Last week I met a man who was enraged. Like so many of us, he had lost about forty percent of the value of his investment portfolio, and he was at a loss to figure out where to put his anger. Yet he sensed that the other side of his anger and grief, there was a different perspective. He was anxious to get there, to be free of his distress. He wanted to move on.
Most of us weren’t dealing with confessed fraudsters like Bernie Madoff. So should we be angry at our advisors? Maybe. Certainly, Bernie Madoff and his like should be put in prison, regulation should be re-written and actually enforced, and the pay structure at financial institutions should be brought in line with performance over some reasonable time frame.
But I think there is a bigger issue here. I think most of us are really angry at ourselves. At least for a short time, we believed in bubbles. We believed that real estate prices would go up and up. We believed that the inflated price our neighbor received selling last year would drive the price of our own homes next year.
We believed that credit would always be easy to get. We believed that huge financial institutions could not, would not fail. And, most dangerous of all, we believed that the crazy things that happened in some markets (sub-prime, alt-A, CDOs) would not affect us as long as we were not directly participating in those markets. We were wrong.
I think this means that if we want to get past our anger, we need to stop looking outward and start looking at our own lives. Fundamentally, this is a moral crisis. We had money, we thought, and now we have less of it. Things like this happen, as the disclosures on our brokerage accounts and retirement funds say: You can lose money. If your financial advisor told you otherwise, then your advisor may belong in jail with Bernie.
We were wrong. We lost money. And now we need to forgive ourselves for it.
If anger at our advisors represents the first layer of the onion, and anger at ourselves is the second, then the next layer of the onion is fear that we may run out of money. Thirty-somethings are a lot more likely to be able to shrug off big losses than sixty-somethings, who have less time to catch up. Those of us who are older are facing the necessity to retire later than we planned, work part-time in retirement, travel less than we had dreamed, or make other adjustments along two themes: planning and stewardship.
I’m a planner by nature, creating alternatives for a variety of contingencies, so this is second nature to me. I chose my house partly because it has a first floor bedroom and bath, although I trust I am a good thirty years from needing to live on one floor with a caretaker upstairs.
If I lose more money before the time I need to start drawing on my retirement plans, I can sell my house and live somewhere more modest. That’s a contingency plan, and it is also a nod to stewardship, by which I mean not taking more than I need.
Right now, I live on two acres, I drive a car that gets 36 miles to the gallon, and I limit my trips to my Burlington office to two per week. I compost. I garden. Could I do more? Yes. I could live in a smaller house, even shared space. I don’t want to do that because I am a very private person, and I love having large dogs. But if I had to give up privacy and dogs, I could do it.
Not everyone is as fortunate. Many people in these times have cut their use of resources, their own and those of the wider world, to the bone. So they need more from the rest of us. That means our charitable contributions, our taxes, the prices of goods and services are going up. Which brings me to the next layer of the onion: anger at other people who now need help so desperately, our anger that drives a wedge between humans.
And our anger was supposed to be about money? No, it is about unfairness, taking more than belongs to us, stewardship of our own and others’ resources, forgiveness of others who need our help more than ever, and perhaps most of all, forgiveness of ourselves. Once we get past the moral dimensions of this crisis, we can focus on rebuilding financial plans.
Sunday, April 05, 2009
Sunday, March 22, 2009
Living on the Far Side
One day last week as I drove up the hill where I live, I looked to the left and counted thirteen in my neighbor’s front yard, then another fourteen to the right in the open fields.
A few days without snow cover, and there is grass to eat, but the deer seem to have to range far to find enough. They are out at dawn and at dusk, as we might expect, but also in broad mid-day. The deer are hungry.
Constrained to the house more than usual, my dogs watch out the windows and let me know when more deer appear. I have become vigilant, doing a complete scan all around the house before anyone goes out even for a quick pee or to run the ten yards or so to the fenced dog run. Still, a couple of times when I thought there were no deer, we stepped outside to see a whirl of white tails. Thank goodness, my dogs come when they are called, at least if I speak quickly before they are in full pursuit.
The deer seem to be getting stronger, but they don’t move away quickly even when human or car approaches. They stand and stare, as if to say, “Please, let us eat this nice grass. There is nothing for us in the woods.” It’s a little spooky, a little like living in a Far Side cartoon. It makes me feel as if I should rush from car to house and lock the door, lest I hear the sound of hooves on the front porch and see antlers framed in the front windows.
Meanwhile, the back window—one of only two on that north-facing side of the house—has broken. No trees nearby, no falling snow or ice. I have to wonder if a bird flew into it with enough force to crack the glass. And from the front windows, I just saw a flash of black and white fur. Skunks back in the barn. Nature is on the move. It must be spring.
A few days without snow cover, and there is grass to eat, but the deer seem to have to range far to find enough. They are out at dawn and at dusk, as we might expect, but also in broad mid-day. The deer are hungry.
Constrained to the house more than usual, my dogs watch out the windows and let me know when more deer appear. I have become vigilant, doing a complete scan all around the house before anyone goes out even for a quick pee or to run the ten yards or so to the fenced dog run. Still, a couple of times when I thought there were no deer, we stepped outside to see a whirl of white tails. Thank goodness, my dogs come when they are called, at least if I speak quickly before they are in full pursuit.
The deer seem to be getting stronger, but they don’t move away quickly even when human or car approaches. They stand and stare, as if to say, “Please, let us eat this nice grass. There is nothing for us in the woods.” It’s a little spooky, a little like living in a Far Side cartoon. It makes me feel as if I should rush from car to house and lock the door, lest I hear the sound of hooves on the front porch and see antlers framed in the front windows.
Meanwhile, the back window—one of only two on that north-facing side of the house—has broken. No trees nearby, no falling snow or ice. I have to wonder if a bird flew into it with enough force to crack the glass. And from the front windows, I just saw a flash of black and white fur. Skunks back in the barn. Nature is on the move. It must be spring.
Monday, November 03, 2008
Don't jump
From a family member:
A protester's sign in front of the New York Stock Exchange: "Jump you fuckers!" with the comment "I try not to forward things, but I just had to send this. Points for creativity and brevity of message."
My response:
Zero points for forgetting that your sister worked across the street from the New York Stock Exchange for seventeen years.
It's fun to demonize someone else, isn't it? But the majority of people who work in financial services in New York are just regular folks, trying to cover their bills. Think folks like Doug and Carrie in The King of Queens--that's what most people who work in financial services are like. Then there is a layer of professionals very like me...in fact I was one of them.
The financial industry expands and contracts much more than other industries. I haven't seen the job loss numbers in a few weeks, but I seem to recall losses of over 170,000 jobs in the last survey I saw. That's not just in banks, investment banks and insurance companies--it also affects cab drivers, coffee shops, hair salons.
I can tell you from personal experience in 1998 when I was laid off the first time that it is a double hit when these waves of job reductions occur. Not only do you not have your old paycheck, but there are very few jobs to compete for. And the bills keep coming. Not surprisingly, there were a few people who jumped. One woman I knew jumped under a subway car.
I know you didn't intend to offend me, and you didn't. But I do find these flip responses annoying. There is plenty of blame to go around for this crisis, and plenty of pain as well.
Was there greed on Wall Street? Yes. But if you rounded up the people who were driven solely by greed, I believe you would be able to fit them in the average small town high school gymnasium. Add the ones who simply did not understand the complexities of the financial instruments they were selling, and then you need a much bigger venue.
But that is the nature of the financial industry. Do you think that the people who sell variable annuities with guaranteed income streams really completely understand the embedded risks? Very few do. We have to rely on regulators to bullet-proof the products that are sold, and regulation tends to focus on the general public, not on the supposedly sophisticated investors that bought mortgage backed securities. Regulators failed us in the years since mortgage requirements were relaxed. And individuals who took out mortgages that they couldn't afford deserve blame as well. Plenty of blame to go around.
Personally, I have lost about 40% of my retirement savings if you measure it today. But I have great confidence in the US financial system to rebound. I was on Wall Street (literally, in an office overlooking the New York Stock Exchange) in 1987 when the market crashed.
And I was there on 9/11/01. We really thought the world was ending then. This crisis does not feel anywhere near as bad as that--we were unsure whether the markets or the city itself would survive the attack. An attorney I worked with briefly appeared on the front page of the New York Post head down on his way out of an upper floor window of the World Trade Center. Another jumper.
From one of our recent newsletters, here are a few other downturns for your consideration:
October 1973: Arab Oil Embargo launced a financial crisis, time to market improvement was 12 months
October 1974: Franklin National bank collapse (bankruptcy), time to market improvement was 2 months
May 1984: Continental Illinois bankruptcy, time to market improvement was 2 months
May 1986: Drexel Burnham Lambert bankruptcy, time to market improvement was 2 months
October 1987: US market crash (financial crisis), time to market improvement was 2 months
February 1995: Barings Bank bankruptcy, time to market improvement was 0 months
September 2001: 9/11 attacks (political crisis) time to market improvement was 12 months
There is no guarantee, of course, that we will see a near term recovery in the markets, but my experience of past downturns gives me a lot of confidence in the future.
And I hope that nobody jumps over loss of a job or part of an IRA.
A protester's sign in front of the New York Stock Exchange: "Jump you fuckers!" with the comment "I try not to forward things, but I just had to send this. Points for creativity and brevity of message."
My response:
Zero points for forgetting that your sister worked across the street from the New York Stock Exchange for seventeen years.
It's fun to demonize someone else, isn't it? But the majority of people who work in financial services in New York are just regular folks, trying to cover their bills. Think folks like Doug and Carrie in The King of Queens--that's what most people who work in financial services are like. Then there is a layer of professionals very like me...in fact I was one of them.
The financial industry expands and contracts much more than other industries. I haven't seen the job loss numbers in a few weeks, but I seem to recall losses of over 170,000 jobs in the last survey I saw. That's not just in banks, investment banks and insurance companies--it also affects cab drivers, coffee shops, hair salons.
I can tell you from personal experience in 1998 when I was laid off the first time that it is a double hit when these waves of job reductions occur. Not only do you not have your old paycheck, but there are very few jobs to compete for. And the bills keep coming. Not surprisingly, there were a few people who jumped. One woman I knew jumped under a subway car.
I know you didn't intend to offend me, and you didn't. But I do find these flip responses annoying. There is plenty of blame to go around for this crisis, and plenty of pain as well.
Was there greed on Wall Street? Yes. But if you rounded up the people who were driven solely by greed, I believe you would be able to fit them in the average small town high school gymnasium. Add the ones who simply did not understand the complexities of the financial instruments they were selling, and then you need a much bigger venue.
But that is the nature of the financial industry. Do you think that the people who sell variable annuities with guaranteed income streams really completely understand the embedded risks? Very few do. We have to rely on regulators to bullet-proof the products that are sold, and regulation tends to focus on the general public, not on the supposedly sophisticated investors that bought mortgage backed securities. Regulators failed us in the years since mortgage requirements were relaxed. And individuals who took out mortgages that they couldn't afford deserve blame as well. Plenty of blame to go around.
Personally, I have lost about 40% of my retirement savings if you measure it today. But I have great confidence in the US financial system to rebound. I was on Wall Street (literally, in an office overlooking the New York Stock Exchange) in 1987 when the market crashed.
And I was there on 9/11/01. We really thought the world was ending then. This crisis does not feel anywhere near as bad as that--we were unsure whether the markets or the city itself would survive the attack. An attorney I worked with briefly appeared on the front page of the New York Post head down on his way out of an upper floor window of the World Trade Center. Another jumper.
From one of our recent newsletters, here are a few other downturns for your consideration:
October 1973: Arab Oil Embargo launced a financial crisis, time to market improvement was 12 months
October 1974: Franklin National bank collapse (bankruptcy), time to market improvement was 2 months
May 1984: Continental Illinois bankruptcy, time to market improvement was 2 months
May 1986: Drexel Burnham Lambert bankruptcy, time to market improvement was 2 months
October 1987: US market crash (financial crisis), time to market improvement was 2 months
February 1995: Barings Bank bankruptcy, time to market improvement was 0 months
September 2001: 9/11 attacks (political crisis) time to market improvement was 12 months
There is no guarantee, of course, that we will see a near term recovery in the markets, but my experience of past downturns gives me a lot of confidence in the future.
And I hope that nobody jumps over loss of a job or part of an IRA.
Tuesday, August 19, 2008
Sunshine at my back
Recovery of a window in my dining room has had more impact than I ever could have expected. The light is different throughout the entire ground floor, all four rooms in this simple and traditional Vermont farmhouse.
As I sit in my new most favorite place, I can see out windows in all four directions. First, I imagine eyes in the back of my head, looking across the porch to the dawn. To my left are two majestic maple trees and a wide expanse of pasture, the old dairy barn in the foreground. Ahead, I glimpse the crabapple, which seems to bloom only one year in three, periodic victim to harsh Vermont winters. Beyond the crabapple, the forsythia, even more sensitive, and beyond that, the valley stretches down to the village. To my right, perhaps the most fraught, a single small window looks to the maple grove and the northern wind. Vermont farmers knew how to build, windows few and small to the north, many and expansive to the south.
I could sit in this spot for years, analyzing portfolios and answering correspondence. Puppies at my feet. A pot of tea at the ready. Taking breaks to run to the raspberry patch or the vegetable garden. Perhaps I’ll get a chicken or a few.
The downside of my new profession is that I must, must, must make calls to people I know little or not at all. If the payoff is sitting with the sun at my back and German Shepherds on my feet, I’ll hit that bid all day long.
As I sit in my new most favorite place, I can see out windows in all four directions. First, I imagine eyes in the back of my head, looking across the porch to the dawn. To my left are two majestic maple trees and a wide expanse of pasture, the old dairy barn in the foreground. Ahead, I glimpse the crabapple, which seems to bloom only one year in three, periodic victim to harsh Vermont winters. Beyond the crabapple, the forsythia, even more sensitive, and beyond that, the valley stretches down to the village. To my right, perhaps the most fraught, a single small window looks to the maple grove and the northern wind. Vermont farmers knew how to build, windows few and small to the north, many and expansive to the south.
I could sit in this spot for years, analyzing portfolios and answering correspondence. Puppies at my feet. A pot of tea at the ready. Taking breaks to run to the raspberry patch or the vegetable garden. Perhaps I’ll get a chicken or a few.
The downside of my new profession is that I must, must, must make calls to people I know little or not at all. If the payoff is sitting with the sun at my back and German Shepherds on my feet, I’ll hit that bid all day long.
Monday, August 18, 2008
German Shepherds on my feet
As I spend more time working from home, my contentment in this house grows. I find myself tweaking furniture placement, finishing up construction projects, opening the curtains wider to better enjoy the views. To the east and south, the Nebraskas lie beyond wide vistas of pasture, forest and valley. Out back, old Mr. Trombley’s prized maple grove still stands. The trees are enormous and very old. Nobody taps them now, and every now and then one falls. Except for half a dozen, they stand on my neighbor’s land, and none is near enough to threaten my cozy nest. There is only one window to the back, not a very large one, the winds of winter coming from that direction, but I can see the maple grove from here.
My dining room, where I now sit and type, is all new since yesterday, the culmination of a project to remove a clumsily placed closet and put in its place my large breakfront cabinet, formerly in front of a window. There are now three windows in this room, and the entry way is more graceful. From the porch, you have a welcoming view right into the dining room, or at least it is welcoming to those already acquainted with my two German Shepherds. And from the dining room, you can see out to the porch, orange and gold nasturtiums perched all around the rail. Sunrise happens through this window, and before today I had never seen it save from the porch.
I’m working through what it means to work from home. Do I have my office-office and my home-office in the same space? Will I really allow clients into my home? Do I try to create an upstairs space that is psychically extra-personal? How do I feel about cluttering the dining room with laptop and files? All of these are good and intriguing questions. In the winter, this room with its three windows, two interior doors and one exterior door may be chilly, but right now I sit with the dawn at my back, views to the outdoors on every side, and toasty German Shepherds on my feet.
My dining room, where I now sit and type, is all new since yesterday, the culmination of a project to remove a clumsily placed closet and put in its place my large breakfront cabinet, formerly in front of a window. There are now three windows in this room, and the entry way is more graceful. From the porch, you have a welcoming view right into the dining room, or at least it is welcoming to those already acquainted with my two German Shepherds. And from the dining room, you can see out to the porch, orange and gold nasturtiums perched all around the rail. Sunrise happens through this window, and before today I had never seen it save from the porch.
I’m working through what it means to work from home. Do I have my office-office and my home-office in the same space? Will I really allow clients into my home? Do I try to create an upstairs space that is psychically extra-personal? How do I feel about cluttering the dining room with laptop and files? All of these are good and intriguing questions. In the winter, this room with its three windows, two interior doors and one exterior door may be chilly, but right now I sit with the dawn at my back, views to the outdoors on every side, and toasty German Shepherds on my feet.
Thursday, August 07, 2008
August morning
On Sunday, my friend shook his head sadly. He travels throughout the region, and already he was seeing leaves—just a few—changing on the trees at elevation. Surely, I rejoined, it must be only stressed trees. We were only a few days into August. And we scarcely feel we have had a summer, so much rain have we had this year.
Ten inches one week. The farmers despair of their hay. Children are whining, and so are adults. We are missing the opportunity to soak our bones in intense summer sunshine, to pack away remembrance of warmth during the proverbial two weeks of Vermont summer. We specially need warmth now, as we face winter with unprecedented fuel prices.
Today as I walked to my car, I could no longer deny the signs. Not one colored leaf, but many. True, I don’t see them in the branches yet, but all over the front lawn lies confetti of red and gold. August 7. Usually, we get another week or even two before a certain chill turns the air, and we know. Winter is on the way.
Life will speed up now. There are kids to get ready for school, insulation to wrap around pipes, wood to stack, vegetables to freeze. Once we see those first leaves and feel that first chill, it’s time to get busy.
Monday, August 04, 2008
Counting blessings
Much to my surprise, the evening news played “Happy Birthday.” After a moment’s surprise that my quiet celebration had national coverage, I realized that Barack Obama shares my birthday.
In accordance with long-standing tradition, I took the day off. I believe my birthday should be a holiday. After many years of more success than error, I am careful what I choose to do with the day. The most memorable birthdays are the least planned, but the most carefully engaged. My birthday is a day when I am likely to get in the car, head for the bottom of the driveway and only then decide which way to turn. Sometimes I get promises for my birthday; I still owe myself a kayaking lesson from last year. And one day I will collect.
Today we started with a good, long swim in the Little River. The dogs splashed, swam and attempted to herd several Golden Retrievers and one prim, immaculate little pit bull girl. It was raining, sure, but after rain every single day in July—ten inches last week—we couldn’t wait any longer for swimming. Last year we went swimming twice a day.
A nice lunch, a glass of wine, a nap, and a trip to the raspberry patch took up most of the afternoon. A few household chores. I may be almost to the end of the laundry backlog. A thought of cutting some grass in the afternoon, but the mower refused, and I took it as a sign. A good book. A short walk down to see Cassie’s best friend. Most of all, a staunch refusal to think about messy details of life and work. Today is not a day for worry but a day to savor all my blessings.
Dinner over, I stepped out to consider the pile of wood that still needs to be thrown into the cellar. The work is soothing, even meditative, but I am careful not to overdo. I threw a few logs down cellar, then stood still for a moment, enjoying the rainbow over Mount Elmore.
Across from my house are two spots rainbows are almost certain to occur after a bit of rain and the sidewise slant of Vermont light. Sometimes the two are connected by one gigantic bow, often double, even triple rows of color. They are stunning, gorgeous, predictable, yet wholly a gift, just perfect for a watchful birthday girl counting her blessings.
In accordance with long-standing tradition, I took the day off. I believe my birthday should be a holiday. After many years of more success than error, I am careful what I choose to do with the day. The most memorable birthdays are the least planned, but the most carefully engaged. My birthday is a day when I am likely to get in the car, head for the bottom of the driveway and only then decide which way to turn. Sometimes I get promises for my birthday; I still owe myself a kayaking lesson from last year. And one day I will collect.
Today we started with a good, long swim in the Little River. The dogs splashed, swam and attempted to herd several Golden Retrievers and one prim, immaculate little pit bull girl. It was raining, sure, but after rain every single day in July—ten inches last week—we couldn’t wait any longer for swimming. Last year we went swimming twice a day.
A nice lunch, a glass of wine, a nap, and a trip to the raspberry patch took up most of the afternoon. A few household chores. I may be almost to the end of the laundry backlog. A thought of cutting some grass in the afternoon, but the mower refused, and I took it as a sign. A good book. A short walk down to see Cassie’s best friend. Most of all, a staunch refusal to think about messy details of life and work. Today is not a day for worry but a day to savor all my blessings.
Dinner over, I stepped out to consider the pile of wood that still needs to be thrown into the cellar. The work is soothing, even meditative, but I am careful not to overdo. I threw a few logs down cellar, then stood still for a moment, enjoying the rainbow over Mount Elmore.
Across from my house are two spots rainbows are almost certain to occur after a bit of rain and the sidewise slant of Vermont light. Sometimes the two are connected by one gigantic bow, often double, even triple rows of color. They are stunning, gorgeous, predictable, yet wholly a gift, just perfect for a watchful birthday girl counting her blessings.
Saturday, August 02, 2008
Stacking wood
The decision to purchase more wood is easy. Finding a seller is easy. Then starts the hard work of getting the wood in.
Over the last two years, mostly last year as my confidence in the wood furnace improved, I burned almost two cords of wood, primarily on weekends. Circumstances have altered, and I now expect to be working locally two to three days a week, so I can burn more wood. Certainly economics would suggest more wood and less oil. So I ordered six cords.
Mind you, it took me months to get the last wood into the cellar. The delivered pile was just slightly downhill from the wood chute, requiring an intimate relationship with the wheel barrow. Load, move, drop into cellar, move, stack.
This year’s deliveries are a little closer, and the outside work is easier. Still, it’s drop, move, stack. Then do it again. And again. Great exercise—aerobics and weight lifting all in one. And the work is highly, highly meditative. Just what I need as long as I’m careful not to overstrain my fifty-ish un-athletic back and knees.
My professional changes are much the same. It’s easy to make the decision to go from a marketing role to a sales and business advisory role. It’s easy to make lists of people to call, and I have a strong enough network of past relationships that many people will do me the courtesy of seeing me. Just like it’s easy to order the wood. The challenge will be to see if I can keep doing the daily lifting.
By the time winter closes in, I should have some idea if I can stay the course. Sure hope my wood is in by then.
Over the last two years, mostly last year as my confidence in the wood furnace improved, I burned almost two cords of wood, primarily on weekends. Circumstances have altered, and I now expect to be working locally two to three days a week, so I can burn more wood. Certainly economics would suggest more wood and less oil. So I ordered six cords.
Mind you, it took me months to get the last wood into the cellar. The delivered pile was just slightly downhill from the wood chute, requiring an intimate relationship with the wheel barrow. Load, move, drop into cellar, move, stack.
This year’s deliveries are a little closer, and the outside work is easier. Still, it’s drop, move, stack. Then do it again. And again. Great exercise—aerobics and weight lifting all in one. And the work is highly, highly meditative. Just what I need as long as I’m careful not to overstrain my fifty-ish un-athletic back and knees.
My professional changes are much the same. It’s easy to make the decision to go from a marketing role to a sales and business advisory role. It’s easy to make lists of people to call, and I have a strong enough network of past relationships that many people will do me the courtesy of seeing me. Just like it’s easy to order the wood. The challenge will be to see if I can keep doing the daily lifting.
By the time winter closes in, I should have some idea if I can stay the course. Sure hope my wood is in by then.
Wednesday, July 16, 2008
Let us be thankful (lest we weep)
The $1200 wood bill has been trumped by heating oil at $5 a gallon and propane upwards of $4. If I burned the same amount of fuel as last year but at this year’s prices, the total cost to heat my house would be $4,000, double last year’s bill. Ouch.
Fortunately, I have the ability to burn either wood or oil in my furnace, so will switch the percentage to as much wood as I can manage. The limiting factor is that I can only burn wood when I am home to run up and down the stairs and put logs on the fire. So if I plan to burn wood four to five days a week and all evenings, I think I can cut my bill to $3,000. Still painful, but better.
As you may imagine, the “prebuy” is the hot new topic wherever Vermonters congregate. As in “Didja get your prebuy yet?” Translation: “Have you heard from the oil (or gas) company what their price will be for the coming heating season?” There’s a level of obsession with the coming winter that we don’t usually see until the first crisp turn of the air in mid-August.
The prebuys are just now out. The fuel oil companies have been having trouble coming up with plans they can live with. Mine is offering $5 a gallon if you buy now, with a couple of adjustments for good credit and paying by check. How else would you pay? Oh, maybe credit card? That would be dire.
Alternatively, you can pay $4.80 for the oil and 40 cents for a cap for a total of $5.20. Then you can pay by the month. And if the price goes down, you pay the lower price. Worth it? I’m not sure. And there is a time value of money calculation I need to do as well. From a psychological point of view, I would rather pay once and not worry further. But I am fortunate to be able to do so.
These small fuel oil companies are really hurting. They buy oil at a price and sell it at a markup, but they can get hammered if prices go against them. Even the little guys are pretty adept at hedging, but these markets are making everyone queasy. Further, as prices go up, so do the odds that they will not get paid, and you can’t really repossess oil from a home tank. Aside from the human and political angles, there is sludge at the bottom of most tanks. So they deliver smaller amounts and sometimes insist on getting paid before delivery. More, smaller deliveries mean higher costs for their trucks and drivers.
The politicians and the non-profits are ramping up for a tough winter. Unless the weather is unusually warm, they are expecting to need to open up gymnasiums and armories as temporary shelters for people who simply cannot heat their homes. Winter in Vermont is beautiful but can be deadly.
The only happy campers these days are the wood guys. Their costs have gone up to some degree, but nothing like the rise in prices. Me, I’m grateful to be able to soften the price rise by shifting to more wood. It’s a rare opportunity, not to be repeated until I retire and can stay home most days happily feeding the wood furnace. But that’s more than a decade away, and who knows what energy future we will face by then?
Note: Just so you know. I will not be accepting political or merely cynical comments on this or any of my posts. You certainly have the right to hold whatever opinions you hold. But this blog is not the place for them.
Fortunately, I have the ability to burn either wood or oil in my furnace, so will switch the percentage to as much wood as I can manage. The limiting factor is that I can only burn wood when I am home to run up and down the stairs and put logs on the fire. So if I plan to burn wood four to five days a week and all evenings, I think I can cut my bill to $3,000. Still painful, but better.
As you may imagine, the “prebuy” is the hot new topic wherever Vermonters congregate. As in “Didja get your prebuy yet?” Translation: “Have you heard from the oil (or gas) company what their price will be for the coming heating season?” There’s a level of obsession with the coming winter that we don’t usually see until the first crisp turn of the air in mid-August.
The prebuys are just now out. The fuel oil companies have been having trouble coming up with plans they can live with. Mine is offering $5 a gallon if you buy now, with a couple of adjustments for good credit and paying by check. How else would you pay? Oh, maybe credit card? That would be dire.
Alternatively, you can pay $4.80 for the oil and 40 cents for a cap for a total of $5.20. Then you can pay by the month. And if the price goes down, you pay the lower price. Worth it? I’m not sure. And there is a time value of money calculation I need to do as well. From a psychological point of view, I would rather pay once and not worry further. But I am fortunate to be able to do so.
These small fuel oil companies are really hurting. They buy oil at a price and sell it at a markup, but they can get hammered if prices go against them. Even the little guys are pretty adept at hedging, but these markets are making everyone queasy. Further, as prices go up, so do the odds that they will not get paid, and you can’t really repossess oil from a home tank. Aside from the human and political angles, there is sludge at the bottom of most tanks. So they deliver smaller amounts and sometimes insist on getting paid before delivery. More, smaller deliveries mean higher costs for their trucks and drivers.
The politicians and the non-profits are ramping up for a tough winter. Unless the weather is unusually warm, they are expecting to need to open up gymnasiums and armories as temporary shelters for people who simply cannot heat their homes. Winter in Vermont is beautiful but can be deadly.
The only happy campers these days are the wood guys. Their costs have gone up to some degree, but nothing like the rise in prices. Me, I’m grateful to be able to soften the price rise by shifting to more wood. It’s a rare opportunity, not to be repeated until I retire and can stay home most days happily feeding the wood furnace. But that’s more than a decade away, and who knows what energy future we will face by then?
Note: Just so you know. I will not be accepting political or merely cynical comments on this or any of my posts. You certainly have the right to hold whatever opinions you hold. But this blog is not the place for them.
Monday, July 14, 2008
Burn, burn, burn
Today I contracted for my wood. Two cords of dry at $250 a cord, four cords of green at $175. By the time I burn the two dry, the green should be ready.
The Vermonter who came to talk about cutting up fallen trees in my neighbor’s maple grove gave me lessons in wood economics. A house the size of mine could use 8-10 cords in a winter if I burned only wood, he says. I can believe it. Last year I burned 2 cords only on weekends. And this winter, I expect to be home more during the week.
He quoted me the above price, but wasn’t all that anxious to sell. He can stockpile till November then likely get $375 a cord over in Stowe where people have more money. I called someone I had heard had a better price, but they were at $225 for green with an eight-week waiting period. They aren’t even selling their dry wood yet. Not till November.
So altogether, I have now committed $1200 for wood. Tomorrow I call to find out what the prices are for fuel oil (I have an almost full tank to start, thank heaven) and for propane (I only burn a little, to knock off the chill in the living room). This year the chill may stay unknocked.
My friends and neighbors say the pre-buy programs are, well, quite unattractive. That’s the Vermont way of saying we are terrified. Usually we don’t start obsessing about fuel costs until the second or third week of August. I count myself fortunate that I have the option to burn wood as well as oil in my furnace. And that I have two dogs to pile on the covers on winter nights. Not all my neighbors are so lucky.
In a day or two, the first load of wood will appear on the side lawn. And I will proceed to shove it through a window into the cellar and stack it. Conventional wisdom is that wood warms you twice, once when you split it and again when you burn it. My Vermont neighbors reckon that this calculation comes up short; it’s more like seven times they say. Cut, split, stack, load, unload, stack, and finally burn.
The wood guy suggested that he deliver two cords at a time, a few days apart, “to give me time to get it in and stacked.” He was dead serious. He had no idea that last year it took me weeks to get two cords into the cellar.
Guess I will have to do better if I aspire to be a wood-burning Vermonter. Aerobics and weight training, all at once. Wish me luck. Better yet, come on over.
The Vermonter who came to talk about cutting up fallen trees in my neighbor’s maple grove gave me lessons in wood economics. A house the size of mine could use 8-10 cords in a winter if I burned only wood, he says. I can believe it. Last year I burned 2 cords only on weekends. And this winter, I expect to be home more during the week.
He quoted me the above price, but wasn’t all that anxious to sell. He can stockpile till November then likely get $375 a cord over in Stowe where people have more money. I called someone I had heard had a better price, but they were at $225 for green with an eight-week waiting period. They aren’t even selling their dry wood yet. Not till November.
So altogether, I have now committed $1200 for wood. Tomorrow I call to find out what the prices are for fuel oil (I have an almost full tank to start, thank heaven) and for propane (I only burn a little, to knock off the chill in the living room). This year the chill may stay unknocked.
My friends and neighbors say the pre-buy programs are, well, quite unattractive. That’s the Vermont way of saying we are terrified. Usually we don’t start obsessing about fuel costs until the second or third week of August. I count myself fortunate that I have the option to burn wood as well as oil in my furnace. And that I have two dogs to pile on the covers on winter nights. Not all my neighbors are so lucky.
In a day or two, the first load of wood will appear on the side lawn. And I will proceed to shove it through a window into the cellar and stack it. Conventional wisdom is that wood warms you twice, once when you split it and again when you burn it. My Vermont neighbors reckon that this calculation comes up short; it’s more like seven times they say. Cut, split, stack, load, unload, stack, and finally burn.
The wood guy suggested that he deliver two cords at a time, a few days apart, “to give me time to get it in and stacked.” He was dead serious. He had no idea that last year it took me weeks to get two cords into the cellar.
Guess I will have to do better if I aspire to be a wood-burning Vermonter. Aerobics and weight training, all at once. Wish me luck. Better yet, come on over.
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