I spent Sunday afternoon visiting open houses with my mom. My parents are coming up on a big change in their lives: my dad's retiring, my sister graduates from college and embarks on her life as an individual in May--especially with the recent Wall Street tremors, my parents are doing a lot of thinking about how they want to spend the next phase of their lives. They're thinking seriously about selling their loft and downsizing, or selling their loft and moving upstate, or renovating their loft, or selling their loft and moving to Santa Fe or Maine or--you get the idea. Their lives are up in the air. They're in quite a good financial position, with substantial savings, a valuable apartment, and my dad's pension, but they don't have unlimited funds--still, they're putting their legal documents in order (including updating their wills) and working with a financial adviser to plan their future.
This involves a lot of house-hunting. My parents love house-hunting. My mother is one of a relatively small number of people who genuinely like renovating fixer-uppers, and she's got a great eye for interior design, and my father has the kind of vivid imagination that begins sketching a life around each new property, so they really get into it. This weekend, they've begun thinking about Brooklyn--my dad grew up in Brooklyn (Brighton Beach), and is reluctant to move back to that side of the river, but a walk around Park Slope proved persuasive. I can envision them living so happily in Park Slope or Prospect Heights--my dad sniffing around the Park Slope Food Co-Op for the ripest peaches, my mom visiting the big flea market on 7th, going to yoga classes & knitting group on Union, gardening on her roof. I want them to enjoy their time and their money; I want them to enjoy themselves and each other.
They really are looking to downsize, so I'm not sure why they decided to check out a penthouse on Eastern Parkway. Oh, wait, yes I am--it was the incredible view on the StreetEasy listing. My mom and dad made a list of places they were interested in, and my mom, K, and I went to see them yesterday. In person, the view was even better--mind-blowingly beautiful--the Manhattan skyline unfurled like your own personal backyard, a full vista of bridges and shining buildings--one missed the Trade Towers viscerally again, looking out there--and on the other side, Prospect Park rolled away like the world's biggest lawn. It was like being being on top of the Empire State Building, except...better, because you can see the whole Manhattan skyline.
The indoor space needs to be gutted, and the price tag is $995K just for the bones. As one might imagine, this is more than my parents were hoping to spend on their next home. Still, my mother insisted that my father would have to see it for himself. I doubt it's in the cards, but it was enormous fun for me to get to tour the place, and see that view, and all the while enjoy the vicarious thrill of hypothetically spending other people's money for them.
Monday, September 22, 2008
Penthouse Living
Wednesday, September 17, 2008
A GChat Transcript In Which Financial Knowledge is Power!
My Friend: help i need a financial consultation.
me: shoot.
My Friend: tiaa cref.
what the arse is it?
and how do i know what percentage of what makes good sense>
?
me: It's a retirement thing for non-profit folks.
What kind of account are you looking at?
Is it a 403(b)?
My Friend: yes.
me: Okay, that's the nonprofit equivalent of a 401(k). It's an employer-sponsored retirement plan.
Are you being offered a match of any kind?
My Friend: i have no clue.
they sent me this form.
they said 'return it!'
and then they said 'today!'
me: That probably means no, but I'd ask someone if you have time. Do you have a Roth?
My Friend: no.
me: Does the convenience make a big difference to you? If you start contributing to the 403(b), the contributions will be deducted directly from your paycheck, pre-tax, which is very convenient and doesn't reduce your paycheck the amount of the full contribution, which is also cool.
My Friend: no contribution match from employer.
i checked.
me: Okay.
My Friend: convenience?
no, not a big deal.
me: Ideally, then, I think you'd open a Roth instead.
But that requires a lot more individual initiative.
My Friend: i don't know if i have that option.
me: You do. It's an IRA, not an employer-sponsored plan.
My Friend: ah.
so what about the form that i need to return today?
me: Well, I think if you're up for opening and administrating the Roth yourself, you skip this form.
The advantage of the Roth is a tax advantage: you pay taxes when you put the money in, not when you take it out (that's what happens with the 403(b)), so it grows totally tax-free, and when you retire making more money than you do now, you save lots on taxes.
My Friend: right! which makes so much more sense.
me: Way more sense.
The obstacle is this: a lot of plans require an initial investment of $2,000-$3,000, which you may not have on hand.
My Friend: no, i do.
so that will be okay.
me: Cool. You can open one online at Vanguard in about twenty minutes.
It's way easy.
I would do that instead of the 403(b) if there's no match.
I contribute to my 401(k) at [My Company] because there's a super-generous match.
My Friend: woot!
unfortunately not the case here.
me: Alas!
My Friend: in the short term, my dental insurance is free . . .
me: nice.
me: One more thing: once you set up the Roth (Roth Individual Retirement Account, is its full name, often Roth IRA) with the minimum $$, you can automate contributions by linking your Vanguard account to your bank.
My Friend: wow!
you are the best financial advisor i've ever had!
Friday, September 12, 2008
Lehman
Two friends of mine work at Lehman Brothers. They graduated from top schools with degrees in economics, and off into the world of finance they went. They're both good guys--one was very clear to me that he just wanted to stay a few years, put away as much money as he could, then go out on his own to start a graphic design firm before he turns 30. I hope he ended up putting that money away after all. The other was always great at math--he's affable, kind, and not that ambitious, and I think to him, a stable job he'd be good at that would pay him enough to live with his sweet girlfriend in Manhattan and take her to all the nice restaurants in town sounded like an awesome deal. I know so many people who went into finance right after college--they're consultants, and analysts, and personal wealth managers--they handled other people's money by the bucketful. They started when the profits of the subprime mortgage bonds were already flowing into the top financial firms, and the hedge funds, like an unstoppable river, like a force that always has been and always will be. Finance feels like a stable, sensible choice--until something like this happens. I imagine right now my two friends at Lehman are very anxious for their jobs and their futures. I'm sympathetic to their anxiety, even though they've had it really good the past couple of years and probably have solid and lucrative careers ahead of them regardless of this downturn. Still, I hope they come out of this okay.
Thursday, September 04, 2008
A Post-Apology Update
So, I've actually had a really financially chaotic several weeks--my record-keeping system had kind of broken down, because my computer had been down so long with all my records on it, and I'm just now starting to clean up the mess I allowed to accumulate. There'd been a ton of life stuff going on: settling into the new place still, and then a dear friend staying with me for a week (lovely, but having friends is always expensive--the eating out, and going to do things you wouldn't otherwise, and all that. But totally worth it), and then a crazy week or so at work, and then a little vacation, and then a week spent reviewing six plays in seven days, and then a week recovering from that...and that pretty much brings us up to now, where I'm sitting in the midst of a pile of undone to-dos and clutter, financial, personal, and otherwise, and facing down the "time to get serious" deadline about grad school. In shorthand, a sketch of my situation goes like this:
Financial tasks accomplished:
--Continued regular savings (bless you, ING autodrafts; I couldn't have done it without you).
--No utter disasters.
--Insurance claim filed.
--Flung more money into ETS's gaping maw, to the tune of the $130 GRE registration fee. Again.
Financial tasks unaccomplished:
--Successful hounding of former management company. So, it was supposed to be two months. Then it was supposed to be three. I called up, said it had been three months and where's my check please and the cranky receptionist (dear Alexis, if you read this, maybe think about getting a massage or doing some yoga or something else relaxing) explained that the check is actually sent out in the fourth month. Clearly the hope is to maximize "breakage" and keep many security deposits. Not mine, you assholes.
--Following up insurance claim. Insurance company kind of bonkers, dispatched large packets of letters to various health providers requesting information they already had. Must call. Laid out $700 from savings that will be replenished from reimbursement, if reimbursement ever successfully extracted from clutches of Empire BCBS.
--Full righting of financial system, i.e. getting back to routine of checking on things daily.
Current financial concerns, other than former management company and insurance company:
--the prospect of depleting my savings to cover my half the broker's fee that K already paid our broker. How I'll make up that money by the end of the year, or, if I can't, how I will find budget room to save at an advanced rate for the trip I hope to take next summer AND replenish savings.
--Dwindling financial obsession nice in some ways, problematic in others (i.e. results in dwindling motivation, which results in "oh, whatever, I'll just put this $12 lunch on my credit card").
--Can I really afford/is it really necessary to get out to Portland for a week in the fall? Plane fares are more expensive than they used to be. On the other hand, I have somewhere to stay, and I do feel like it really would be a good idea to take my recommendation-writing professors out to dinner to remind them who I am and how much they want to help me get into grad school.
Current nonfinancial concerns:
--American Studies or English departments?
--Time to study for GRE in Lit in English comes from where?
--Holy shit, personal statement needs drafting like now.
And so, I am a busy little bee, but did not mean to neglect so egregiously this blog. It is just that my entire life is up in the air, you see. But a return here will be helpful as I do a quick sweep through my finances to get them back in order, and I'm glad to have made one, and sorry, very sorry, that it took so long.
Gah: An Apology
I'm so sorry about the long unexplained absence. I've got the other blog going, and I've got a little part-time thing reviewing off-off-Broadway plays, and I'm thinking now that I have to seriously take stock of the way I'm managing my time, especially because I have to get serious now about applying to graduate schools.
That said, I don't want to shut this blog down altogether. It's been an invaluable way for me to figure out my finances over the past two years, and I've gotten enough lovely emails from readers that I think it's been helpful for some other people, too. Therefore, what I'd like to do about this blog, at least for the next few months, is give a platform, with the traffic I have, to two to three young people working on their financial lives. I'll pop in with periodic updates, too, but I want y'all to have something regular to read.
Send me an email and let me know what you'd like to put in this space. I'd like a variety of people but a uniformly strong, personable writing style. I don't make a lot of ad revenue here, but maybe we can figure out some mutually agreeable solution.
