Small Town Living

I suppose what I'm about to write is obvious even if you haven't lived in a big city and moved to a small one. But it is my experience and I just felt like writing about it.

Today is September 26, 2013. In 2001 we moved from Ventura County near Los Angeles to Redding CA, a city of 90,000 people. There is no way to escape the dense population and heavy traffic in Southern California; it's everywhere. There are some nice things about living in that dense area.

In the L.A. area there are way more jobs in a variety of companies than in a small town. In a recession the job market will rebound faster in a dense area. Yes there are more people there to lose jobs and then who are out looking when the jobs start to come back on line, but there is also momentum there. There are also more things to see and do, and more restaurants to choose from. But the advantages are overshadowed by the problems of a dense living situation.

The main thing about the L.A. area is the traffic. There are lots of places with 5 or 6 six lanes of freeway on each side of the median with cars tightly packed together and traveling at or above posted speed limits. Leave a gap big enough to fit a car in and someone will slip into that spot. There is no way not to tailgate. There are also many situations where the traffic is completely stopped and crawling along at 2mph. It can take you 20 minutes or 2 hours to go from the same point A to the same point B. That's why if you ask a Californian how far away some place is they will give you an answer about how long it will take to get there.

The other thing about that density is crowds of people at seemingly every event or attraction. Go to a theme park and you'll be lucky to ride 5 of the 20 big rides because lines are 1 hour long at each one. Go to Disneyland and you'll have line waits of 20 minutes up to an hour or longer. Even restaurants can have waiting lines. Little can be done without bumping into people.

In a dense area like L.A. people simply don't have time to chit-chat, nor to store employees have extra time to really help you out (most of the time) because there is a line of customers waiting to ask the same employee for help. Everyone seems to be pressed for time, scurrying around like ants.

Now that we've lived in Redding for over two years I really appreciate the slower, more comfortable, less traffic, uncrowded lifestyle here. But as always there are no perfect places, so Redding has its issues too.

There simply is no traffic here when measured against the L.A. area. Those who have lived here for 20 years can complain about the traffic but really they have no idea. Oh I know there are one or two spots where the line of cars at a signal can get to be 10 to 15 cars long, but really...

Nobody is in a hurry so it is rare to have someone tailgate here. Normally when driving down a country style single lane road (of which there are many even in the city limits) people stay 3 or 4 car lengths back. There's no reason to push. The city is roughly 6 x 6 miles so it only takes 15 minutes to go from one end to the other. Why hurry!

The thing that surprised me the most about Redding is how friendly the people are and how much time they have for you. Nobody is in a hurry. I rarely hear a car horn beep. If there is a line of 4 or 5 people at the cash register and the cashier is having a friendly chat with the lead customer, even after the sale is complete, nobody says a word to speed them up. I asked for help at an ACE hardware recently about the use of denatured alcohol and the store employee spent 15 minutes looking things up on the internet for me.

I suppose each area has it's own quirks. I've finally learned to respond the way most people do here when they pass people when walking. They first smile, then they slightly nod their head. I found myself doing that in the "big city" of Sacramento at the airport last week and realized I had become a Redding'ite in that respect. Nobody at the SAC airport smiled and nodded at me.

We've had quite a few contractors come to the house over the past two years. In every case they call about 10 minutes before they come to let us know they are on their way. No contractor has ever missed an appointment with us, and they all finish the job on time! Amazing.

Redding is tucked into the foothills of the Cascade mountains at the extreme upper end of the California Central Valley. Most of the city is flat but the upper end, especially the upper west section where we live, is hilly. In the winter we an see snow covered mountains to the west, north, and in a distance to the east of our house. It only snows once every three or four years on the city and only for a day or so. But you can see the beautiful white capped mountains for several months in the winter.

Shasta Lake is just 9 miles from our house. The annual pass to park in the public launch ramp areas is only about $75 for a senior like me. The pass goes on the Toyota 4Runner, not the boat. So I can bring the boat trailer or the jet ski trailer to the lake on the same low cost annual pass. Whiskeytown Lake is 13 miles away and my life long senior pass only cost $10. So boating is both close and cheap here. In L.A. the best close lake was 72 miles away and launch fees were $24/day. Not only that but who knows how many 100's of 1,000's of boats there are in that area wanting to boat on a hot weekend day. There were sometimes waiting lines to get on the lake; you had to wait for a boat to leave so the next boat in line could enter. Wow.

Recreation is awesome here. Do you ski on snow or water? This is the place. Do you 4-wheel in your Jeep or SUV, or Quad? This is the place. Do you mountain bike, or have a dirt or dual purpose motorcycle? This is the place. Do you hike, climb or fish? This is the place. There are 22 miles of paved two lane walking trails here along the Sacramento River. Hunt. You can't beat the hunting in this area.

Alas the down side of living in Redding is there is so little to do outside of doing things... well outside. There is the Shasta Dam tour (sort of outside), well worth the visit. The local Cascade Theater has some top stars and lots of B level performers. The local college has concerts. There is the annual, large and impressive Cool April Nites (all outside) with about 1,200 restored cars. But no museums, no theme parks, no zoo, no ocean harbor, a lack of top quality restaurants, it's just dull. We learned that we have to take day trips to Sacramento 166 miles south to see and do some of those things.

There are lots of signs of homeless, drug abusers, and alcoholics here. I'm not sure the percentage of them is any more than a large city, there are just fewer places they can congregate, and we seem to have to drive through those areas often. Fortunately there are lots of services here to assist those in need.

This is a great place to raise kids. The kids here don't have that street hardness they do in the L.A. area. They are still kids. Even the teens are great. But the work ethic here is lacking and role models don't abound. They don't have the draw of big business to help drive them through college and seek challenging jobs such as architecture or electrical engineering. There is no manufacturing in Redding to speak of. Oh the kids can go away to college and hopefully some of that will rub off on them but they start with a deficit. I suppose that's not all bad but most of the youth here will not likely end up with high paying jobs.

All in all I'm very happy we moved here. I like the slower pace, the conservative nature of this area, the high percentage of Christians, and the beauty of the area. We have a home that costs 1/4 of what it would cost in the Los Angeles area, and we have three times the land. Our neighborhood is dead quiet. We don't even have to listen to air traffic overhead save for the 5 or so private aircraft that take off on Saturdays. No jet sounds here. If a helicopter passes overhead it is either going to the hospital or carrying water to put out a brush fire. No traffic helicopters are within 150 miles.

Too bad Redding is in liberal California with high taxes and too many regulations.

Investing:

As a retired person I first had to start investing 20 years before retirement so I eventually would have enough money to retire. The idea of putting away enough money to last 20 or 30 years is daunting. Here I am today with Social Security income, a pension, and our portfolio to live on. But where to invest? What are my expectations over the next years regarding investing.

The biggest problem I see is our federal debt is out of control, federal spending is out of control, and we are implementing Obamacare which will further sink the country into debt. The effects of these federal programs are going to have major impacts on our economy for the foreseeable future.

The dollar is the most stable world currency, but it is sure to be downgraded and has been once recently. At some point the world will switch to another currency which will further disturb the dollar. The U.S. trade deficit already is weakening the dollar because more dollars flow out of the country than are brought into the country. As the U.S. slowly looses its credit rating those who own our debt, like China, will begin to put their money elsewhere and that too will impact the value of the dollar.

As the dollar loses value inflation rises. This will steel more value from the dollar.

The next biggest problem is the U.S. is no longer manufacturing products sufficiently to bring dollars into the country (as already evidenced by decades of trade deficit spoken of above). As we lose expertise in manufacturing, and we no longer have the factories to produce products we will slip further and further into being a "service economy." Hogwash. A few decades ago we were told that we were becoming a service economy as if that was a reasonable replacement for manufacturing. It simply isn't.

Service dollars move from hand to hand inside the country. Nothing is added. As we import more than we export our dollars dwindle and end up in the hands of others outside the country.  This is a loosing proposition.

The next biggest problem is the baby boomers are retiring, I'm one of them. As we retire a couple of things happen. We no longer have income with which we portion some of into the stock market. When there is less money going into the stock market there is less money for companies to use to expand and add jobs and manufacturing to our economic base.

Further not only are the baby boomers not investing but we are drawing money out of our investments to live on. The size of the population of the baby boomers is sufficient that this draw down will impact the value of the overall stock market.

So how does one invest in the face of a failing U.S. economy? Well first there is still growth left in the market. Historically equity return has been about 7.8% average annually since 1929. That number will slowly decrease over the next 10 to 20 years. Don't count on earning an average over about 5% for the next 10+ years if you invest in the stock market.

Bonds are nice stable investments, but that is the problem. They may return 5% but if inflation kicks in, as I expect it will, the 5% return on bonds may easily be less than annual inflation. So bonds won't be a good investment.

Stocks adjust with inflation somewhat. If we have 10% inflation the market will rise faster than if we have 2% inflation. Equities aren't inflation proof, but they are the best option anyway.

Investing overseas. This is tricky but any portfolio should have some percentage invested in external markets. Your guess is as good as mine which countries or businesses to invest in overseas, but I think that will become more clear as time passes. Will it be China? Will it be India? Brazil?

So in general we must adapt to the perfect storm of higher taxes, higher inflation, lower stock market returns, and lower salaries. If you're pre-retirement spend less and save more. If you're in retirement spend less so your portfolio will go further.

If you want to start a business don't start a retail outlet. Manufacture something and do it in the U.S. That won't be easy but find a way, and a product.

Vote against any suggestion that we raise the minimum wage. That is simply going the wrong direction. Costs have to come down and salaries have to come down too for us to survive. We are being priced out of the world with our spending habits. How can we possibly compete with $10-20/hour salaries when equally good workers earn less than $1/hour. Their standard of living and salaries have to improve, our's has to decrease. There is no other way.

We can't vote these problems away. It's simply too late. we are on a path that is set in stone. Voting can impact the outcome but we still have trillions of dollars of debt, an annual deficit, and nearly impossible entitlement programs that aren't going to go away anytime soon.

What can save us? Manufacturing more would be the biggest improvement. But we have to manufacture quality products that cost the same or less than those products we are currently importing. We must manufacture for our own consumption and for export too. For that to happen either the overseas manufacturers prices have to increase, or our costs (read salaries) have to decrease. To close the salary gap between the United States and other countries will be painful but it will have to happen. However this will exacerbate the problem of paying off our debt. If there are less dollars being paid to workers, there is then also less tax dollars to pay off debt.

The federal government must cut their horrible spending habits.

Federal regulations that force companies to manufacture in the United States and not overseas is doomed to fail. That will only force manufacturers to spend more on salaries which will make our products too expensive to export. It is a loosing proposition. Higher taxes on corporations has the same impact. It drives jobs and profits overseas. We mus lower corporate taxes to encourage them to do business here.

The entitlement programs have to be revamped. Social Security must be altered to pay way less than it does, and to way less people. Medicare is totally out of control and sinking the country. Obamacare is a third major expense that will be added to the Social Security and Medicare abominations.

We must, as a country, learn to live within our means; and our means will be shrinking. We are now living on borrowed money, both federally and individually.