Love of Money

“For the love of money is the root of all evil: which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows.” – King James Bible, 1 Timothy 6:10

It should come as no surprise that no one is immune to the temptations of money. Not even the Amish.

My wife and I have long admired the Amish for their family values, self sufficiency, community cooperation, and marketing of back-to-basics goods (like quilts). One of our favorite general stores to visit is Lehman’s in Kidron, Ohio. It stocks everything the Amish and do-it-yourselfers could ever want. Last time we visited we bought wicks for our oil lanterns and root beer flavoring to make our own soda.

But lately I’ve seen several stories of troubles in the Amish community of northern Indiana. The traditional Amish life revolves around farming but when you have large families and new farm land is either very expensive or unavailable, something has to give. Many families have started businesses in furniture, wood crafts, quilting, buggy making, etc. In northern Indian, Amish men found they could earn high wages ($30-50 hour) in factories for the recreational-vehicle and modular-homes industries. The flush of cash created a "keeping-up-with-the-Joneses mentality,” Amish style.

Local bishop began allowing the use of telephones, fax machines and web sites for businesses. [When shopping for a quilt in Pennsylvania at an Amish home business we noted that the room was lit by a gas lantern but they did have a modern credit card reader.] "People wanted bigger weddings, newer carriages." The WSJ states

it became common practice for families to leave their carriages home and take taxis on shopping trips and dinners out. Some Amish families bought second homes on the west coast of Florida and expensive Dutch Harness Horses… Others lined their carriages in dark velvet and illuminated them with battery-powered LED lighting. … Instead of asking neighbors for help, well-to-do Amish began hiring outsiders so they wouldn't have to reciprocate.

But the “good times” came crashing down last fall when the recreational-vehicle industry began layoffs and shutdowns. Traditionally the Amish would help each other, but nearly half the households had become dependent on the manufacturing income, so for the first time ever, local bishops allowed followers to seek unemployment benefits. Fears of an Amish mortgage crisis resulted in a run on an Amish owned bank.

Bottom Line

No one is immune from overspending and unemployment. Everyone needs to live within their means and have an emergency savings. Beware the love of money. No exceptions.

Ironically the AARP has published a guide to managing your money called "50 Ways to Love your Money"

On the lighter side

Something else I've long admired is the work of Weird Al Yankovic. The video for his song "Amish Paradise" is one of his best. See if you can spot the lyrics he borrowed from Gilligan's Island.
www.youtube.com/watch?v=is3t4Ixq_YQ

Financial Fire Drill

"I'm quite worried about the fiscal imbalances that we've got and what that might mean in terms of financial crisis ahead" - Bill Gates

Today's article has a long history. The Consumerist has an excellent blog posting called Prepare For A Budget Meltdown By Conducting A Financial Fire Drill. It summarizes a story by the NYT, Preparing Your Budget for Disaster which is turn is referencing a book called “The Two Income Trap.” So now that I've credited all concerned, here's the details...

You're fired! Now what? It's the nightmare scenario, and you can prepare for it by conducting a financial drill. Take a moment and pretend you have no income. Ask how you would pay pay for rent and food, and what lifestyle changes you could make on two week's notice. - Consumerist

Spending
When your earnings are reduced, you must cut your spending to match. "Restaurants, movies, cable, vacations, all of these can go."

Maintain & Reuse
Avoid buying anything new by using what you have until it literally breaks down or falls apart. Patch your clothes, fix things that break, drive your car until it is no longer road safe. I my family we drive our cars for about 10 years until our mechanic says they can no longer pass inspection (rust) or repairs exceed the current value of the car.

Borrow
Since your credit will dry up as your financial situation worsens, tap your credit lines while they're still available. But don't dig yourself into a hole you can not pay back. With the recession/depression you might be unemployed for a long time (it took me 6 months after I was laid off). Borrow only in case of emergency and only if you're confident you have funds to pay the monthly payments.

Readjust Your Assets
In my case most of my funds are in higher risk mutuals since retirement is years away. But if you have no job you might be forced to cash in your stocks and mutuals early. In this case it can be a rude shock when a market collapse like 2008 wipes out 50% or more of your nest egg. Consider moving your money to more conservative accounts until you start earning again.
Consider how much you can pull from your 401(k) and Roth IRA without incurring penalties. The Consumerist and NYT have the details.

Bottom Line
Keep in mind this posting is about a financial emergency like unemployment, NOT a way to find quick cash to buy a giant plasma TV for the Superbowl game. Borrowing to buy luxury goods is always a bad idea.

Surviving a Layoff

"If you don't have any friends, relatives or neighbors whose job is currently on the chopping block, it's probably because you don't have any friends, relatives or neighbors." - MICHELLE GOODMAN, ABC News

Not all disasters are natural. In 2008 many large financial companies have taken huge losses resulting in massive layoffs. The media industry is struggling and many others I suspect. As someone currently job hunting due to a layoff I can verify that this is a horrible time to be unemployed.

If you are in the same boat I am or if you're worried that you might be laid off, then I recommend the ABC News article, "The Ultimate Layoff Survival Guide."
The columnist makes several excellent suggestions for the newly laid off:

1) Reign in your emotions. (don't do anything stupid that you'll regret)
2) Grab your valuables. (when cleaning out your desk don't forget work samples, letters of commendation, and great reviews)
3) Don't leave benefits on the table. (know what termination benefits you're entitled to)
4) Take the government handout. (State unemployment benefits ain't much, but it helps)
5) Put a positive spin on it. (Enjoy the time off and don't criticize your former company)

Bottom Line
Don't downplay the first item on the list - emotions. I've gone through exactly what she's described: "peeved, depressed [&] incredibly freaked out". You only hurt yourself by being snappish and angry.