Thursday, December 27, 2007

Post Christmas review and looking ahead to the New Year

Well, I survived my trip home and am already back at work, if not quite out of vacation mode.

I did fairly well financially. I aimed to spend around $20-25 per person on my shopping list, aside from Mr. Boyfriend, and came in right around target. I have to go back and add up miscellaneous charges, but I think I did fairly well considering I had a boyfriend, four parents, two grandparents, two brothers, two sisters, a roommate, and several friends to buy for. If I do say so myself, I also managed to do quite well in the actual purchasing of gifts, and was really happy that everything I got for everyone seemed right on target.

Travel expenses came in around budget as well. I did spend some unexpected money changing my return flight, and had a little bit of sticker shock when filling up my mother's car with gas when I borrowed it to visit a friend. I also did some shopping and spent more money on myself than I had really planned to, but most of that came out of Christmas money I actually received on the trip, so it wasn't too bad. All told, I didn't clean out my travel fund, so really I'm not at all dismayed by spending more than I'd expected to.

In terms of what I got, I am thrilled with pretty much everything I got. A few things that aren't quite me have already been returned, and I need to make one more run this weekend to exchange the rest. I got more cash than I expected, as well as a gift card from my boss, and am sitting on what I didn't spend already to decide what to do with it. I think most of the money will go into my moving fund after I verify what I need to spend on books for the semester, since I've already blown about $100 on clothes and shoes (all of which were on sale and immediately became my favorite items of clothing ever).

Looking toward New Year's Eve, I'm glad that I don't have to stress about what to do or whether to spend money like so many other New Yorkers. It's a big night for the dance company and I'm already booked for at least one job, so rather than spending money to get into a fancy party, I will get paid to be there! I certainly can't complain about that.

In miniscule money news, I found out that the Direct Federal Subsidized Loan takes a portion of the money I accepted and holds it in reserve as a rebate "to encourage timely repayment". I don't entirely understand why or how this works; all I know is I will end up paying $34 out of pocket before I start classes. No biggie.

The other is that my dentist has clearly mistakenly billed me, and I'm dreading handling this. My explanation of benefits from the insurance company shows the dentist could bill me $22.60--and instead he billed me $75.55. Someone's got some explaining to do, and I'm not really in the mood to deal with this right now. But I definitely need to be shown where and how I owe more than $50 more than I expected.

And lastly, I have until Monday to gather up all my final medical reimbursements. I really want to clean out my HCRA before the end of the year, so I don't have to wait until next September to get the reimbursement.

Friday, December 14, 2007

2008 Financial Resolutions

It's that time of year, isn't it? Several of the other blogs I frequent (including Might Bargain Hunter, My Open Wallet, and The Simple Dollar--see also Cash Money Life's resolution roundup) have already done this, and given me some ideas. So below, in no particular order, things I'd like to accomplish with my money in 2008.

1. Cut my living expenses. While technically, yes, I can afford the rent that I'm currently paying (in that I'm not going into debt to do so), it's just about 50% of my monthly takehome pay (not including utilities). I don't know what I was thinking--I need to be saving more money at this time in my life, especially since I'm at work more than I'm at home! Luckily, my plans to move in with Mr. Boyfriend in the first quarter of the year will result in a lower rent payment by probably two to three hundred dollars per month.

2. Continue with my on-paper, on-purpose budget. Once my rent goes down, I will up a few categories in my budget (like groceries/eating out) and add a few more categories (like clothing replacement--I need a real winter coat!).

3. Add another $1,000 to my emergency fund. While I can live off what I've got for about four months in true emergency fashion (ie, no money coming in from anywhere else) and more than six months in a scenario where I lose my main paycheck but would work part time at Starbucks or something, my goal right now is to build it up to a nice, round $10,000.

4. Begin setting aside money for Lasik surgery. I went for a consultation earlier this year and discovered that I am a perfect candidate for the surgery--and that it's going to cost me about $5,000 out of pocket. I did not set up my 2008 HCRA account for this type of expenditure, but I will do so for 2009. That still means that I have to have the cash on hand to shell out before I get reimbursed. I'm scared of the procedure (medical stuff makes me very nervous) but it will be SO worth it. My vision is pretty bad, and about two years ago I lost the ability to wear contacts for more than an hour or so at a time. Glasses are fine, I guess, but I can't even rememember what it's like to wake up, get out of bed, and just GO...no fumbling around for glasses before I can find the floor.

5. Pay for school. I will be starting a Master's degree program in January. I got a departmental scholarship that will give me nearly $2,000 towards tuition for the spring and fall semesters, plus a $5,000 annual tuition reimbursement from work. This will leave me with about $4,000 in loans per year (the degree should take two years, maybe two and a half), and I'd like to pay them off as I accumulate them. So far, all my loans are federally subsidized, which is great--I'm hoping I can really make this an interest-free loan. I will be paying for books, fees, etc, out of pocket as they come up. This is all new to me--I've never taken out loans of any type before, so I'm interested in learning how this works.

As far as paperwork goes, I think this year I finally refined all my systems for keeping track of money coming in and going out. It's possible I may give up mystery shopping in 2008--I won't know for sure until I do my taxes, but it seems that the money I brought in this year was not quite equal to a lot of the hassle I went through with some of the companies. I may just continue with a few of my favorite regular jobs to pad my Paypal account for extraneous eBay shopping.

From where I'm standing right now, 2008 looks to be a pretty good year--financially-speaking and otherwise.

Monday, December 10, 2007

I have long been a "see a penny, pick it up" kind of person. The most I've ever found on the ground was a $20 in a Walgreens parking lot (which I got to keep when no one claimed it), and I found a lucky penny in front of the Wynn in Las Vegas (I went on to hit two $250 jackpots consecutively). After some news reports of Operation Lucky Bag, New York City police officers are operating, however, I find that I won't pick up money on the street--and it seems like I'm seeing it everywhere!

A while ago, while walking into a subway station in the middle of the night, I passed a frighteningly large wad of money on the stairs. The outer bill was a $100. I didn't even touch it, just acted like I didn't see it and kept on going. Friday while walking home, there were a couple $1 bills on a main corner at an intersection near my home. I left it there. Saturday, a single dollar in the aisle of the bus I was riding was making me incredibly uncomfortable until a very drunk guy got on board and exclaimed "HEY LOOK A DOLLAR!" and gave it to the driver. (Drunk Guy then proceeded to be very startled that he was not wearing a hat).

I've long known that society is more apt to keep found money than to turn it in, but now I'm afraid to do even that. I'm afraid that if I pick up money left in one of these sting operations and try to do the right thing but don't see the very closest plainclothes cop, I might be questioned or arrested--so instead, I do nothing. It's a very bad mindset to put people in.

In other news, I attended my second non-participatory Secret Santa gift exchange this year. The first one, I was informed of two months earlier and completely forgot (also subsequent emails failed to include reminders, and only two people ended up remembering out of 8, so I didn't feel so bad). The second, at lunch today, was when a department I'm not part of but work closely with invited MY department to have lunch with them, and I was the only one who ended up showing. They were going to do their Secret Santa later but asked if I minded, which of course I didn't. I hate Secret Santa gift exchanges, as I always get something perfectly useless and am tortured about what to give. The ones where you have a name ahead of time are only slightly better to me than the Dirty Santa or White Elephant games, in my opinion.

And in still more news, I pulled one of my free credit reports today, and am happy to say that all is well. I've started doing a staggered routine, pulling one company every four months rather than all three at once. For the most part, the information is accurate and the same across all three (I don't have much credit in general), so this way I'm getting a year-round view instead of once a year. I recommend everyone do the same.

Wednesday, December 5, 2007

The hidden costs of living in a big city

As I prepare to move in with my human beloved, I've been doing some reminiscing about moving to be with my inanimate love, New York City. I started my adult life (post-college) here in the city, and since then, I've come to realize several things. One thing that jumped out at me was the hidden costs of living in a big city. I was prepared for sky-high rents, and even to some extent for higher prices like movie tickets and groceries. I knew I'd lose the car expenses--gasoline, insurance, maintenance--so figured it would roughly even out. But there were some things I didn't expect.

The wear-and-tear cost
I go through things, particularly outerwear and bags, MUCH more frequently than I've ever done before. Every coat I've had has had to have pockets resown at least once. I reheeled a pair of boots for the first time in my life, because they were so worn down I couldn't walk in them anymore. Umbrellas actually blow inside out and must be thrown away. Before moving here, I used to get rid of bags and coats in perfect condition, and could take them to a thrift store or even consignment shop. Now, these things go in the trash in tatters and have to be replaced. Before, the only time I would ever go to a tailor was to have a brand new suit fitted to me, but now I even take my boots in to get new heels put on them.

I finally decided the cause of this is not me, but the city. I walk about six times more than I did down south, and I'm walking as much on pure cement--sidewalks, roads--as inside buildings on marble or carpet. I've discovered that wearing sneakers to work will not only save my shoes, but save me pain--I can wear heels 24 hours a day as long as I'm not stomping around outside. My coats and bags get carried around more. Instead of being tossed onto the passenger seat, they're being carried around, rubbing against other people on the train, otherwise just being WORN more.

Eating out
I was prepared for the higher costs of restaurants--and I've found that for the most part, especially by avoiding chain restaurants and fast food--I can actually eat cheaper and healthier here in the city. However, I was not prepared for how frequently I'd "need" to eat out. One of the downsides of a walking society and being away from home for most of the day is that you must carry everything with you. This automatically makes it more difficult to carry food along when I know that I'm going to need it--Mondays, for example, I have dance class after work. I do not have time to go home between work and class. I typically pack my lunch for work, so it's not that I'm against carrying food with me--but packing two meals makes things tricky. What will stay good for an entire day, rather than just a few hours? What will allow me to carry the least dirty tupperware around in the evening? What will be the lightest, considering I also have to carry books, a purse, and a bag for my dance outfits? What will hopefully not spill all over everything during my morning commute? And of course...do I really want to stay late on a Monday and eat dinner at my desk?

More often than not, I will pack in lunch and then go out to eat after work. I can eat for around $5, so it's not an exorbitant amount of money, and it also gives me a chance to sit in a restaurant and read my book with no other distractions for 45 minutes or so (treasured time, actually). I'd like to have a public area where I could do that and bring my own food, but I haven't figured out a way to make that work yet (sometimes in the summer I could go to a park, but now the studio has moved and there are none convenient).

The cost of grooming/Having a big city look
I'm rather simple in terms of style. I lean heavily towards comfort, especially in shoes, and don't have a particularly chic style. I'm ok with that. However, there's a real pressure around me to dress stylishly, to get manicures and pedicures, to be groomed and coiffed in places very few people ever see, to get highlights and lowlights and all sorts of professional assistance with my unruly hair. Then it doesn't help that I went and joined a dance troupe so that at least some of these services could be considered necessary.

I don't buy it. I have a friend who's a hairdresser who cuts my hair, and I love what she does. It's ridiculously cheap compared to a salon, in the comfort of my home or hers, plus I know who my money is going to and I feel good about that. I dye my own hair with dye purchased at a discount cosmetics store. I paint my own nails. I will treat myself to a manicure every once in a long while for a special occassion (I think I've had two) and I've never had a pedicure because the thought of someone working with my feet freaks me out. I've decided to spend my "pamper" money on things that work for me--laser hair removal and massages, twice a year during spa week.

Overall, it's clear that my money would stretch farther in a smaller metro area. The price I'm paying for rent would be more than a mortgage on a very nice house. Groceries, restaurants, and entertainment would be cheaper. A car and gas would pull it closer to even, but I still think that my counterparts earning the same salary in my hometown in Tennessee probably get to live it up a little more than I do--plus, their boots' heels aren't coming off.

*snappy transition*
I'm doing most of my Christmas shopping tonight--I'd say all, but I am not that much of an optimist. Whatever I can get online tonight, though, I'm going to. I've been bookmarking holiday deal sites for a few weeks now, and I'm going to put them to work. Most items will be shipped to my mother's house, where I'm spending the holidays, to avoid having to carry everything on a subway, bus, and plane with the rest of the holiday travellers. Overall, I think this is going to beat the Christmas that Mr. Boyfriend and I baked thousands of cookies for our families. Sure, it was cheaper than shopping but we spent literally 13 hours straight cooking, gained 30 pounds between us, and I still can't face macaroons.

Monday, December 3, 2007

The cheapest family in the nation

Wow.

Anytime I feel bad about how much I make, here's an entire family living on what's almost my exact salary.

*feeble waving from sickland*

Related to my post about using credit card rewards (something I’m working towards), Seven Reasons to Use Your Credit Card for Everything. This is something that I’m moving toward, using my credit card for all recurring, expected costs like dance classes and utility bills, then paying one lump sum per month to the credit card. I can’t set up auto-bill for many things right now—in fact, only my cell phone and Blockbuster membership are on it—since my expenses vary so much. I pay 50% of my electricity and cable bills, so I can’t even estimate a way to set that as an auto expense. Same for dance classes—it’s the same amount every time I purchase a 10-class card, but the speed at which I go through those cards varies with my schedule. Still, I won’t make another major purchase except on my credit card, and I’m planning to do all my (budgeted, saved-for, planned) Christmas shopping on my credit card as well.

This couple, however, takes it a little too far!

As much as I like personal finance, maximizing my options, and playing with details, I do have a life outside of it. Throwing this kind of management into the mix would ensure that I never did anything fun again.

Many apologies for the delay in posting—I’ve been swamped both in my personal life and at work, and have come down with my second cold since October, so I’ve not been up to posting much lately. I’m working on rectifying it, though—aiming for three regular posts per week instead of pressuring myself to post every day, which leads to procrastination when I miss one.

Monday, November 26, 2007

Oh, poor little neglected moneybags blog!

I did not go shopping on Black Friday or on Cyber Monday. In fact, I have done no Christmas shopping whatsoever, which is a little unnerving. As this week is turning out to be very busy, that’s not going to be remedied any time soon.

On the upside, however, I spent hardly any money at all over the four-day weekend. I had done my grocery shopping the weekend before, and although I have basically run through my entire food budget, I also have enough leftovers to last me a good while. Probably the rest of the week, in fact.

Savings-wise, I must now ramp up my savings rate as Mr. Boyfriend and I have picked a move-in date, which is, to put it bluntly, about as soon as we can possibly manage. Now that my raise has kicked in, and what with the extra money I’ll have coming in this weekend after working on my freelance stuff, this should not be a problem. It just means I need to be mindful of it.

I’m also considering taking any leftover travel and most of the leftover gift money out of my sinking funds at the end of 2007 and applying them to the moving fund. However, I’m afraid it might make me stingy with presents and gas money in December, so I will wait until the end of the year to decide that. While I don’t mind going back and revising budget categories when they need it, I’m a little loathe to just re-brand an existing sinking fund for something else that I suddenly decide I want more than what I was saving the money for in the first place.

Oh, and my next big savings goal: Lasik. Once I’m moved in, I think I’ll be able to justify saving for it, and hope to get it done in 2008 or 2009. We’ll see—I’m banking on not moving for several years after this, and also on being able to pay for school as I go through, and you know what they say about the best laid plans of mice and Moneybags (what, you haven’t heard that one?).

Happy holidays, everyone.

Monday, November 19, 2007

Shady Cingular Tactics

Sorry for my recent lack of posting—the promotion that wasn’t supposed to come with any added responsibilities sort of did come with some added responsibilities, and I’ve been swamped. I come bearing lessons learned from experience, however.

Related to my post on reading the fine print, another important responsibility in the world of personal finance is to carefully read your bills—especially if those bills are paid using an auto-pay feature from a credit card or bank account.

My cell phone bill has been exactly the same—to the penny—for about six months, ever since I got my Palm. For two years before that, it was also consistent, so I’ve had it on an auto-pay to my credit card for more than a year. I still check out the bill online sometime before the second of the month, when that auto-pay goes through, just out of paranoia. I’m glad I do--imagine my surprise when I clicked through the email yesterday to see that it is $20 higher than normal! I scrolled through the detailed billing to find that my plan has been changed from an unlimited data plan ($39.99) plus 200 text messages ($4.99) to an unlimited data plan that includes 1500 text messages (all for $39.99). This is great, right? It lowers my bill by $4.99 per month.

However, a) I did not authorize or know about this change, and b) I’d been charged a pro-rated amount of $18.66 for 10/29-11/11 for this feature—despite already having paid for unlimited data and 200 text messages for that period of time.

The way Cingular/AT&T works is that they bill you for the month coming up plus any incidental fees that accrue during the month (like text message charges if you don’t have a plan). This means that my previous bill had included a $39.99 unlimited data charge and $4.99 text messages charge for the period from 10/12 through 11/11, which was paid by auto-pay on 11/2. But since they included a pro-rated amount of the new $39.99 charge for inclusive text messaging/data from 10/29-11/11—I was being double billed! You can see how this works out in the image below (well, it's easier if you click on it to make it readable--clearly I am not all that educated on how Blogger works with images!).



I called them up yesterday and voiced my serious displeasure. For one thing, I’m concerned that they can change my plan without informing me, even if it results in a bill that’s $5 cheaper per month, and I’m especially concerned that they can attempt to double bill their customers—and I bet they’re getting away with it with many, many customers. The rep that I spoke with immediately credited me the pro-rated charge after I pointed out that I’d already paid for text messaging and unlimited data from 10/29 to 11/11, and I needed to either receive a pro-rated credit back for what I’d already paid if I was going to be charged a pro-rated amount of the new inclusive package, or the $18.66 needed to be taken off post-haste. She went one step better and credited me an even $20, and supposedly flagged my account so that no changes can be made without my express authorization (her only reasoning for how this could have happened is that perhaps the plans I was on are no longer available—but it still seems like Cingular ought to alert their customers that this is happening). And I find absolutely no excuse for the double-billing whatsoever. It’s blatantly obvious that I’d already paid for the period of 10/29 through 11/11—I guess the only reason they added a second charge for the exact same service is that they thought they could get away with it.

If you are a Cingular/AT&T customer—or really, have any regularly recurring bill that’s on auto-pay—read your bill carefully and before the auto-pay takes effect.

Tuesday, November 13, 2007

Renter's Stupid Tax

Where do you draw the line between expenses you as a renter are responsible for and what your landlord should spend money on?

This weekend, I broke my handheld showerhead. I was trying to re-aim the spray and got a little too rough, cracking the hose that attaches to the showerhead itself. I was really upset at first, thinking that these showerheads cost around $200-$300 which is money I did not want to spend on something I'd be leaving behind. However, a little googling determined that in fact I can replace what was in the apartment with a comparable (and truthfully, slightly better) model for around $30. A trip to the store turned up a $16 "universal" hose, which is the only part that's damaged, so I came home with that.

It's not quite that easy, however--that universal hose is not, in fact, so universal, and is not only far too long but also sticks out funny into the shower and does not fit into the holder-grippy thing (technical term). So I'll be going back to Home Depot this weekend to try and swap out the hose we've used all week for an actual kit (not sure how much luck I'll have with that, but we have no choice but to keep using it--five people in one small apartment for three days and then two people for the rest of the week definitely need to have a working shower!). This is an instance in which I am clearly responsible for the repair--I broke what was there when I moved in; therefore, I will be replacing it with something of roughly equal value. (This is something my roommate needs to learn, since she damaged the rug several months ago and hasn't made any effort to fix it). But what about standard wear and tear?

While we were at Home Depot, I wanted to look at door sweeps. Our balcony door's sweep began falling off a few weeks ago and I finally ripped it off because it had gotten so warped we were having problems closing the door. I had originally intended to fix it, then just decided to get a new one. My boyfriend argued with me, telling me that this was not my responsibility and instead I should alert my landlords and make THEM fix (and pay) for the sweep. I feel like this is a small enough expense and a simple enough chore that I do not want to go through the hassle of communicating with my elderly landlords (which involves having their daughter come over to translate), and likely being misunderstood and lectured for breaking something (which has happened before, unwarranted), just for them to come up (likely when we are not there) to fix something I could do myself in five minutes.

It's not the only thing around the apartment I would like to fix myself. There's a sticky drawer, a few doors which rattle in their casings, caulk that needs reapplying...these are all simple and inexpensive improvements which I am fully capable of making myself and which I don't entirely mind doing. However, I am paying dearly for this apartment and this is one of the perks of renting--not HAVING to deal with renovations and repairs. In spending the money on caulk, door sweeps, or adhesive felt for door hinges, am I paying renter's stupid tax?

I don't have an easy answer. Clearly, I am of the opinion that I don't want my landlords to deal with these minor things I can handle myself. When it's a lightbulb in a 15-foot ceiling above stairs, sure, I'll call them. But I don't like dealing with them if I really don't need to, and caulk repair and a self-adhesive door sweep fall into those categories of things to do myself and leave them out of. My boyfriend feels that this is what I'm paying rent for, and I should actually be making sure that they're taking care of these things, even if it's uncomfortable for me to talk to them about it.

Ultimately, I'm going to do it my way. My boyfriend doesn't live there, and he doesn't need to deal (or not deal, as the case may be) with my landlords. The cost for all the possibly-landlord's-responsibility chores is going to be less than $15; it's certainly something my budget can handle and worth the peace of mind to me. But I'm curious: What do you think?

Monday, November 12, 2007

entertaining is more expensive than travelling!

I have spent so much money in the last six days.

My younger cousin is visiting me with her best friend. Though there is a seven-year age difference between us, this cousin and I were particularly close growing up as her mother used to babysit me several days a week. I moved away when she was about six, and in the last few years have been trying to rebuild that relationship as an "older sister" role, especially since they've had some family problems. I'm also trying to encourage her to stay in school and pick a career that will take her wherever she wants to go, instead of following the footsteps of the rest of my family, living within two miles of where they were raised and settling for whatever job has a "help wanted" sign out front. (It still startles me to realize that I am the very first person on my mother's side of the family to earn a bachelor's degree, and my sister and I are the only ones out of our generation to go to college).

Anyway, I've been having fun showing them New York and what the city has to offer, but my wallet is pretty much screaming in pain at this point. (And these are just MY expenses...they pay for themselves for almost all meals, and have treated me to one for having them).

Things I normally would not have paid for over the past week:
  • Dinner out every night, including a $45 per person evening at Lucky Cheng's, and several other meals out
  • Tickets to a show (which I've already seen, and for cheaper, but I wanted to see their reactions)
  • Hookah bars every other night
  • Snacks, including bottled water and lots of tea (it's been so cold!)
  • Top of the Rock tickets (my treat for all three of us)
  • Shopping (which is what they've spent 90% of their money on)
  • Ice skating (I really need to just invest in my own pair of skates--I could go for free in Bryant Park a few times and get my money's worth in a month)
  • A cord for my handheld showerhead (which I broke, and which didn't fix the problem, so I'll still be having to buy an entire handheld showerhead kit)
Things which I don't mind having paid for over the last week
  • Everything but the showerhead stuff
It's funny though--their trip has been infinitely more expensive than traveling to see my family. Still, it's worth it--the girls are having a blast and they seem to be making the connection--without my saying anything--that going to school and picking a job with sustainability means that they can do whatever they want, move wherever they want...take charge of their own lives.

Thursday, November 8, 2007

Mo' Money!

I got a promotion and a raise this week. It was my first promotion ever (yay!) and my most significant raise (about 13%). It's big enough that I will see a definite boost in my take-home pay, which has me most excited of all.

The night I got this news, I sat down and figured out roughly how much it'll pan out to be after taxes, and then planned what to do with it.

1. Increase my 401k contributions.
I would like to be contributing a full 15% as Dave Ramsey suggests, but I just can't quite swing that yet, especially with the upcoming expenses I foresee. I will bump my contributions up 1% to 10%, and enjoy the 6% match.

2. I will not change my budget yet.
I am on a rather strict on-paper, on-purpose budget right now. My rent is high (a little more than 50% of my pre-raise takehome pay--ouch!) and I am squirreling money away for school and the impending move. Rather than create new budget categories (like clothing again!) or putting more dinero in existing ones (more for eating out! or travel!) I will continue as is. The first paycheck's difference will be placed in a school fund (for books and anything not covered by loans), and the second into a moving fund. I'll keep doing this until I actually move.

3. Dreaming about future options.
There are lots of things I want to do with the money when I am free to do something with it. I anticipate that my rent will drop by $100 or more after the move, so that will give me even more to play with. I'd like to have a clothing fund again--I AM a 20-something young professional, after all, and you know how we working girls love to shop.* I'd like to build my emergency fund up some more--right now I have about six months worth of dire emergency funds (nothing gets paid but rent, utilities and food) and I'd like to pad that a little more, up to $10,000. I'd like to buy some real furniture. I'd like to have a pet fund, if I can convince Mr. Boyfriend to eventually get a cat. I'd like to just loosen the budget reigns a little bit and have more money in all my existing budget categories.

Clearly, I can't do everything with only a little more than $200 per month. But I can start. I can plan. Even $20 put away each week will wind up being more than $1k after a year, and that's without the power of compound interest. The most important thing is that I do plan...that I don't just fritter this extra money away. Having goals is one thing...but you have to take steps to reach them.



*I'm being a little ironic here...I'm not a big shopper, but I am still trying to build a full professional wardrobe, especially since I lean towards all black clothing. Not having a clothing budget for the last year or so hasn't been that much of a hardship, especially as I do put money from my side gigs or that I receive as gifts to good use to buy things that I need, like a winter coat. But I don't go shopping "just because" anymore.

Tuesday, November 6, 2007

On Credit Card Rewards and My Grandfather's Advice

My maternal grandfather was a rags-to-riches story, and aside from his example of hard work and business savvy, he gave me one piece of financial advice: he told me to get a credit card with rewards and do all my spending with it. He showed me part of a statement in which he'd gotten more than $1,000 in cash-back bonuses in one month alone.

I didn't take his advice. In fact, I argued with him at the time, believing credit cards to be destructive and impossible to manage. I didn't get one until I was in my mid-twenties, and then I started with a secured card. Six months ago, I got a Discover card with some type of reward system that I don't fully understand and I've been using it for auto-drafts of my cell phone bill and other miscellaneous (but planned) expenses.

Lately, however, I have been thinking that perhaps I am not using credit as the tool it can be. I have a very good credit score, I have proved to myself that I have the discipline to handle a credit card, and then I saw Dumb Little Man's post this morning about how to really maximize credit card rewards.

A few things of note from his post:
#2. Don't be a sucker for promo rates.
I keep seeing commercials for the Chase credit card which changes what you get points on each month depending on your spending habits and which gives you like 200% points back or something equally ridiculous. While I knew there had to be a catch somewhere, I bet this is exactly where it is--I don't even know what my Discover card's rate is (I just see that I have earned x dollars in cash back when I log in to my account), and I wonder if it is also a promo rate that probably just expired since I passed the 6-month mark. This is definitely something for me to watch out for.

#6. Take advantage of the "minor" benefits.
As I am still beginning to use a "real" credit card, I'm discovering some of the biggest benefits to using one--the protection they afford which debit cards and cash do not. One of my debit card numbers was stolen earlier this year, and charges of around $30 went through before I caught the fraud. Luckily, I closed the account down before another $1,100 in charges went through, but it still took me six weeks to get that initial $30 back. If it had been a credit card, that wouldn't have happened. Also, I had a subscription to the New York Times which I ended up cancelling because they would bill me three times in one week, or different amounts, and couldn't give me justification for the charges. I took it up with Discover, who took care of it for me, and then I cancelled the subscription. In addition to these protections (and more along the lines of what Dumb Little Man is talking about), apparently these rewards cards also entitle you to certain perks like roadside assistance or extended warranties. So, I should use the credit card for any purchases which are likely to need an extended warranty, thereby garnering myself more rewards points as well (as purchases requiring an extended warranty tend to be higher cost anyway).

I think this is going to be my financial goal for the next two months--do some research, find a card that gives me rewards I will find useful and the earning of which I understand, and figure out which of my expenses I can put on the credit card to pay off in full each month. I do not want to have a slew of cards open in my name, but this is the prime time of my life to find a good rewards card. I don't have much credit history, especially since I closed and cancelled the first secured card I had--for all practical purposes, I only have six months' worth of credit history because of that.

I will end up changing my habits a bit--I currently try to pay cash for everything that I can, but there are clearly some regular expenses I can put on the credit card to get the points (like dance studio costs or cable and electricity). My roommate gets free trips from JetBlue with her rewards card...I wonder what I can get?

Monday, November 5, 2007

I am a cheap date--and I'm proud of it!

When does a frugal date become a cheap date?

CNN.com had an article about this last week, mostly in terms of finding cheap date options when you can't help but be one. Most of their interviewees are college students, justifiably strapped for cash. I think it's a mistake to leave cheap dates in the realm of academia, however--who says you have to spend money on a date just because you can?

CNN.com says: Work with what you have. (take advantage of your location)
Little Miss Moneybags says: This is my favorite tip. When my boyfriend and I were first dating, we had both recently moved to New York City and were working at Starbucks. Needless to say...we did not have much extra cash. But we are both big nerds, especially about the city, so we started exploring the city together. (Our very first date, actually, was a ride on the free Staten Island Ferry, followed by walking up Broadway for hours). We saw new neighborhoods, explored the history of different areas, compared architecture and landscaping, studied the effects of gentrification, and found some of our very favorite restaurants, parks, views, and places to take visiting friends and family. The only cost was that of transportation (subway, on our monthly unlimited passes) and food/bottled water/snacks (we usually hit very low cost restaurants and packed granola bars). We later purchased several guide books and walking tours as Christmas gifts for each other. We now look back on those times as some of our favorite moments we've shared together. We don't go exploring new neighborhoods as much anymore, but we'll still walk for miles together in my neighborhood just talking and wandering.

CNN.com says: Play off your shared interests. (self-explanatory)
Little Miss Moneybags says: Clearly, it's best if you and your beloved (or beloved-to-be) have something in common, but in my own life I've found that that's not as common as you might think. My ex was a sports fanatic; I much prefer theater. My current honey works in theater, so he's not as interested in spending his free time going to shows; I'm more interested in reading and dancing now. Fortunately, we do both love science fiction books and nerdy shows on TV (Discovery Channel, Sci Fi, History Channel...oh, where are you, a la carte cable?!). We can watch these shows for free (or sunk costs, really, since I pay the cable bill anyway), we can explore or go walking, or we can just be together--he can play video games while I read a book, but we talk to each other occassionally and feel comfortable in each other's presence. At the beginning of a relationship when you are still getting to know someone, it's probably more important to find things that interest both parties which you can do together.

CNN.com says: Learn something together. (Take a class, go to a wine-tasting)
Little Miss Moneybags says: Ha! This is one that has really never worked for me, at least in a structured way. I cannot imagine any guy I've dated ever coming to the dance studio with me, nor do I want to take, oh, guitar lessons. Also, most guys I've dated seem a little resistant to organized learning aside from school anyway--if they want to learn something new, they'll do it on their own, thankyouverymuch. However, the television shows and exploring that my boyfriend and I experience together are educational in several ways: literally, as when watching How It's Made or a PBS special about NYC, or organically, as when reading plaques on the sides of buildings downtown and realizing that this is where George Washington was inaugurated or that City Hall was initially built with an unfinished back entrance, as who would ever go north of it?*, or conversationally, by learning about each other while discussing something we've seen or heard or seeing how we react when tired, cranky, and cold.

CNN.com says: A little effort goes a long way. (Picnics, homemade dinners)
Little Miss Moneybags says: Unfortunately, a homecooked meal does not count as a cheap date after three years--that's just dinner! I prefer to cook at home when I can, so it would be hard to justify that as something special considering I do it every weekend. However, a handwritten love letter scrawled on a post-it might mean as much or more than a $3.49 Hallmark card and any gift that signifies true thought and caring behind it is worth a lot no matter what the cost. If you're often spending more in dollars than in effort, I think you need to reevaluate the relationship anyway--are you sure it's worth it?



*For those unaware, City Hall is located somewhere in the southernmost tip of Manhattan....a good sixth of the way down the island.

Friday, November 2, 2007

Social costs

My Open Wallet has an interesting post about the impact of being social or antisocial on personal finance. I agree with her, that in some cases being antisocial is cheaper, and in others, it's definitely more expensive to be exclusive.

Being Social
I live with a roommate, and thus split the cost of rent, eletricity and cable, and also have almost-unlimited bread-borrowing opportunities. I *might* be able to get my own place for what I'm spending now, but it would be a crappy studio apartment, and I sure wouldn't have cable and internet. Plus I would miss out on the lifestyle aspects of sharing a living space, like someone to talk to and who will take out the garbage when I'm sick. Splitting cab rides is cheaper than taking one solo. Going out with my boyfriend means he usually (but not always) pays, or we split the bill.

On the other hand, going out with friends is almost always NOT cheaper for me. I'm a strict vegetarian, and my entrees are usually $2-$20 cheaper than the omnivores around me. Unless the difference is hugely disproportionate and the group wants to split everything equally, I usually just go along with it--I figure that into my budget when deciding whether to go out. I'm also really lucky in that the friends I go out with most frequently (colleagues from my old job, actually) are extremely considerate of the difference and try to take it into account (which actually makes me more willing to pony up an even portion). My closest friends and I prefer a restaurant which is pay-when-you-order, and when we go elsewhere we frequently cover-me-then-I'll-cover-you-next-time.

Being Antisocial
I'm a homebody by nature and prefer to spend every weekend at home puttering around and cooking every meal. This keeps my food bills lower than they might be--usually. I'm on a kick of trying a new recipe each weekend, and I know at some point I'm going to wind up with something I hate so much that I'll throw it out without finishing it. There goes the cost of groceries I might not have otherwise purchased! Also, cooking for one often results in a lot of waste in general, as ingredients or leftovers go bad before one can eat them. My boyfriend and I recently gave up going to the movies in favor of renting DVDs from Blockbuster. One adult admission in NYC runs about $10.50, so it's a significant savings (we were going to 2-3 movies per month). Factor in the cost of snacks at the theater vs. at home, and it's even more pronounced. I'm not actually sure that this qualifies as antisocial, since we certainly weren't socializing with others at the theater or even each other, and now we can talk to each other over the movie or pause it and talk about a part we liked.

However, I already lean toward the crazy-cat-woman and frugal-till-you're-just-cheap end of the spectrum, so being antisocial might have associated non-financial costs that aren't healthy for me. While I don't purposely blow money just to make sure I'm spending time out with people, I do build it into my budget knowing that the costs are going to come up (an example would be budgeting for tea/pierogies at bimonthly book club meeting). I tend to pick relatively cheap enterprises (I get books from the library instead of purchasing them, and our meeting places tend to be very reasonably-priced coffeehouses and the like) and I don't want to be that person always complaining that they have no money for this or that, especially when I CAN afford a few luxuries in my life (and in fact, I think it's necessary to prevent going crazy!).

So, to sum up. Neither being social nor being antisocial is harder on the wallet--it all depends on the specifics of the situation and how you personally approach the instances.

Thursday, November 1, 2007

Expenses I Hate

So, every once in a while I get irritated about expenses that are normal, everyday, because-you're-a-human-type of expenses. I recognize that these are either things or services I need to pay for, but it just irritates me that they exist. In no particular order, they are:

Fees I Think I Shouldn't Be Charged At All
This includes service recovery fees on my cell phone, a 9/11 fee on airline tickets, banking fees (which is why I recently changed banks). Pretty much any surcharge. Federal, state AND local taxes on any one thing. Automatically included gratuities. Toll roads and bridges.

Things I Hate Having To Spend My Money On But Know They're Necessary
Toilet paper and dish soap (when living with roommates...you always feel like YOU'RE the one buying it all the time and no one else pitches in, even if that's not the case). Female necessities, including extra trips to the doctor and birth control prescriptions.* Bottled water. Deposits for anything. Broker's fees. Insurance copays. Curtains.

Things I Avoid Doing/Getting Because Spending The Money Seems Outrageous
Drycleaning. Shoe repair. Organizers of any type. Pens/pencils (when was the last time you truly had no pen or pencil to your name?!). Art. Music.

Things I Don't Mind Paying For, Ironically
Renter's Insurance. Taxes (within reason). Lemonade from lemonade stands.



*If guys could have babies, birth control would be ubiquitous and free. Ha!

Wednesday, October 31, 2007

Death and taxes

From All Financial Matters, an excellent explanation of how taxes are calculated. His example is for married filing jointly, and my situation is a little different--for 2007, federal tax rates for a single person are as follows:

$0 $7,825 10% of the amount over $0
$7,825 $31,850 $782.50 plus 15% of the amount over 7,825
$31,850 $77,100 $4,386.25 plus 25% of the amount over 31,850
$77,100 $160,850 $15,698.75 plus 28% of the amount over 77,100
$160,850 $349,700 $39,148.75 plus 33% of the amount over 160,850
$349,700 no limit $101,469.25 plus 35% of the amount over 349,700

See IRS.gov for more information on your specific information.

My effective tax rate winds up being about 13.5%--and then there's New York State and City taxes to figure in. When I was at Starbucks, several employees realized that there was a per-week hourly limit after which it was pointless to work since we lost the extra income to taxes.

I also wondered the other day whether there is a problem with owing taxes each year as opposed to getting a refund. I aim to break even, but with my up and down side income, have had to pay for the last two years and expect to for 2007. I set money aside throughout the year in anticipation, although I do not file quarterly. As far as I can tell, as long as I pay by April 15, there's no problem at all.

I have some posts planned for the future regarding taxes as an interest-free loan (either way) and how to take advantage of what your tax dollars are buying you.

Tuesday, October 30, 2007

financial confidant

Making the rounds of the personal finance blogosphere today is the question “Do you have a financial confidant?” It’s an interesting question, because while I don’t really have one, I feel like I end up being one pretty frequently.

I’ve been pretty transparent about money in my own life for as long as I can remember. Part of that is probably because I’ve always been good with money and I’ve been working since I was 15, so I’ve been handling money for a long time. For example, many of my friends, including my roommate, know exactly how much money I make. My boyfriend also knows how much I have in savings and investments (and I know what he makes and his net worth). My parents know how I’m doing; I was so excited at my first job that I told my mom exactly how much I’d be making and she said it was more than her! I don’t know if we’ve discussed it since then, but I’m sure she knows it’s going up. My dad asked me point blank, and was shocked—he expected it to be double or more what it really is, which irritated me. Both of them know that I’ve been completely independent of them since college.

Almost everyone knows how much my rent is—it’s sort of a pastime in New York to talk about how much you’re paying, whether you got a good deal, if you had to pay a broker’s fee. My coworkers all likely know the range my salary is in, though I think I’m at the top end of theirs. Everyone knows that I also freelance on the side for extra money, and I’ve given explicit information for getting involved to some people. Most people know that I’m very interested in personal finance, though none of them know about this blog.

But to me, “confidant” implies someone whose advice I seek, who I go to with problems or goals, perhaps for accountability, or otherwise someone with whom I’m sharing information I keep from others. I don’t have that. And I don’t know that I’m terribly interested in finding someone to fill that role.

I gather a lot of information online, from books and radio shows, and from a meeting with an investment advisor at Fidelity when I rolled over a 401k, and then I compile it and try to make sense of it in my own life. I’ve developed systems for tracking my goals, my spending, and my budgeting success, and generally find that this process works very well for me. And I seem to be doing ok, for my age and station in life. I guess because of all that, people have started coming to me for advice, and while all I can give is the experience of “this worked for me” or “I’ve read that…”, people seem to find that sufficient.

My roommate, for example, has asked me for help with learning to budget and figure out how to live on her own (she moved out of her parents’ house into our apartment, and had never been on her own before, whereas I’d been on my own for about six years when we moved in together). She sees a personal finance coach as well. My boyfriend asked me for advice when negotiating his current job’s salary and in dealing with taxes and benefits. We have wildly different styles of managing money but the same basic philosophies—debt is bad, do what you love and the money will follow, be self-sufficient. My sister and I talk about money, in large part because our parents are still helping her out a little financially and she feels bad about this for a couple of reasons. My best friend and I talk about money, especially because in the last year our lives veered in such different directions that we now have different goals. I’m learning from her about money and parenting; things I never much cared about before I suddenly see the importance of (like affordable health care for pregnancy, birth and early childhood as well as buying a house). My ex-boyfriend would not take my advice (or anyone’s, for that matter) even when he asked for it and how his life is turning out is evidence of that.

Are financial confidants necessary? Maybe for some people, or maybe for some situations, or maybe for some specific issues. I certainly wouldn’t rule one out when contemplating a big purchase or dealing with a windfall or something like that. For now, I’m ok, and I don’t mind being the one people come to. It forces me to be more transparent about my own situation—I can’t very well give advice while cloaking my own choices.

Friday, October 26, 2007

Always Read The Fine Print

ALWAYS. A-L-W-A-Y-S. All the time, no excuses, no matter what.

Now, do I take my own advice? Yes and no. I admit to skipping past the terms and conditions of privacy policies when it comes to creating an online profile on a website. But if the item in question is at all related to my financial life, I will take the time to read the fine print. These are situations where it’s especially important to do so:

Contracts
Contracts for cell phone service, home repairs, computer warranties—anytime you pay for something that includes a contract, you should read it before you sign. This is where your rights and responsibilities are spelled out as well as the rights and responsibilities of the company you’re doing business with. Make no mistake: those rights and responsibilities are ALWAYS in THEIR favor, not yours, so make sure you’re covering yourself by being aware. You can learn valuable things like:
  • Your cell phone company requires you to pay for their service for x number of years, and if you cancel before then you must pay x amount in an early termination fee (there is currently legislation underway that would require that fee to be pro-rated! Cross your fingers!).
  • Your cell phone contract also spells out the difference between regular SMS messages (which are included in a text messaging plan or for which each provider charges around $0.15) and premium messages, which are billed by a third party and not your provider (like voting for American Idol or getting a ringtone or joke sent to your phone). These charges are usually around $0.99 but some of them also sign you up for a weekly or monthly subscription service with little or no warning (but I guarantee you that there is fine print wherever you saw the short code to text to, be it an ad on TV or in a magazine). Knowing this difference would have really helped this guy.
  • Contracts for appliances and services like refrigerators, contractors, or the like spell out exactly the terms of the deal: how much you’re required to pay up front, delivery charges if applicable, when the work should be finished, etc. You need to read this up front so you know a) when things are supposed to be done, b) what remedy you have if they’re not, and c) what your responsibilities are. I’m not a homeowner and have not dealt with any of these contracts yet, but I will be reading every word of them and asking questions if necessary when it comes time.
Of course, there are lots of other situations where you would encounter a contract. READ IT before you sign. Ask questions about things you’re unclear on. If there’s something that doesn’t suit you, ask if you can change it (your success with this will vary). If the salesperson hassles you about taking the time to read the contract, do not do business with them. It’s a legal document which details your rights AND your responsibilities, and any company that wants uninformed customers is not one you want to give your money to.

Sweepstakes, Rebates and Promotions
Fine print abounds in this material, and it’s important to read and understand it to increase your chances of winning or getting your reward. You might discover you’re not eligible because of your age (most states require entrants to be at least 18 years of age) or your location (some states don’t allow certain types of sweepstakes). You might discover you need to do something to be qualified, like write an essay, fill out a form, or have your paperwork postmarked by a certain date. If you don’t take the time to read the fine print, all of it, you might spend your time and possibly money on something that ends up being worthless.

I recently got an email from my new bank, saying that if I signed up with their online billpay and used it for three new bills during the month of October, I’d get $50 deposited to my account. I know they’re good for it; I initially switched to this bank because they had a $100 promotion for opening a new checking account (the fine print: I have to keep the account open for at least six months, it’s for new customers only, the $100 is taxable income). However, I didn’t read all the fine print for this online billpay promotion, and as a result I’m not getting the $50. I’m not losing out on any money, but I did take the time to set up the online billpay and go through their system instead of going online to each vendor and paying them directly as I’ve always done. I don’t know whether I’ll continue to use the billpay feature (which would make it less of a waste of time) or go back to the way I used to do it, but the fact remains that it’s not something I would have done had there not been an offer on the table. My failure to read the fine print wasted my time.

Travel
You already know that the paper you sign when you rent a car has lots of important information on it, like whether you have unlimited mileage and how much it’s going to cost you if you return the car with less than a full tank of gas. But did you know that there’s fine print available when you buy an airline ticket? In addition to agreeing not to dress provocatively on some airlines, you’re given a few rights as well—while a Passenger Bill of Rights is still in the future, all airlines have a Rule 420 which details the circumstances under which they’re required to compensate you for delayed or cancelled flights and how.

I managed to successfully get a voucher from Northwest after they stranded me, nearly made me miss my sister’s wedding, and then tried to blame it on the weather—when the reason our flight was pushed back was because the plane was leaking oil. Clearly spelled out in their Rule 420 is that if the delay is caused by malfunction or maintenance issues of the plane, they are required to provide accommodation and meal vouchers for passengers stranded overnight, as I was. I took a voucher over direct reimbursement, since the value of the voucher was larger than what I’d paid out of pocket, though it probably wound up being the same cost to them.

Health care
Actually, most of the print in health care situations isn’t all that fine—it’s just so boring no one wants to bother with it. However, it’s important to be familiar enough with your health insurance to understand the premiums that you’re paying out of every check, the copays you’re responsible for when you go to the doctor, the difference in cost for brand name versus generic prescriptions, and limits like maximum out of pocket expenses or annual plan benefits.

Other situations
Fine print shows up on the bottom of your receipt, detailing return policies. You see it on websites, encouraging you to seek qualified legal, financial, or other professional advice instead of relying on the internet. It appears on sale tags in stores (sales are final, must buy two to get one free), products (cape does not enable user to fly), and commercials (professional driver, closed course. Do not attempt.) Fine print covers peoples’ asses, gives them instructions, and in some cases, details their rights. Ignore it at your own (financial and legal) peril.

Tuesday, October 23, 2007

I noticed this article about Health Savings Accounts on The Consumerist today and it reminded me that today begins open enrollment for my company’s benefits. I went ahead and took care of everything and noted the following:

1. My health care costs are going to go up.
My dental costs used to run me $2.86 per check and now will be $3.06 (a 7% increase, a little lower than the forecast of 8.7%). However, I used to pay $21.13 per paycheck for medical care and I will now be paying $28.05 (an increase of about 33%!). In addition, my maximum out of pocket costs will be increased to $1,000 from $750. As a concession of sorts, I guess, my company made a deal with the Mayo Clinic that if I took a health risk assessment, I would get 10% off my contributions. Still, the end result is that my medical costs will be about 20% higher even if there is no change in my frequency of doctor visits and my prescription costs do not go up.

2. My health care reimbursement account is about the most wonderful thing since sliced bread.
I have $10 a week put into an HCRA to lower my taxable income and get reimbursed for copays, deductibles, and some over-the-counter medicines. I debated about raising this for next year, but even though I’ve had about three times as many appointments as normal this year (thanks to a suspicious looking mole and a crown), I’m also still working through funds leftover from 2006* so I think leaving it at $240 per year works just fine. If your company offers and HCRA or you qualify for an HSA, you should definitely look into it—I’m all about lowering my tax liability and this is a very legitimate way to do so.

3. I am probably over-insured without even paying a penny.
Disability, accidental death and dismemberment, and basic life insurance are all company-paid to a certain baseline, and I choose not to pay extra to purchase more insurance. This is only because I am single and have no dependents. I have enough in savings to cover the costs of a funeral, god forbid, and I have no debt. If the total worst happened, my parents could afford to handle the costs. But if I were married or had a kid, I would completely change my tune and inspect all of this a lot closer. YMMV.

4. I will continue, for now, at my current rate of retirement contributions.
I’m contributing 9% of my measly paycheck to my 401k with a 6% company match. My goal is to contribute a full 15% on my own as Dave Ramsey recommends, so that the match is just pure gravy, but I’m not quite there yet. I won’t make any changes until I have my year-end review (and hopefully at least a small raise!), at which time I’ll see how much I can afford to sock away before I notice it (probably another 1-2% depending on how big the raise is).

5. I need to revisit my will.
Another perk my company offers is online will and estate-planning help, which I took advantage of when I started. I get a free review each year, and enough has changed in my life with moving and acquiring new things that I might want to make sure things are still all up to date. As I said, I have no dependents, so I’ve chosen two family members I’m very close to as my inheritors of what little I’ve got.

And that about sums up my position on life and money right now. Medical costs are going up but ultimately I probably won’t even notice the amount as it’s pretax. Death and dismemberment suck and I hope they don’t happen to me any time soon. I do not have enough money to do everything, so I’ve got to be smart about putting to work what I DO have.


*This is an extremely rare situation—federal law states that any funds not used by March of the following year are lost. However, when I started my job in mid-November of last year, some ambiguous paperwork caused an entire $240 to be drafted into my 2006 HCRA out of one paycheck, and I went scrambling throughout January and February to buy enough OTC stuff to use it up. I succeeded, but their formal review for those funds lasts until the end of SEPTEMBER, so I am just NOW getting to use the money that was taken out of my first paycheck here a year ago.

Monday, October 22, 2007

Money-free weekends

Trent over at The Simple Dollar frequently advocates money-free or at least low-cost weekends. While I typically don’t really look for things that are free to do, I do try to save money during the weekend by making smart choices.

1. I become Suzy Homemaker.
This definitely isn’t for everyone, but I find it satisfying to take care of things on the weekend that I can’t get to all week. My two biggest “chores” are cooking and cleaning.

My new goal (as of two weeks ago) is to cook one new recipe per week. My busy schedule means that this will only happen on the weekend. So far, however, it’s working out really well—I made baked burritos this weekend as well as a nachos bell grande that might cure me of my Taco Bell addiction (in favor of my own creations!). I’m learning new recipes and gaining knowledge in the kitchen, plus I’m saving money by not eating out (the first time I make something truly horrible, that might change). This past weekend, I went to the grocery store three times, so I definitely didn’t have a money-free weekend—but the money I spent will keep me in lunches to take to work every day and that’s money well spent.

Cleaning is, to some extent, relaxing to me, and I think it’s a decent investment of both my time and money. Clutter has mental and financial costs, so decluttering my excess possessions is a great way to save money down the road, and maybe make money today (by selling things or donating them for a tax writeoff). Having everything organized so you don’t have to buy a second one of something you can’t find makes things less frustrating. I’m looking ahead to moving within the year, and I’m so irritated that I paid to move all these things I don’t want. A clean place is inviting and makes me want to stay in rather than spending my money on outside entertainment. I have a slightly higher standard of “clean” than any roommate I’ve ever lived with, and I don’t mind doing the extra work to keep things at my level, although I prefer not to do them with my roommate home (I don’t want to make anyone feel guilty, and I also don’t really want the help). My roommate is usually gone at least one day out of the weekend, so I’m free to crank up the radio and scrub away, both of which are FREE!

2. I take advantage of things I’m already paying for.
As a rule, I don’t watch much television. I’m not hooked on any shows and I don’t like to leave it on for background noise. However, I’m paying for cable and it’s not really negotiable (I live with a roommate, and this was a compromise I had to make). Since I’m paying for it, I might as well get my money’s worth, but preferably not during the week when I need to be doing other things. This past weekend I got a lot of money’s worth, as there was a marathon of the second season of So You Think You Can Dance, which I was pretty much glued to. This is a debatable Good Thing—if I’m watching television, I’m not reading a book, out in the fresh air, or otherwise doing something good for my body—but I definitely don’t spend every weekend glued to the set like that. In addition, our On Demand channels offer several workout options which I’m learning to take advantage of, and I also recently discovered the music On Demand channels—like radio without the commercials. Watching TV and tootling around on the Internet, both of which I’m already paying for, are definitely preferable to going to a movie and forking over $10+ just for a single ticket or otherwise paying for entertainment when I’ve got lots going on in my own living room.

3. I go exploring.
Sadly, I don’t do this as much as I used to, but probably 95% of the dates my boyfriend and I had during our first year together were exploring different neighborhoods of New York City. We had a set of cards with walking tours printed on them as well as a couple guidebooks, and we’d take the train to whatever stop we felt like and then go exploring. The only money we spent was on a meal and maybe a bottle of water, and we learned a lot about our new city and also each other (it’s a learning experience to see another person in a stressful situation like being lost, or tired and cranky, or in an area where they don’t feel safe). We found several of our favorite restaurants this way. We both look back very fondly on those times and still occasionally go exploring. Our real world jobs are now more demanding of us and we’ve gotten lazy on our weekends, but it’s definitely an option we still have and take advantage of every now and then. Anyone who lives in or near a big city should try this a few times.

4. I read.
I’m a library power-user and I’m a member of two book clubs, in addition to having to do a lot of reading for work. I read every day of the week, on the train, at lunch and before bed, but I can also knock out one full book or at least finish a couple I’ve already started in one weekend. I don’t buy books as a matter of principle—it’s a slippery slope for me, and my paycheck will not cover the addiction once it starts. Also, I’m still moving a lot, and books are HEAVY.

There are probably lots of other free or cheap things to do in my area: street fairs, shows, clubs and meetings. Of late, I’ve been more of a homebody, but I’ll probably try some of those things out at some point. This past weekend feels like a pretty successful low-cost weekend and I’m aiming to repeat that at the end of this busy week.

Friday, October 19, 2007

Poor stretching their paychecks to the breaking point

See the story at CNN.

The thing that irks me most about this article is that someone I'm close to would literally say (of the Greenpoint, Brooklyn, family whose check used to last four days and now lasts two): "Well, if it's so tough for them, they should just leave. Move away from the city and go somewhere else."

As if it were that easy.

As if people can afford to just pack up and move somewhere cheaper when their entire familial support system is right here. When they have no car. When the parents are going hungry so the kids can eat, so where are they supposed to save any money?

And this same person would then complain that there were no taxi drivers, or mechanics, or others in a service profession. And this same person is in her late twenties and is STILL not financially independent. While she probably could make it on her paycheck (she'd have to, she makes substantially more than I do!), she doesn't. She gets help with small luxuries (like a cell phone) as well as more than $20,000 in schooling paid for each year just because she breathes air. And she has the nerve to think of someone struggling to make ends meet and say, "Hmph. Let 'em get out of the city then."

It just burns me up.

Another set of classes, another set of books

Whoa.

I think I've mentioned, I'm planning to go back to school in January for a Master's in degree in my field (publishing). I got my official acceptance letter in the mail two days ago, and all my course registration paperwork yesterday...but still have not seen anything about financial aid.

I nearly tore my hair out early this summer studying for the GRE in order to qualify for a departmental scholarship and I made the cutoff with a couple questions to spare (or if you look at it another way, I missed the highest scholarship cutoff by one question--but you have to attend full time for that, and I can't handle that with work and everything else I've got going on. A part-time scholarship is fine with me, thank you!). I am desperately waiting on news of that scholarship so I can figure out how much I'm going to have to take out in loans.

This is something I'm really torn about. I've never had any debt at all. If I get this scholarship, I could probably afford to pay the difference up front out of my emergency fund...but school is not an emergency. I think the albatross of future payments will weigh less heavily on my neck than the knowledge that if something were to happen, I wouldn't have six months of expenses in the bank, especially considering that I'll be reimbursed everything I pay at the end of the semester depending on a B- grade average through tuition reimbursement at my job. Which is another argument both for and against loans vs. using my emergency fund: if I'm going to be paid back in four months and I'm reasonably certain of making the GPA required for the reimbursement, why not just pay it and not end up paying the interest?

Well, the same argument applies: If I pay up front with my emergency fund, I will be losing the financial security (in terms of interest) and the mental security (of six months of expenses in the bank) in favor of not incurring interest (which I'll have to pay back because the reimbursement will only cover the actual tuition cost).

So really the question boils down to which is greater: the loss of interest and mental security or the incurred cost of interest by taking out loans and paying them back at the end of each semester?

Until I meet with a financial aid advisor, I really won't know specifics, but here are a couple of guesses:

1. It will depend on what kind of loan I take out.
If I qualify for and take out only subsidized loans (the yearly maximum is higher than what I need, so it's a possibility), then it's entirely likely I won't even end up paying interest--the federal government pays the interest on the loans while I'm in school, and I'll pay them off before I graduate. If I only take out unsubsidized loans, the interest will be accruing during the months I'm in classes and I will have to pay that out of pocket when paying off the loan using the tuition reimbursement money at the end of the semester. It's also possible I might wind up with a mix of subsidized and unsubsidized loans.

2. It will depend on the tax consequences of everything else.
The scholarship might wind up being a tax liability for me, as I'd have to claim it as income. Same with the tuition reimbursement. But aren't taxes paid on student loans deductible? How would taking the loan in 2007 vs. 2008 affect the overall tax picture?

3. It will depend on whether what I'm planning is even possible.
I don't even know if the student loan system is set up to handle things the way I'd like them done. They'd probably prefer me to hang on to the loan until I graduate, incurring interest that will need to be paid then. I know with car loans, early payment penalties are written into the contract--could something like this bar me from my plan?

4. If I pay out of my emergency fund, would the cost of paying for the second semester while waiting on the first semester's reimbursement put me in a financial black hole? I'm not sure what my total cost per semester is going to be until I hear about this scholarship, and it's entirely possible that my responsibility will be less than $2,000 per semester (in a most perfect world). In that situation, yes, I can afford to be without the four grand for a few weeks. I won't like it, but I'd still be able to handle most emergencies, like hospital copays, rent, or groceries. If it's going to be more like $5,000 per semester, however, while I can afford to pay for one semester up front and wait for the reimbursement, I canNOT afford to be without $10k for even a few weeks and expect to pull through any emergencies. I'll need to figure out where my baseline cutoff is, and preferably before I find out what the cost is going to be.

Clearly, I have some research to do. I'm very antsy to get things taken care of, although I'm just going to have to wait. Once I get the financial aid information in the mail, I can set up an appointment with their office to get some answers to my questions. On November 8, I can apply for the tuition reimbursement (I have to apply before registering for classes but after I know what the cost is going to be, and I also have to wait until I've officially been employed here for 12 months, which is November 7). Once I'm assured of reimbursement and the cost of what I need, I can arrange for the loan and then register for classes.

And the only loophole in this whole process is that registration starts in three weeks, and there's no way on earth everything's going to fall into place for me in that span of time. I risk not getting the classes I really want. There are five or six that are applicable to my specialization, although one of the classroom courses is on Mondays (when I'm not available) and the three are online. So if I don't get my first choice classes, I'm stuck giving up dance classes FAR earlier than I wanted or taking one or both of my classes online.

I guess there's no point worrying about it right now--I've got my plans made as best I can, and now I just have to wait on the mail before jumping right into action. I guess it's a good thing at least that I'm excited about all this!

Thursday, October 18, 2007

My personal finance success story

This post is inspired by a great way to give kudos to my parents for getting me where I am today, and is also a contest entry over at Get Rich Slowly.

I think my personal finance success story is really my mother’s success story—because I wouldn’t be where I am today without her. This is not to say I’m a trust-fund baby—far from it—but she gave me an intellectual foundation for handling money and then a fantastic start into adult life. I managed not to screw it up, but I probably wouldn’t be where I am now without those two crucial things.

My mother’s association between me and money began about a year before I was born. My parents were in their mid-twenties, married for a few years, and felt well enough established that my father suggested they start trying for a baby. My mom thought it over and then said no—she wanted to buy a piano first, so that her future progeny could grow up to be musical (I was the first person in my family to play an instrument). They began saving, and a few months before I was born, brought home a very nice piano which sits in my mother’s home to this day.

Later as a single mother, she managed to send me and my sister to private elementary school by working midnights. We were poor, but I never knew it—the woman can squeeze three dollars worth of purchases out of a single dollar bill. Not only did she take us to summer camp each year, but she took at least two of my cousins along as well, footing the bill for all of us kids. She sent our gently used clothing and other goodies to distant and very poor relatives in eastern Europe. My earliest financial lessons were of spending money only where there is value—be it in experiences or at the grocery store, make sure you’re getting something important back—and to help those who need it.

When my mother remarried and became a stay-at-home mom again, things were easier on us financially. We’d moved to a part of the country with a much cheaper cost of living, and her new husband was a doctor. There was no private school for us to attend, so we didn’t have the cost of that to deal with either. Despite the “prominence” of being an M.D. family, we lived simply. My parents both drove used, paid-for cars, carried no credit card debt, shopped at consignment shops or Walmart for clothing (which about killed me in the popularity department), took only one vacation a year (to see family in Florida), and saved, saved, saved. During this time, my mother started listening to a new radio show called The Money Game with a host named Dave Ramsey. We were forced to hear his corny jokes and rants against credit card companies during our afternoon commute to pick all the kids up from their various schools or to and from ballet classes. I hated it, but as my later life showed, something sure sunk in.

When I was 16, I went to boarding school. One of my class requirements was a job which applied at least part of my earnings against my school bill. My mother allowed me to put the smallest percentage to my bill with the stipulation that I was now 100% responsible for makeup, toiletries, clothing, entertainment and any food I wanted that didn’t come from the dorm cafeteria. I bought a camera, ate a lot of Ramen while my roommate ordered pizza, and then learned the value of a budget.

In my senior year of high school, my parents gave me the worst blow I could imagine—they offered to pay my way to college, provided it was a college associated with their church…and if I went to a state university or any other school, I was completely on my own. Their deal covered tuition, room and board—as before, I would be on my own for personal expenses, now I would also have to buy my own books, and no, they wouldn’t give me a car. Grumbling about blackmail, I went to the church-affiliated school closest to our home which ended up being a fine school as far as education is concerned (although too religious for my taste), and graduated without a dime of debt.

During college, I didn’t get a credit card. I built an emergency fund and bought a dirt cheap, ugly used car that I fixed up myself. At one point I worked four jobs to save money for my trip to England. I never went a semester without working, and always had at least one job (usually two) during the summer as well. I had a written budget and planned what to do with any money I received.

Two weeks after I graduated, I moved to New York City with an internship and a few thousand dollars in the bank. I managed to survive for nearly a year working at Starbucks, internships and an independent bookstore before getting a “real job”. I’ve been completely financially independent since I was 22. I don’t make a whole lot of money, but I have a swanky apartment. I have money in the bank—money for emergencies, money for retirement, money for planned expenditures throughout the year. I have everything I need and much that I want. I have a credit card, which is paid off in full every month. I have a fantastic job in my dream industry.

All of this is possible because of my mother’s piano. Before I was even conceived, she was setting herself up to lead a life of example—a life of saving for what you want, prioritizing your goals, and working hard, even at crummy jobs, to make sure that you have the money for the things that are really important to you. The radio program she played when I was in the car taught me how to budget and live within my means. Her commitment to giving me a debt-free start to adult life and teaching me independence in small steps allowed me to follow my dreams much earlier than anyone else I know.

Her example underscores how important it is to raise kids to understand personal finance. While I don’t know exactly how much my parents make and I never have, I knew that they budgeted and paid off their credit cards in full every month and that they actively talked about money. My mom took steps to make me independent, from opening up my first bank account and showing me how to balance my checkbook to encouraging me to shop around for car insurance to get the best deal (I also think it’s an excellent thing that they never gave me a car, but don’t tell my 17-year-old self I said that). She’s never given me cause to associate money with friendship or a person’s worth, and has repeatedly helped those in need, with no expectation of repayment.

I’ve had to work at sticking with this fantastic foundation I was given—I did look into financing a car while I was in college, and my first year in New York involved a lot of walking since I had no money for the bus and a lot of days-old Starbucks sandwiches saved from the trash can since I was really, really tired of Ramen by this point in my life. I probably would have gotten a credit card at that point if I could have qualified and I wouldn’t have had much self-control. Working four jobs while going to school full time was exhausting and my grades probably suffered a bit. I’ve wasted lots of money here and there, mainly on cigarettes, dr.pepper, and an old boyfriend. But the fact remains that I am the most financially stable of anyone my age that I know, and I don’t see how I could have done it without both the example and knowledge my mother imparted, and also the great debt-free start she planned and saved for.

Wednesday, October 17, 2007

Saw these on my aggregator today

Some great, thought-provoking articles over at two of my favorite blogs.

J.D. over at GetRichSlowly talks about recurring monthly costs and whether they are worth it. Recurring monthly costs are something that I try to avoid as much as possible. Pretty much the only ones I have right now are my cell phone bill, which has been a static (but higher after I got my Treo) cost for years, and a subscription to Blockbuster’s cheapest online movie plan.

My cell phone is my only phone as well as now being my calendar, on-the-go email, address book, and main form of entertainment (via Monopoly!), so although I pay about 5% of my monthly income to the mighty Cingular/AT&T, I really don’t begrudge it.

The Blockbuster subscription started as a mystery shop requirement and I was reimbursed for the cost. When the shops were discontinued, I kept the subscription-—it’s $6.49 per month for two online rentals and two instore swaps making it only about $1 more than renting just one movie in the store. There’s a Blockbuster only a few blocks away from my apartment, and for the time being, this is a cheap treat for myself.

Both of these charges are auto-billed to my credit card, which is paid off each month in full.

And Trent at The Simple Dollar has been reviewing one of my favorite books, Your Money or Your Life, for the past two weeks or so, and today’s post focuses on ways to save money. These ideas are so unbelievably simple, so basic, I can’t believe everyone doesn’t automatically follow them. Alas, I’ve seen with my own eyes that many people don’t. In short order, my experiences with some of YMOYL's 10 sure ways to save money:

Live within your means.
How is it possible to spend more than you have? There's just some kind of mental block in my brain that requires me to pay off my credit card in full every month, just as if it were any other kind of bill. I don't know what my APR is and I don't care, because I don't use it. I only have so much coming in; therefore, I must have that or less going out each month.

Take care of what you have & wear it out.
This, also, is plain old-fashioned common sense. My parents took great care of a Dodge minivan that lasted for nearly 300,000 miles and was the starter car for me and my three younger siblings. That car could get banged up (as it inevitably did) as we all learned to drive. It sure was ugly, but under the hood it ran great. By the time it died (after probably 16 years), it was puffing out black smoke if you went past 45 mph and had only one windshield wiper. It had been in at least two minor wrecks, and the front passenger door no longer opened. When we graduated to our own cars, we knew how to drive carefully--and also how to maintain a car so that it would last a long time as well.

I'm getting some boots reheeled this week--they're perfectly good boots, but the heels are worn down. This could be a case of, "They're worn out, I should toss them"--OR it could be a "Take care of what you have" opportunity. I really like these boots and they're already broken in, so the $10 to get them reheeled is a better investment to me than $50+ for a new pair that I might not like quite as well.

The difficulty with both of these commitments is to make sure that we're not putting our effort in the wrong place. Quality clothes are worth taking care of and will take much longer to wear out--but their upfront cost is more expensive than a more cheaply-made item. Don't try to truly wear out a cheap shirt that is pilling or otherwise looks bad, and be willing to give up things that you'll never, ever wear out because you hate them. Go ahead and pass them on to someone else, because the costs (mental and physical) of clutter shouldn't be underestimated.

Anticipate your needs.
This is actually the only way a budget really works. If you're only budgetting for bills that regularly come up, like food, electricity, and cell phone, that's great, but an unexpected medical bill or even Christmas will completely throw you for a loop (and as with dieting, each time you "fall off the wagon" makes it harder to get back on again). This is where an emergency fund (for true emergencies) and sinking funds (for expected but somewhat irregular expenses) come in so handy.

For an emergency fund, figure what you'd need to survive for a month if you lost your job or got very sick or otherwise lost your main source of income. Then save six times that. Note that it's your EXPENSES for a month, not your current income--this can actually cut the amount you're saving almost in half, depending on how much you already save per month (and I guess in some sad cases, it might be MORE than your monthly income, depending on whether you're actually living within your means).

Sinking funds are also very easy--you can start by figuring either what you can afford to set aside (as in for gifts) or what the cost is going to be (like a once-a-year premium for renter's insurance) then divide that by the number of paychecks you get and start setting money aside. Failure to do either of these will be very, very ugly.

Rising up in the world!

As this is a new blog, traffic here is still quite light, so I was delighted to receive two comments this week on my spam text messages post.

Thinking that was a little unusual, I googled "spam text messages" and discovered I'm on the first page! A small victory for me, and a reminder that I need to continue working hard to have enough content to keep people interested and coming back.

Tuesday, October 16, 2007

A cheap mark

Have you ever been taken advantage of financially?

I guess this could run the gamut of a freeloading friend to being mugged. There are a lot of gray areas in between, and I’ve experienced quite a few. I think these actions informed my financial philosophy quite a bit, so I’m going to dig into them a little bit.

The first incident I recall happened when I was probably around 9 years old. I decided to have a lemonade stand. As I was sitting out front, two teenage girls stopped by and convinced me to take some Canadian coins because they were worth more than American money. When I happily told my mom about my bounty, she gently explained that in America, Canadian money was perfectly worthless. I remember being heartbroken that two pretty teenagers could be so mean as to lie to a little girl and essentially steal lemonade from her. The lesson I learned was not to be so trusting of someone who tried to convince me of something without going to other sources first.

In junior high, I was taken advantage of for most of the year. I had just entered the seventh grade and one of my classmates was pregnant (she may have actually been an eighth grader in remedial classes, and I know for a fact she was a few years older than me). This girl started asking me for my lunch money, whatever I could spare, for doctor visits for the baby. She was clearly poor and I felt so sorry for her. I’d usually give her $2 of the three my mom gave me for a hot lunch, or whatever extra I could spare. I just couldn’t say no. I kept this a secret for about half the year, until a teacher confronted me (I still don’t know how they knew she’d been coming to me for money) and told me not to give her any more because she was using it for drugs. I was angry about being lied to, but this girl never came to me for money again and I never confronted her about it. Her baby was born more than a month premature but survived. All I took away from this lesson were horrific eating habits—the $1 I kept of my lunch money would buy me a pack of knockoff oreos and a chocolate milk, and I literally lived off that or other vending machine food until my junior year of high school. Luckily, I have an excellent metabolism, but just because I look healthy doesn’t mean I am, and I’m still combating a massive sugar addiction in adulthood.

I’ve had several friends who’ve borrowed money from me and never paid me back, or “non-smoking” friends who’d rather bum off me than buy their own packs and admit their dirty secret. I was in a relationship for many years where my boyfriend couldn’t hold down a job or manage money, where I ended up paying for almost everything and in a few rare cases loaning him money.

In college, I got suckered into PrePaid Legal, an MLM scheme which is probably for the most part harmless EXCEPT that the girl who brought me in ended up breaking into my apartment and living there for a week while I was on vacation, and then joyriding in my car. When I began legal proceedings against her, not only did PrePaid Legal’s pre-paid legal assistance NOT help me out, but they wouldn’t move me to a different chain without my having to repay the initiation fees. From this, I learned to tune out anyone talking about a “great new opportunity” faster than a monkey on a banana split.

I also got most of the way through one of those “complete 10 offers and get a free $500 gift card” before losing half the required paperwork during a move. Those things aren’t scams if you can keep on top of them; I know several people who got gift cards, a large screen TV and a laptop from doing them. It’s not *free* but it’s a good deal for the uber-organized and anal-retentive. I typically am just such a person, but the move threw me off my game. No real lesson here, I guess—I’d be willing to go through this again in a year when I’m eligible if the prize was good enough. I guess the lesson would be to keep all these papers somewhere super safe instead of moving them between boroughs in the middle of it.

I was robbed on Christmas night in 2003 while moving to New York. Almost everything I owned was stolen out of the back of my mother’s van in a guarded hotel garage, including my passport and social security card, 90% of my clothes, and my entire CD collection. I’ve never heard anything from the police, although someone found my passport in a trash can two years later and mailed it back to me. I hassled with the insurance company to be reimbursed for at least part of the cost of replacing everything, and the experience taught me to always have renter’s insurance here in New York.

My identity was stolen earlier this summer, literally the day after I moved. Someone hacked into my ebay, paypal and gmail accounts. Ebay caught it before they were able to do any damage and I was able to get all three accounts back to normal fairly quickly. But then two weeks later, bogus charges started showing up on one of my debit cards, to the ultimate tune of $1,200. Again, I caught this quick enough to only be temporarily out $25 until the investigation was done and I was credited the money. Both of these lessons taught me to be super careful—I’m already quite skeptical of phishing emails but apparently fell for one of them. I have no idea how my debit card number was taken or if the two instances were related, but the timing seems suspicious. For once, I was glad of my compulsive email checking and constant monitoring of my checking account, for without these habits, I wouldn’t have caught the situations in time to mitigate as much of the damage as I did.

My point in this exercise is to show why I am as diligent about checking my financial picture as I am, and also why I can be perceived as a little stingy with money. I don’t loan money anymore, to anyone. Occasionally, I will make a gift of money to a friend who needs it, but I do it not expecting to be paid back. If I give a gift, I am hardly being taken advantage of. I’m suspicious of anyone asking for money on the train or on the street, although when I worked at Starbucks I knew several of the homeless regulars, and I have given them money when my own situation improved. I think my overall outlook is once burned, twice shy, and a couple of bad situations early on left me very wary of being taken advantage of again. Perhaps I am too jaded and hold my wallet too close to the vest—but it’s a risk I’m willing to take for now.