Challenging Money: Yakezie Edition

In today’s Challenging Money, I want to bring your attention to one of the best personal finance networks on the Internet today: the Yakezie.

Readers who have been around since 2009 might remember my previous involvement with the Yakezie and some of the link posts I’ve done in the past.

April brought my renewed commitment to the Yakezie “challenge” which includes supporting my fellow personal finance bloggers in whatever way I can. For example, this week’s post on buying a home featured many bloggers that are part of the network.

Highlights

This week’s theme is all about “making it,” views from the perspective of those who have achieved a good deal of success, in money and/or in life.

#1: Wise Bread: 6 Things You Can Look Forward to When You Have Money: With all the frugality articles in the space, it’s refreshing to read a post that explores the benefits of having money–what it is we’re actually working toward.

“And quitting your job to further your education so you can make even more money in the future? That’s simply an opportunity only people with the financial means can make, which is now you.”

#2: Zen Habits: 38 Life Lessons I’ve Learned in 38 Years: I really enjoy Leo’s reflective posts because they are full of useful observations that inspire and motivate me to act, like this one:

“34. No one knows what they’re doing as parents. We’re all faking it, and hoping we’re getting it right. Some people obsess about the details, and miss out on the fun. I just try not to mess them up too much, to show them they’re loved, to enjoy the moments I can with them, to show them life is fun, and stay out of the way of them becoming the amazing people they’re going to become. That they already are.”

#3: Sweating the Big Stuff: Purchasing When You Can Afford It: Again, a lot of the focus in our space is on spending less, paying off debt, etc. But what happens when none of those things are an issue? How do you control what you spend? Daniel asks a difficult question.

“…if you have a healthy emergency fund, fully funded retirement fund, and have already put away money for other goals: how do you limit yourself from spending when you really can afford it?”

Elsewhere

In other news, I was interviewed for a column in Thrift Culture Now, where I discussed everything from American financial culture to my background.

I also want to let you know about a contest Lending Tree is running until July, which is giving away $1,500 toward your mortgage or rent once a month. You are asked to share your best money management and finance tips on their Facebook page. Enjoy!

Should Millionaires Apply for Unemployment?

I recently posed this question to my newsletter readers after seeing Sam’s tweet about it last Friday:

“Almost 3,000 millionaires claimed jobless benefits in 2008 according to the IRS and nobody should complain. They suffered an insured loss.”

Most people have one of two reactions to this kind of news:

  • Good for them!
  • What the heck?

It’s a polarizing topic, just like politics or health care. I think there are two basic principles at work here which people are reacting to. Let’s take a closer look:

Right: “…a just claim or title”

The basis of Sam’s earlier tweet is the belief that everyone who is rightfully entitled to receive unemployment benefits should be able to do so.

Unemployment insurance, at the very core, is an insurance product managed by the state. Companies pay into the fund on your behalf, and in exchange, you get to collect money if you happen to lose your job unexpectedly.

While the fund is sensitive to income for payout amounts (with a maximum cap on benefits), there is no maximum cap on income that I know of. So millionaires can, in theory, claim unemployment just like anyone else.

Their employers, just like millions of other companies, paid into the same fund to insure against the loss of a job. Claiming unemployment is simply cashing in that insurance policy…right?

Need: “…a situation or time of difficulty”

A need analysis would evaluate someone’s measurable need for unemployment compensation, whether that’s based on percentage of income replaced, amount of savings available to cover expenses, amount of required monthly expenses, or some other measure.

Unemployment insurance as it works now doesn’t discriminate based on these factors, but many critics of the system do. They argue that unemployment helps too many people who don’t really need the money, and not enough people who truly do.

A need-based system would evaluate a person’s ability to sustain their families on unemployment income while they search for another job.

Looking at unemployment through the eyes of need paints an entirely different picture–millionaires probably don’t need the help, and even if they did–unemployment only replaces a small fraction of their previous income. What good could it possibly do?

Where Do I Stand?

A lot of people have asked for my opinion on unemployment because so many of my friends have been laid off. (I would not be surprised if the unemployment rate in the architecture industry currently tops 50%.)

When it comes to principles vs. emotion/compassion, I usually tend to side with principles. Some people call it being smug, or even “riding a high horse,” but to me, fairness and equality rule the day every time.

A lot of people criticize the current system for not helping those who really need it. They say that there’s a lot of ongoing fraud and abuse in the system.

I agree. But a need-based system, if that’s even an alternative, would open us up to infinitely more fraud.

On the subject of millionaires, I think they’re within their right to claim because that’s the system they’ve paid into. They’ve done so with the understanding that they would be able to benefit in case of a loss. If we don’t think it’s right, we need to address the system, not crucify the users.

So, what do you think—should millionaires claim unemployment? What is the future of the system and what would be the best/most fair setup?

Photo by ItzaFineDay