Complex Numbers

Luxury, Necessity or Investment?

In tough economic times, a lot of people cut back on spending. Why, here's a story about a poor woman who was forced to (gasp!) buy cheaper bottled water, (choke!) give up organic beef and (faint!) clip coupons.

http://www.washingtonpost.com/wp-dyn/content/article/2008/04/30/AR2008043003435....

The last thing Marti Tracy wants to do on a Saturday is clip coupons. But last month the 34-year-old Bowie resident felt she no longer had a choice. She'd already given up organic meat and decided to buy organic milk only for her 2-year-old son, not for the whole family.

To be fair, the article goes on to report:

"Clearly, I'm not unable to feed my family. But I just can't feed my family the way I'd like to feed them."

Anyway, one other thing jumped out at me from this article, but let's back up a minute here and look at the title I put on this entry.

Because the housing and credit crunches (I refuse to call them "crises") negatively affected my business, I've been doing a lot more thinking than usual about the use of money. One of the places I've reached with my thinking is that every expense can be fit into one of three categories: luxury, necessity, or investment.

Now, I'm almost as fond of quoting Robert Heinlein as I am of quoting Bruce, so here's a relevant Heinlein quote:

Another ingredient for a happy marriage: Budget the luxuries first!

Many individual, or family, financial disasters, however, seem to be the result, not of "budgeting the luxuries first," but of being constitutionally incapable of telling the difference between a luxury, a necessity, and an investment.

A friend of mine once told me, "You should buy a quality car and take care of it! A car is probably your second biggest investment!"

Um... no. My second biggest investment, thanks to recent price run-ups, is in ExxonMobil stock (my biggest, of course, is my house). Where does my car (okay, truck, actually, but the same principle applies) stack up on my list of investments?

Nowhere, because a car isn't an investment!

Oh, there are exceptions, especially for business owners who use a vehicle to help them make money, like say real estate people or landscapers. But a personal car is not an investment, for the simple reason that (again, with a very few and far between exceptions) a car will never increase in value over time.

An investment, simply put, is something that you can reasonably expect to return to you more than you put into it. In terms of money, that means that a house (yes, even now) is an investment. Stock in a quality company is an investment, because even if it does end up losing value, a person has a reasonable expectation of increased value when it's purchased. Bonds are investments. Gold bullion is an investment.

Okay, we've gotten that out of the way. A car isn't an investment. Is it a luxury, or a necessity? Well, there you get into gray areas. For example, in New York City, with its mature and relatively efficient public transportation system, a car - ANY car - is often a luxury; on the other side of the country in Los Angeles, I'm told a car is an absolute necessity. Most of us "need" one to get to work - unless we work from home or some such. But do we "need" a Lexus, or will a Corolla do? Do you "need" a brand-new car that's guaranteed to lose 20% of its value the moment you turn the key in the ignition for the first time, or will your "need" for a car be satisfied with a well-maintained used vehicle?

These are questions most of us are forced to answer, now more than ever. We, here in America, are used to certain things that in other countries are unimaginable luxuries - like televisions, or air conditioning. Once air conditioning became widespread and relatively cheap, buildings were no longer designed to take advantage of natural cooling processes, and in those buildings, air conditioning cannot be considered a luxury, but a necessity. A similar process applies to vehicles that seem to get bigger and bigger every year: "Oh, everyone else is driving bigger vehicles, so I 'need' an even bigger one to keep myself and my family safer than we'd be in a tiny little car." Europeans can run around in Mini Coopers, but by damn, here in America, we want Hummers so we can be safe. Pretty soon, we'll all be driving around in semi tractors. For safety.

At the funeral on Monday, I was introduced to the rabbi who would be performing the ceremony - they tailor military funerals to the faith of the deceased. As this was someone who didn't know a thing about my dad or his family, he had to ask a few basic questions.

Burials, by the way, are a luxury. Your body takes up real estate that could be used for something else. It's usually resting in a coffin that costs many thousands of dollars - probably the most that any of us will ever spend for a thing that won't be on display for more than a couple of hours, unless you count taxes. Fortunately, it was a luxury my dad could afford, and he was a guy with a keenly developed sense of the difference between luxury and necessity and investment.

But back to the rabbi. After ascertaining my father's Hebrew name and basic life story - much of which he had already gleaned from military records - he asked if I was my father's only child.

"Yes, I am," I said.

"And are you married?" he asked.

"Yes - my wife is right over there."

"Any children?" Of course, he had to find out if Dad had any grandkids, so the question didn't bother me.

"No," I replied.

"You mean 'not yet,'" he smirked.

I let it go. A funeral is not a place for confrontations, though if Fred Phelps and his ilk had shown up I would have made an exception. But, no, I thought to myself, I mean 'not ever."

There was a time, up until around the time my father was just getting his sea legs for the first time, when agriculture was a major business in the US, and some huge percentage of Americans were farmers. Well, agriculture is still a major business, but only a tiny fraction of us are farmers; much of farming is now corporate. Back then, it wasn't uncommon, for many reasons, for a family to consist of a dozen kids. My maternal grandmother, I'm told, had 11 siblings. She had four kids herself, and might have had more if my grandfather hadn't died of pneumonia when the youngest was mere months old.

She lived in Brooklyn, about as far from farms as you can imagine being without getting into Manhattan. But one of the reasons for large families (apart from lack of reliable birth control and high expected rates of infant mortality) was that, back then, children were seen as assets - investments, even - that could help with chores as they grew up, and the more you had, the more help you had (once you got past those inconvenient first few years).

No longer. Now, most people, I think, don't look at their kids as help, but as some nebulous concept of "the future," as a carrying on of one's genetic material and, to some extent, values. Oh, most people find chores for them to do, but from what I can gather, that's more to help them build discipline and a work ethic, rather than out of necessity.

In my view, in short, children are a luxury. They take up more resources than they return; I've read where it could cost as much as a half a million dollars to raise a single child through high school - not even college! And then what? Well, you hope they'll be there in the nursing home when you're old and decrepit. A gamble, if you ask me.

Now, I am no longer a practicing Jew for a lot of reasons, but every once in a while, like with this well-intentioned rabbi, it's brought home to me just how far my philosophies are from mainstream Judaism.

Bear with me a moment more while I try to explain that more fully. See, unlike its own children, Christianity and Islam, Judaism doesn't have a really developed concept of an 'afterlife.' Heaven and Hell aren't really Jewish concepts, not the way we understand them in modern mythology. It's more complicated than I'm making it sound, but I've already rambled on long enough; suffice it to say that the Jewish belief is that death is like going to sleep, only permanently, and that we live on after death only in the good deeds we've done and in those whose lives we've touched - most notably, our descendants.

The rabbi's comment was, I believe, meant to reassure me that one day, my father can live on through my own progeny.

But progeny are a luxury I can't afford. I don't have time, now, to do all the things I want to do. I have better places to put my money than into someone who is practically guaranteed to give me a hard time through his or her teenage years, all for the vague hope that someday the kid will grow up and hold my hand while I die.

Hell, I couldn't even do that for my dad. The living accommodations in his last years were financed by the U.S. Coast Guard (retirement pension), his medical bills were paid by Medicare, and goddammit, I didn't even get there in time to hold his hand when he expired.

So, no, Rabbi Pinzer, I'm sorry I'm a bad Jew, but there will be no "not yet" for me, and by the way, I didn't keep Passover either. "Be fruitful and multiply" (the First Commandment, as Jews number them by going through the Tanach and enumerating every imperative attributed to God) made sense when humanity was a few scared apes clinging to the banks of the Euphrates and occasionally wiped out by flood or famine. It allowed for better-than-replacement of the species, for whatever that ended up being worth in the grand scheme of things. Now, in a world of six and a half billion hungry mouths, "Be fruitful and multiply" makes about as much sense as "Sacrifice to the snake god."

Anyway, I've gone on long enough, but this has been simmering in my head in one form or another since Monday. Of course, your own necessity vs. luxury vs. investment equation will be different from mine - perhaps having a child is the most important thing in the world to you. In that case, mazel tov! And I'm certain you'll make the right decision for you.

Just don't try to tell me your car's an investment.