Book Review: Nickel and Dimed : On (Not ) Getting By in America

This is a review of "Nickel and Dimed : On (Not) Getting By in America" by Barbara Ehrenreich.

The concept of the book is to run a real world test to see if the author could "get by" on a low wage job. The author worked in Key West, Maine and Minneapolis working as a waitress, maid and at Walmart for a month each to test her ability to make ends meet. While it is an interesting and at times an entertaining read, the book fails to accomplish its goal of demonstrating the real difficulty in low wage work.

Nickel and Dimed was a entertaining and easy read. First of all the concept of testing out the difficulty of living on low wages is an interesting idea to me. The stories of her daily work and interaction with management and co-workers were interesting. I laughed out loud more than once. But unfortunately I was most entertained by the stupid things the author did and said.

Let me be clear that I think it can be very difficult for someone to support themselves on minimum wage. Its not impossible for a single person to survive but it isn't easy. Supporting a family on one minimum wage income is not very realistic if not basically impossible. I generally agree with the authors belief that its hard to make it on low income wages but I feel she did a horrible job proving or arguing the point.

My biggest fault with Nickel and Dimed is how poorly she proved her point. First of all she set out with the assumption that it couldn't be done. Its not hard to fail if you believe you will fail. More than that she didn't do much at all to really prove her point. She was able to find work pretty easily. She rarely talked about the actual dollars she was spending. She didn't seem to do a good job at being frugal at all in my opinion. About all she did was demonstrate that work can be hard, bosses can be jerks and low cost housing can be hard to find. I didn't need to read a over 200 pages to find that out. The biggest difficulty she had was the cost of housing. If she had simply gotten a roommate then her budget problems would have been fixed. She could have made a lot better argument for her point if she covered such topics as the cost of health care insurance, the cost of child care, unexpected emergency bills or high cost of gasoline but she didn't go into these topics much if at all.

Unfortunately the author had some significant personal biases that detracted from the actual topic. While working as a waitress she decided that 'visible Christians' were bad tippers and felt necessary to share that opinion with us. It was a pretty judgmental and stereotypical declaration that I don't expect is based on anything credible except a couple anecdotal incidents. The author is an atheist. So it seems to me she's really just voicing her anti religious views. She also spent a significant amount of time whining about how she disliked drug tests. She went so far as to suspect that its 'demeaning effect' was appealing to employers. These points are pretty irrelevant to the struggles of an individual earning low wages. They really only seem to be in the book as a reflection of the authors biases. The author later revealed an obvious bias on that topic when she feared she might not pass a drug test due to her "chemical indiscretion in recent weeks". I guess if you use marijuana as she had then the idea of a drug test might be a concern. An atheist drug users dislike for religious people and drug tests doesn't have anything to do with how hard it can be to make in on low wages. When she went into those topics it was distracting and detracted from the legitimacy of her points.

The author seems to have some problems with management or maybe authority in general. She frequently assumed or implied that the people in charge had evil motives for everything. The worst example of this kind of thing on her part was when she called the owner of the house keeping business a 'pimp' for no real reason I could see other than that he was a man who employed women.

At times Nickel and Dimed came across with a condescending or arrogant tone. Here's a good example of that "You might think that unskilled jobs would be a snap for someone who holds a PhD." To even suggest that having a PhD means you'll be a good waitress or maid or have an easy time of those jobs is arrogant and condescending in my opinion. She declares in her conclusion "I am an unusually fit person" which isn't what I'd call humble. I found it amusing how she was surprised that nobody she worked with seemed to care that she was writing a book.

With all its faults, I have to admit that I actually enjoyed reading the book. The concept was very fascinating. The writing and story was interesting enough to keep my attention. But the author failed to make a good argument at all and had some views that would offend many people. Its sad though since I do think there is a real story to be told about the difficulties of the working poor in America. Nickel and Dimed simply doesn't do the topic justice at all.

There is a preview of the book on Google Books if you search for the title.

But the bottom line is : I can not recommend this book.


If you're interested in the topic then I'd recommend instead watching the "Minimum Wage" episode of the TV show 30 Days from Morgan Spurlock. You can watch the full episode on the Hulu site. They do a LOT better job of discussing the actual finances without all the attitude that Ehrenreich had.

Bargain Buys at Chrysler after Bankruptcy? - Doesn't Look Like it

With the recent news of Chrysler going into Chapter 11 bankruptcy and their closing down about 25% of their dealers you might think that you could get a real sweet deal on a Chrysler vehicle right about now. But this doesn't appear to be the case. I checked the Chrysler and Dodge websites to see if they had any good incentives. Some cars hard rebates in the $2000 - $3000 range, but thats nothing spectacular. With them closing down nearly 800 dealerships you'd think that would mean they'd have a big pile of cars that they'd need to get rid of quick from those dealers. They plan to move the 44,000 to their other dealers. But that won't necessarily result in great liquidation sales. From this article: "Getting the surviving dealers to buy or assume loans on the cars and trucks shouldn’t be too difficult, he said. Chrysler stopped building vehicles while it reorganizes in bankruptcy, and some stores are running short of certain models, Press said." If they have a short supply of vehicles then that will keep the prices from going down much.

Bottom line: No great bargains on Chrysler vehicles right now.

Best of blog posts for week of May 15th

Get Rich Slowly links to a funny SNL video Don’t Buy Stuff You Cannot Afford

FMF highlights a pretty good Top 10 Investing Rules of Thumb from the ETF Database site.

Should You buy Long Term Care (LTC) Insurance?

Long Term Care (LTC) refers to medical care services over a prolonged period of time. Its often in a nursing home. LTC can be pretty expensive. The average cost of a year in a nursing home in 2008 was $68,000. Long Term Care insurance is a form of insurance that you can buy to pay for the possible costs of LTC. Lets consider the question: Is LTC insurance something you should buy?


Is LTC something you'll need?

It is very probable that you'll need some form of LTC during your life. The government has an informational site setup on LTC at Longtermcare.gov. They have some stats on the likelihood of needing LTC:

• 70% of Americans will require some LTC in their lifetime.
• 40% will need care in a nursing home for some period.
• Women 3.7 years and men 2.0 years.
• 33% never need care, 20% need over 5 years.

Most LTC needs are for people over age 65. However this study says that 37% of people needing LTC in 2000 were under age 65. The risks of needing LTC grow with age. Only 1.4% of people under 65 currently need LTC, 14% of people over 65 need LTC and HALF of people over 85 need LTC.

Conclusion : It is probable that you'll need LTC and most likely it will be 2-4 years of care after age 65.

So now that we know LTC is something we're likely to need, next we should look at the likely cost of insurance.


What does LTC insurance cost?

LTC premiums can be pricey. The premium costs will go up with age. The younger you are the lower the costs will be to get a premium.

The following table of average costs are from the government Longtermcare.gov site.

Age	Average Annual Premium amounts paid in 2007 – averaged for all ages and for specific age groups. (2008 LIMRA International, Inc.)
All ages	$2,207
Under age 40	$ 881
40 to 49	$1,781
50 to 59	$1,982
60 to 64	$2,249
65 to 69	$2,539
Age 70 and older	$3,026

I got a quote from this site Long Term Care Quote. Unfortunately they want contact info.
The quote result was from 3 reputable insurance companies. They offered coverage of $100 a day for up to 3 years. The premiums varied in the $91-$104 / month range for myself at age 37. So that is around $1,200 a year premium.


Should you buy Insurance? If so then at what age?


LTC insurance is pretty pricey. There aren't a lot of people with $2,000 to $3,000 a year to spare. If you can't really afford LTC then its not something to go out of your way to buy. However if you do have the funds to afford it then it might be worth something to consider.

Looking at the costs of insurance at different ages, I think that you're not likely to have it pay off if you buy LTC insurance in your 30's or 40's. Few people need insurance at that age and if you keep paying on a policy till you hit your 60's or 70's then you may as well just self insure. But if you look at the costs for LTC insurance in your 60's then you could be paying $2000 to $2500 annually for a policy and make use of it within 10-20 years. Given the average cost of LTC this should be worth a purchase. With that thinking in mind, I wouldn't buy LTC until you're around 60-65 age.

LTC insurance is an optional insurance and would fall below higher priority insurance such as health insurance, auto insurance, home insurance, disability insurance and life insurance.

Bottom line: LTC is optional purchase if you have the means and I'd wait till age 60-65 to consider it.


Be wary and do your research

A Consumer Reports article on LTC isn't very positive about the insurance. They say: "A CR investigation, for which we reviewed 47 policies, reveals that for most people, long-term-care insurance is too risky and too expensive. " A couple recommendations Consumer Reports gave are agreeing with my suggestion to consider buying a policy around age 65 and they also recommend to look for a strong insurer.