of people. That is healing.

Val: The people who come to share our lives for a month or for a year are members of our community. Every single person who contributes something to the community remains a part of the land and the house, the crops we grow, the goats we raise. They are all still here. You always will be.

But secondly, while we profoundly appreciate the labor interns give, it is a primary goal of our internship program that interns take away from the experience a vital education, not merely in farming, but in communal and simple living. It has been our experience, based on exit interviews, that this is generally the case. A few interns this season even commented that being Shii Koeii felt like “a university because I’m learning so much.” We want people who come here to receive more than they give.

The small rural farm life can seem isolating to a city gal (I certainly thought it was), but I noticed this summer that you are extremely involved with the local community—far more than I am in Brooklyn. Can you talk about your relationship to your town? How is it different from when you lived in Denver?

MS: Because we live in a county of 6000 people, and among a village of 300 people, we have the ability to relate to people on a much more human level that is not transitory or disposable. We’ve helped start two small farmers markets to help build a local economy, not just a cash one, but for barter and trade and gifting. We’ve hosted a youth group to come out and learn about gardening, natural building and their relationship with the natural world. We hope to plant seeds in the youth that may bear fruit one day. Shell Oil Company is beginning to drill for oil and natural gas in our valley, and it’s very alarming. We’re trying to find ways to build relationships with others in our county, to not just stop the drilling but to help create an alternative economy where vulnerable people are not susceptible to predatory invaders who can splash a bit of cash around for a short time while deeply wounding the ecosystem. Because of the scale of the population, we can have more of an effect on county social and political issues than we ever could in a big city like Denver, where we used to live.

How has your off-the-grid life influenced your view of what is necessary?

VP: If one chooses to live simply, and especially if one has the wealth of a savings with which to begin such an enterprise, one can have a very good, healthy, happy life as a micro-farmer/home-steader—especially if one rejects the rugged individualist, pull-yourself-up-by-your-own-bootstraps American mythology that argues (wrongly) that we can somehow survive independent of relationships to others, ever–and lives in egalitarian community.

MS: Many people have gone on a trip somewhere —summer camp, a long backpacking trip, etc.—and realized how little they’ve needed to not just survive but to have a joyful life. We consider ourselves wealthy in many ways—we live on land, we eat food from the land, we drink clean water, we breathe clean air, we live along a river, wild animals live freely among us. The longer we’re living on the land, the more it’s hard for us to understand all that Stuff people consume in mainstream society. Are these things addictions to cope with what they’ve lost or don’t have? The most valuable thing in life is relationship. Capitalism has attempted to commodify and make relationships and peoples disposable. People and places are not consumable experiences. Each are complex beings that deserve mutual respect, caring and trust.

[Interview edited for length and clarity.]

Olga Kreimer is a writer and tutor currently living in Brooklyn. This summer, she successfully fought a rooster using only her words!
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A Conversation with Mark Greif About ‘The Trouble Is the Banks’

Logan Sachon — Tue, 13 Nov 2012 18:48:10 +0000
by Logan Sachon
The Trouble Is the Banks is a book of letters written by ordinary Americans detailing their experiences and frustrations with Wall Street during and after the financial disaster of 2007 and 2008. The letters were first compiled by the website Occupy the Boardroom, and the book was edited and put together by n+1. Excerpts have appeared in the New York Times. I consider the book required reading.

The book is available through the n+1 site and, as of today, on Amazon and in bookstores worldwide. I spoke with Mark Greif, a founder and editor of n+1 and editor of the book, by phone.

Logan Sachon: I’d love to hear how you feel about the letters. I spent Sunday reading it and I found it to be terribly depressing.

Mark Greif: Oh no! Well for me of course it’s more interesting to hear your reaction.

LS: Oh, don’t get me wrong. I liked it. I think it’s really interesting, really important. And the things that people are talking about—losing their homes, drowning in student loan debt—I knew these things were happening, of course, I knew the numbers were high. But there’s something different about reading story after story of it.

MG: And there were a number of letter writers that we weren’t able to include, because we weren’t able to reach them for permission. There was one incredible letter, from a guy and his wife, about their house that they loved. He had the letter that he sent initially to the bank, begging them to let him keep his home, and then he had the letter to us, explaining that they had lost it. But we couldn’t find him.

LS: And they all came in through the Occupy the Boardroom site?

MG: When the site initially launched, they put it together in like seven days. So some just didn’t include a name, some had names and info, some had emails, some didn’t. If there wasn’t a name or address and there was identifying information, we’d take that out and run it. But if there was a name or email, we felt like we had to try to get permission.

LS: Tell me how the book came about.

MG: I actually remember the exact night I found the original site. It was late, I’d been around in the occupation here in New York, and I’d watch live coverage of the other Occupy movements. I watched footage of Oakland and of Scott Olsen, the veteran, getting hit in the face with rubber bullets. I was traveling these tunnels of doom on the internet, you know, and I felt like the really specific demands—the concrete desires—were getting overshadowed by police violence and whether or not the protestors had showered or whatever. And then I came to this site and started reading these letters, and they’re all saying exactly what they want, articulating exactly what needs to happen.

I love the democratic way of letters. In the time of slavery, who got to be the postmaster general was a big deal because that’s how people organized. So I read these letters and I was really captivated by them. And then I learned that they planned to deliver the letters to the people they were addressed to, to deliver the letters to the banks. So I went to that.

LS: Just to see it?

MG: Right, not as an organizer, just as a participant. I volunteered to carry some of the letters. I would take them in to the reception desk, deliver them. We started out by the lions, at the 42nd street library, and we didn’t get very far. We got to the Bank of America, and it was barricaded. I was in the back by these guys in suits trying to get in, these Bank of America employees, and I tried to give them some of the letters—hey, guys, these are addressed to you—and some took them, some didn’t.

And then it was over, and I brought the letters that I hadn’t been able to give out home. And I put them on the chair, and I just started to feel guilty that I just had them. And these were just copies, but I felt like the letters could continue to tell this story. And because of my involvement with n+1, I had access to a printing press. So that’s how it started.

We did read all 8,000 letters. I did not read all 8,000, but together we read all of them. A friend loaned me her art studio for the day and I just started to pin them up and that’s how I did the first chapter.

LS: Do you have a favorite?

MG: One of my favorites is the letter from the carpenter. At the end he says, “What makes you feel better, madame?” And I just love that.

MG: One thing when you read these letters—if you watch TV, it’s easy to think that people in this country are dumb—but reading these letters, you realize our fellow Americans are kind of brilliant and eloquent. Even someone who doesn’t write much, if given an opportunity to speak on their situation, can do it and be smart and articulate. I love all the people that are over 70 and 80 years old and saying, if I could get out there, I would join the protestors.

Dayna Tortorici, Kathleen French, and Emma Janaskie, who also worked on the book, really love the letter accompanied by the painting. It was nice that in the process we got a sense of them, just from emailing. And that painting is really good, and very prophetic in a lot of ways. It was done before Occupy and Zuccotti.

LS: Can we talk about the sarcasm in a lot of the letters? There is a lot of it. And it really was starting to bug me—”Oh golly, bank CEO, I am so very excited to have you be my new pen pal”—but then I realized … well, how else can you assert your power, if you’re in this position of asking for help, or explaining an impossible circumstance? You’re writing a letter to a millionaire, the head of a bank. How else can you assert your agency?

MG: If you take a step back, you see these things that are weapons of the weak. Sarcasm. Some are pleading, even if they know that there’s really no chance that it’s going to lead to anything. But maybe it will. Maybe there’s a chance. But someone has to know.

LS: So what’s the plan. You’ve written about getting this book into the bankers’ hands.

MG: I’m very excited—we’re going to mail copies to all of the people addressed in the book. And I think there’s something special about the book, rather than a stack of papers or emails. It’s harder to throw out a book. Books encourage the habit of silent reading, promote consideration. They’re different than letters to the editor in that way. They stick around. I think people might be moved by them.

When I first was working through the letters, there were so many things that seemed wrong, like they must have been mistakes. There is a tendency to side with people who are more organized—the banks, the people in power. And when I looked up up the claims about fraudulent practices—they’re true. I was amazed at my own continued naivete, to disregard kind of, some of the letters. Like, was there really widespread discrimination against the disabled? And I guess it’s called ableism, thinking, there’s no way this is systematic. Because what we found is that it is. That’s why we put in the appendices.

LS: So few of the letters explicitly blame anyone.

MG: Yes. I’m also struck by the personal responsibility people take for themselves. Many admit to buying more house than they could afford, taking out more loans than they could afford. There’s the wisdom of time, and there is something very satisfying in seeing people own their choices, acknowledging they were fully reasonable and rational actors.

No one denies that American life is better and richer than 50 years ago, but the foundation that should be built under this isn’t there. It turns out I have a strong congenital optimism. I don’t think I’d seen the right to assembly used in my lifetime, and now I have. And to see it is inspiring.

People ask me if it makes a difference for people to read this book—executives at banks, legislators. And I don’t know. But I do feel that there is a lot of be hopeful for in that the middle-level level people in banking and finance and government, they’re the ones who are really making a lot of these very tiny decisions. I think people that work in banks are good people. I do think the heads of organizations can be ideologues, but I think most people are good people.

Someone asked me today, do you think it’s all over, that the only chance to do anything meaningful was in 2008, and we missed it? And I said, yes, 2008 was an opportunity. The absolute disaster of 2008 was an opportunity. But I don’t think all is lost. And well, another crash seems possible. Not that I’d want that, but who knows. It’s a time of change. I’m a literary person. I spent my whole life trying to avoid thinking about finance.

Mark Greif is a founder and editor of n+1. You can buy The Trouble Is the Banks from n+1 and on Amazon. You can also make a tax-deductible donation for a copy to be given to a banker at the n+1 site.
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