Much Going On: Does It All Add Up?

Numbers add up. You take 1+1 you get 2...and so forth. With this, you can navigate through lots of life where numbers play a role.

Consider our bills. They come - relentlessly - week to week (e.g., groceries); month to month (rent/mortgage, utilities, phone/cable/streaming services, etc., etc. Some come quarterly, e.g. paying estimated taxes (for some of us); annually as well (e.g. Christmas gifts). However and whenever they come, they come. And we need some facility with numbers to manage all this.

It seems, though, that a growing number of us don't manager our numbers that well. Credit card debt balances and student loan defaults mushroom; folks tap into their savings, IRAs (even paying pre-591/2 10% penalties), taking loans against 401ks, getting Home Equity Loans, applying for those relatively easy to get personal loans from companies like SOFI, and all other variations on the theme of borrowing.

Which isn't such a big deal, except that in many cases, whether because of lack of facility with numbers, or despite it, there's little hope of paying back the debt - or at the very least no reasonable plan to do so. 

The best manifestation of this would be that Buy-Now-Pay-Later schemes that have become more and more the go-to way to get stuff for so many of us. Are we really running the numbers when we commit to these? Or are we like college students who use credit cards without consideration of running up balances or their ability to address the monthly statements that include loan-shark interest charges?

If we imagine a world in which folks took their numbers seriously and made prudent decisions based on even a rudimentary adding up of the liabilities they're taking, the world would be a tad lighter when it comes to the burden of crushing debt, wouldn't it?

Of course, there's the whole issue of people being behind the 8-ball. They can't afford things, so they borrow. But if we parse through things, do we find that these borrowings are for real necessities, or are they for items that folks really don't need? 

Here's a simple way to tell the difference between needs and not-needs. Needs = food, clothing, and shelter. Oh, and regarding each of these, let's not drop them into the Luxury Bucket. You really don't need to live in a McMansion (or whatever the equivalent term might be these days). And you're clothes can be quite becoming without becoming ultra-expensive - or ultra-plenteous. While St. Benedict's instruction that a monk does not need more than two outfits is going a bit far, having closets jam-packed with every conceivable style color of shirts, pants, dresses, etc. is, well, excessive. Right?

As for food, you can have nutritious and delicious without spending a fortune. Of course, cooking at home is really key here, in both categories. You'll spend less eating at home. But even better, home-cooked meals are decidedly healthier and - if you put any effort into the prepping and/or cooking - much tastier. Even if you've got the equivalent of the bad dancer's two left feet when it comes to cooking, remember food should primarily serve your body's need for fuel, not your taste-buds needs for thrills.

But we didn't start this train of thought about adding things up with all this in mind at the start. We were going to pass on an observation about the economy and the markets. With the stock market reversing from its blood-bath, many of us can feel the terrible tug of watching the daily media celebrating the revival of what they claim has been a continuing Bull Market in stocks, despite all that money stock investors lost recently.

Do the numbers add up here? So far from the last top in February at 612.90 to the bottom of the fall in April at 496.74, SPY has regained a bit more than 50% of that fall. That's about right for a correction in an ongoing Bear Market. Could it gain more? Sure. But it would have to really take off from here to even evince some initial inkling of a reconsideration of the theory that a Bear Market has begun.

The number just don't add up so far.

As for the economy, well, we finally did get a report that the last period for which numbers are available produced a negative number. Naturally, this comes with the theory that you need two consecutive negative months to even dream about a Recession (Or was it three or four?) 

The numbers don't add up - yet. And, besides, the numbers for the economy come from the past, not the present. That's likely the main reason why it usually takes 6-12 months before the government declares a Recession - or more accurately that we've been in one for 6 - 12 months.

But adding up numbers isn't really the cup of tea (or maybe some more adult beverage) we need after a hard week's work. So let's leave it all at that and get on with the weekend. If you need rest after a hard day's night, get it. You'll likely need it as the year wears on.