What Does California’s New Minimum wage Buy? A Long Commute and a Room

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Spending more than three hours in a car each day is not unusual for Daniel Gretz. Gretz works as a security guard in Milpitas, which is in the southern part of California’s Bay Area. Each morning, he gets in the car and drives about 97 miles up Route 101 from Greenfield where he lives with his brother’s family.

Gretz had grown up in nearby Cupertino and has over the years seen housing and rental prices sky rocket.

“There are more and more people moving outside the Bay and then commuting to work,” says Gretz. Five years ago, when he first moved to Greenfield, his commute was “an hour and 15 minutes max. Now, on a good day, it’s an hour 45 minutes. On Friday, I leave work at 4:30 and not get home until 7 o’clock.”

Trying to survive on hourly pay of $15 an hour, Gretz feels he has no choice but to make the daily trek up and down the 101. Moving closer to Milpitas and San Jose would mean renting a place that would swallow up majority of his monthly paycheck.

As California becomes the first state to approve a proposal for $15 minimum wage, the question becomes: Is $15 an hour enough?

On Monday, California governor Jerry Brown signed a bill that will gradually increase California’s minimum wage over the next six years until it reaches $15 an hour by 2022. Thanks to a 2014 ballot initiative, San Francisco will have a $15 minimum wage by July 2018. And while $15 an hour will benefit many of California’s low-wage workers, in the Bay Area it is barely enough to live on. Stagnant wages have not kept up with the rents, which have gone up by more than 10% each year.

In search of lower rents, Bay Area residents have moved further away from their jobs — often traveling from one Bay Area city to another for work. According to the U.S. census, for most workers in the Bay Area their commute to work is about 30 minutes long. For those earning $15 and less, however, it can sometimes be as long as one to two hours each way.

The Bay Area consists of 101 cities, nine counties and spans about 7,000 square miles. It is home to more than seven million people. To picture how sprawling the Bay Area is, consider this: New York City — home to more than eight million people — is just 304.6 square miles. The Bay Area is about 23 times as large.

‘Moving day sux’

Above a bar on Mission street in San Francisco, is an open space where the neighborhood youth gather most days. The space belongs to Homies Organizing the Mission to Empower Youth (Homey), a community organization focused on helping at-risk youth. Near the staircase on the second floor is a whiteboard. On it, written in red marker is: “Moving day sux.”

The organization renting the space above Homey was recently evicted and had just moved out, says Carlos Gutierrez, director of operations of Homey, when asked about the note. Homey was able to extend its lease, but its rent has almost doubled. Most of the people working at Homey have grown up in the Mission, but in the recent years have had to move to places like Oakland and Stockton after being either evicted or having their rents hiked too far. A drive from Stockton to San Francisco is about two hours each way.

“People born in San Francisco can’t afford to live in San Francisco,” says Gutierrez, 36, who has moved to Oakland with his teenage son. As a result, he says, San Francisco has become a commuter city.

San Francisco, Oakland and San Jose — all cities in the Bay Area — are among the 10 most expensive cities to rent a one-bedroom apartment, according to Zumper, a startup that connects people with houses and apartments for rent. In December, median rent for a one-bedroom apartment in San Francisco was $3,500, highest in the nation. At $2,190, Oakland was the fourth most expensive city and San Jose was sixth, with median rents for one-bedroom apartments reaching $2,130.

In Oakland, where Gutierrez lives, the rent for one-bedroom apartments increased by 19% in 2015. Rent of two-bedroom apartments increased by 13.3%, reaching $2,550. In the U.S., affordable housing is defined as housing that costs about 30% of one’s monthly take home pay. For a $2,190 one-bedroom apartment to be affordable, one would have to make about $7,300 a month, which is equivalent to about $87,600. The annual salary for someone earning $15 an hour? A little more than $31,200.

Working at Homey, Gutierrez earns between $30,000 to $35,000 a year. His rent in Oakland is $1,200. After taxes, his rent is more than half of his take-home pay, he says. His daily train rides to and from work add up as well. He also has more than $40,000 in student loans. Despite all that, he can’t imagine leaving San Francisco area and the community that he has grown up in and cares about.

“We are here to stay. They can’t get rid of us. The lot of us, we are not going anywhere,” he says.

“We are the cockroach people,” jokes Robert Eligio Alfaro, executive director of Homey, who sits at a desk across from Gutierrez.

“We find a way to stay here, be here,” Gutierrez continues.

It was the ethnically diverse communities that made San Francisco what it is today, says Alfaro. “And in no way do these people feel that they are going to leave their communities or give it to up to someone who has more money,” he says.

Organizations like Homey have been working with other organizations that tackle issues like affordable and low-income housing. According to Alfaro and Gutierrez, the two objectives are closely related as homelessness, moving from place to place and feeling insecure about housing can contribute to a rise in at-risk youth.

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Like some of Homey’s employees, Gretz did not always have such a long commute to work.

Back in 2011, during the recession, the security company Gretz worked for was acquired. Afterward, he was told that his pay would be reduced: from $24 to $14 an hour.

“They basically said: ‘Start putting your resume together.’ They didn’t think I was going to stay, but it was better to have a paycheck than nothing at all,” says Gretz. At the time, the U.S. unemployment rate was still between 8% to 9%. “Everybody was kind of feeling the pinch — it was not the best time to find something else.”

Back when he earned $24 an hour, Gretz rented a studio for $1,100 a month. When his rent went up and his pay was slashed, keeping a place on his own was not financially feasible.

“When you get the rug taken out from underneath you and are making $10 less an hour, you have to make some serious financial adjustments,” he says. In the months that followed, he refinanced his car, leaned on his credit cards too much and moved in with his disabled brother, who had just recently bought a house for his family. And while his brother’s house was 97 miles away from Gretz’s workplace, he says that if he were to accept jobs closer, the pay would be lower.

Gretz, who has been actively trying to unionize security guards in the Bay Area, has recently received a $1 raise and now makes $15 an hour. He says it is “mind boggling” to him how people earning minimum wage make ends meet. California’s current minimum wage is $10 an hour. In San Francisco, the minimum wage is $12.25.

“If I am struggling [on $15 an hour], what must they be going through?” he says.

Protesters rally and close down a McDonald&rsquo;s restaurant in downtown Oakland in May 2014. Photograph: Kim Kulish/Corbis<br /></dt><dd class=

‘Just one room. It’s all I can afford’

One of the people feeling the pinch is Ernestina “Tina” Sandoval, 40, who lives just outside of San Francisco in Richmond, California. Sandoval works overnight 10 p.m. to 6 a.m. shifts at a McDonald’s and is paid $11.52 an hour.

Mother of two — a 17-year-old daughter and a 10-year-old son — she often struggles to make ends meet. To save money, she often walks to and from work, which takes about 30 minutes each way.

“If it’s between my daughter and myself, I’d rather have my daughter have those $5. She is a teenager. Have some change for lunch,” says Sandoval.

For Sandoval, the difference between earning $11.52 an hour and $15 an hour would be continuing to rent a room for the three of them in a relative’s home and moving into a one-bedroom place of their own.

“At the moment, I rent a room in a house. Just one room. It’s all I can afford,” she says. Still, the one room is more than what her family had a few years ago, when they lost their home during the recession.

“I walked into the police department and said: ‘I am homeless and I don’t know what to do,'” says Sandoval. The police helped place her into a family shelter in Richmond — right across the street from the McDonald’s, where she applied for a job. For the next eight months, Sandoval continued to live in the shelter and work at the McDonald’s where she still works.

Today, she continues to fight for $15 an hour — a wage that she says McDonald’s, a multimillion dollar company, can afford.

“Those $15, it would make a big difference,” she says.

Written by Jana Kasperdevic of The Guardian

(Source: MSN)

California Farmers Shore Up for El Nino

Provided by CNBC

In the San Joaquin Valley in California — where more than a third of America’s vegetables, and two-thirds of the nation’s fruits and nuts are produced — temperatures are roughly in the 40s. The monthslong citrus harvest continues, and farmers are tucking young almond tree plantings into the ground. And during these tasks that make up farming, there are moments to look to the horizon and hope. There’s snow topping the Sierra Nevadas.

After four consecutive drought years, farmers are hoping and betting their livelihoods that the snowpack along the 400-mile-long Sierras, from north to south, will accumulate. Then in the spring, the snowpack will melt and trickle down to fill surface water reservoirs and hopefully bring down soaring water prices.

But there’s also worry a naturally occurring weather pattern known as El Nino will bring fast and furious precipitation. Acres of land have been left idle in the drought, making that barren land susceptible to flooding, mudslides and erosion. “A strong El Nino is expected to gradually weaken through spring 2016,” according to an update released Thursday from the National Weather Service’s Climate Prediction Center.

“We haven’t really experienced the full effect of El Nino just yet, but so far it’s not near as dry as it was a year ago,” said Jesus Ramos, a farmer who owns 140 acres of mostly citrus trees in Terra Bella in Tulare County. “And there’s snow on the mountains,” he said. “It’s nice and bright.”

Further north in Madera County, third-generation farmer Tom Rogers has planted some new almond trees on his 175-acre almond farm. Almond tree blooms should be popping in about four weeks. “You can see the buds move,” he said.

Both Rogers and Ramos are taking reasonable precautions. They’re doing things like making sure drains and creeks are cleaned and open. “I’m cautiously optimistic,” Rogers said.

But in other agricultural pockets of the U.S., El Nino has already created damage, including bloated waterways that are impeding transportation of food. “Swelled major waterways across the nation have slowed the movement of barges, which are an important channel for the distribution of agricultural goods,” according to an El Nino economic report from IHS Global Insight, released this week.

The net effect of El Nino typically is small but positive. The economic benefits of the 1997–98 El Nino event — the most severe to date — were about 0.2 to 0.5 percent of GDP. IHS Global Insight expects impacts on the same order of magnitude during the 2015–16 El Nino.

The current El Nino is expected to affect temperature and precipitation patterns across the U.S. during the upcoming months. There’s an “increased likelihood of above-median precipitation across the southern tier of the United States, and below-median precipitation over the northern tier of the United States,” according to the National Weather Service.

One of the reasons heavy rainfall can actually damage crops, the land and infrastructure is absorption rates. “The land has been so dry for so long, it’s almost impermeable,” said Mary Simms, a spokeswoman for the Federal Emergency Management Agency. Excessive, dry land can “act like concrete” despite precipitation, she explained.

“So far the rain has been coming slowly and absorbing,” said almond farmer Rogers.

Given this El Nino is expected to be among the biggest, according to forecasters, FEMA established a new El Nino-specific task force last August to encourage preparedness among industries, business owners and residents.

About 28,000 new flood insurance policies were purchased by California residents from the end of August to the end of November last year, according to FEMA, a 12 percent increase.

As El Nino rolls out, the effects could be widespread and touch many sectors. Unseasonably warm or wet weather can influence consumer spending such as higher retail sales as families go outside to shop. New home construction could be volatile in 2016 as builders place bets on which U.S. regions will have a milder winter, according to IHS research.

But El Nino’s major devastation could be related to crop production and global food security.

“The strength of the current El Nino has put our world into uncharted territory,” said Stephen O’Brien, U.N. under-secretary-general for the coordination of humanitarian affairs. “The impacts, especially on food security, may last as long as two years,” said O’Brien in prepared remarks on Jan. 7.

California, meanwhile, as the nation’s largest agricultural producer and exporter, is bracing for El Nino. The 2015 drought alone was forecast to cost about $900 million in gross crop revenue losses, and 10,100 direct seasonal job losses, according to an August 2015 report on the drought and California agriculture from the University of California at Davis.

“We cannot live with it being dry all the time,” said citrus farmer Ramos. Amid the prolonged drought, his total water bill for his ranches has soared to more than $200,000, compared to roughly $17,000 just a few years ago. Added Ramos, “The water issues are far from over.”

Provided by CNBC

Written by Heesun Wee of CNBC

(Source: CNBC)

10 Best States for Helping Home Buyers

© AP Photo/Nick Ut
© AP Photo/Nick Ut

Most Americans want to achieve the dream of homeownership, but for many, that dream is fraught with financial obstacles. That’s why all 50 states and Washington, D.C., offer specific home-buying-assistance programs to help residents turn homeownership into a reality.

HSH.com recently created a database of the home-buying-assistance programs in every state. From that database, we have assembled a list of the states which offer the most robust set of programs to their residents.

What makes a set of programs the best? We rewarded states with home-buying programs open to the majority of borrowers with the most points — four points per program. Down-payment assistance was assigned the second-most significant weight — three points per program. Finally, all of the other ancillary programs were awarded equally — one point per program.

We divided the programs into several categories: first-time and/or repeat buyer purchase programs, down-payment assistance, mortgage credit certificate, energy efficient, home improvement, veterans, disabled homebuyers, and job-specific.

For states that had a tie score, we used higher population (the ability to help more residents) as the tie-breaker.

Here is HSH.com’s list of the states with the best home-buyer programs:

10. MONTANA

Score: 18
Number of programs: 7
Montana has the third-lowest foreclosure rate in the U.S., according to CoreLogic’s March 2015 National Foreclosure Report. Perhaps it’s all the support the state lends to first-time buyers. Montana offers seven statewide programs: three purchase programs, one down-payment-assistance program, a program designed to construct, acquire or rehabilitate homes for disabled buyers, a low-rate program for veterans, and a mortgage credit certificate.

9. MISSISSIPPI

Score: 19
Number of programs: 7
The Mississippi Association of Realtors acknowledges that while low inventory and added regulation are holding the local market back to a certain degree, the state is making considerable progress following the downturn. To help more residents achieve the dream of homeownership, Mississippi offers seven statewide programs: two purchase programs, three down-payment-assistance programs, a program for low-income disabled first-time buyers, and a mortgage credit certificate.

8. IOWA

Score: 20
Number of programs: 7
The spring home buying season has been good to Iowa so far with both prices and sales on the rise. There’s no better time for potential buyers to utilize the home buying programs the state offers. Iowa offers seven statewide programs, including three purchase programs, two down-payment-assistance programs, a program specifically designed for veterans, and a mortgage credit certificate. Down-payment assistance is available statewide to both first-time and repeat buyers.

7. CALIFORNIA

Score: 20
Number of programs: 8
First-time homebuyers face tough conditions in California as affordability continues to decline. To help improve affordability, the state offers two first-time and repeat purchase programs, three down-payment-assistance programs, a mortgage credit certificate, a program specifically designed for California teachers, and an effort to promote energy conservation by providing buyers with the opportunity to finance energy-efficient improvements.

6. IDAHO

Score: 22
Number of programs: 7
Idaho offers its homebuyers three first-time and repeat purchase programs, three down-payment-assistance programs, and a mortgage credit certificate. Idaho’s purchase programs serve many different audiences: FHA, VA, USDA, manufactured housing, 30-, 20- and 15-year conventional loans, and FHA 203(k) loans.

5. NORTH DAKOTA

Score: 23
Number of programs: 8
The oil boom in North Dakota has begun to attract many new residents to the state. In an effort to turn those residents into homeowners, North Dakota offers three first-time and repeat purchase programs, three down-payment-assistance programs, a low-rate program for single parents, veterans, the disabled and/or the elderly, and a home-improvement program.

4. COLORADO

Score: 25
Number of programs: 9
The population boom in Colorado is certainly one of the factors contributing to the state’s limited housing inventory – there simply aren’t enough for-sale properties to accommodate the demand. But the state is certainly doing its part to assist home buyers. Colorado offers four first-time and repeat purchase programs, two down-payment-assistance programs, two programs for buyers with disabilities, and a mortgage credit certificate.

3. NEW YORK

Score: 25
Number of programs: 10
According to CoreLogic, New York is one of eight states that reached new home-price peaks in April, further ratcheting up the pressure on buyers to purchase a property before prices and mortgage rates move even higher. To help alleviate some of the pressure on buyers, New York offers three first-time and repeat purchase programs, three down-payment-assistance programs, a veterans program, two home-improvement programs and a recapture-tax program.

2. WYOMING

Score: 28
Number of programs: 9
Wyoming has begun to see an influx of buyers from surrounding states who want to take advantage of the lower real estate and income taxes. To help these new buyers capitalize on the ownership opportunities the state has to offer, Wyoming offers five first-time and repeat purchase programs, two down-payment-assistance programs, a home-improvement program, and a mortgage credit certificate.

1. PENNSYLVANIA

Score: 28
Number of programs: 11
Pennsylvania is the top state on our list, offering the most home-buyer-assistance programs. Pennsylvania offers four first-time and repeat purchase programs, two down-payment-assistance programs, two programs for disabled home buyers, two home-improvement programs, a program specifically designed for certain professionals (such as teachers and first responders), and a mortgage credit certificate.
Methodology
Using a weighted average system, HSH.com assigned a score to each of the 50 states and Washington, D.C. States that offered first-time and repeat buying programs were awarded most generously (four points per program). Down-payment and/or closing-cost assistance options were weighed as the second-most important feature (three points per program). Finally, all the other ancillary programs were awarded equally (one point per program). We divided the programs into several categories: first-time and/or repeat buyer purchase programs, down-payment assistance, mortgage credit certificate, energy efficient, home improvement, veterans, disabled homebuyers, and job-specific. For states that had a tie score, we used higher population (the ability to help more residents) as the tie-breaker.

Written by Tim Manni of HSH.com

(Source: HSH)

Retiring with Debt: How to Tackle the New Normal

© Ken Reid/Getty Images
© Ken Reid/Getty Images

Bora Paloka, a 65-year-old former hairstylist in New York City, is not living the type of retirement her husband and she had always imagined. For the past five years, the couple has been using welfare money to cover basic monthly expenses, and to make matters worse, the credit card debt she entered retirement with has ballooned.

Saving enough money to retire comfortably has long been the goal of the American worker as pension plans have disappeared. But now an added wrinkle complicates the scenario for those like Paloka: retirees are increasingly entering their golden years with crippling debt.

Households headed by those 75 or older saw debt double to $27,409 in 2010 compared to $13,665 in 2007, according to the Employee Benefit Research Institute (EBRI). And it’s not just mortgage debt that poses the problem: credit card and student loan debt are stifling retirees’ plans for leisurely days on the golf course followed by 5 o’clock margaritas.

Coping with this sort of debt does not leave Americans in a solid position to exit the workforce: 82% of workers aged 60 and older expect to or are already working past age 65, according to the May 2015 survey of the Trans American Center for Retirement Studies. Among them, 56% believe they will not be able to afford to retire because of their income or health benefit requirements.

Of course, for those forced into an early retirement, the obstacles increase: life expectancy has lengthened, and the typical consumer needs to be able to cover costs incurred during 30 plus years of retirement.

The best way for Americans to tackle debt in retirement is to develop a strategy and time line so they can attack the most troublesome debt first. It’s also important for them to consider taxes, retirement portfolio withdrawals and income streams so that they don’t outlive your money or leave heirs with outstanding loans.

Prioritize Your Debt

If you have multiple debt burdens, choosing which obligation to attack first is important.

Tackling high interest credit card debt, whether the charges were for a necessity or indulgence, is a must, according to Michael Conway, CEO of Conway Wealth at Summit Financial Resources in Parisppany, N.Y. If a retiree has multiple credit cards with debt owed, he should first pay off the one with the highest interest rate and then work his way down. This is what personal finance experts call “the avalanche method.”

Next up, take care of student loan debt, a pesky phenomenon that’s increasingly rearing its ugly head into retirement for many Americans. With education costs only increasing each year, student loans now make up a large portion of retirees’ total non-mortgage debt, according to the study by Limra Secure Retirement Institute: individuals aged 65 to 75 have six times the student debt compared to 25 years ago.

Financing a college education for yourself or your children is a priority to most looking to increase earning potential over a lifetime, but luckily, this debt can move down your list of priorities because of the low interest rates on education loans — typically from 1.5% to 8.8% for private loans and currently 3.86% for federal loans.

Student loan consolidation can simplify your bill to one streamlined payment and give you more time to pay off the loan. When choosing whether to consolidate a loan or not, retirees should compare their current monthly payments with the monthly loan payment for the consolidated bundle and ask whether they can afford to pay loans for the next couple of decades.

Mortgages are the big X-factor when considering entering retirement with debt. Generally speaking, it’s safe to pay the monthly amount owed on your mortgage while you tackle paying off your credit card and student loan obligations; once you’re squared away on those debts, you can work toward paying your house off in full. That’s because with a fixed mortgage, prices remain the same and don’t increase with inflation. That decreased urgency to pay off the debt, coupled with the fact that homeowners get a tax a break on their mortgage interest payments, makes this debt more palatable and less destructive to a retiree’s bottom line. To boot, the mortgage you took out will appreciate in value and is considered good debt, as opposed to bad debt, the money you charged to take that weeklong trip to Cancun. (That exception for mortgage debt is an adjustable rate mortgage, an ARM, which should be paid off sooner rather than later, because of the increasing interest rate over time).

The option of refinancing your home in retirement can cut down your monthly costs and help in your quest to paying off your mortgage. Lower rates come through from changes in market conditions or an improved credit score. But caveat refinancer: refi does have costs and fees like a 3% to 6% refinancing fee on your principal balance.

A reverse mortgage can bring in some steady cash flow and access home equity slowly over the years. This route comes with costs, depending on the size of your loan, like upfront mortgage insurance and real estate closing costs. Mortgage insurance adds an additional 1.25% on top of an adjusted interest rate.

If all else fails, downsizing your home is an economically efficient way to save some cash for retirement and free yourself of burdensome debt. A realtor can help with costs of selling your home and buying a new cozy condo for two.

Timing

During the first year of retirement, couples usually spend the equivalent of 75% to 85% of what their income was, mainly on home, food and health-related expenses — decreasing that expenditure level as they head deeper into retirement. Retirees should look at income and tax brackets to help determine what strategy to take for monthly spending and withdrawals from retirement accounts, according to Neil Krishneswamy of Exencial Wealth Advisors in Plano, Texas.

Financial advisors would caution retirees, with credit card debt, of over-splurging in their first retirement years. Non-deductible and with high interest rates, credit card debt will financially stunt you if not paid off early in retirement. More friendly debts, like mortgage debts, can be left to simmer while you pay them off slowly throughout your 70s and 80s.

“Some people are comfortable with having debt during retirement, but it’s good to have other means to control tax burden,” said Krishneswamy, specifically referring to the trusty mortgage interest deduction.

Alternative accounts like an emergency fund for back up can soften up the debt burden for the future.

Of course, diversity of investments is key: Krishneswamy says that if all your investments are in a 401(k), then any distribution you make from investments comes from a 401(k). “If there is no flexibility, then there is a higher tax burden,” he says.

That’s why multiple streams of retirement planning vehicles are of the essence: retirees older than 59.5 can start making withdrawals from their traditional IRAs with no penalty. Withdrawals are subject to state and federal taxes but can be used toward paying down debt. Those with a Roth IRA are not subject to the same tax burden, as a consumer with such an account has already paid taxes on contributions.

In Brooklyn, N.Y., Sunny and Mary Gianetto use their Social Security earnings and tax free annuities from financial companies they invested in to stay afloat in retirement and pay off their obligations.

Sunny Gianetto retired at age 65 and his wife at 62. Now at 80 years old, Sunny hopes to exceed his monthly budget through additional earnings, because his Social Security check won’t do it alone. “The wonderful people in Washington give us a raise every year and the increase comes in January, but it’s not enough,” he said.

The Gianettos have monthly expenses of car insurance and home maintenance to pay for. “If we didn’t have the tax free investments, we would be in trouble,” Mary said. Both husband and wife try to plan smart for the future and have a monthly budget.

Taxes

For people burdened by excessive debt in retirement, sometimes drastic measures like moving are necessary to find tax advantages. That can make all the difference in chipping away at the debt and moving toward a financially independent lifestyle.

Conway says to consider moving out of a state unfriendly to tax advantages, like New York with a high income tax rate of 8.82%, to a tax friendly state like Arizona, with a 4.54% income tax rate. All the better, retirees can head to states like Nevada and Florida, which have no income tax rate. Retirees may often look to migrate to warmer climates, but they shouldn’t make the mistake of moving to one of the top least tax friendly states like California- 13.3% income tax rate.

Moonlighting for More Cash: Real Talk

If you have debt, you should try to hold off on retirement, says Sergey Kuznetsov of AXA Advisors in New York City. That’s a strong opinion urging people who exit careers with debt to find a side hustle or alternative income stream.

But it’s a realist policy, given that people who retire in their 60s need to have money for the next three to four decades.

“If you want to make sure you have enough money for retirement, you have to stick to a monthly game plan,” Conway says. Therefore, individuals who are about to retire with an unpleasant amount of debt should consider working longer or seeking part time work after retirement to keep up with monthly payments.

That’s exactly the strategy Paloka has employed when trying to whittle away at her credit card debt.

Fearful that her four children will inherit her credit card debt, she began knitting for Hania Bytloi, a company that sells handmade knitwear. “I sometimes work through nights to finish the products,” she said.

With her husband selling a few books here and there, the Palokas are still unable to pay for everything and go to their children for help. “My eldest daughter helps pay for my credit card debt, but she is constantly late on the payments, which puts me back even more,” said Paloka.

There’s not a one-size-fits-all strategy here, of course.

“It’s like a little game of chess or jigsaw puzzle, and you need to ask yourself, ‘What’s the best thing you can do with your money?'” Kuznetsov says.

Written by Qendresa Efendija of The Street

(Source: The Street)

9 Cities Running Out of Water

The nine cities with the worst drought conditions in the country are all located in California, which is now entering its fourth consecutive year of drought as demand for water is at an all-time high. The long-term drought has already had dire consequences for the state’s agriculture sector, municipal water systems, the environment, and all other water consumers.

Based on data provided by the U.S. Drought Monitor, a collaboration between academic and government organizations, 24/7 Wall St. identified nine large U.S. urban areas that have been under persistent, serious drought conditions over the first six months of this year. The Drought Monitor classifies drought by five levels of intensity: from D0, described as abnormally dry, to D4, described as exceptional drought. Last year, 100% of California was under at least severe drought conditions, or D2, for the first time since Drought Monitor began collecting data. It was also the first time that exceptional drought — the highest level — had been recorded in the state. This year, 100% of three urban areas in the state are in a state of exceptional drought. And 100% of all nine areas reviewed are in at least extreme drought, or D3.

According to Brad Rippey, a meteorologist with the United States Department of Agriculture (USDA), California has a Mediterranean climate in which the vast majority of precipitation falls during the six month period from October through March. In fact, more than 80% of California’s rainfall is during the cold months. As a result, “it’s very difficult to get significant changes in the drought picture during the warm season,” Rippey said. He added that even when it rains during the summer, evaporation due to high temperatures largely offsets any accumulation.

A considerable portion of California’s environmental, agricultural, and municipal water needs depends on 161 reservoirs, which are typically replenished during the winter months. As of May 31, the state’s reservoirs added less than 6.5 million acre-feet of water over the winter, 78% of the typical recharge of about 8.2 million acre-feet. A single acre-foot contains more than 325,000 gallons of water. This was the fourth consecutive year that reservoir recharge failed to breach the historical average.

Normally, current reservoir levels are high enough to buffer against drought. However, “after four years of drought, reservoir holdings are perilously low,” said Rippey. Current total storage levels are at about 17.2 million acre-feet. The typical annual withdrawal is around 8 million acre-feet, which means total storage may fall below 10 million acre-feet by the end of the summer. This also means there is little room for error if the state enters a fifth year of drought.

In addition to surface water, groundwater is a major water source for the state, particularly during periods of drought. According to a recent U.C. Davis analysis of the California drought from 2012 through 2014, groundwater may replace as much as 75% of surface water lost to dry conditions this year. As Rippey explained, however, the problem is that the amount of groundwater is unknown. “The monitoring system for groundwater is not nearly as robust as the surface water monitoring system,” Rippey said.

City and state officials have reacted to the long-term drought by imposing various water restrictions. According to the California Department of Water Resources, California declared a statewide emergency during the 2007-2009 California drought — the first in U.S. history. California declared another such emergency during the 2012-2014 drought, and statewide precipitation was the driest three-year period on record. In an attempt to curb water use, statewide regulations impose penalties for exceeding water consumption budgets. Using water on lawns, for car washes, or to clean driveways is banned or restricted in each of the nine cities.

There are also economic consequences. The U.C. Davis study estimated a loss of at least 410,000 acres of farmland due to water shortages in California’s Central Valley, one of the nation’s most important agricultural zones and the location of most of the cities running out of water. An estimated $800 million was lost in farm revenue last year. That total does not include $447 million in extra pumping costs sustained by the Central Valley. Researchers at U.C. Davis estimated a total statewide revenue loss of $2.2 billion, and more than 17,000 jobs lost in 2014 due to drought.

The U.S. Drought Monitor is produced by the National Drought Mitigation Center at the University of Nebraska-Lincoln, the USDA and the National Oceanic and Atmospheric Administration (NOAA). 24/7 Wall St. identified the nine urban areas with populations of 75,000 or more where the highest percentages of the land area was in a state of exceptional drought in the first six months of 2015. All data are as of the week ending June 2.

These are the nine cities running out of water.

9. Bakersfield, California

A visible lowering water level in an irrigation channel in Bakersfield, California, in March, 2015.© FREDERIC J. BROWN/AFP/Getty Images A visible lowering water level in an irrigation channel in Bakersfield, California, in March, 2015.> Exceptional drought coverage (first half of 2015):72.8%

> Extreme drought coverage (first half of 2015): 100%

> Population: 523,994

Over the first half of this year, nearly 73% of Bakersfield was in a state of exceptional drought, the ninth largest percentage compared with all large U.S. urban areas. The possible impacts of exceptional drought include widespread crop failures and reservoir and stream depletions, which can result in water emergencies. The drought in Bakersfield has improved somewhat from the same period last year, when nearly 90% of the area was in a state of exceptional drought — the highest in the nation at that time. Like many other areas in California, however, Bakersfield has suffered through more than four years of drought, and any improvement is likely negligible. The Isabella Reservoir on the Kern River is one of the larger reservoirs in the state with a capacity of 568,000 acre-feet. The reservoir has supplied water to Bakersfield since 1953. Today, Isabella’s water level is at less than 8% of its full capacity after falling dramatically each summer since 2011.

8. Sacramento, California

A homeowner points toward his drained swimming pool that cannot be refilled this summer due to water restrictions in Sacramento, California.© Patrick T. Fallon/Bloomberg via Getty Images A homeowner points toward his drained swimming pool that cannot be refilled this summer due to water restrictions in Sacramento, California.> Exceptional drought coverage (first half of 2015): 78.3%

> Extreme drought coverage (first half of 2015): 100%

> Population: 1,723,634

Sacramento is the most populous city running out of water, with 1.72 million residents. The city is located just north of the Sacramento-San Joaquin River Delta, a major source of water not just for Sacramento residents but for a great deal of California. The delta also helps provide water to millions of acres of California farmland. The Sacramento and San Joaquin rivers supply nearly 80 California reservoirs. With the ongoing drought, current storage levels are well below historical averages. On average over the first half of this year, exceptional drought covered more than 78% of Sacramento. The remaining area is far from drought-free, as 100% of Sacramento was in a state of extreme drought over that period — like every other city on this list.

7. Chico, California

Farmland in Chico, California.© Barbara Rich/Getty Images Farmland in Chico, California.> Exceptional drought coverage (first half of 2015): 85.3%

> Extreme drought coverage (first half of 2015): 100%

> Population: 98,176

Starting in June this year, new state legislation requires Chico residents to consume 32% less water than they did in 2013. Water bills now include water budgeting information and penalizes residents with higher fees based on how much consumption exceeds the recommended amount. The new rule may be a challenge for some residents, as Chico had among the highest per capita daily water consumption in the state in 2013, according to the ChicoER, a local news outlet. According to The Weather Channel, in April of this year a jet stream shift brought rain and snow to parts of Northern California where Chico is located, a welcome relief to the area’s long-running dry spell. Despite the short-term relief, Chico still suffers from drought — an average of more than 85% of the city was in a state of exceptional drought over the first half of this year.

6. Lancaster-Palmdale, California

An aerial photo of the drought in Palmdale, California.© Jeffrey Milstein/REX An aerial photo of the drought in Palmdale, California.> Exceptional drought coverage (first half of 2015): 87.9%

> Extreme drought coverage (first half of 2015): 100%

> Population: 341,219

Compared to the first half of last year, drought conditions in Lancaster-Palmdale are worse this year. Last year, nearly 80% of the city was in extreme drought and just 10% in exceptional drought. This year, 100% of the city was classified as being in a state of extreme drought and nearly 88% in exceptional drought. Many Lancaster-Palmdale residents, particularly those in the Palmdale Water District, receive their water from the district’s water wells, the Littlerock Dam, or — like many Californians — the California Aqueduct. The Colorado River Basin is also a major water source for the region, including Las Vegas to the northeast of Lancaster-Palmdale and Los Angeles to the southwest. Rippey explained that with only three or four wet years in over a decade, the Colorado River Basin region has endured a staggering near 15-year drought. The river, which used to flow into the ocean, now ends in Mexico. Like every other city suffering the most from drought, Lancaster-Palmdale residents are subject to various water restrictions.

5. Yuba City, California

A nearly dried irrigation canal in Yuba City, California, in 2014.© AP Photo/Rich Pedroncelli) A nearly dried irrigation canal in Yuba City, California, in 2014.> Exceptional drought coverage (first half of 2015): 95.4%

> Extreme drought coverage (first half of 2015): 100%

> Population: 116,719

Yuba City is located on the Feather River, which runs south through Sacramento. The river begins at Lake Oroville, the site of the Oroville Dam and the source of the California Aqueduct — also known as the State Water Project (SWP). The dam’s water levels reached a record low in November 2014. While water levels have increased considerably since then, they remain at a fraction of the reservoir’s capacity. More than 95% of Yuba City was in a state of exceptional drought over the first six months of the year, making it one of only five urban areas to have exceptional drought covering more than 90% of their land area. Like other areas suffering the most from drought, the proportion of Yuba’s workforce employed in agricultural jobs is several times greater than the national proportion. The drought has had considerable economic consequences in the region. Agricultural employment dropped 30.3% from 2012 through 2013, versus the nearly 2% nationwide growth.

4. Fresno, California

A farm with a lawn and swimming pool near Fresno, California.© REUTERS/Lucy Nicholson A farm with a lawn and swimming pool near Fresno, California.> Exceptional drought coverage (first half of 2015): 100%

> Extreme drought coverage (first half of 2015): 100%

> Population: 654,628

All of Fresno has endured at least moderate drought conditions during the first half of each year since 2012. For the first time this year, 100% of the city was in a state of exceptional drought, up from 75% in the same period in 2014, and one of only four urban areas experiencing maximum drought conditions in their entire area. Like in many parts of California and several other cities suffering the most from drought, Fresno’s economy relies heavily on agriculture. A major source of water in Fresno is groundwater pumped from aquifers, or natural underground basins. In addition, water is delivered directly from the Sierra Nevada mountains to replenish dwindling surface water levels. Precipitation over the winter was yet again disappointing, and snowpack in the Sierra Nevada mountains was measured at a record low this past April.

3. Modesto, California

A pray for rain sign in Modesto, California, during a drought in 2014.© Debbie Noda/Newscom/ZUMA Press A pray for rain sign in Modesto, California, during a drought in 2014.> Exceptional drought coverage (first half of 2015): 100%

> Extreme drought coverage (first half of 2015): 100%

> Population: 358,172

Like several other drought-stricken cities, Modesto is located in California’s Central Valley between the Sierra Nevada mountains and the San Joaquin River, which are both essential sources of water for the region. Lack of precipitation during the area’s multi-year drought and particularly over this past winter has resulted in record-low snowmelt levels in the mountains. In addition, the San Joaquin River supplies 34 reservoirs, which together are at 39% of their capacity as of the end of May. One of the city’s major sources of water is the Modesto Reservoir, which draws water from the Tuolumne River. The reservoir is smaller than most in California. Over the past four years, the reservoir’s water levels reached their lowest point in September 2012 and are currently just below the historical average.

2. Merced, California

An aerial photo of Lake McClure near Merced, California, in April, 2015.© AP Photo/Rich Pedroncelli An aerial photo of Lake McClure near Merced, California, in April, 2015.> Exceptional drought coverage (first half of 2015): 100%

> Extreme drought coverage (first half of 2015): 100%

> Population: 136,969

Merced is in the Central Valley, an agricultural hub, which not only accounts for a considerable portion of California’s economic output, but also supports the majority of the nation’s agricultural production. The agricultural sector in the Merced metro area accounted for 13.1% of area employment, far higher than the comparable nationwide proportion of 2%. Agricultural businesses suffer more than perhaps any other industry during severe drought conditions. Agricultural employment shrank by 12.5% in Merced from 2012 through 2013, and the drought has only worsened since then. Over the first half of 2014, exceptional drought covered 78% of Merced, one of the highest percentages in the nation at that time. Over the same period this year, 100% of the city was at the maximum drought level.

1. Hanford, California

A worker digs a ditch next to a fallow field on April 24, 2015 in Hanford, California. As California enters its fourth year of severe drought, farmers in the Central Valley are struggling to keep crops watered as wells run dry and government water allocations have been reduced or terminated. Many have opted to leave acres of their fields fallow.© Justin Sullivan/Getty Images A worker digs a ditch next to a fallow field on April 24, 2015 in Hanford, California. As California enters its fourth year of severe drought, farmers in the Central Valley are struggling to keep crops watered as wells run dry and government water allocations have been reduced or terminated. Many have opted to leave acres of their fields fallow.> Exceptional drought coverage (first half of 2015): 100%

> Extreme drought coverage (first half of 2015): 100%

> Population: 87,941

With 100% of Hanford covered by exceptional drought conditions, the city is tied with Merced, Modesto, and Fresno for the worst drought conditions in the nation. Like the other three cities, Hanford, too, is located in the Central Valley. In addition to statewide restrictions as well as city emergency regulations already in place, city officials adopted additional water restrictions this June, such as barring serving of water at restaurants other than by request as well as vehicle and driveway washing bans. In addition to water restrictions and crop and environmental damage, the drought has impacted the region’s air quality. According to a recent report from the American Lung Association, Hanford had nearly the worst air pollution of any U.S. city. The report identified the dry, hot summers and stagnant air as key contributing factors to high concentrations of particulate matter and smog.

Written by Thomas C. Frohlich of 24/7 Wall St.

(Source: 24/7 Wall St.)