Help! My Checkbook Has Sprung a Leak

We have embarked on a new life journey. After spending the past four or five years resting comfortably and lazily in our apartment we took the plunge and joined the ranks of the homeowner. If you read this blog you know we were looking for a place last fall but gave up. The market just didn’t seem right. Prices have dropped since then as have mortgage rates. The pieces simply fell into place for us. So during the next few weeks we will be devoting most of our time to moving.
There are several reasons for making this move now. My in-laws who are very elderly require an increasing amount of care. A few years ago when they lost the ability to keep up with the maintenance requirements of a home they sold it and moved into an apartment. Their timing was perfect considering all of the health issues that have occurred since then. In any event it is easy to see how important it is to live close to them so we can drive them to their appointments and generally lend needed assistance. Neither of them should be driving a vehicle at this point and we feel some responsibility in maintaining the public safety. We will be living about a mile from their place and that seems close enough.

The other reasons for moving now involve money. Despite prices dropping continuously during the past year, homes remain stubbornly unsold on the market. For any given home there is a maximum price that a buyer is willing to pay and an minimum price that a seller is willing to accept. Right now those two numbers are too far apart. For many of those homes where these two numbers converged a sale has taken place. I figure the market probably still has a 5-10% drop ahead of it and worked that into my offer. I have no illusions about timing the market just right. I’ll settle for close.  Luckily for us the seller accepted the realities of the market and dropped their price.

With so few properties selling right now it is difficult to judge by comparison what a fair price is but the tax assessment on the place we purchased dropped $31K since last year and we paid a price about $55K less than that new assessment. Overall I think we paid a fair price neither being cheated nor taking advantage of the seller.

Now we are in the process of cleaning, painting, and updating the kitchen.  The new stove and dishwasher gets delivered tomorrow and the garage door will be repaired right after lunch.  I think I am beginning to understand what economists mean when they talk about money having velocity. 

A Few Thoughts on 3 Wars

Iraq:

There was an article in yesterday’s Wall Street Journal, The Guns of August 1990 , where Fouad Ajami argues that, “The last 20 years would have been very different had the American forces taken that open road to Baghdad the first time around.” We can be confident that the decision to stop short of victory was made by President George H.W. Bush, possibly being influenced by General Powell.  I believe our military had both the ability and initiative to continue and bring the war to a more complete conclusion.  Whether we eliminated Saddam Hussein or not would have been made based on information we as civilians are not privy to.  If Saddam Hussein had been removed from the middle east equation at this time would that have affected the attacks on the World Trade Center? 

Vietnam:

Even though I agree that our entry into a conflict with Vietnam was both ill advised and most likely illegitimate the fact remains that we snatched defeat from the jaws of victory in Vietnam.  I am convinced that militarily the war was essentially won when the Tet Offensive failed. Why the media chose to portray it otherwise is pretty strong evidence that our media has had an agenda for a long time. On the other hand, it probably doesn't matter since our civilian leadership had already removed victory as an option early in the game. We learned quick enough that the enemy was completely committed to victory.  A significant follow up to stopping the Ted Offensive could have changed the outcome of the war and allowed us to leave much earlier with our pride intact and ultimately fewer lives lost.

Korea:

Even though Truman was a committed New Dealer I still liked him. He was both feisty and I believe honest. However, I totally disagree with his decision to not pursue total victory in Korea. Even if Truman was justified in relieving MacArthur of his command in Korea it does not in any way make MacArthur’s belief in total victory any less right.  We would not be dealing with North Korea now if we had gotten it right back then. Moreover, the people of North Korea would not have spent the past sixty years in misery.

My $100,000-$250,000 Tobacco Windfall

I used to be a smoker. Starting to smoke cigarettes in 1964 I might have rationalized my decision by pointing out that men smoked and boys did not. As an impressionable young man I could not help but notice that all of my role models smoked. My dad smoked as did both of my grandfathers. The movies provided addition reinforcement. John Wayne, Humphrey Bogart, Gary Cooper, and even Bing Crosby smoked. And so I started not so much because of peer pressure as what I might call societal pressure, a right of passage if you will. 

Tobacco companies and the medical profession were still arguing about the health issues associated with smoking. Television programming was riddled with cigarette commercials. Hospitals permitted smoking. And I suspect there were as many ashtrays in the halls of government as there are Marxists now. In short there was no stigma attached to smoking. Looking back now I can not imagine that I enjoyed my first cigarettes but somehow I acquired the habit. By the time I reached my eighteenth birthday I was fully addicted to the damned things and easily smoked a pack a day. I even smoked an occasional cigar and pipe. Upon reflection I have to admit that I probably did not look as sophisticated as Bing Crosby with my pipe. But somehow the human mind deludes itself and presents a self image that has absolutely no connection with reality. 

Smoking was not as expensive in the sixties as it is now. I paid $2.87 per carton (10 packs) for most brands and for a while smoked the more expensive ($3.60 per carton) Benson & Hedges cigarettes that came in hard pocket size boxes. Unhappiness reigned in the smokers’ world when cigarette prices reached $5.00 per carton. 

As the years passed evidence for the relationship between smoking and cancer accumulated. In spite of this I continued smoking regularly reaching a peak of about two packs a day. At some point I decided to quit or at least cut down on my smoking. Trying to quit is a fun activity. So much fun that I did it many many times over a period of years. Well, maybe fun isn’t the word. 

I could tell you that my success was variable or I could be honest and say I failed in every attempt. When I made a conscious effort I found that I could easily get by on a half pack a day but over time my smoking would increase and I would find myself going through more than a pack a day. Sometime in early 1975 I detected some blood after coughing. This event elevated the importance of quiting to a new level. If I needed incentive to quit this was it. But so powerful is the addiction to nicotine that even fear can not overcome the urge to light up the next cigarette. I discovered that the first cigarette of the morning was critical and needed to be delayed as long as possible. On a work day I usually broke down around 10AM. Getting aggravated was a license to smoke. A quarrel with a poor outcome might elicit a response such as, “Why do I even care if these things kill me”. Any excuse worked. 

After a few weeks of successfully keeping my smoking down to half a pack a day I determined that the time was right to just quit. If I was a man I would be able to beat this. I knew most of the triggers that would have to be overcome and prepared myself psychologically to face them. I finished dinner, smoked a cigarette, and prayed to God that I would have the strength to follow through with this. Those first hours were pure misery. I kept an unopened pack of cigarettes in my pocket at all times in case of emergency. Not having cigarettes just makes you obsess more. Failure would require the opening of the new pack and even though that was a weak barrier it was a barrier. Somehow I made it through the evening. The next morning I fought off the urge and went to work. I skipped my coffee since I knew the association would be strong and would make it more difficult. I sure didn’t need to make it more difficult. At noontime I drove home for lunch and had my usual two sandwiches. Then the craving for a cigarette became irresistible. It had been 18 hours since my last fix and I started to lose it. I broke down and lit up. It was the best cigarette I ever smoked in my life. Overcome by guilt I wondered if I would ever be able to follow through. Then it occurred to me that the full feeling after a meal was the strongest trigger possible. I always needed a cigarette after a meal. If I ate breakfast that day I would not have made it to noon. This best cigarette also turned out to be my last cigarette. I still remember the date, May 5, 1975. The secret that finally made quitting possible was quitting meals. I no longer ate lunch and dinner. I divided all of my food into tiny snacks so that I was never even close to full. This didn’t make quitting easy. It just made it possible. I would be lying if I did not admit that quitting was nearly a living hell for the first week. The physiological need for a smoke probably goes away after a week or two but it did not feel that way to me. I can not remember anymore, but the craving did not go away for a long time. The desire to smoke lasted for months.

Trying to recall events from 35 years ago is difficult; but I think is is useful to at least make the attempt to remember how I managed to pull this off.  Here are the main points I think made the difference:
 

1. Cutting back to half a pack a day a few weeks prior to actually quitting may have helped. Smoking less means that the concentration of nicotine in my system was reduced slightly well in advance to reducing it to zero. Since I do not understand the mechanism of nicotine addiction I can not say with certainty that cutting down prior to quitting actually helps.
2. Quitting coffee drinking removes a recurring action associated with smoking. Let’s face it, coffee and cigarettes go together like toast and butter. The same is true of beer and smoking. Anything associated with smoking has to be eliminated. I started drinking coffee again within a month with no problem.
3. I think the pack of cigarettes I carried with me for the first few weeks was an important psychological crutch. You may be able to navigate your basement in the dark but that is no reason to not have a flashlight with you.
4. Giving up meals was the single biggest factor. Reducing my food consumption to nibbling and avoiding eating enough to get full was critical. Dare I say that to a smoker a big meal without a cigarette is like sex without the orgasm?
5. I changed my routine. I started taking walks and avoided activities like reading, watching television, and listening to music. They had too strong an association with smoking and so why take the risk.

It has been established fact for a long time that smoking is bad for your health. Smoking is associated with emphysema, cancer—lung cancer in particular; and smoking combines synergistically with other irritants such as silica and asbestos to cause a whole host of health problems. With governments using cigarette smokers as a major source of revenue the habit has become very expensive. To put the cost into perspective I performed a rough calculation to see how much money I saved by quitting 35 years ago. If I assume an incremental price increase between 1975 and the present and make reasonable guesses about returns on investment over that time I figure that the money I saved approaches a quarter of a million dollars. If I assume my numbers are too optimistic I can scale it down and say that at worst I saved $100,000. 

There is a part of smoking I never hear anyone talk about. Smoking stinks. Tobacco smoke sticks to your clothing, permeates your home and car, and gives you bad breath. Which brings me to the question of the century. Why would someone do something that costs a lot of money, harms their health, and makes them smell like an ashtray all the time? If you were born after 1980 and smoke you have to be either self-destructive or else just plain stupid.

Adapt, Improvise, and Overcome

My silence for the past eleven months can not be blamed on writer’s block or a lack of things to write about. I have spent the past year mostly occupied by family and work. I am happy to say I have found time to read and watch an occasional movie. I spend the time in between wondering how to plan my future in a post-constitutional America. Words like adapt, improvise, and overcome came to mind. Updating a blog that only four people in the world bother to read never seemed particularly important.

Last fall my wife and I invested considerable time searching for a new home and on three occasions thought we had found what we were looking for. The first house we considered was perfect in several ways but overpriced. We made an offer which was not accepted and the seller’s counter-offer was still too high. The second home we considered was in many ways better but needed a new roof. We made an offer taking in account the fact that we would have to pay out close to $12,000 to replace the roof. They gave a curt no to our offer. My wife loved the place whereas I exhibited a distinct lack of enthusiasm. I figured I could adapt to any living situation and so we made a second offer which was also turned down though this time they responded with a counter-offer. Eventually we settled on a compromise price that I believed to be very generous but something I could live with if I didn’t give it too much thought. The mortgage process went smoothly and I figure we were probably within a week of final approval. Then we moved on to the home inspection.

I have participated in home inspections before and they can be very fascinating, sometimes even scary. I recall an inspector finding out that the main electrical panel was ungrounded, that the clean out for the sewer line was 30% buried in concrete, and that some of the wiring was so old that the insulation was cracking, all in the space of less than five minutes. Since the house I was looking at this past month was only 20 years old I did not expect to find problems. I was wrong.

There is something about the inspection process that opens your eyes to defects. Even defects the inspector doesn’t point out to you become obvious. Issues began to accumulate rapidly. On the outside we discovered that the garage door was showing signs of weathering near the ground. I considered this a small defect but one that would require attention as soon as the weather permitted it. The brick walkway was improperly installed and the bricks in the center were significantly lower than on the edges. This would require what amounts to completely rebuilding the walkway. I had not noticed this before.

Walking around the house we studied the way in which the deck was attached to the house but a complete examination would require removing boards from the deck in order to get a good look it. The presence of dirt, pine needles, and moisture along the line where the deck connected to the house suggested potential issues. The inspector pointed out that some of the nails holding the deck to the house were loose and could be pulled out by hand. He didn’t need to explain why this might be. The kick plate was essentially in contact with the deck and unlike the deck is not made of pressure treated wood. This became an issue on the other end of the house where we discovered that the kick plate was completely rotted out and showed evidence of insect damage, probably carpenter ants. Without tearing out parts of the house there was no way we could determine how far the rot had progressed. I won’t bore you with all the details nor do I want to give the impression that everything was bad. The heating system was excellent as was the electrical work.

At the end we decided against proceeding with the purchase and that was that. In the meantime the house in the adjacent town with which I had fallen in love and on which I would have made an offer had sold. It was a little more expensive but the taxes were 40% lower. With no additional houses coming on the market we decided we might as well wait until spring. After all there was nothing happening in the economy to suggest that the market was going to abruptly turn around and now that we are in April of the following year we can see that we judged correctly.

At the moment there are too many things going on and so looking for a house will have to wait until at least mid-May or perhaps longer.