I’ll Shop At Trader Joe’s When I’m Dead

Everyday low prices

 

It’s hard to imagine that trying to save money while stocking your pantry can be taken as a social statement. But for some people, politics infuses everything.

Walmart is America’s biggest retailer, a weekly staple for tens of millions of consumers. But for several thousand others with a flair for being dramatic and uninformed, Walmart’s wide air-conditioned aisles are just a coal mine with too much fluorescent lighting. Add the inevitable truth that a low-price retailer will attract working-class customers (among plenty of upper-class customers), and for many, Walmart thus becomes Exhibit A in the Everything That’s Wrong With Unbridled Profit display.

Don’t fool yourself into thinking that you’re doing your microscopic part for the Gross Domestic Product by patronizing your local Korean mom-and-pop grocery instead and paying its comically high markups.

For the most part, corporatization is the ultimate result of Adam Smith’s division of labor. Not to go Economics 101 on you, but the gist of the dead Scotsman’s argument is that the best way for an economy to thrive is that everyone do what they’re best at. In the early days of motor vehicles, there were dozens of manufacturers – some with factories not much bigger than a 4-car garage. The manufacturers who figured out how to best cut costs without impacting quality were the ones that survived and flourished. That hired the most people. And whose descendants signed suicidal union contracts that eventually rendered said manufacturers limp, but that’s another story.

Objections to Walmart range from the preposterous to the starkly so. For instance:

a) “They pay slave wages.”

Working at Walmart is voluntary.

a1) “Yes, but they should still pay more.”

Again, voluntary. The biggest economic myth of our lifetimes is that a third party (the union boss, the Department of Labor sycophant, mommy) is entitled to have an opinion on an agreement between two principals – in this case, the employee and the employer. Walmart can offer its employees 4¢/hour if it wants. No applicant has to (or will) accept it.

Besides, you think Walmart’s smaller and less-successful competitors are showering their employees with gold doubloons and rides on the company jet?

Starting cashier wage ($)
Walmart9.66
Albertson’s9.28
Safeway8.89
A&P8.25
Kroger7.70
Piggly Wiggly7.30
Food Lion7.12

Numbers courtesy of PayScale.

b) “Disgusting people shop there.”

Yes, and only neurosurgeons who run ultramarathons shop at other grocery stores. Here’s an upscale lady waiting in line in the pharmacy at Smith’s.

Yes, that’s toilet paper hanging out of her butt. No, it’s unclear that it’s clean. Yes, hopefully it is. No, this doesn’t count as taking pictures of unsuspecting women for salacious reasons. She was the retail equivalent of a green flash – a fleeting phenomenon that a camera had to be quick to catch.

c) The consensus favorite, “They prey on people who don’t know any better.” Including yours truly, apparently.

Shop wherever you want: the very point of capitalism is that you have choices. $400 Cole Haans and $5 shower flip-flops serve the same purpose, as do a new Infiniti QX and a 1985 Hyundai Pony. The richer you are, the more options you have and the greater justification and rationalization there is for spending more.

We get disdainful looks from friends when the topic of willingly shopping at Walmart comes up. We respond that while we’re not poor, we’re not so rich that we can afford to have a grocery-buying philosophy that transcends price, selection, 24-hour convenience and freshness. Not coincidentally, paying a karmic premium is something that few truly rich people do. What, the generic 10-ounce can of cooking spray at Safeway lubricates a skillet that much better than the equivalent Walmart one? Or is it just the intangible feeling of knowing that the extra 19¢ you pay for the former will help provide an Ivy League education for the Safeway employees’ kids, when divided among 197,000 of them?

If you’ve been conditioned to consider Walmart as emblematic of everything evil, a logically sound 800-word screed isn’t going to change your mind. Meanwhile, “Everyday low prices” sounds like a pretty convincing and airtight business strategy to a rational person.

Walmart shopping is a powerful barometer of what some amateur sociologists* have dubbed The Rwanda Test. Here’s how it works: you take a Rwandan, present him with a first-world moral quandary, state your position, then see if he wants to punch you in the face. Complaining that a parolee beat your daughter to death is legitimate. Complaining that the millions of dollars you make playing dress-up leave you unfulfilled is not. The next time you take a stance against America’s largest seller of breakfast cereal (of which there were 220 varieties at my neighborhood store yesterday), think about who’s listening. Then think about the billions of people on the planet for whom refrigerated milk to pour on the cereal is an untold luxury, let alone refrigerated milk that someone went to the trouble of removing the fat from (without increasing the miniscule price of the milk, no less.)

*alright, one friend, who was possibly medicated at the time

**This post is featured in the Carnival of Wealth #8**

A Fun Way To Spend A Saturday Afternoon

 

Poor little fella barely made it past the "Gross Revenue" line

 

If you’re already enough of a geek that you’re reading a personal finance blog despite being just a few keystrokes away from participating in The Golden Age Of Internet Porn, we invite you to take the next step.

Before you invest in any publicly traded stock, you need to understand how to read financial statements. This applies even if you let your company’s HR department handle your 401(k) and never bother to look at what mutual fund(s) it owns a piece of. You need to start looking. Stock prices move in both directions, in case you weren’t aware.

One more time: if you have a company-directed 401(k) then it probably owns part of a mutual fund, which is a basket of any number of stocks – usually around 80-100. Do you have time to measure the positive and negative indicators of 80 stocks? Probably not. That’s what fund managers and investment analysts are for.

If you rely on them, you’re not taking ownership of your finances. You’re passing the buck, almost literally. How many 401(k)s counted General Motors as a component a couple of years ago? You know, the most disastrously managed company in the history of American commerce*? When GM stock sank and ultimately got delisted – to say nothing of Fannie Mae, Freddie Mac, and other government wards that our elected officials insist on keeping on life support – how many of the people who indirectly held it via their mutual funds cared or noticed?

Would you like to know how to do this? If we taught you how to fish, would you ever worry again about going hungry? If we taught you how to weigh yourself, would that information come in handy for your next doctor’s appointment or Army special ops recruiting signup?

Understanding financial statements is more intricate than stepping on a scale, but not by much.

We needed a guinea pig, so we went down the list of America’s most profitable companies, stopping when we found one whose public image is pristine enough that people don’t routinely bitch about the company. That eliminated ExxonMobil, Microsoft, Wal-Mart, Pfizer, Merck, Philip Morris etc. We ended up at company #22, Corning. Besides, the Cincinnati-based glass and ceramics maker is only America’s 414th largest company by revenue, meaning it must have healthy profit margins.

We then give Corning the EDGAR treatment. EDGAR is the Securities and Exchange Commission’s Electronic Data-Gathering, Analysis, and Retrieval system: it’s where publicly traded companies are required by law to post their financials, and it’s at sec.gov/edgar.shtml.

You bored yet? Probably. Fix yourself a sandwich, turn on some music, meet us back here in 5. Here’s a Magic Eye picture to keep you occupied:

The money page on EDGAR is this one. Enter the relevant name or ticker symbol. Corning’s is GLW, which the company’s website says stands for “Corning Glass Works”. Apparently Jacques Demers is their vice president of investor relations.

It’ll ask for a “Filing Type”. The one you want is called the 10-K, which is essentially a company’s annual report without all the PR bullcrap.

It’s an htm file, should be easy to access. But don’t read it, it’s as interesting as watching glaciers move. Just search for the following phrases:
Consolidated Statements of Income
(plural)
Consolidated Balance Sheets
Consolidated Statements of Cash Flows

 

There are other financial statements, but these are easily the most important. We’ll bang them out one at a time, starting with the income statement (a/k/a the “profit and loss statement”).

Look at a company’s financial statements, and you can learn more than you imagined. You’ll discover how much debt the company is carrying, and if it’s leveraging itself to the point where it’ll be tough to pay back all the people it’s borrowing from. You’ll be able to determine whether the company is consistently increasing profits year after year, or if it’s standing on a plateau. Or a cliff. You’ll distinguish legitimate assets that can help the company grow from overvalued ones that make little difference to the bottom line.

Sifting through this is a little dreary at first, but so what? You’re an adult: most of what you’re now doing is boring. Kids get to enjoy life: they don’t have to concern themselves with saving receipts and filing taxes and learning to keep the warranty cards for their household appliances. The trade-off is that kids are stupid and poor.

Perusing a 10-K is as convoluted as you want it to be. We promise to make it painless, or at least reasonably so.

Next up, the three major types of financial statements and how they work.

*GM easily gets the nod over Enron, which never created anything tangible and was never a significant cog in the economy to begin with. GM used to make tanks to flatten Nazis with. Now its primary output is Christmas baskets for union bosses.

**Featured in the Carnival of Personal Finance**

Or Go Read Man Vs. Debt Instead

You're going to need one of these

Why can’t you be like other sites?

It’s the one complaint about Control Your Cash that we receive most often: where are the first-person stories about your struggles with income and debt?

1) There are several thousand other blogs that already memorized that riff and can play it by heart. We wouldn’t be bringing anything original to the party. Besides, this isn’t a place for self-indulgence. We don’t give a damn about the details of your finances*, and don’t expect you to care about ours. Or anyone else’s but your own.

We used to think that other people’s Facebook photos were the Ultima Thule of human boredom. But they’re captivating compared to hearing a personal finance blogger yammer about how he’ll now pay off his student loans 3 nanoseconds faster thanks to this handy new money-saving method he discovered for making your own duct tape. Also, the Sunday paper is full of coupons for your next grocery shopping trip.

2) No struggles to speak of.

Oh, does that sound condescending? Then would you feel inadequate if Danica Patrick told you she has no trouble negotiating traffic at 160 mph? How about if the chick from Evanescence said she could easily hit notes in the whistle register?

We’ve spent our adulthoods doing the prudent, common sense thing and seeing where it leads. So far, it’s working. At least more so than buying pet clothing and paying for tax refund anticipation loans might have.

You want commiseration? Start drinking or become a sex addict. Meetings in the church basement, Tuesdays at noon. No crosstalk, please.

Good. Now that we’ve got the children out of the room, join us for something worthwhile. Two things we try to do here:

-explain financial concepts that people presumably want to know about, or should, but don’t.
-show how not being financially idiotic can pay tangible rewards. And occasionally, show instances where you might think you’re doing the smart thing but aren’t.

If this sounds dictatorial, it isn’t. No more than your 3rd grade teacher was when she explained how multiplication works. Look, there’s no secret to gaining wealth. The mantra, again:

Buy assets, sell liabilities. Do this often enough, measure the results, and if you do nothing else you’ll get rich in spite of yourself.

Financial self-sufficiency is nowhere near as simple as “spend less than you earn”, but it’s not as complex as you think, either. That wedding you’ve been fantasizing about since you were a little girl? Unless it involves only you, the groom, a justice of the peace and a visit to IHOP afterwards, it’s a liability. Sell (i.e. don’t buy) it. The matching funds your employer offers for your 401(k), which will give you more tax-free income when you retire in exchange for a few seconds of incremental effort today? That’s an asset. Buy it.

Almost everything in your financial life fits into one category or the other – if not individually, then cumulatively. The bachelor’s degree in women’s studies is a liability. The interest-bearing student loan to pay for it is a meta-liability, and an obscene waste of money. The used DSLR camera that you can pick up from a highly rated eBay seller and is indistinguishable from a new one that’s twice as expensive? That might not be an asset by our definition, but the difference in their prices is. Buy the camera, assuming you’ll use it.

If you want patently obvious advice and feel-good pabulum, Google “personal finance blog” and you’ll find it. If you want to be challenged and inspired, stay here. Read the archives. And let us teach you how as much as you’re willing to digest about how money works (and how it doesn’t.)

*Dang. That should have been the subtitle for the book.

**This post is featured in the Carnival of Wealth #5**