The Financial New Year's Resolutions So Far:
1. Give 5% of my salary.
2. Open a Roth IRA and automate contributions.
To those two, I'll add this one:
Earn the full employer match in my 401(k).
My employer offers a dollar-for-dollar match up to $1,500. That means that there are two ways for me to earn the full match: I can either contribute at least $57.70 per paycheck for the full year, or I can front-load my contributions and earn the full match early on. The benefits of the first plan are, I think, pretty obvious: it means that I can set up contribution levels for my various savings vehicles and minimize the thought they require. The benefits of the second plan are subtler: if I leave this job before the end of next year (a possibility, given the combination of my grad school and travel plans), I'll already have grabbed all the "free money" available.
Both have genuine advantages and disadvantages, but I think what I'm going to do is a compromise. If I contribute $80 per paycheck to my 401(k) (that's 7% of my gross and 9% of my net), I earn the full match in 19 paychecks (that is, towards the end of October). That cuts my losses if I leave early but also allows me to automate contributions to my Roth and my ING travel and mini-emergency funds. If I do stay the whole year, my 401(k) will contain $3,580 (without growth) at the end of the year.
So the final formulation of my third financial New Year's resolution is: Earn the full employer match in my 401(k) by signing up and automating contributions of $80 per paycheck.
Friday, December 29, 2006
The Financial New Year's Resolutions So Far:
Thursday, December 28, 2006
If you have any interest in the roles of branding and status in consumer culture, you absolutely must read this article, "What's Noka Worth?" The author of the Dallas Food blog takes on a gourmet chocolate brand, and argues convincingly that with a supreme act of branding, the accountants-turned-chocolatiers behind Noka Chocolates have been rebranding a good-but-not-outstanding base chocolate for markups between 2,592% and 6,956% (depending on the quantity in which one purchases). They sell the most expensive chocolate in the world, with none of the skill of lifetime chocolatiers. It is remarkable.
What this means is that when you pay $40 for .3 oz. of chocolate (let me write that out: that is three-tenths of an ounce of chocolate, or approximately one-fifth of a Hershey bar by volume), what you are paying for is not the quality of the chocolatiers' ingredients, which do not differ in quality level from the ingredients of other top-flight national-market chocolatiers (Vosges, La Maison du Chocolat, Jacques Torres, &c.), and it is not the work of the chocolatiers (which is, according to this report, below average). What you are paying for is branding, pure and simple. What you are paying for is the story told to you by the chocolatier, a story about purity and tradition and an almost ascetic gourmandism. What you are paying for is the assurance that you have impeccable taste, and what you are getting is the proof that you do not.
Saturday, December 23, 2006
I had planned on posting (for real) today and tomorrow, but it's not going to happen. My parents' annual open house is tomorrow evening, and there's too much work to be done before then (we are nominally Jewish, but my mother's religion is a religion of parties and interior decorating, so...Christmas for all!). I'm going to be busy baking dozens and dozens of brownies and decorating cookies and the house, and I still (!) have one gift to buy.
I'm anxious about the holiday-related money—it's not so much that I've been spending too much (though, um, that's a factor, too), but that I've been keeping track of it poorly—but I'll survive. I vow that my accounts will reconcile by the 28th. I should be back here posting by the 27th.
Merry Christmas. I wish you a wonderful holiday, and uncomplicated accounting in its aftermath.
Friday, December 22, 2006
Today the awesome Boston Gal and Wanda of Well-Heeled tagged me to reveal five things about myself that my readers don't know. Welcome to readers who found me through those links, and here goes:
1. I wrote my undergraduate thesis on James Joyce's Ulysses. It's my proudest academic achievement, and secretly, I miss working on it.
2. I lived in Berlin for about four months, learning German and exploring the (fantastic) city. I fell totally, entirely, completely in love with Berlin, and with Kreuzberg, the neighborhood in which I lived there. I can't wait to go back. My German, however, is rapidly deteriorating for lack of practice.
3. I don't own a television. When I'm at my parents' place, though, I'll watch Law and Order anytime it's on, no matter how many times I've already seen the episode.
4. I listen to audiobooks of British murder mysteries when I'm trying to fall asleep. This sleep habit bugs my boyfriend only slightly less than my habit of showering before bed and going to bed with wet hair (it's a curly-hair thing! it needs to air-dry!).
5. I have an extremely close relationship with my younger sister. We fought and hated each other for a long time, and now we're pretty much best friends.
I'm tagging the fabulous folks behind the following blogs: The 100 by 30 Project, No Money in Poetry, and A Pile of Coins (my very favorite German-practice pf blog!). Hop to it!
Posted by English Major at 6:44 PM
Thursday, December 21, 2006
As I begin to think about setting New Year's resolutions (and as you may be doing the same thing), I'm thinking about something a very smart lady once told me that changed my entire mindset about setting and achieving goals. She told me not to focus on results, but on the process.
I'll try a little demonstration. Let's say, hypothetically, that I want to be prettier in 2007 than I was in 2006 (hard to believe, I know!).
Here's the worst way to set the goal: In 2007, I will be prettier than I was in 2006.
Basically, this kind of goal-setting just sets you up for failure. It's vague, it reeks of wishful thinking, it's impossible to tell if I've achieved it, and it doesn't tell me what I can do to achieve it. Thumbs down.
Here's a better way to set the same goal: In 2007, I will have better skin.
This is an improvement because it's more specific than it was the first time around. It tells me where I'll be focusing my efforts. Nevertheless, it's still unworkably vague.
Here's the best way to set the same goal: In 2007, I will find a skin-care routine that works for me by researching my skin type and trying some well-reviewed products. I will drink 32 ounces of water every day and cut out one caffeinated beverage each day. I will see a dermatologist twice over the course of the year.
First, this last way of setting the goal places the focus on your behavior. I don't control my hormones, just like I don't control the stock market. But I can control my behavior. I decide if I drink Diet Coke or water, and I decide how much I contribute to my investment accounts from each paycheck. Second, it changes the criterion for judging success. If, one year from now, my skin hasn't improved that much but I've done all the things I've said I'd do to improve it, I've still succeeded. Similarly, if the stock market has underperformed, I may not meet my goal if the goal is "reach balance of $20,000 in IRA," but I've still reached it if the goal is "contribute to IRA from every paycheck."
Set goals with reasonable expectations. Am I setting the goal of maxing out my 401(k) for 2007? Not a chance. The maximum contribution of $15,000 is an enormous 50% of my gross income. Instead, I'm setting a goal to 1) Sign up, and 2) Contribute enough to earn the full company match. I'm not even setting the goal of maxing out my Roth for the year, and that's only ("only") $4,000. Instead, my goals for my IRA are 1) to open the account, and 2) to automate contributions from every paycheck.
With money goals, there are two easy ways to make your goals achievable:
1) Work with percentages, instead of absolute numbers. Instead of "I'm going to put $10,000 in my 401(k) this year," try, "I'm going to increase my contribution from 6% to 10%." This builds in the requirement that you pay attention to how much you can really afford to give, and it lets your contribution grow with your income.
2) Work in smaller time increments. Instead of "I'm going to save $5,000 for a house this year," try, "I'm going to put away $100 every week towards a down payment." Every week you get to meet your goal (especially if you automate the transfer!), and if you miss a week, you can be back on the horse the next week, succeeding again. This can help to circumvent the "all or nothing" mentality, where you slip up on a goal and then decide to chuck the whole thing entirely (I do this a fair amount myself).
Both of these techniques remind you that your goals are something you work for every day. It's the difference between cramming for a test (trying to save $5,000 in your last 4 paychecks to meet a goal for the year) and studying one hour every day (saving regularly from each paycheck over the course of the year), and especially with the help of automation, it's a great way to set goals you can achieve and achieve the goals you set.
I talk to my friends fairly openly about money. I could tell you what my closest friends make, what they pay in rent, and what their savings allocation is (but I won't). There are a couple of things that make this possible.
We're all just now starting our post-college lives, and we have a lot to learn. When I got home from school after graduation, I would see my friends, and all anyone would talk about was a constant stream of, How's the apartment hunt going? Where are you looking? Are you using a broker? What's her fee? How many people are you living with? How's the job hunt going? Been on any good interviews lately? Know anyone at the organization I want to work for? What do they pay? And then, once we'd all had a bit more of a chance to get settled, it was, Where are you living? What are you paying? For how much space? How close to a subway? What are you doing? How much are you making? What are your benefits like? When do you become eligible for them? We usually had a little bit of meta-discussion about how we weren't used to talking about money all the time, and we'd append, "If I may ask" to the questions, but I don't think anyone felt embarassed, and the reason is simple: We needed to talk about it.
Things in New York change so much so fast that our parents aren't a great source of advice where these things are concerned. If you ask a 60-year-old who's lived in the same apartment for 25 years where he thinks you ought to look for affordable rent, he'll often shrug and say, "Brooklyn?" (Or worse, "Alphabet City?") Your friends will tell you, "Williamsburg's priced us out. Try Bushwick. Try Greenpoint. Astoria's priced us out. Try Flushing. Try Sunnyside. I have a friend who's looking to sublet this place in East Harlem..." Your friends are how you gauge what rent is fair, what salary is fair, what benefits are fair, what broker's fee is fair. Your friends tell you if they've seen a "for rent" sign on a building in a neighborhood you like or if their companies have freelance jobs available. This is what "networking" was before it was sleazy seminars with cheap wine and cheese and everyone passing out business cards--it was having friends. Like, actual friends. And as far as I'm concerned, it's still the most effective kind of networking there is, because there's real trust, not just gladhandling, involved.
It makes me sad to hear personal-finance bloggers advise their readers never to talk about money with their friends. Why not? I understand that income disparities may strain friendships, but is it possible they will have less of an effect if acknowledged? That your friends will stop asking you to meet them at restaurants that you can't afford if you tell them you can't afford those restaurants? When my friends and I go out, we look for places with big prix fixe menus for low prices, like the Indian restaurants on East Sixth Street, or Japanese places with big bento boxes. We share things. We don't like to pay more than $15 for a meal. We can't afford it. We all know we can't afford it. We buy each other drinks when we have money and someone else doesn't. We loan each other books. We help each other move. We share bargain-shopping tips. Talking about money is helpful. It helps us learn things and do better, it helps us learn from each other's mistakes and successes. It brings us closer together--makes us feel like we face our common problems together. We don't talk about money to brag or compare--we talk about it in order to help each other.
That's what friends are for, right?
So my advice is: talk about it. If you find yourself uncomfortable, ask yourself why. Ask your friends why. And if you still find yourself uncomfortable, if you feel judged or pitied, perhaps you need to think about who your friends are, and how much y'all have in common.
Wednesday, December 20, 2006
The first, which came somewhat early, was to begin giving to good causes regularly, starting with 5% of my net pay.
The second, also somewhat early, is to open a Roth.
I'd like to open my Roth at Vanguard, which means a minimum deposit of $3,000. My ING account currently has a balance of $2,313.57. By the beginning of the New Year, the balance will be around $2,420. Still a ways off. Nevertheless, I feel really strongly about opening my account with Vanguard, because of their low fees and strong target funds. My (not-so-)secret hope is that my generous aunt will continue her tradition of generous cash gifts to the nieces and nephews, and with my January savings contributions, I'll reach the $3,000 threshold by the end of January.
Then I'll open the Vanguard account, plunk my cash in a target fund, set up automatic transfers, and forget about it for awhile.
Monday, December 18, 2006
As I mentioned some time ago, my father and I used to fight about money. One reason for that is that he vacillates between the desire to be generous with me and the desire to save money. Understandable.
Friday night we went to the theater together, and out for dinner afterwards, and over soup and salad he renewed his offer to give me money on a monthly basis. He really thinks (and pretty much correctly) that I don't make enough money to get to be spontaneous with it every now and again. "Put something on the credit card," he urged. (He means his, not mine.) I declined--one of the reasons we've fought in the past is the absence of clear boundaries--he'll tell me to use the credit card to have some fun (or buy some work clothes, or whatever) and then get upset when he gets the bill--and I like to think that I can learn from my mistakes. He asked if I was managing to save any money, and I got to tell him proudly that I've saved almost a full paycheck's worth. After all that talk about how I didn't make enough money to live comfortably, being able to tell him that felt awesome. It felt like telling him that I can take care of myself, that I'm resourceful, practical, and responsible.
He told me he was proud of me, and it meant more to me than he could have known.
And strangely enough, somehow that may mean that I feel like I can take money from my parents, that I don't have to sit at home when I could be out with friends just to prove a point. Of course, I've already done a budget with the money he'd like to give me included, and I'd be saving 46% of the extra money and giving away another 16%, so mostly they're helping me contribute to my savings, and it's hard to have a problem with that.
It's sort of a wakeup call, too, this kind of thing, because even though I'm a novice at personal finance, I'm doing okay, I'm doing well enough that my father can be proud of me. That's a good thing to remind myself, too.
Sunday, December 17, 2006
If you have the time, I really heartily recommend that you read this article from yesterday's New York Times magazine. It's written by Princeton bioethicist Peter Singer, and treats seriously the idea of building an ethics-based model of philanthropy. It's a great read.
Incidentally, Warren Buffet's approach towards estate planning is, to my mind, absolutely perfect:
Buffet says he believes in giving his children “enough so they feel they could do anything, but not so much that they could do nothing.” That means, in his judgment, “a few hundred thousand” each.
He says "a few hundred thousand" flippantly, but that's because he's a billionaire. The point, I think, is to let his children pursue their own goals, but not to obviate the necessity of pursuing something. Exactly what I'd like for my own children, in the event of their existence.
Friday, December 15, 2006
I've been thinking all day about today's Purchase I Don't Regret, and nothing's jumping out at me. Mostly (I must confess) this is because I'm a recent graduate not just of college but of parental welfare, and it's a lot easier not to regret spending someone else's money. To the point that it really doesn't count. So I thought I'd take a look at where I let little luxuries into my budget--that is, when I choose not to buy the cheapest available. I think this tells me something about your priorities, and I'd encourage you to try this exercise with your own spending:
My "little luxuries" include:
Salon-brand hair products
According to my credit card statement, I spent $46.60 on two bottles of hair product on October 27. It's special curly-hair stuff, free of the gross chemicals (as opposed to the non-gross chemicals) that I don't put in my hair, ever. I am not even halfway done with either product, even the one that I use every time I comb my hair. So let's assume that these bottles last me through February. That leaves me with a monthly cost of $11.75 for two great products, or $5.88 each. I'm willing to accept that. It's also not that much more than I pay for my cheapo conditioner (let's not go into my complicated hair-care routine, okay?), of which I probably go through two $2 bottles a month.
I don't mess around with my hair. Although I've been thinking about getting myself one of those special scissors to do some maintenance to extend the time between haircuts, I'd never go to the local Supercuts. The person who cuts my hair will always be a trained professional who specializes in curls, and in New York, that will always run me somewhere close to or north of $100.
Lately I've been using a drugstore foundation, but pretty much everything else I use (except for mascara) is M.A.C. I spent about $80 on makeup when I got this job three months ago, and since then have only spent $14 for a new compact of (drugstore, as aforementioned) powder foundation. The nice thing about M.A.C. is that the color payoff is so huge that one eyeshadow lasts two years, easily. I also bought the palette (cheap, on eBay) so that I can buy $8 pans of eyeshadow rather than $12 pots. It saves money and space. But the point is, I don't buy Wet 'n' Wild.
No, I don't use $45 face creams. I do, however, use Proactiv. Without it, my skin wouldn't be gross, but it wouldn't be great. Pure and simple: I'm willing to pay for great skin.
I tried to eat ramen. I did. I bought a bunch of Cup-O-Soups to take to work. I can't do it. It's too gross, and it has enough sodium to bring down a camel. I don't mean I don't bargain-shop, but there are things I won't do to save a buck in this department. I will eat mediocre sushi instead of the amazing stuff and deli sandwiches instead of fancy wraps, but I won't buy lackluster produce, and I won't eat ramen.
This is more a matter of finance than a place in which I disregard finance, but I'm always willing to pay more (within reason) for quality. The cost-per-wear is way lower.
It's interesting to me that my luxuries cluster around personal appearance. I kind of hate to confirm that girls-and-their-luxury-spending stereotype. I'd venture that these things feel more like "needs" than "wants" to many women because personal appearance is a point on which women are often judged. Look up some statistics on the pay gaps between women identified as attractive versus women identified as unattractive, hm? In women, "well-groomed and attractive" means "smart, competent, organized," and a hundred other things besides. I also have to work doubly hard, because being over a size 12 often means that I have some serious bias to overcome. In short, I have to wonder why these are the things I'm willing to pay for
Thursday, December 14, 2006
I was just about to leave work, but checked in on the Donors Choose project to which I donated this morning. It's fully funded! Fifth-grade kids in my neighborhood will read poetry!
I know that some of my readers clicked out via that link. If you donated, thank you. I'm really, really grateful, and also quite moved.
Big English Major props to Trent of The Simple Dollar for his post on taking financial advice from Shakespeare. He starts with the ubiquitous Polonious line, but goes on to the meatier (no pun intended) speeches from Timon of Athens and The Merchant of Venice.
I'll add my own from my personal favorite of Shakespeare's works, Twelfth Night:
These wise men who give fools money get themselves a good report--after fourteen years' purchase. (IV.i)
The point, of course, is that you can't pay people to like you, at least not without paying exorbitantly and continuously.
Here we go again!
Today, we take on the grammar of saving money. Aside from the overuse of the idiom "socking away," what do you think is the most common usage problem afflicting personal finance bloggers writing about saving money?
My vote goes to the "hoard"/"horde" Homophonic Dilemma.
Much as I like the image of little Attila the Sums storming up the piggy bank's back, waving their scimitars, in fact, when we save large sums, we are hoarding, not hordeing or hording money. Similarly, the product of that strict savings plan is a hoard, not a horde or hord. Less like the Visigoths, more like the loot in a dragon's cave.
Go forth, ye hordes, and hoard.
I know, I'm early. Seventeen days to go. But this one hit me with the force of a truck sometime during my subway ride this morning.
I have to start giving money away.
Let me be frank. I take home $889 every two weeks. I pay $600 a month in rent. There is not a lot of slack in my budget. Not an awful lot of fat to cut.
That is not a good enough reason. That is, it's an okay reason, but there are better reasons to give money away, not least to get in the habit of doing it so that when I make more money, I give more of it. As I started thinking in the last post, I need to make sure my financial decisions support my principles. If Millionaire Artist can do it on a much-reduced income, I can do it on the biggest income I've ever had. I'll let myself start small, but from here on out--that is, starting with the paycheck I received today, a percentage of every paycheck goes to a good cause.
So I've just donated $40 (a paltry less-than-5% of my paycheck and slightly more than 5% of the project's total requirement) to support a teacher at a public school in my neighborhood in establishing a poetry library for her fifth-grade class. Seventy-nine per cent of this teacher's students come from low-income families. Check out the teacher's description of the project and consider making a donation to this project or another Donors Choose (which gets the full four stars on Charity Navigator) project. If I can do it, you probably can too.
Wednesday, December 13, 2006
Perhaps you have noticed that I don't really know what I'm doing with this personal-finance blogging stuff. Perhaps you have noticed that I write screeds about values a little too often and direct my small readership to articles from Kiplinger's too rarely.
I'm confused. Not about blogging--in general. I'm confused about what I want my life to be.
I took a job basically right out of college. It's a job at a company whose name impresses people, and it offers opportunities for advancement, and all that sort of thing. It offers a 401(k) with a decent match and health insurance. It's a good job. It doesn't pay a great salary, but it's a good job.
But much like the dissatisfied co-worker whom I advised to quit (and who will, in fact, be giving notice after Christmas), I'm not sure those things are more important to me than doing interesting things with my life, the kind I may not be able to do from an office. How can people do this their whole lives? How can they sit in offices, which basically means being alone all day, spending the bulk of the day treading water? Am I supposed to just sit in this office and save money every paycheck and wait for the milestones of my life to pass outside the window (no, my office does not have a window)? Am I supposed to sit in my office and wait to get married and have kids and send them to college and retire, go home worrying about the balances of my accounts, watch a movie, fill in the day's expenses into my budgeting software, go to sleep? For years?
I find this prospect terrifying, depressing, and absolutely untenable. I can't do that. I cannot do that. And I won't. I'm not saying I couldn't do this job for a couple of years until I go back to grad school--but not my whole life long.
I feel like with lots of people, focusing on money gives a sense of movement to a static life. If your goal is to make a million dollars by the age of thirty-five, each day at work is a challenge not because you like the work, but because you're trying to position yourself to advance. And I guess I can respect that, but it's not for me. I can't do a job I don't love. Not for my whole life.
I want to travel. I want to see beautiful things I've never seen before. I want to have lots of friends in lots of places. I want to read lots of wonderful books. I want to use my brain, which is a pretty good brain, all day long. I do not want to use it printing up shipping labels. I come home from work exhausted. I come home from work not wanting to read a book or go to a museum. I haven't seen my best friend (who's an unpaid intern at a theater group she loves, and is thinking about starting a company with a couple of her fellow interns--that's a theater company--and tutors rich high school kids to pay her bills) in more than a week. I want to have silly parties, drink cheap beer and laugh at jokes about Paris Hilton and Ulysses. Maybe I want to go back to Portland, where I have friends who roast pigs over backyard spits and sit on Goodwill couches on the porch, doing the crossword and watching things go by. Maybe I want to stay in New York, where the people-watching and the public transit are unparalleled and you can always find good bread. Maybe I want to study for the GRE, apply to grad school, and pick myself up to move wherever I get in. New people to meet. New books to read. I don't know.
I don't know what I want to do. I'm learning, slowly, about what I don't want to do, but I really haven't come much closer to figuring out what I do want to do. Whatever it is, I want it to sustain me. I want doing it to be something to look forward to and to enjoy every day (or at least, the vast majority of days).
Personal finance bloggers often scoff at needing to find one's purpose. They advise, instead, settling down at a well-paying job and keeping financial goals in mind. My priorities are different. I will make the money work, honestly I will, just as long as I can figure out what I should be doing and find a way to be doing it. This doesn't mean that I should be reckless, and it doesn't mean that I shouldn't educate myself on how to deal with money, but money is not the point. It is not enough to sustain me. I need to pursue a life driven by a sense of purpose.
Tuesday, December 12, 2006
What does personal finance gospel dictate in the event you're invited to a dinner party (free food!) on very short notice given by people of whom you're not particularly fond (poor company) and to whom you may then have to extend a reciprocal invitation?
Posted by English Major at 5:39 PM
I have an entire week off, paid, between Christmas and New Year's. That is awesome, please do not get me wrong, but I am also anticipating that it will be somewhat expensive. My friends at grad school (or, in a couple of cases, still in undergrad) will be home visiting, and I'll want to see all of them often, and it'll be one of those times when I schedule my days like this: Lunch with X. Coffee with Y. Dinner with Z. Drinks with big group. Taxi home. Declare bankruptcy immediately. Do not pass GO, do not collect $200. Since I'd obviously rather stick pins under my fingernails than withdraw from my savings account to cover the extra socializin', I'm thinking about ways to minimize its financial impact.
1) Use grocery money.
Not as dumb an idea as it sounds, I promise. Two reasons: first, with my boyfriend visiting his parents in Chicago and my sister home from college, I'm guessing I'll probably do what I did over the long Thanksgiving weekend, and pack up my little overnight bag for a stay at my parents'. That means? That's right. No grocery shopping. Second: leftovers. They throw a huge party every Christmas Eve, and I speak from experience when I say that there are leftovers for two weeks. I'm sure they'll let me take some home. This frees up about $75 for catching up with friends while drinking beer.
2) Use clothing money.
Am I going to need to buy new clothes right after Christmas? I think not. That's why God invented gift receipts. I can divert that $50 into Necessary Taxis, which I foresee occurring with increased frequency during this week.
3) Play a lot of Scrabble.
It is the game of the young and hip (you think I'm joking, and I am totally not). Really, the point here is to find ways of socializing that don't include cash outflow, or that include less cash outflow (e.g., "Hey, let's all take the 7 out to Queens for a cheap matinee instead of seeing the movie in Times Square!")
4) Don't buy more than one drink.
What money won't I be using to cover the extra expenses of my profligacy? My gift fund money. Not only does my boyfriend's birthday approach soon after Christmas, but the whole point of the gift fund is to save it when I've got it so as to be able to spend it when I need it. I'll begin contributing to 2007's gift fund with the paycheck I get on the 28th of December (I really, really love it when I get paychecks while not in the office).
The idea here is to predict what I'll actually be doing and rebalance my budget expectations so I can set realistic goals based on which budget categories will be circumstantially straining at their boundaries and which will be largely unnecessary. Like I've told my boyfriend a couple of times, budgeting for me is all about knowing my own habits.
It's hard for me to disagree with Wanda at Well-Heeled when she says, "Now I know it’s not smart to rack up credit card debt, but I can see Tolu’s side of the story. He’s been to 22 countries! I guess you can say the experience was priceless." Word, Wanda. I've also got the wanderlust. I've been to England, France, Italy (and the Vatican, technically its very own mini-country), Germany (where I lived for a few months), the Netherlands, South Korea, Mongolia, and, uh, Canada, and my hunger for travel is piqued rather than sated. My next major travel goal is to ride the Trans-Mongolian Railway, which connects Moscow and Beijing via Ulaan Baatar, an absolutely extraordinary city to which I'm frantic to return. After that, I'd like to travel through North Africa, visiting Egypt, Libya, Algeria, Tunisia, and Morocco.
Unlike the person to whom Wanda is relating, however, I have no $100,000 salary to which I can look forward. For that reason (among others), I wouldn't ever travel on credit. I would, however, defy personal-finance gospel by prioritizing saving for travel over saving an emergency fund. My parents' financial situation permits them to cover my emergency expenses, and (at least for the next few years) they would choose to step in if I had an emergency that money could help me out of. Without that security, I don't know if I could say that for me, travel is more important than a $10,000 emergency fund.
As I begin to get a sense of my financial goals, my plans for my own savings become clearer. Travel plays a big part in those savings plans. It's not, however, absolutely my first priority. I absolutely must open a Roth IRA. I want to open it with Vanguard, where there are minimal fees. Vanguard's minimum balance for a new Roth is $3,000. Therefore, when my ING savings account reaches $3,000, I'll open my Roth at Vanguard. At that point, I'll begin (little teeny) automatic contributions to the Roth in addition to working on rebuilding the ING account, which will be devoted to saving for what are essentially "experience purchases": travel and graduate school.
This plan takes advantages of the resources I've got and prioritizes the things that are most important to me. It also doesn't leave me totally dependent on my parents: in the worst-case scenario, I could break my $1,000 CD at Bank of America at this point without losing principal. I think that allows me enough peace of mind to begin saving aggressively for the things that really matter to me.
Posted by English Major at 12:32 PM
Monday, December 11, 2006
CNN Money features "Fortune's 10 Rules for Building Wealth." I'll review them here, and see how I measure up.
1. Start early.
Check. I currently contribute about 12% of my net income to a high-yield savings account. When I become eligible for my company 401(k), I'll begin contributing to that too (see below).
2. Use your 401(k).
Not yet. I don't become eligible for my company's plan until January, but you can bet I'll be asking for the signup information before we close for Christmas and New Year's. I'll be contributing enough to get the full match ($1,500/year).
3. Keep it [your asset allocation] simple.
Well, right now it's a little too simple, but that's the plan. I'll probably lean heavily on target retirement funds, at least for the time being. Anything else is too intimidating.
4. Don't try to beat the market.
Pursuant to #3, um, no fear.
5. Don't chase trends.
6. Make saving automatic.
Actually, I have to confess that my transfers from checking to savings aren't automated, yet, though of course I make them religiously. One reason I haven't wanted to automate is because my current savings allotments aren't permanent. Once I open my Roth and my 401(k), hopefully in January, I'll get a better idea of what's going on. My biggest financial New Year's resolution, after setting up the aforementioned accounts, will be automation.
7. Go heavy on stocks.
8. Hold down fees.
I'll be opening my Roth at Vanguard, so no worries there.
9. Ditch credit card debt.
I pay off my bill online after each charge. Credit card debt isn't going to happen.
10. Defer taxes
Not so much applicable to me, insofar as I lack any investment accounts.
In sum, a pretty good set of goals for someone beginning to manage their own financial life, and a nicely-formulated simple set of guidelines to which I can aspire. Also, a neat diagnosis that tells me that the things I'm doing I'm doing pretty well, but there are things I need to be doing that I'm not, yet. I'm working on it!
The Christmas spending is officially begun. I haven't bought any big gifts yet; just craft supplies. I found a bulk supplier for the cloves (the difference between $4/oz. and $1/oz. is a big one), but am still trying to find acceptable prices on a couple of other items. That said, I bought:
10 oranges: $3.99
20 oz. cloves: $19.98
3 yards satin ribbon: $5.97
3/4" hole punch: $8.99
Still to come: flat marbles, magnets, silicon glue. I tried a craft store and a hardware store for the magnets; no luck getting them for under $2.50 per package of 8 (clearly an unacceptable price). I'll either find them in bulk on the internet or I'll return the hole punch and do a baking project instead. Because while I'm basically coming in at budget on the clove oranges, the magnets are turning out to be far more expensive than I'd envisioned. If the magnet project isn't coming in under $40, I'm scrapping it (I only cut it that much slack because I'm getting about 10 gifts out of it with the probability of leftover supplies). That means I can't pay two shipping charges--I can either buy the marbles online, or the magnets, but not both from two separate sites. New York has a strange and notable absence of craft stores, but I'll head down to Canal Street this afternoon after work to see if I can find supplies at reasonable prices without shipping charges.
Posted by English Major at 11:03 AM
Sunday, December 10, 2006
Hello from bed. Yesterday, my boyfriend and I were serious homebodies. We slept past noon, watched cartoons, played a parody of the old text-based videogames he grew up with from start to finish, and played a cutthroat game of Scrabble (I won). I made chicken cutlets, garlic couscous, and steamed artichokes with dipping sauce for dinner; he made ice cream sandwiches with homemade chocolate-chip cookies for dessert. The only things we bought all day were chocolate chips, vanilla ice cream, and the "oh yeah" items that going to the grocery store reminded us of (paper towels, a box of pasta, an avocado). We spent less than $20 for a relaxing, rejuvenating, and all-around lovely day. Internet, I am not demeaning the pleasures to be found outside the home—brunch, for example, is a favorite and somewhat costly weekend practice of mine. Every now and again, however, this is the kind of day one needs, and it is a privilege that costs next to nothing.
Friday, December 08, 2006
It's time for another post about a purchase I don't regret!
And this time, it's a two-for-one special on hardcover books. Specifically, Zadie Smith's On Beauty and Marisha Pessl's Special Topics in Calamity Physics.
I never, ever buy hardcover books for pleasure reading--I think these are the only two new hardcovers I've bought in the past three years or so. Two reasons: they're a bitch to carry around in my purse, and they're expensive. (An additional reason: I almost never read something that close to its publication date.) I spent close to $60 on these two books.
They were, however, worth it.
1) I really, really wanted to read them. I wanted to read On Beauty both because I think Zadie Smith is an interesting young writer and because it works intertextually with Howards End, one of my all-time favorite books. I wanted to read Special Topics in Calamity Physics because it was being described as a "literary mystery," which is one of my favorite genres (though, as it turns out, if it's one of yours, too, I'd recommend Donna Tartt's The Secret History or anything by Dorothy L. Sayers instead.)
2) I enjoyed reading them (not to say I liked them without reserve, because that's not the case--but I enjoyed thinking through them and forming opinions about them).
Here's the important part, though:
3) Reading them soon after publication (that is, when only hardcover is available) added value to the reading experience. Other people were reading these books around the same time I was, and I had several very enjoyable conversations about them. There is no other time when a book offers that opportunity for lively, engaging conversation with a wide range of people.
I wouldn't make a habit of it, but sometimes it's worth it to pay double the price for the hardcover edition. It offers both the intellectual satisfaction of the communal focus on the book and the visceral satisfaction of holding a nice, fat, heavy hardcover book. And there's always the justification I'd use on my mother when I was a teenager:
"Oh, poor you, your daughter skipped the drunken party in favor of an expensive book."
Across the spectrum of personal finance blogs, people use a wide variety of budgeting methods. There are Luddites amongst us who use actual, physical envelopes with actual, physical cash inside, and there are techies who have Quicken, Money or Mvelopes synched up to their bank accounts and use Yodlee and Wesabe in addition. Personally, I use a funny little combination of the two: Budget, by Snowmint Creative Solutions. Much like Mvelopes, Budget creates a high-tech mockup of the old-fashioned envelope system, earmarking funds from each pay source into different "envelopes" so that I can always see what I have available for a particular category of expenses. Budget doesn't synch with your accounts (or, rather, it allegedly does, but I haven't been able to make it work), which I actually kind of like, because it allows me to round my spending up to create a buffer in my checking account, but it's a convenience downside (you have to enter your own transactions). I really love Budget--it's not too much software for me, and it's a lightweight, Mac-designed program that does exactly what I need it to--show me how much money I can spend and allow me to "save" without opening a zillion ING subaccounts. All in all, it's a great little program for a visually-oriented Mac user whose finances aren't too complicated and who likes to create "bank errors" in his or her own favor.
Thursday, December 07, 2006
Very much like the last usage issue, what's wrong with the following real personal-finance blog sentence?
I wasted .98 cents.
Much like last week, the issue is redundancy. Here, though, more than last week, we run into an actual comprehension issue. The dollar sign and the word "dollars" don't interact to cause confusion--they're just redundant and silly. The decimal point and the word "cents," though...that's a whole different story. What this sentence actually says is that the waster wasted an amount we might transcribe as point ninety-eight cents--a little less than a penny. In fact, the waster (wastrel, even) wasted ninety-eight cents--a little less than a dollar.
To say what you mean with a mimimum of confusion try it one of these ways:
I wasted $0.98.
I wasted ninety-eight cents.
I wasted 98 cents.
Writing is like balancing your checkbook the old-fashioned way--you have to be careful with those decimal points!
Posted by English Major at 1:40 PM
It took me quite awhile to find it, but I'm delighted to be included in the most recent edition of On the Moneyed Midways, which selects a favorite post from personal finance-related carnivals. They list me as the best of the first carnival to which I ever submitted a post! I'm quite honored.
I'm also glad to have found On the Moneyed Midways, because it encourages me to read posts from carnivals I wouldn't otherwise read, like this post from the Carnival of Personal Growth.
Wednesday, December 06, 2006
One Frugal Girl, an English major herself, kindly linked me to this article on CNNMoney.com, in which hiring managers address the job prospects of liberal-arts majors.
English majors are, I think, appealing to employers for the same reason that we're appealing to law schools, business schools, and med schools: your typical English major is articulate, communicative, a good writer and a close reader--these characteristics are conducive to being a good lawyer, making a good pitch, or having a good bedside manner, but are also crucial office skills.
Frankly, I think the reason you see low "average salaries" listed for English majors is that many of the same people who want to be English majors want to take on low-paying careers because they love the work: teaching, say, or work in not-for-profit. An English degree without subsequent training can prepare you beautifully for a career in advertising, say, but often the people who are really dedicated to pursuing that fat Madison Avenue paycheck will opt for Communications as a major because they think they'll learn more directly applicable job skills. Basically, I think an English major can earn as much as a Communications major easily--it's a matter of if he wants to, and whether the people who strive for high salaries choose to be English majors or Communications majors.
I keep a coin jar (well, strictly speaking, I keep a coin mug) in my office, and I dump change in there over the course of the day--change from when I buy lunch out or a Diet Coke from the vending machine. I consider it a sort of self-taxation system. I've had the coin mug since a couple weeks after I started this job--almost three months ago now (wow!). I think, in order to somewhat alleviate the holiday burden, I'm going to be cashing it in at my local CoinStar machine somewhere in the next week and a half. I'm thinking I'll probably take somewhere in the neighborhood of $25 away from the machine.
That $25, totally painlessly, will buy me a dozen oranges, a yard or two of ribbon, and a big bag of whole cloves in bulk from one of the Indian markets on Lexington Avenue, and I'll be able to give a dozen hanging clove oranges, which are long-lasting, sweet-smelling, and decorative, without touching a dime of my earmarked gift money.
(Sorry for the post-free Tuesday; our internet connection at work was down, and I was out all evening.)
Now that I know a teeny-tiny bit about personal finance, I've been feeling compelled to talk about it. I don't mean talking about money with my friends--that's a different subject, really, and one I'd like to address. But I did have a little come-to-Jesus chat with my boyfriend last night.
My boyfriend is a freelance video editor. He works mostly in TV, and after a long stretch of doing day-here-day-there gigs, he's taking a 46-week job with one show. He'll be on payroll and everything, which is great--they'll deduct taxes, and save him the hassle of paying taxes as a self-employed person (he still has to do that this year, and it's going to be a nightmare). It also means that, for the first time in a long time, he'll have a constant and consistent cash flow. What does that mean? It means that he can make a budget!
I can't even remember how we got on the subject, but on the subway last night, I basically pulled the Gospel of Personal Finance out of my back pocket and got up on my soapbox. By the time we got off, he'd agreed to open a Roth. By the time we went to sleep, I'd helped him draft a quick monthly budget based on a conservative estimate of what his paycheck would look like after taxes.
I think he's going to join Mvelopes. He's exactly the kind of person it's designed for--hates keeping receipts, loves being able to tinker with graphs, wants to be able to enter data directly from his Treo, wants everything electronically synched up with everything else, &c. He's also going to close his low-yield savings with his brick-and-mortar bank and open an ING account (I sent him a referral). Like me, he likes the subaccount feature, and plans to open subaccounts to save for an emergency fund, new gadgetry, periodic clothing purchases, and even a gift fund.
He had what he called "an a-ha! moment" when I was explaining how I do my budgeting: I may not spend $50 on clothes every two weeks (okay, bad example), but that means that every month, $100 is available to be spent on clothes; I have the money ready, earmarked for that purpose. I think the idea of budgeting as planning ahead, as guessing about your lifestyle and prioritizing when things conflict, was new to him.
See, the thing about him is that he's often anxious about money but has had a hard time, because of both his personality and his inconsistent financial situation, getting on top of his financial situation. My hope is that if he starts learning how to manage his money during this time of consistency, he'll be interested enough and proficient enough in his finances to continue good planning and managing over periods of inconsistent pay. My hunch is that if I help him set up a system that works for him, I can help his tendency towards inertia be constructive rather than destructive, because once he gets a system set up, and it works, and it alleviates his financial anxiety, I think he'll stick with it as long as humanly possible.
I told him to stop me when I get too pushy, but he seemed to appreciate the help. I know that I'll be less anxious if he's less anxious, so I consider it time well spent.
Monday, December 04, 2006
This afternoon a co-worker I like a great deal came into my office, closed the door, and burst into tears. She hates her job: finds it unchallenging, tedious, and ultimately mind-numbing. She expressed the opinion that, "Yes, it's valuable to have money in my 401(k), but isn't it worth something not to cry at work every day?"
I absolutely agree with her. I told her as much. Contributing to your 401(k) from the age of 22 on is valuable--extremely valuable. But not crying at work everyday is, to paraphrase the old ads, priceless. (Besides which, no matter what she's doing, she can still contribute to her Roth!)
I really feel extraordinarily strongly about this. The whole reason I want to learn to manage my money is so that I can afford to live the life I want to live. None of my aspirations carry with them the promise of fabulous wealth--if I know how to manage money and live within my means, I can make it work; otherwise, I may always resent the limitedness of my financial compensations. My point is, though, that for me, personal finance is a tool, something I use to construct the life I want. I do not, and will not, construct my life around my personal finance goals.
Saturday, December 02, 2006
It's time again for that most entertaining of English Major tics, the grammar and/or usage correction! Tired But Happy cites savers striving for "piece of mind" as a pet peeve. Valid, but I'm going to go with another one. What's wrong with the following sentence?
Will you give me a $100 dollars?
1. The redundant combination of the dollar sign and the word "dollars." We read "$100" as "a [or "one"] hundred dollars." Theoretically, then, we should read "$100 dollars" as "a [ditto] hundred dollars dollars," implying some sort of exponential math, like compound interest on crack.
2. The redundant combination of "a" and the number 1. The numeral 100 reads as "a hundred," or as "one hundred." It does not need an article, especially an article that technically disagrees with the noun it's working with ("a"? singular. "Dollars"? Plural).
The phrase "a $100 dollars" contains two unnecessary components. It can be correctly rendered either as "$100" or "100 dollars," whichever suits your fancy. The only time you will ever need the "a" is when you are beginning a sentence this way (e.g., "A hundred dollars buys a lot of ramen."), because it is technically incorrect to begin a sentence with a non-letter (but there's no semantic confusion, so I tend to shrug at that rule, despite the fact that I obey it myself). There, of course, you are welcome to swap it for "one."
There! I have just saved you the time of typing "a" and "dollars." Time is money, you know.
Friday, December 01, 2006
I've been thinking a fair bit about stuff because of the holidays, and the fact of the matter is that there isn't a whole lot of stuff I really want. There's a ton of stuff I'd like to have--like, I wouldn't turn it down if you offered it to me, but I probably wouldn't go hike twenty miles up a mountain to get it, either (most of this like-to-have stuff is clothing)--but there isn't any particular item that has totally captured my imagination right now. My mother is slightly irritated, because this makes buying me Christmas presents kind of tough. I've been mentally running through the list of things I sort of could want, and I pretty much just don't. I don't need a new cell phone, or a BlackBerry, or a new iPod. Most of these desires are satisfied by great things I've already got, so I thought I'd do a little set of posts (every Friday, I'm thinking) about the things that I've had for awhile and really appreciate--things that were good purchases that have brought me lasting enjoyment.
So, the first item on this list is my truly excellent headphones. I use them with my iPod, which would definitely be on this list had I bought it myself.
I use Sennheiser HD280Pro headphones. I've had them for close to three years, ever since I picked them up for $90 on eBay my sophomore year in college, dreading another flight home with only my flimsy Radio Shack 'phones between me and the ferocious engine rumbles. Three years later, they still retail for $200 (okay, $199.95), so you can tell I got a good deal. The first time I put them on, I felt like I'd never listened to music before. Every instrument is individually distinguishable through these headphones. Sound is richer, better. Because they're circumaural (that is, they go around and on top of your ear), they do a far better job of insulating me from background noise than iPod earbuds, so I can listen to them at a lower volume and avoid blowing out my eardrums (also, sound quality is best at lower volumes).
In three years of heavy usage, they've suffered a few cosmetic blemishes (I am not the most careful human in the world where my electronic devices are concerned, I confess, and I carry my headphones and iPod everywhere, shoved into my purse, so my Sennheisers have a couple of cracks in the plastic shell and a tear in the fabric that covers the right earpiece). But that's all they've suffered. They work like new (actually, they work better than new; it takes good headphones a few hours of cumulative listening time out of the box to reach optimal sound quality), they've just increased their street cred.
Yes, I sit on the subway in my big, puffy DJ headphones, and maybe that makes me look silly. They take up a ton of space in my bag, which means I can't carry cute little clutches and wristlets on a day-to-day basis. But, in my opinion, they're entirely worth it, and I do not regret their purchase for one second. I love them. They're sturdy, long-lasting, and they've vastly increased the enjoyment with which I listen to music. And I got them for less than half-price.
I haven't even had a chance to recover from the previous fare hike before getting hit with this one. I haven't taken a cab under these rules yet, but the free paper I was reading on the subway this morning puts the increase at far more than 11%. Anecdotally, a cab from Penn Station to the Met cost their writer about $18, not including tip. That's insane.
I really may have to swear off cabs. Thankfully, I very much doubt this price hike will affect my late-night transportation of choice: the gypsy cab. For non-New Yorkers, a gypsy cab is a non-medallion car, a sort of freelance livery service that picks people up on the street (though I believe this is technically illegal). You negotiate the fare with the driver before getting in the cab, a process I've always found intimidating. Because my neighborhood doesn't attract a lot of yellow-cab traffic, and because I'm often coming home from bars in far-flung places late at night, I've become more comfortable with gypsies. From many neighborhoods in Brooklyn and Queens it costs me $20 to get home quickly and safely in a taxi, and I don't think that price will change. But with this latest price hike, I think it's possible that taxis have exceeded a price at which I can take them when I am tired, or inconvenienced by the weather, or running late.
It's December 1. My goal for the month is to take no non-essential cabs (as defined above).
Student of Finace has the latest Festival of Under 30 Finance here. It features my post, Holiday Shopping (which is, in retrospect, a really awful title and should have been something like "Holiday Shopping For The Frugal Semi-Hipster").
Thursday, November 30, 2006
Today brought one of my semiannual extra paychecks. I get paid biweekly, and I pay my monthly expenses from two paychecks, which means that twice a year, I get a paycheck that doesn't have the monthly bites (rent, utilities, Metrocard, Netflix, et cetera) taken out of it. This one is very much needed with the holidays approaching. I'm sending what would have been my rent money ($300 per paycheck) right into my ING savings account. Other allocations will pay for me to get a haircut before I start going to parties (and a dress and a pair of shoes in which to go to them) and flesh out my gift fund. While I feel like I'm spending quite a bit on the holidays (and I am), the timeliness of this extra paycheck is much appreciated, and ensures that the holidays won't set me back in the scheme of things. And of course, it's tremendously satisfying to see my savings number move from $1,900 to $2,200. I've actively saved $700 in the past two and a half months--that feels great, and it's almost the equivalent of a full paycheck.
Posted by English Major at 3:36 PM
In this post, No Credit Needed asks personal finance bloggers to talk about their favorite charities.
A favorite charity of mine is Dress for Success. It combines a lot of things I think are important: encouraging financial self-sufficiency in lower-income women, a focus on the real power of clothing & appearance in a way that feels almost academic in nature, and shopping.
Dress for Success helps women who have been out of the workforce for an extended period of time or never in it at all. Participants are referred by social services agencies--they can't just walk in off the street. (This is both a positive point and a negative one for me--I understand why it needs to work this way, and it makes sure that services go to the people who will reap their maximum benefit, but it's a shame that those services aren't accessible to anyone who wants and needs them.) Dress for Success deals with that most ephemeral of job qualifications: the First Impression. Women with little disposable cash often can't afford the things that go into that first impression: haircuts and haircare, braces, tooth whitening (or, in some cases, extensive cosmetic dentistry), skincare, makeup, professional shoes, and, perhaps most importantly, a quality suit. When they walk into the interviewers' offices, they make an immediate impression of other (alterity, the academics would say) that is, shall we say, not particularly conducive to coming out on top in the interview process. Not someone who belongs at this company, the interviewer mentally notes. Who is she kidding? It's a slightly creepy facet of American financial instinct that we are less inclined to give money to people who look like they need it. I've noticed this just based on the way I'm dressed--it's way easier to negotiate a deal if you're not in sweats. (A good friend of mine and I used to get all dolled up for our junk-store shopping trips, and found it paid off big-time.) The point is that I can hide my lack of experience in a college degree, shiny hair, and an expensive smile, while a woman who hasn't had my advantages (like parents willing and able to pay for orthodontics) sits in her interviewer's office feeling exposed as someone who doesn't belong. The interview is more likely to think that she is slovenly (thus, that she won't be meticulous in her work) and she is more likely to project a lack of confidence. Welcome to social immobility.
Women at Dress for Success don't just get professional makeovers. The organization also gives them interview coaching, resume editing, and training in a limited set of job skills (mostly computer competency). The idea is not only to improve their skills, but to give them confidence enough to compete on a more level playing field with candidates who've had more advantages in life. With a professional-level job comes a shot at financial self-sufficiency.
Dress for Success accepts donations of very gently used business clothing as well as cash, and they appraise clothing generously for tax purposes. They know the value of a good suit.
In December, I will be making two donations: one to my (deeply underfunded) high school, and one to Dress for Success. I also hope to volunteer with Dress for Success in the upcoming year.
Wednesday, November 29, 2006
I just thought I'd slip my $.02 into the large pot of holiday finance tips. A few notes on how I do my holiday shopping. I love giving gifts, and these are some of the principles that guide me.
1) I sometimes buy things without a recipient in mind.
If I come upon a really sweet deal, I'll take it. There will always be someone whom I've forgotten or whose gift could use augmentation. This morning I bought a set of iPod speakers for $7 including shipping. I'll give it to one of my friends or I'll bring it to my office and listen to music when I stay late. One caveat on this tip: it works best if done in advance. That allows you to consider who your recipient will be and/or how the gift will fit into a gift theme, if it won't be your only gift to that person (I'm big on little gift packages).
2) I rely on gift cards.
I get a few gift cards a year from family friends who don't know me that well. Unless they're at stores where I regularly shop, I try to apply them to things I need anyway or save them to buy gifts. My Urban Outfitters gift card from last Christmas will buy my boyfriend an awesome blazer for this Christmas. A Virgin gift card will also come in handy, though I'm not yet sure just how.
3) I plan ahead.
Seems to contradict #1, but doesn't. I don't just mean "have a price ceiling for each gift recipient," because that's obvious. But the earlier you start shopping, the less the possibility of overpaying on and/or missing the mark with a last-minute gift. I start thinking about where I should be looking for different people's gifts early, which allows me to set up online alerts for good deals I can incorporate as I go.
4) I use eBay.
I remember looking around the library one early December afternoon last year and noticing that approximately a third of the kids "studying" were actually buying gifts on eBay. You have three options here: find it cheap, find it handmade, or find it ironic. If you know what you want to get someone, there's a chance you'll find it cheaper on eBay than retail. Alternately, if you're not quite sure what you want but you know that you want something unique, eBay offers the chance to browse people's craft items. I bought my sister a crocheted cloche last year that she wears regularly. On the third hand, if you think it would be really funny to present your college roommate with a set of commemorative stadium ashtrays, eBay is also the place to go.
5) I scour craft fairs and secondhand shops.
Local craft fairs and internet craft clearinghouses (like Etsy) are a great place to find good gifts. Though you'll find a lot of expensive stuff, there's also a great opportunity to pick up unique gifts for very little money. Some of the things I've found good bets: handmade jewelry (a mixed bag, because it can also be exorbitant, but check out this awesome ring for $10), handmade notebooks or stationary, and handmade bags (like these two). This offers the assurance that no one will give a gift like yours, reminds your recipient that you think she's unique, and offers the satisfaction of supporting independent artists. Junk shops are also great for jewelry and knickknacks--one of my most successful presents to date was a doublefaced genuine brass Victorian hand mirror that I picked up in a junk shop in Portland* for about $15. Be careful with vintage clothing because of size and shape differences--I only risk it as a gift if I know the recipient's figure quite well, like, practically to the measurements.
6) I make baskets.
The whole is often greater than the sum of its parts. Putting together a bath basket for someone who needs personal relaxation time, for example, is often a big hit: include bath bubbles or oil, a candle, a homemade mix CD, a shortish book (poetry works well if your recipient likes it, and either new or used books are fine, but inscribe it if it's new), and some plate-free finger-food sweet thing (homemade a plus), and you've effectively given someone a very lovely afternoon or two. Similarly, variations on the "hostess jar" theme work well, too: a Mason jar with homemade mocha mix accompanied by a mug, for example, is a thoughtful present to an acquaintance, and doesn't cost you more than $10.
7) I bundle.
Again, "the whole is often greater than the sum of its parts." When I'm giving one person several small things, I like the things to have a theme. Not only does this demonstrate your thoughtfulness, it makes the gift seem more like a larger, unified present than a handful of little things.
In general, the best gift is something the recipient loves but wouldn't have bought himself or herself. That's always my gift goal as I embark on my holiday shopping.
*Portland has absolutely the most amazing junk stores in the world. Portlanders: hit up lower Hawthorne and Store II. (Also, obviously, the Alberta arts district)
It totally, completely, 100% makes my day that two Google search strings have brought people here, and they are
Dont major in English
clothes for English majors (I am, in fact, the first search result for this string, ahead of Dartmouth's paper, which offers an article that is, in fact, directly on point--this totally delights me.)
I want to talk to the people who visited this blog because of these searches, particularly the clothing one. In my opinion, English majors are by and large well-dressed. You get a few of the "Clothing is SUPERFICIAL. I read BOOKS. Books are DEEP" types, but on the whole, most English majors are pretty style-savvy, tending to be interested in doing interesting things with their clothing and often into thrifting. Perhaps it is the transference of minute focus on issues of literary style, that is, an understanding both analytical and affective of presentation.
Dear clothes for English majors searcher,
Email me! Let's talk about English-major style!
Somewhat premature holiday greetings,
After a little bit of searching personal finance blogs, I came upon a couple of articles that noted that most companies' automatic card increase links don't trigger a hard credit pull, so I tried that. I requested a $200 increase, and by 8 this morning had been notified that I got a $100 increase, to a total limit of $500. Pretty good, considering I've had the card for two months. I think I'll also be applying for an American Express Blue card. That should get me set for credit--I don't see much of a reason to have more than one Visa (it's a Chase Freedom) and one American Express, and I like both cards. Neither has an annual fee and both have pretty good rewards programs, so that works for me.
On commentors' advice, I'll pay the $5.95 shipping charge just to clear the proverbial deck. My concern was that paying it would reduce my leverage with the company, or my drive to have the charge reversed, or both, but given that I'm already in touch with customer service, I think it'll be okay. I'll schedule a payment today for tomorrow. Thanks for your advice!
Posted by English Major at 1:18 PM
I logged on to my ING savings account this morning and noted happily that the APY has increased from 4.4% to 4.5%. I'm pretty settled at ING--I haven't moved, and wouldn't, for a higher APY at Emigrant or Citi or any of the others--but I'll still take a rate increase, and happily, if they're handing them out. It's nice also that ING is increasing its rate just when other online savings accounts are decreasing their rates. To me, it signals (perhaps irrationally) that ING is a good long-term prospect.
Tuesday, November 28, 2006
Two things about credit cards:
1) I like the balance on my credit card's web interface to read $0.00. Right now it reads $5.95. The outstanding balance is a shipping charge for a product that was supposed to have been refunded. I'm in contact with customer service--perhaps I've improved at dealing with customer service; I've certainly been persistent--and the rest of the charge has been credited, but not that $5.95 yet. My billing cycle ends today. I'm not actually sure what happens if I leave that $5.95 (as well as today's online shopping charge, which I can't pay yet as it hasn't registered yet) unpaid. Am I immediately charged finance charges? I'm not so interested, unsurprisingly, in being immediately charged finance charges. Much as I mentioned in my post about the Roth, it boggles my mind how much it's the pragmatic details of these things that are elusive.
2) My credit limit on my only card is $400. That's kind of embarassing, somehow. It also means that if I want to keep my debt utilization ratio to under 1/3, which I do, I can't actually put more than $134 on the card. (I'm actually not entirely sure if that's true, because I'm not sure if Chase gauges my debt utilization by the balance at the end of the month (that would be zero) or by the accumulated charges over the course of the statement period. I've definitely put about $300 on the card this month, all told--of course, I also schedule full payment as soon as I make a charge, in slightly neurotic fashion. The point is, it would be good to have a higher credit limit, just so I could feel sure. And the Chase card web interface has a quick-and-easy "increase credit limit" page, in which you can request a higher limit. I'm not sure if that triggers a hard credit inquiry--I don't want a ding in my credit score, especially if they're not going to bump my limit up. Probably I should just wait until I've had the card longer than two months.
Posted by English Major at 4:19 PM
Today isn't Monday, and "Cyber Monday" is kind of made up. But there really do seem to be some good sales on online shopping. I just combined a 30% off "Customer Appreciation" sale (yesterday and today) with a "$50 off orders of $150 or more" coupon to end up getting a dress, a blazer, a pair of jeans and two bras for $105 ($117 less than the items' total full price). The best part is that I already had $100 in my virtual envelope for clothing, so it's not even an unanticipated splurge. It's really nice not to feel guilty about shopping, and if I've had the money earmarked for that purpose, I don't.
My next clothing purchase will be a dress for holiday parties (my parents' Christmas Eve cocktail party, the company party, &c.), a pair of shoes for ditto, and a new pair of boots. And hopefully, because I'll be earmarking money for that purchase in advance, I won't feel guilty then, either. Definitely a point in good budgeting's favor.
If you're a plus size or shopping for someone who is, check it out, and don't forget the extra coupons.
Monday, November 27, 2006
In January, I'll become eligible for my employer's 401k plan. The match is dollar-for-dollar, up to $1,500. That's about 6.5% of my salary, but much less than that of more senior employees' (which gives me pause, somehow, given that my company is employee-owned).
I think, then, that instead of contributing $100 per pay period, I will contribute enough to get the full match (about $60 per pay period) and divert the rest into a Roth IRA. This means that before January I will need to find a place to open a Roth and set up automatic contributions, lest I derail my savings-allocation plans. I hadn't thought I'd be opening a Roth until after I hit my ING savings goal, so this will require a whole new bunch of research.
It's amazing to me the extent to which what I (we?) don't know is the pragmatic elements of finance. It is very easy to realize that saving is good, and almost as easy to discern one's options for savings vehicles. It is, however, almost impossible to find out how to open a Roth, say. Really what I want is a step-by-step set of instructions, along the lines of:
Step One: Consider X, Y, and Z when choosing which company to use for your Roth [even the concept of a Roth being with a specific firm is a little hazy]. Here are the major options: A, B, and C.
Step Two: Go to www.whateverwebsite.com.
Step Two: Click "Open a Roth IRA."
Step Three: This is the information you will need to provide.
Step Four: Set up automatic transfers.
Step Five: Here is how you maintain your account, that is, what you should keep your eye on and how you should conduct business with your chosen company.
Because this is the part that I do not for the life of me know how to do. Any and all pragmatic instructions are very much welcome; in their absence, I will begin my usual internet-combing.
Tuesday, November 21, 2006
It's 6:46, I'm still at work, with 35 pages of reading left to go. At least I'm not missing out on boyfriend-time, because he's out at a volunteer orientation (actually, this is a personal finance decision too--if he volunteers for RightRides, they buy him a ZipCar membership, which means we can drive when it suits our financial needs: to do big, stocking-up rounds of grocery shopping or to visit a museum outside the city instead of paying for train tickets, &c.). But all day I've been getting through the day going, "I'll just get done and get out of here and get some ice cream and go home and watch a NetFlix movie." I'm tired enough that going out of my way to get the ice cream is unappealing, and it's late enough that the grocery store downstairs from our apartment will be closed. I've just saved myself $5, and if I bring my lunch to work again tomorrow, I'll have done a little something towards making up for my hideous weekend spending.
Posted by English Major at 6:53 PM
Reading around personal finance blogs, it seems that even the most financially aware people still have sacred cows, things they're willing to spend money on no matter how many bloggers multiply the cost out by days or weeks or months or years and promise that if they only cut out This One Thing, they could retire significantly better-off. For some people, the thing they'll defend is bottled water; for others, smartphone upgrades. For me, it's--well, too many things. Diet Coke, and taxis, and buying lunch out--all sorts of things, really. What is it for you?
My point really is that as long as we aren't defending all of these spending choices, maintaining a few less-than-optimal expenses seems, to me, pretty much fine. Not as frugal as some choose to be with their lives, certainly, but I think the people who are very frugal generally derive some kind of enjoyment from the frugality itself that rivals the enjoyment that I get out of not sweating buying a Diet Coke. At some point, one just says "different strokes for different folks." It's a matter of priorities, you know? If I suddenly decide I want a plasma-screen TV (or really any TV--I don't have one), I'd have a hell of a lot more urgency about cutting out the aspartame fix. The same would be true if I suddenly had to tighten my financial belt dramatically. But neither is the case, and so at this point I pretty much say "What's the big deal?" Perhaps I am confirming the stereotypes of apathetic twentysomethings in doing so, but it's also possible that I'm just somewhere in the middle of the spectrum that stretches between Very Very Frugal and Devil-May-Care Spendthrift. I still may challenge myself to go a month without buying it in the near future, and see what that does to my monthly finances, but the point is that as long as it's just this relatively small slice of my money (or anyone's money) we're talking about, I think saying, Well, actually, I am going to spend it on Diet Coke is not a totally insupportable choice.
Monday, November 20, 2006
The English major in me notes this common personal finance usage error. Please permit a short exploratory detour, in which I will embody the stereotype of English majors as nit-picky grammar Nazis.
Wrong: Keeping up with the Jones. Gramamtically, here, you're trying to keep up with one person, like the Dude in The Big Lebowski: The Jones. Alternately, you are trying to keep up with several people named Jone. The Jone family.
Wrong: Keeping up with the Jones'. This suggest keeping up with something that belongs to more than one Jone, as if you are running behind the Jone family car.
Wrong: Keeping up with the Joneses'. Now we have the family name right, but still, we are trailing the car down the driveway, or perhaps cat-sitting for a rambunctious cat. The possessive is unnecessary.
Right: Keeping up with the Joneses. This implies striving for consumptive parity with more than one person named Jones. The Jones family. Thus, the Joneses. Properly pluralized and without needless apostrophes. Lovely.
Want a personal finance application? Proper grammar and usage make you sound smart. When you sound smart, you come off better on the job or in an interview. Then the money comes rolling in.
Now the word "Jones" looks funny to me across the board.
The last several weekends I've spent way more than is necessary and/or reasonable. Let's see if I can break down this weekend.
$0, other than groceries. I stayed in and napped and read and had some alone time while my boyfriend went out with a friend. It was nice.
1) Feeling virtuous after a) spending nothing the day before, and b) cleaning the bathroom, and also running quite late, I decided that it would be fine to "spend" the $20 my boyfriend owed me for groceries on a cab downtown for a friend's poetry reading. The reading started late, meaning the cab was unnecessary anyway. Boo.
2) There was supposed to be free chai at the reading, but it turned out to be a myth, and the pressure to order was quite intense. I went in on two pots of chai for five people: $5, my portion covered by my boyfriend (hang on, this is a theme)
3) Went to my parents' apartment to do a test-run of Thanksgiving pies. Expected to find them in, or to find something we could make into dinner. Found neither. Ordered in sushi, $25.
4) Got a call from my parents: out for my uncle's birthday, at a country-western bar featuring a singer they've been raving about since they returned from Texas recently. Starts in ten minutes, hurry. Cab: $8, covered by my boyfriend out of the money he owed me for sushi minus the money I owed him for tea (sensing a theme?). Thankfully, my dad bought my first beer and my aunt bought my second.
5) Since I still had to do the pies, back to my parents' after drinks & a long set. This means waking up late and taking a cab to work (withdrew money from an out-of-network ATM: $3 in fees, $8 for cabfare). It also means I didn't pack lunch despite buying groceries on Saturday to do just that. Lunch: a predicted $10.
Appalling total: $66, plus the $32 I now have in my wallet. I hate cash, mostly because I blow through it so easily.
Things for future attention: I have the sense that this you-owe-me-I-owe-you business with the boyfriend is serving neither of us, financially. It's fake money--it doesn't quite feel like one is spending it on either end, either incurring the debt or trading something else to pay it off. It's a bad idea. I'm not quite sure what I plan to do about it--should we pay each other in cash, or just scrupulously avoid covering each other's debts, or what? (Aaaargh!)
Planning. Planning will help me avoid these things. As will leaving time for public transportation and not always running late. Basically, cabs are my "latte factor." Cabs and Diet Coke. The point is, though, with better planning, about $48 of the onerous $66 would have been unnecessary. Planning.
Saturday, November 18, 2006
I'm still trying to work out this grocery-shopping thing.
My boyfriend and I did a round of shopping today—really the first full round since I moved in a month and a half ago, the first shopping that wasn't just, you know, pasta, chicken, a can of soup...i.e., the first round that was planned. We went reasonably far abroad to shop—our local grocery store, just downstairs, is really lacking (this is an unfortunate fact of living in a neighborhood in which we can afford the rent), especially where produce is concerned.
Overwhelmed by the presence of fresh produce, we spent $86. For not that much food (not even a week's worth of groceries, because of the whole Thanksgiving thing). I mean, it doesn't break my budget, but clearly I need to work on my grocery-shopping skills.
Reasonable, if unpredicted, factors accounting for the high cost:
1) We're still laying in staples, like flour, vanilla, spices, &c. We probably spent about $25 on just that stuff.
2) I bought enough ingredients to do a big batch of macaroni & cheese for freezing.
Things that are just errors:
1) Grabbing stuff not on the list. Avocadoes, Leibniz biscuits, bagels & cream cheese, three cans of the hard-to-find soup I used to eat as a kid...nowhere on the list. (But very tasty.)
2) Too much cheese. It's expensive! We bought feta for couscous salad, chevre for baby-spinach-walnut-cranberry-apple-deliciousness salad, mozzarella for burritos, and a brick of white cheddar for macaroni & cheese.
3) Really, we just do not have the means for fancy butter, no matter how immeasurably it improves sauces (which it does).
So I think for next time I'll be a little more careful in my planning, and set a modest goal of only spending $70. It'll be more food next time, but less pantry-stocking. So that's my benchmark.
Friday, November 17, 2006
Some things are more important than money.
Scratch that. A lot of things are more important than money.
Here's the thing, though: money plays a supporting role in well-nigh everything. In A Room of One's Own, Virginia Woolf takes a crack at explaining why so few canonical works have been written by women. Her explanation? Money and time. Historically, women's literacy has lagged men's. Historically, women have not had money of their own. Historically, women's work has been domestic, and has thus infringed upon their ability to claim private time. The book's title comes from its author's assertion that what one needs to be a writer is an income (note: this is "an income" in the now-outdated British sense, meaning interest on a principal that is never touched) and a room of one's own. So we have money (an income) and what money buys (private time away from work--we might think of this in a contemporary sense as the money not to have to work, or the money to pay a nanny, or both).
So far be it from me to say that money is unnecessary to what my college calls in its promotional materials "the life of the mind." It's simply not true, and many of the life-of-the-mind-living too often forget that.
On the other hand, there are things I wouldn't ever sacrifice for money, and my education is one of them. So is the education of any children I may have. It's absolutely my top priority, just like my education was my parents'. It breaks my little heart to see personal finance blogs advising "send your kids to community college--they can transfer to a state school for graduation," and "don't major in English." There may well be people who choose their college majors based on the kind of salary they'll earn after graduation, but I don't know any of them, and frankly, I don't think I want to. A close college friend who was an Economics major studied it because she found it fascinating. She wrote a thesis on historical preservation and now works at an urban planning firm, making a little more than I do. Could she have made more money at a think tank? Yes. But she's doing what she wants to be doing. Study things because you find them fascinating--welcome to the world of intellectual curiosity. Don't study things because you can put up with them and they'll let you buy a big house.
I understand that I speak from a place of privilege, that my "and the paycheck be damned!" approach is absolutely unfeasible for many people. Too many people. But as much as I want to learn to manage my money, as much as I want to make it take me as far as possible, I wouldn't ever give up my "life of the mind" for double the pay. I turned down a job at $32,500 to take this one, which pays $30,000 and double the satisfaction. I couldn't live my life doing something that didn't interest me and reward me.
And really my point is that there are things you don't cut corners on. They're different for different people. I have a friend who buys pretty much everything used, including her clothes and her furniture, but will shell out $25 per pound for custom-blended loose-leaf teas. It matters to her. And if your child is interested in something, loves something, wants more than just a big paycheck--education is one of those things. It's not about what an employer will think upon seeing "Vassar" or "Wesleyan" on your resume (despite the fact that the names of non-Ivy institutions are often more important than one might think). It's about the way in which a good education changes its recipient's life, and his mind.
There are qualitative differences between small, private schools and large state schools. Not just in terms of a student's ability to coast (though really, economically, wouldn't the model be "the school that provides the biggest return for the least amount of effort is the best"?), but in terms of the degree to which academics insinuate themselves into everyday life, the extent to which they are really the raison d'etre. One might theoretically argue that one purchases, for the extra money, far more hours of academics at a liberal-arts school than at a state school or community college. One also purchases individual attention from professors who will act as mentors and networking hubs. One purchases, in many but not all cases, higher academic standards that will give your child the maximum value for your educational buck.
It's also about what we call "cultural capital." It means that the child whom you send to a liberal-arts English (or history, or sociology, or anthropology, or other "what will you do with that degree?") department gains knowledge that elevates her social status and thus expands her income horizons as well as her intellectual ones. It means that she can impress people at dinner parties, people who might give her jobs or grants or introduce her to people who will give her jobs or grants. We speak of "cultured" people. "Culture" as an acquisition is almost entirely dependent upon curriculum (or extraordinary environmental [not aesthetic] sensitivity, as in the case of your Jimmy Gatzes and other nobility-impersonators)--we learn to form our opinions and we learn the things (not just existing facts of the field, but methodology and style) that shape their formation.
We disciples of the humanities don't like to think of our fields this way. But the truth is, "knowledge is power" isn't just a rah-rah afterschool special of a phrase. It's also, in a very profound sense, true, and we can expand it thusly: "knowledge is money."
So, depending on what you consider "valuable," there may be an argument on purely economic reasons for the English major. Me, I just like reading books, but I recognize that my English education has provided a few completely invaluable income-earning abilities. I have the name of my college behind me, which may not be as recognizable as "Harvard" ("the H-bomb," to those in the know), but is recognizable to academics and those who follow academics--the first question in my job interview here was, "Oh, do you know [Professor X]?" I did. I never took a class with him, but at a small liberal-arts college, you know everyone. Another question? "So, what are you reading right now?" (Answer: Special Topics in Calamity Physics, and despite the fact that several major book reviews have given it raves, here are my problems with it...) I am not just more articulate because of my English degree, I am better able to navigate the minefields of aesthetics that permeate fields from publishing to advertising to product development. And? I've read a lot of great books, and I know why metonymy makes the world go 'round.
This is quite garbled (probably, then, it doesn't display my degree to its best advantage), but it can be summarized thusly:
1) What shall it profit a man, if he shall gain the whole world and lose his own soul?
2) An English (or, generally, liberal-arts) education is really far more tangibly valuable than many people think.
Thursday, November 16, 2006
Following directly from the themes of my last post:
My parents have offered to contribute $500 to my monthly budget. Consider that I take home about $890 every two weeks, and this would increase that by more than a third. I could join a gym and have sushi every now and again. But I've prided myself on beginning a more independent part of my life and on not being a burden on them as my father retires. I initially turned it down. My father was hurt, and said something along the lines of, "I just want you to have some fun. You're 23. Life's too short." I felt guilty.
Do I take it, take a reduced amount, or turn it down?
Posted by English Major at 8:47 AM
Tuesday, November 14, 2006
Today, I came upon this amazing post by TiredButHappy. In my recent reading of personal finance blogs, I've met so many people who've built their own financial lives from scratch. Almost everyone has student loan payments to factor into their monthly budgets, even the ones free from credit-card debt payments (often on debt incurred on college expenses). This is true of many of my friends, as well, but it's not true for me. My parents paid for all four years of my private education (and private elementary school before I got into a fancy public high school). They didn't qualify for financial aid, and they didn't just pay my tuition and fees--they paid for rent, groceries, books, even the odd beer here and there. When I worked in college, I pocketed the entire paycheck, free and clear. I didn't live high, or anything--my rent was cheap and I shopped at Safeway, not Whole Foods, and at secondhand clothing stores--but I was still going to the movies sometimes, buying clothes, buying cocktails and occasional concert tickets and late-night sodas and all the rest. I often felt guilty as I watched my roommate argue with herself over asking her dad for rent money or a friend put a car repair on her credit card. I knew I had it easy. And at graduation, my generous aunt sent a check for $2,000 that covered the broker's fee and security deposits on my new apartment--not a penny of that money came out of my own pocket. My great-aunt's savings bonds and my parents' gift of money from the sale of assets in my name let me live through the summer while job-hunting in a leisurely way that let me find the job I really wanted, as opposed to the first one I could get. In short, this September was really the beginning of my adult financial life. So many people have had to begin so much younger, responsible for their own living costs, or responsible for enormous educational debts--I have had the luxury of not thinking about any of that.
I have had it easy. The first time I realized the extent to which my privilege provides a substantive financial advantage was when I decided to buy a 1-year CD with the money I'd saved from my paychecks in school. A friend with whom I discussed it brought up lack of liquidity as a concern, and I realized with a start that that's not really a concern for me. If I had, say, a medical emergency while my money was tied up in a CD, my parents would cover the cost. They might not even want me to pay them back when my money was freed up, but they certainly wouldn't charge interest. My money could earn a higher interest rate without any significant drawbacks. That's a real advantage, a quantifiable one, one as tangible as the fact that I can save the money that I would otherwise have to put towards student loan payments--or I can spend it. There's more flex in my budget and in my life.
I guess what I want to say is that I am grateful for the gifts given me, the opportunities and advantages, and I am positively in awe of the people who've done it for themselves, from scratch. Single Ma just blows me away--she's fought singlehandedly (no pun intended!) for every one of her financial and personal achievements, all the while retaining her principles and priorities. Her daughter is mighty lucky--I can't imagine getting a greater gift from a parent than that kind of determined love and dedication.
I'll never be able to give myself all the credit for any financial success I achieve, and I guess in some ways I'm grateful I don't have to. That's why my parents worked hard all their lives (especially my dad, who's a second-generation immigrant who grew up in a Brooklyn tenement)--so I wouldn't have to think about the cost of my dream college or worry about student loan payments, or take a job I didn't like. It's why self-made personal finance bloggers work and save and strive--to better their own lives and the lives of their children. The children who have been given these gifts should not regret them. I don't mean that we shouldn't consider the impact of our privilege on our lives, and on our culture. But the gifts given us were meant--the gifts given me were meant, and lovingly. I can't turn them down--I couldn't even if I wanted to, and I don't. I can, however, be grateful for the help I've received, and be responsible morally as well as financially in the ways I use my money. I can give my parents a daughter they can be proud of, and I can try to give something back to my society, and, if I have children, I can give them the very best of all the important things--books, and experience, and education, and principles.