Sunday, July 25, 2010

Getting out of Dodge.





With California being the epicenter of the housing meltdown along with a budget crisis so severe not even the Governator can save it, more and more people are getting out of Dodge and seeking refuge in places that were once considered simply “fly-over” states.

During the last fiscal year, 135,173 more people moved out of California than moved in from other states. Though just a drop in the bucket for a state of 38 million people, the trend remains significant because such declines usually occur when working Californians decide better opportunities lie elsewhere.

This was the topic of conversation when I met with my good friend Sara(Sara, Nate and Charlie shown above) for lunch at a local coffee shop in her neighborhood of Pasadena. The genesis of the subject matter, however took place years ago, well before the economic meltdown of 2008. Sara reminded me that we first discussed the idea of her and then boyfriend Nathan aka “Nate” moving out of L.A. around 2006 when everything was on the up and up and opportunities were a plenty. She also reminded me what my initial reaction was, when she brought up the topic. “Leave L.A.? No way kiddo, you guys are underestimating your ability to succeed here, you just have to be more ambitious, if you can make it in L.A. you can make it anywhere.” What a difference a couple of years and a stock market crash makes. The person who made that comment while sitting on his fuel injected high horse, has since been served a healthy slice of humble pie with a side of perspective. I decided to make our lunch into a lunch / interview with Sara’s permission of course.

I asked Sara to give a general bio of her and Nathan, how they met, how long they lived in L.A., etc. for the purpose of this post.

I'm 29 and Nate is 30. I've lived in L.A. my entire life and Nate moved here from Wisconsin when he was 5. We both grew up in La Crescenta and went to Monte Vista Elementary where we met in the third grade then we both went to Crescenta Valley H.S. and I went on to CSUN and he went to Sacramento State and then transferred to Utah State. We've been married for three years this Wednesday (7/28). I am an only child but my Dad is one of 7 kids so I have a fairly large extended family spread out around the country. Nate is the youngest and has two older sisters, one of whom lives in Colorado Springs. I am a stay at home mom and a Graphic Designer and Nate is a High School Science Teacher and varsity football coach. We've lived in Pasadena for nearly 6 years.

1. What are some of the things you guys love most about living in L.A.?
There is a never-ending availability of things to do. The good live music, amazing food, museums, parks, beaches, and cultural diversity can't be beat.
Also, we have a great network of friends here.

2. How has your attitude changed about L.A. in the last couple of years? And what are the reasons behind those changes?
When I was younger and in college L.A. seemed like the place to be. There was always a show to go to, a bar to hang out at or a diner open until 3am. It wasn't until we got married and not long after, became pregnant with Charlie that we realized what a difficult place L.A. is to achieve the goals we had set for ourselves. We want to raise healthy children, own a home and make a good living without having to work ourselves to the bone and sacrifice time with our family and it is near impossible to do that in L.A. now.

3. When we last spoke you talked about Nate signing a 1 year contract at the school he is currently teaching at…you said that the 2 of you have been thinking about leaving L.A. for sometime and that day may come at the end of his contract next year, where are you guys thinking of moving to?
Denver, Colorado is a definite possibility but we plan on taking the next year to really look into different cities around the country to find a good balance of low cost of living, a strong housing/job market, good schools, four seasons (Nate wants snow!) and at the top of our list is a place with clean air. Places like Portland (OR), Nashville, Madison (WI) and Seattle or all possibilities as well.

4. You guys are a very young hip couple that seem perfect for the L.A. scene and all it has to offer, what made you think about moving to a place like Colorado?
We think of ourselves more of the young boring types, but thank you. Living in Colorado near Denver would allow us access to things that only a big city can offer like good food, music, sporting events and museums without the insane cost of living that there is here in L.A. The air is clean, there isn't a shortage of good schools, and the winter brings snow one day and sunshine the next.

5. How much do you know about Colorado?
We both have family with young children in Colorado and they can't say enough about what a great place it is to raise kids. We've visited a number of times and have both really loved what we saw. We also frequently look at real estate in the suburbs between Boulder (which tends to be on the pricey side) and Denver and it's very affordable and Nathan has found that their educational system is fairly strong especially in comparison to California's. Colorado has been at the top of our list for a long time so we've looked into everything from job availability to air quality.

6. What are you guys looking forward to most about moving and how do you envision a life out of L.A. ?
Buying a house and not dreading every breath we take are probably at the top of our list. We hope that we can own a home and live comfortably off of one salary until Charlie and our future children start school.

7. What do you think you would miss most about L.A.?
More than anything it would be the people. Our friends and family here are irreplaceable but almost everyone we know is thinking along the lines that we are so being separated from everyone seems inevitable. Also, I would miss La Cabanita, there's no better Mexican food anywhere.

For the last 29 years I have been proud to call Los Angeles home. I love the weather, the diversity and the culture. But as I get older and my idea of “fun” shifts from the Vegas Strip to the Eastern Sierra Mountains I slowly realize the appeal of settling down elsewhere. A place where “Ed Hardey” and “Juicy Couture” are replaced with a pair of jeans and a t-shirt, and wearing sunglasses indoors is substituted with an offer of sweet tea with a southern drawl.

Monday, July 12, 2010

You did what?!

For the few of you out there who have followed my blog from the very beginning you may recall my second post titled “What do you want to be when you grow up?” in that post I wrote about having to go back to a traditional 8-5 job after nearly 4 years of being on my own and consulting. I wrote about how grateful I was just to be working at a time when so many were not.

Well 1 week ago today I did something that many people would consider crazy at a time like this and voluntarily left gainful employment to go back to the world of freelance and consulting. I made the very best out of the 4 month opportunity I was so very fortunate to have, but knew all along in my heart and mind that it was temporary. I did all that I could to wake up every morning with excitement and optimism. I would get into my car and use a combination of good music along with a short commute as wind to push my sails, only to have that wind completely die off as soon as I walked through the front door of my office building. Certain places are designed to be tolerable day in and day out, while others can only be endured in doses. This company was definitely the latter. One can only live in blind hope for so long, before you forget what you are even hoping for.

Lining up some additional work, procuring other clients and having a couple loyal clients who stayed with me was enough to give my highly anticipated two-week notice. Two weeks that was filled with relief, doubt and anxiety, none of which could negate the fact that this was something I simply had to do. I revisited avenues in my personal life that can be downsized even further and redefined “sacrifice” in other areas and will continue to do so. I would do whatever I had to do, to rediscover joy in what I did.

Within my first week of being back on my own, my flexible schedule allowed me to have friends over for dinner that I have not seen in ages, with music, cooking and conversation in the background that served as a reminder of what life is all about. I find myself smiling at the idea of having to meet a client on a Sunday evening at a Starbucks knowing that Harley, the most beautiful German Shepherd there is can ride shotgun during most of my commutes once again. For those of you out there who have given me guidance and support during this time of my life, I cannot thank you enough! To my dear friends who also happen to be clients, thank you for your patience, loyalty and understanding! As I sit here in my home office, which at the moment is chock full of banker’s boxes and file folders full of work, I realize that no amount of money or false sense of security can ever buy you more time.

Monday, July 5, 2010

"Reformation Hardware"

During the weeks and months after Wall Street and the financial markets were sent spiraling out of control in 2008, two questions loomed: Could this have been prevented? And what is being done to prevent it from happening again? The prior question was fueled by rage and betrayal, but for all intents and purposes was a moot act of pounding on sand. The latter however, would become and ongoing argument on how to restructure a broken system that devastated millions of lives with global repercussions that have never been seen before.

Government bailouts of financial institutions that were “too big to fail” with taxpayer money is no longer acceptable. When AIG was on government life support, taxpayers footed the bill to the tune of $578.00 per person for every tax paying man, woman and child in the United Sates.

The House and Senate finally reached an agreement on a sweeping overhaul of the nation’s financial architecture and reforming how banks do business. Now all Congress has to do is pass the bill and do it quickly. Here are some of the key points to financial reform and how they will affect everyday people like you and me.

Systemic risk regulation

Systemic risk monitoring: A new, council of regulators will both monitor system-wide risk and advise the Federal Reserve Board - the current primary systemic risk regulator.

Oversight and limits: For the first time, there will be higher capital, leverage and liquidity standards on the biggest, riskiest financial firms, as well as bank-like oversight for large "shadow bank" financial companies like AIG and the mortgage financers that were at the center of the crisis.

Banks will have to hold in capital reserves every dollar that they invest in hedge funds and private equity funds. Additionally, banks cannot bail out their funds.

Bottom Line: Banks and other financial institutions will have to have enough cash on hand to back up their own risky investments so the Government does not have to bail them out.

Taking on Bank Risk:

The final bill ensures that firms don't become too exposed to any single financial counterparty or to their own affiliates. Also, banks will have to hold capital in reserve that reflects all the off-balance sheet debt they could potentially be responsible for in the event of a crisis.

The final bill includes delayed implementation of rules to improve the quality of capital that banks have to hold and ensure that leverage and capital standards are higher in the future than they are today.

Bottom Line: This would regulate and monitor the type of investments and risk that any given bank would take. Making sure that firms do not become overexposed to any one particular investment, like with what happened with the toxic Credit Default Swaps and Mortgage Backed Securities that caused the collapse of 2008.

Abusive mortgage protection


Lenders cannot sell mortgages unless they determine that borrowers can afford to repay - even after teaser rates expire.

Prepayment penalties that can trap borrowers in abusive loans are banned for adjustable rate, subprime, and other risky mortgages, and limited for all home loans.

No more kickbacks for mortgage companies and brokers for steering customers into higher cost loans than they qualify for.

Limiting fees on all loans, and providing extra protections on high cost loans.

Bottom Line: One would need more than just a pulse and the ability to sign your name to get a loan.

How long this recession will last is still unclear. Reformation on the grandest of scales seems to be on its way, but there is no telling what modifications will be made before it gets passed. While we wait and see what transpires we must work on reforming our own foundation as well. If there were one silver lining in the ominous clouds of Wall Street in 2008, it would be the harsh wake up call that what goes up eventually comes down. Using our homes as ATM machines, in anticipation of property values continuing to rise indefinitely was simply irresponsible at any level. We have always been taught to save for a rainy day, and for many of us that rainy day is here. All we can do now is do our best to stay dry, and remind ourselves that what goes down will eventually rise again as well, what we do when it does will illustrate just how much we have learned from the storm that was.
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