Dave Barry's Money Secrets (2 page)

2

HOW THE U.S. ECONOMY WORKS

Adam Sandler Is Involved

T
HE ECONOMY IS A LARGE, complicated thing that is difficult for regular untrained people like you to understand. Fortunately, in college I took economics for the better part of an entire semester, during which I took time out from my busy schedule to attend several actual classes. So in this chapter I will explain how the economy works, with certain key words in boldface type to indicate that they are darker than the other words.

The largest single item in the economy is the
Gross National Product,
or
DNA
for short. This consists of everything that is produced by the
labor force
after the labor force finally gets to work and finds a parking space and has some
Starbucks.
At one time the Gross National Product consisted of both
goods
and
services,
but today pretty much all physical objects are manufactured in
Asia,
which means the U.S. workforce is engaged in the
service economy,
consisting of
83 million people in cubicles
furtively sending and receiving
personal e-mails.
Also there is a small remaining
agriculture sector,
consisting of maybe 15 people in
Nebraska
or someplace who grow
soybeans,
although nobody knows what they do with them.

The sum total of the Gross National Product is
several trillion dollars,
of which one third is sent to the
government
in the form of
taxes
for the express purpose of being
wasted.
Another third goes directly to
Bill Gates
. The remaining third is divided up into
wages
and
prices,
which go
up
and sometimes, in the case of wages,
down,
in response to the
law of supply and demand,
which states that if there are fewer than two outs with runners on first and second base . . . no, sorry, that’s the
infield fly rule.
The law of supply and demand states that if you have too much of something that not enough people really want, such as
movies starring Adam Sandler,
the price is going to go down until it reaches $1.99 per DVD; whereas if there is an
under
supply of something, such as whatever toy every child in America including yours wants for Christmas, but the toy manufacturer makes only 25 units of this toy for the entire freaking
world,
you will pay however much it costs you to get it after trading punches with other parents at
Toys Backwards “R” Us.

If all the prices in the nation go down at once, that is called
deflation,
and the way to correct it is to wake up from the
dream
you are having, because this never happens in real life. In real life, all the prices always go up, a condition that economists call
inflation,
or, for short,
normal.
If inflation gets to be too bad,
Congress
holds a
hearing
at which the nation’s
leading economists,
using sophisticated
data collection
and
computerized modeling,
present a
detailed statistical analysis
of the economic situation, after which they light a
bonfire
and sacrifice a
live virgin congressional intern.

The resulting aroma summons
Alan Greenspan
*
 
⁴
,
who is the chairman of the
Federal Reserve Board,
a mysterious organization that controls the
economy
from its secret
Batcave-style
headquarters far beneath the surface of the
earth.

When Greenspan emerges from the ground, he looks around at the economy to determine whether he can see his
shadow.
In this respect, he is similar to the professional groundhog
Punxsutawney Phil,
although as we see in the photographs below, there are distinct physical differences between the two:

Photography Credits

After he has looked around, Greenspan makes an
ambiguous remark,
and everybody tries to figure out what it means. This is not easy, because Greenspan is crafty in his choice of words. For example, two years ago, in a speech before the Economics Council of London, Greenspan said: “What has one foot on each side and one in the middle?” This remark sent shock waves throughout the world economy. Investors lost more than $14 trillion in the resulting stock market plunge, and several hundred corporations went bankrupt, with a resulting loss of millions of jobs. It wasn’t until nearly a month later that economists figured out that the answer to Greenspan’s question was:
a yardstick.
But by then the damage had been done.

Sometimes these misunderstandings aren’t really Greenspan’s fault. The stock market crash of 1987 resulted from an incident at a luncheon when he was simply trying to tell the waiter that he wanted ranch dressing instead of vinaigrette.

If the economy appears to be heading for real trouble, Greenspan will raise or lower the
prime rate.
This is a very important economic thing, but unfortunately I was unable to attend the specific classes in which it was discussed.

The United States also engages in
international trade
with other nations, wherein we buy things that they produce such as
cars, computers, televisions, clothing, furniture, steel, cell phones,
and
pretty much everything else,
and in return they buy things that we produce, such as
Starbucks franchises
and
movies starring Adam Sandler.
If they fail to buy enough things from us, we have a
trade deficit,
and if it gets really bad, we have to remind everybody that in addition to Adam Sandler we have a lot of
nuclear missiles.

Whew! It has been a lot of work, explaining the entire U.S. economy, but now that I’m done, you know as much about how it works as the people who are actually running it. You probably think I’m kidding.

3

MANAGING YOUR PERSONAL FINANCES

R
EMEMBER THE FABLE of the grasshopper and the ant?

The industrious ant worked hard all summer long, harvesting pieces of food dropped on the sidewalk in front of a Taco Bell. But the lazy grasshopper spent the summer frolicking and downloading Internet porn.

When fall came, the ant was snug in his anthill with a wad of rancid salsa the size of a volleyball. But the grasshopper had nothing to eat. He went to the ant’s nest and said, “I’m starving! Can I have some
. . . YUCK!
What’s that
smell
?”

“That’s my food supply!” said the ant, who was a generous ant, “and I will gladly share it with y . . .”

FWOOSH

At that moment they were both burned alive, because the ant had built his nest in a playground frequented by inquisitive young boys with access to lighter fluid.

What financial lesson does this fable teach us? It teaches us that, in selecting real estate, the three most important factors are: location, location, location. But this chapter is not about real estate. This chapter is about managing your personal finances.

Do you have a good “handle” on where your money goes? To find out, ask yourself if the following statements describe you:

•                  You’d
like
to save money for the future, but it seems there’s never any left over after you pay your bills.

•                  You have several credit cards, and you can never quite get the balances down to zero.

•                  You make large purchases on impulse.

•                  When you buy things, you often receive pennies in change, and you put these in a jar or some other container. Over the years you have accumulated roughly 17,000 loose pennies. At one point, you actually bought penny wrappers, but you never put the pennies in them, and you no longer know where the wrappers are, and you have heard that the banks don’t really want them anyway. You frankly have no idea why the government still MAKES pennies. All you know is that you are going to die with these fricking pennies in your possession.

•                  When you wake up in the morning, you have to pee.

•                  Twice a year, you change all your clocks by an hour, but you don’t really know why.

•                  You occasionally bet on sporting events, and you secretly believe that, by doing certain things such as positioning your hands in a certain way, or not looking directly at the television set, you can affect the accuracy of a field goal kicker thousands of miles away.

•                  You have convinced yourself that your sexual fantasies are normal.

•                  Even the one involving the penguin.

•                  At weddings, when the organ plays “Here comes the bride,” your brain immediately responds with: “Big, fat, and wide.”

•                  When you watch
The Wizard of Oz,
it troubles you that Glinda, the so-called “Good Witch of the North,” is actually quite
nonhelpful
to Dorothy. Like, at the beginning, she’s all vague about the power of the ruby slippers, as if she has
no idea
what they can do, and then at the end, when Dorothy has gone through living hell to kill the Wicked Witch of the West so she can go back to Kansas, Glinda shows up and—guess what!—she knows
exactly
how Dorothy can use the slippers to get home. When the Scarecrow asks Glinda how come she didn’t just explain this to Dorothy in the first place, Glinda gives a lame explanation about how Dorothy wouldn’t have believed her, when in fact from the start Dorothy
totally
believed
everything
Glinda told her, including this
lie
that the “Wizard of Oz” was great and powerful, when in fact he was a drunk with a smoke machine (as if Glinda wouldn’t know
that
). So what is clearly happening here is that Glinda was just
using
Dorothy to kill the Wicked Witch of the West. What a bitch.

•                  Speaking of movies: When you’re at a movie theater, and your movie is about to start, you
always
end up in the concession line that doesn’t move because the people in front just
can’t decide
what they want, as if they’re up there trying to negotiate a Middle East peace settlement instead of choosing between popcorn and Milk Duds—FOR GOD’S SAKE WILL YOU MORONS JUST
MAKE UP YOUR MINDS??

•                  Sometimes, when nobody is around, you scratch your private parts with a hairbrush.

•                  You do not keep a detailed household budget.

If any one of these statements caused you to think: “That’s me, all right!” then your personal finances are in serious trouble. What can you do about it?

One important step, of course, is to purchase products carrying the brand of a popular financial guru such as Suze “Suze” Orman. If you don’t know who Suze is, turn on your TV right now and tune it to any channel, including the Cartoon Network. There she’ll be:

Suze always has a smile on her face—the radiant, confident smile of a person who will not hesitate to kill anybody who gets in her way. But she’s also smiling because she has helped millions of people who have learned the secrets of wealth by purchasing her many bestselling books and audiotapes, including
Suze Orman’s Financial Guidebook; The Road to Wealth: A Comprehensive Guide to Your Money; The Laws of Money, the Lessons of Life; You’ve Earned It, Don’t Lose It; 9 Steps to Financial Freedom; The Courage to Be Rich; Here’s Yet Another Suze Orman Book About Money; You Might Think That at Some Point Suze Orman Would Run Out of Ideas for Money Books, but You Would Be Wrong;
and
Buy This Money Book or Suze Orman Will Rip Out Your Throat with Her Large Carnivorous Teeth.

The reason Suze has sold so many books is that she offers a clear, simple, common-sense message that resonates with everyday people:
You pathetic loser.

As Suze explains, because of your loserhood, you’re probably doing many stupid things with your money that you’re not even aware of. For example, let’s say that, every morning on the way to work, you stop at Starbucks and buy a latte for $3.95. It doesn’t sound like much, does it? But suppose that, instead of spending that money on coffee, you set it aside each day. What would happen?

First of all, without the caffeine, you’d fall asleep in your cubicle at work and get fired. But look at the financial upside! At the end of just two working weeks, you’d have saved $3.95 per day for ten days, which works out to, let’s see . . . carry the 6 . . . OK, it’s nearly
forty dollars.
That’s right: You would have saved enough money to invest in
a half keg of beer—
enough, if you manage it properly, to maintain a serious buzz for
an entire weekend.
THAT’S the kind of long-term financial thinking Suze and I are talking about.

But to achieve this kind of result, you need to develop, and stick to, a Personal Financial Plan. If you’re like most people, you’re always thinking of reasons why you haven’t made a Personal Financial Plan, like “I don’t have the time,” or “I’m no good with numbers,” or “I’m being held prisoner in a cave by a lunatic who believes he is taking orders from a bat.”

Well, Mr. or Ms. Excuse-Maker, it’s time you stopped whining and started taking charge of your financial situation. It’s easy! You just need to follow these steps:

1.                  Analyze your cash flow.
“Cash flow” is a term that accountants use to describe the flowing of cash. To analyze your cash flow, first sit down at your kitchen table, put your head in your hands, and think really hard about the following question: “Where the HELL does all my money go?”

When you have figured out the answer, you should make a pie chart to help you graphically visualize your cash flow. It should look something like this:

Where Your Money Goes

When we analyze this chart, we see that your biggest area of concern, cash-flow-wise, is your Miscellaneous. This is where you need to cut back, by not spending so much money on frivolous and unnecessary items. Your children, for example. Chances are that, like most kids today, they want you to buy them every new fad item that comes along, so they can be like their friends. Be firm with them! Tell them: “Just because your friends have food, clothing, and medical care, that doesn’t mean YOU have to have those things.” (We’ll have more on reducing the high cost of children in our chapter on education, under “Steering Your Child Away from Harvard and Toward a Cheap, Crappy College.”)

You can also save on your household expenses by using time-tested homeowner money-saving tips. For example: Do you use toilet paper? Of course you do! No shame in that. But when you’ve used up the roll, what do you do with the little cardboard tube? You throw it away, right? I bet that, over the years, you’ve thrown away hundreds of those little tubes. But if you save them in a box, at some point down the road you’ll have collected enough so that you can put them to some kind of clever, money-saving household use. Although it beats the hell out of me what that use might be. I’m a financial expert, not Heloise.

Another way you can save money is to avoid using your credit cards. Oh, sure, it’s easy to “whip out the plastic,” but it’s also a bad idea. Let’s say you’re at a convenience store, and you buy a can of Diet Coke costing a dollar, which you pay with your credit card. For openers, the people in line behind you—especially if I am one of them—will silently curse you, because now they all have to wait while the cashier gets authorization from Taiwan or Mars or wherever for your stupid one-dollar purchase.

But also, that purchase is going to be more expensive than you think. By the time you have completely eliminated all traces of it from your credit card statement, that “one-dollar” Diet Coke will have cost you—get ready—$386.52!

Does that seem like an absurdly high number? OK, let’s analyze it. Assume that your credit card company charges you an annual percentage rate of 14.4 percent, and that you pay one half of your balance each month. Now do the math.

Ha ha! I am just kidding, which I will indicate here by inserting the international symbol for lighthearted jesting:

Suze and I are laughing because we know that there is no way in hell that you can do the math. I can’t either! I just made up the $386.52. This, I believe, is also what the credit card companies do. I believe they put random, meaningless numbers on our statements, because they know that we, their clueless, math-impaired customers, will not challenge them. It would not surprise me to learn that the credit card companies have an industry-wide competition to see who can get a consumer to accept the most absurd credit card balance. Each year they announce the winner at a big awards banquet:

MASTER OF CEREMONIES:
Our winner this year is Wanda Zuckmiller of Visa, who achieved what many experts in our industry said was impossible: She mailed out the first Visa statement ever with a balance of—and this is a direct quote—“one jillion dollars.” Not only did the credit card holder, a Mrs. Shirley Hemplerigger of Plano, Texas, unquestioningly accept this amount—her exact words were “I have GOT to stop buying collectible wax fruit on eBay”—but Wanda also got Mrs. Hemplerigger to sign a statement agreeing to pay off her balance by sending Visa $50 a month for—and again I am quoting—“87 bazillion months.”