What I Spent This Month

Ok, first month of blogging about my finances, let's see if it helped me stay on track.

Bank charge: $1.00 for using the wrong ATM
Charity: $120 (Most months aren't this high. At the end of the year, I always feel guilty that I haven't given enough.)
Clothing: $19.51 (wow, that is pretty good, even though what I bought was a bra that I didn't really need!)
Dining: $833.96 (ugh, this is the monster. I have been trying to bring a few more breakfasts and lunches from home, but not often enough. And in the summer, my apartment gets really hot if I use the stove, so I tend to eat dinner out more.) But I also see this category as sometimes overlapping with entertainment. I didn't go to the movies or anything this month, so dinners with friends were my entertainment. (Their lives are weirder than most films.)
Education: $387.50 (sailing and French classes)
Entertainment: $13.67 (a couple of used books)
Gifts Given: $42.31
Household: $102.55 (the Bed Bath & Beyond spree, and some laundry & dry cleaning)
Medical: $55.00 doctor, and $349.62 eyeglasses
Miscellaneous: $80 haircut and $7.90 worth of balance adjustments and found money
Travel: $155 (train tickets and one taxi ride)
Telephone: $110.89

Those are all the variable expenses. In addition, there are the standard monthly things like:
Rent $850
Household insurance $12.66
AOL $23.90
Newspaper subscription $37.00
Transit pass $76
and the payroll deductions for medical insurance, FSA and taxes

Bottom line is that I managed to save $1263.10 this month, which is ok, but less than the $1800 I was aiming for. A large part of that is the unbudgeted sailing lessons (which are totally fun and worth the money!) But I spent very little on "stuff."
Next month's goal: stop eating and drinking so much! This is turning into a diet blog!

More re. small change

Dawn's post at Frugal for Life about picking up change reminded me of my junior high school principal. When it was your birthday, he would come and ask you to step out of class (prompting all the other kids to go "WOOO, you're in trouble!"). Then he'd wish you a happy birthday, shake your hand, and present you with a dime, with the wise words "Keep this and you'll never be broke."
So of course everyone would immediately spend it on candy.

Payday!

Gross pay: $3291.67

Deductions:
401k: $493.75
Insurance/FSA: $32.31
Taxes: $948.60 (almost 29% of my pay)

Net direct deposit to bank account: $1817.01

Other notes:
$4.90 imputed income & deduction-- employer-paid life insurance
$98.75 employer 401k matching contribution

(I get paid twice a month)

Questionable source of income

I saw these ads a while back on the subway. There are always subway ads for ambulance-chaser law firms but I thought these were particularly crass! It's that grinning thumbs-up thing that really gets to me, especially on the baby with the gas mask! What kind of sick person thinks "cool, I'm going to get a million dollar settlement because my baby got lead poisoning!" Happy families are NOT all alike!

NetWorthIQ

The folks at NetWorthIQ have just added more features to the site. You can create a profile (here's mine) with your net worth broken down into various categories of assets and liabilities. And now, you can search by age range, income level, education and profession to see how you compare to other users. It's really interesting: some users have high incomes but low net worth, others vice versa. I also noticed that many people had a large percentage of their net worth in real estate, and a fairly small percentage in retirement. Check it out...

Rule #5: Ask These Questions

This is sort of a follow-up to my rule about shopping. If I must go shopping and buy stuff, I try to remember to ask myself these questions, or at least some of them!

• Do I need it?
• How many do I already have?
• How much will I use it?
• How long will it last?
• Could I borrow it from a friend or family member?
• Can I do without it?
• Am I able to clean, lubricate and/or maintain it myself?
• Am I willing to?
• Will I be able to repair it?
• Have I researched it to get the best quality for the best price?
• How will I dispose of it when I'm done using it?
• Are the resources that went into it renewable or nonrenewable?
• Is it made of recycled materials, and is it recyclable?
• Is there anything that I already own that I could substitute for it?

I think I copied this list out of a book a while back, but I can't remember the source and couldn't find it online. If anyone knows who should be credited, please let me know. Not all of these questions relate directly to finances, e.g. things that are recyclable might actually be pricier, but it's a good guide to being a more responsible consumer in general.

10 Ways to Burst the Real Estate Bubble!

I have decided to take matters into my own hands. It's not enough to read a blog or two and believe that the crash is coming. I want an affordable apartment in a nice neighborhood NOW, or at least soon, and there are things I can do to help me get it. If anyone in New York City is reading this, please help me burst the real estate bubble by trying some of these simple tactics:

1. While walking down the street in desired neighborhood, talk loudly on cellphone about how you were MUGGED IN BROAD DAYLIGHT RIGHT NEAR HERE!
2. Strategically deposit empty crack vials and cheap liquor bottles (Thunderbird recommended) all over desired neighborhood.
3. If you know any hookers, invite them to hang out with you in the neighborhood, especially at bars that are near playgrounds.
4. Rent a tuba. Carry it with you to a lot of open houses and tell all the other prospective buyers that you live in an adjacent apartment and were scoping the place out because you need more room for your instruments.
5. Since you've rented a tuba anyway, play it! No lessons needed.
6. Make sure you get to open houses early (but just after the broker gets there) so you can place fake vomit on doorstep of building.
7. Find a garden supply store that sells fox urine-- people use it to keep squirrels out of their flowers, and it smells incredibly bad. It should also give prospective home buyers a powerful sensory subliminal message to STAY AWAY.
8. Another good one for open houses: post a sign saying the building management is on strike. Or if there is a bulletin board for residents in an obvious place, post a sign that says that the termite/cockroach/rat exterminators still can't get the situation under control so they'll be back again...
9. Get a hard hat, a big tripod and a clipboard, so people will think you are a surveyor. Tell people you are doing a geological analysis of high-risk sinkhole sites, and ask if they have ever heard their floorboards creak.
and finally, my favorite:
10. Plaster any empty storefront window you see with a big sign that says "COMING SOON: O.T.B.!"

With concerted, aggressive, sustained use of these simple methods, property values should plummet to a level that I can afford. So help me out! Send in your own suggestions! Spread the word! Make it happen!

And I thought MY apartment was small!

At least it's bigger than this! I had to use the square root button on my calculator to get my head around the fact that it must be less than 8' x8'!

Portfolio Check

Here's a look at my E*Trade portfolio. I'm not doing as well this year vs. the S&P 500 as I did in 2003 and 2004. I bought some bond funds when the stock market was doing well and interest rates were way down, thinking they'd be a good value in the long term. They're not doing so well recently, but they all pay dividends, so it's not as bad as it looks. But a year or two ago I was up over 30% total. I don't plan to buy any more individual stocks in the near future-- I think I'll stick with mutual funds, trying to find ones with low expense ratios... my approach is pretty seat-of-the-pants. I should probably read more about investing.

	Current	Qty	Paid	$ Gain	% Gain	Market Value
ICENX	$28.94	143.281	$20.24	$1,246.54	42.98%	$4,146.55
RYVPX	$11.05	319.149	$9.40	$526.60	17.55%	$3,526.60
BRSIX	$18.01	243.164	$8.27	$2,369.15	117.85%	$4,379.38
RYTRX	$12.88	309.023	$8.09	$1,480.22	59.21%	$3,980.22
GM	$36.45	50	$43.45	($372.99)	-16.99%	$1,822.50
JENSX	$23.97	137.237	$21.86	$289.57	9.65%	$3,289.57
MBDFX	$10.50	232.558	$10.75	($58.14)	-2.33%	$2,441.86
HXBAX	$10.91	216.826	$11.53	($134.43)	-5.38%	$2,365.57
CHTMX	$10.37	232.558	$10.75	($88.37)	-3.53%	$2,411.63
LU	$2.84	200	$1.69	$212.01	59.56%	$568.00
TIVFX	$15.03	171.585	$14.57	$78.93	3.16%	$2,578.92
MCD	$30.57	50	$17.35	$643.01	72.62%	$1,528.50
XRX	$13.13	75	$13.40	($43.24)	-4.21%	$984.75
TOTAL			$28,027.58	$6,148.85	21.94%	$34,176.43

Stream of consciousness

It's Friday afternoon, just went to the gym, do I need to do anything else before I go home? Oh yeah, Bed Bath & Beyond, I've been meaning to buy a new pillow. My neck has been killing me, maybe I'll buy one of those special neck pillows. Here I am in the store, look at all this stuff... wow, they deliver grills to the Fire Island ferries... but then what? Does the ferry let you carry a giant Weber grill on with you? Do they charge extra for that? There are those alarm clocks I looked at last time. My alarm clock is fine, I shouldn't buy a new one even though I've had it since college. Sheets! Wow, a whole set of nice ones, only $59.99! That's cheap, isn't it? Maybe not, I don't know... I haven't bought sheets in ages... yeah, I really should buy new sheets, I'll pick these up. Ok, pillows, downstairs... ooh, more sheets, these ones are even nicer, and only $79.99, which probably is pretty cheap since here are some other ones that are $149... but do I really want sheets? The ones I have are fine. And anyway, if I buy an apartment maybe I'll actually have a bedroom that isn't also my living room, and then I might want a whole new color scheme, I should wait. Ok, ditch the sheets. God, I'm going to spend a ton on decorating if I ever buy an apartment. Ok, pillows. Ooh, there's the neck pillow... memory foam... I don't know, it actually seems kind of creepy how it keeps the handprint... $90! for a pillow! The hell with that! Ok, here are the pillows I want... this one? That one? Geez, even these are $30, when did pillows get so expensive? I thought they were like $9.99... and pillow protectors, they have tons of these. Keeps pillows clean and sanitary, anti-allergen and bacteria, I should probably get some even though I suspect this is one of those made-up things that they invent a need for just to get people to spend money... $5.99 each, that is what the pillow should cost...Ok, let's go pay for this... here's the silverware, someday I'll buy new silverware... hey, ice cube trays for $2.99! That is something I should pick up, I only have one ice tray except for those stupid alphabet letter ones that don't work. Why do I only have one? Oh yeah, I used one for some art project, it's got ink in it... but do I need more ice? It's not like I have a lot of cocktail parties...and I don't use ice that often... well, they're only $2.99, I'll get them. More kitchen stuff, wasn't there something I wanted??? Oh, yeah, a wine holder for inside the fridge... they don't really make such a thing... I could invent one, make some money maybe... this soda can rack could work though, and it's only $2.99... made in China, everything is $2.99 and made in China... should I ditch the pillow protectors? No, I'll keep them. Ok, I'm going to pay and get out of here... at the register... neat-o, bleach pens! and toothpaste clips! Licorice Altoids! Chapstick! Get me out of here! $51.97 total. Not bad. I feel like I just went through an obstacle course.

Entrepreneurial efforts

I've noticed that personal finance blogs seem to fall into two categories: those who are trying to do the best they can on a fixed salary, and those who have ideas for new businesses or money-making ventures. I generally do not have an entrepreneurial bone in my body-- exactly once in my life I stumbled on a great idea for a business, wrote up a lot of plans and notes and got all gung ho about it, but then I just kind of let it go. It was exciting at first but then it seemed really risky and crazy (not least because it would have required me to move to a remote foreign country). Maybe I'll come back to it someday, but I kind of think I am just not that kind of person.

I was in the laundromat one day and a man walked in with a doorknob/lock kit, asking if anyone would like to buy it. This was probably not the best example of targeting an appropriate market: everyone said no, so he left, saying "you can't blame a brother for trying."
I'm not sure what the moral of that story is...

Gamblin' man

This article in today's NY Times rang a bell with me. The premise: Alan Greenspan has forced us all to become gamblers. Before he took over, "banks were advertising one-year certificates of deposit at more than 8 percent, more than double the annual inflation rate." Now, the safest investments barely keep pace with inflation, if at all. (Except for I-Bonds) So you have no choice but to take risks.
I think at my first job, I had some vestige of a defined-benefit pension plan, but ever since then, it's been "you're on your own, baby." Lord only knows what they'll do to Social Security, I don't think I can count on having any. So all my retirement plans are totally in my own hands, for me to manage as best I can. If I didn't have some interest in managing my money, I wouldn't be writing this blog, but the fact is, I have nothing but common sense and very basic research to guide me. I never even took Econ 101. If I've done ok so far, it's mostly luck. (And I've made some choices that haven't gone so well-- see post re. buying GM stock!) It's like playing poker or blackjack-- there may be some factors you can control, but in the end you're at the mercy of chance. Poker is certainly very popular these days, but would you really want to stake your retirement on it?

Quote of the day

“…take care not to get hampered about money matters. I know, by a word you let fall one day, that you don't like my playing at cards so much for money. You are right enough there. But try and keep clear of wanting small sums that you haven't got. I am perhaps talking rather superfluously; but a man likes to assume superiority over himself, by holding up his bad example and sermonizing on it."

From Middlemarch, by George Eliot

What kind of spoon were you born with?

In other words, were you born on third base or did you really hit a home run?
Another personal finance blogger posted a response to a reader who asked if he'd gotten money from his parents or other gifts/inheritance.
This reminded me of an issue that I'd been planning to write about, as part of the larger topics of class and class mobility, and family attitudes towards money. If we're all going to be musing about money, we should acknowledge that there's more to it than how much we make and how much we have or owe. We may live in the land of "equal opportunity", but as this New York Times series of articles and many other sources have pointed out, some of us have an easier time taking advantage of these opportunities. This can mean anything from being born with a huge trust fund, to having parents pay for part of college, to starting one's adult life with a houseful of wedding gifts, and anything in between. On the other hand, some people are held back by having to provide financial support to parents, having to work instead of getting a summer internship, having to attend an overcrowded public school...

So I'll provide a bit more background about how I got to where I am today, and I hope other bloggers will do the same.

My family is middle-class to upper-middle class, depending on how you define it. My father was making about $50,000 in the mid-1980s, (when I was filling out college financial aid forms!) and probably never made more than about $75,000 a year. He was in the 2nd generation of his family to be college educated-- most of them were teachers, a couple were lawyers, and several went to Ivy League schools. My mother graduated from high school but was in the first generation of her family to do so. (Her grandmother was illiterate.)
I went to public schools in a fairly upscale suburb where I always felt that I did not have a lot of things that other kids had--clothes, cars, video games, toys, Disney Land, etc. We never took vacations, though I sometimes went to day camp, and was often taken to concerts, the ballet, and museums. When I was around 10, I had an allowance of 25 cents a week, plus an extra 25 cents that was added to a fund my father kept track of, which I was only allowed to spend on books.
My first real job, other than raking leaves and babysitting, was the summer after I graduated from high school, working in a clothing store.
I went to an Ivy League college, which my father mostly paid for. I had about $10,000 in student loans when I graduated. I worked (waitressing) throughout the school year (except for freshman year) and during summers. A year after graduating, I was unemployed for 2 months, during which time my father lent me some money to help pay my student loans. I also ran up a couple thousand dollars in credit card debt at that time, and lived with my parents for about a year and a half. After I found a job, I paid him back, and eventually moved into my own apartment and have been financially independent ever since. I have never received a gift worth more than $300 from anyone.
My parents are now separated-- I sometimes have to lend/give money to my mother but not in huge amounts.
That's basically it-- I may not have been born with a silver spoon in my mouth, but I know I at least had a spoon! I'm grateful for what I've been given and proud of what I've built up from there.

Rule #4: Shopping

• Don't.

Okay, I know that is too simplistic. But it actually is pretty simple: stay away from stores and you'll be tempted less. I am no saint in this department: I work within a few blocks of J. Crew, The Gap, Banana Republic, Club Monaco, Ann Taylor, Restoration Hardware, Armani A/X, 9 West, etc. etc. It is retail ground zero around here and taking a walk at lunchtime presents temptation galore. Just today, in fact, I was dragged against my will into the Gap and forced to purchase a bra. But I'm also near some nice parks and quiet spots to sit, and I always feel more relaxed and ready to face the rest of my day if I just read or relax in the sun. This doesn't solve the problem of getting a mailbox full of catalogs every night: that is where not having DSL comes in handy. When I think how long it will take to order something with dial-up, I just don't do it, and by the next day at work, I've forgotten what it was that I wanted.
When I do go shopping for things that I need, I find it is better not to go with a friend. Sometimes it is great to have a supportive presence, someone to tell you that you don't look as fat as the mirror might suggest. But then, with good intentions, the friend might convince you to buy something that is a little outside your normal look (in my case, this might actually mean "they try to give you a much-needed makeover") and you decide to go for it, despite that little inner voice that says it's just "not you" and then where is that friend when you're getting dressed every morning? That "not-you" item sits in your closet unworn until you give it to the Salvation Army (of course getting a receipt for tax purposes).

#$%^*&

Just what the neighborhood needs, one less cheap place to eat, one more Apple store. I love my ibook and Apple products in general but this makes me sad.

Link

Rule #3: Found Money

• If you find money on the street, don't be ashamed to pick it up!

Many people may find this a bit petty. And will this tactic single-handedly propel you into the stratosphere of enormous wealth? Of course not. But why not just do it? I've heard people say it's not "worth the time" to stop and pick up a dime. Well, what else were you going to be doing with that split second? And do you take the time to clip coupons? (and for that matter, did you spend an hour or two putting Google & Amazon ads on your blog to earn a few pennies?)
I've seen guys in sharp suits stand on subway platforms and toss pennies onto the tracks, as if the weight of them was just too annoying to have in their pockets, or perhaps just to prove that a mere coin couldn't possibly be something they'd need to worry about. If you don't want your pants to hang funny, fine, but at least give it to a homeless person!
Now I am not advocating that we all turn into the weird guy with the metal detector, and I do not recommend staring at the ground all the time to search for money, because A) you'll miss seeing a lot of really interesting things, and B) you'll end up with back problems.
But money is money-- if you see it, why pass it by?

Real Estate

I'm a bit depressed today after looking at an apartment last night. It was a studio in a great location, good building, good price, low maintenance, nicely renovated... BUT:
--first floor, and in the front, so your only windows are right above the garbage cans and you get a lot of noise from people going in and out of the building
--only one tiny closet
--kitchen not really separate from living space
--the whole apartment was even smaller than mine, 200 sq ft at best.

Small is ok with me, and I don't have that much stuff, but that place was beyond my limit. And it is just insane to me that a tiny studio like that can cost almost twice as much as the large 2-bedroom that I shared ownership of several years ago. (Part of the shitty truth here is that it is much easier to afford a place as part of a couple than on your own.)
The burst of the housing bubble is coming, I can feel it...please baby please...

What I don't spend money on

TV- $0, don't have cable, or anything to plug it into for that matter.
Car/gas-$0. Don't have one. The occasional rental goes under travel
Utilities: Gas/electric/water- $0. all are included in the rent.
Student loans- $0, paid them off

What else... no DSL, no personal trainer, no shrink, no storage unit rental, no manicures, no pets, no cleaning lady, no cigarettes, no drugs... that is my short list of things that many other New Yorkers seem to find essential!

Jan-June budget, part 2

I thought I'd comment a bit more about the first half of the year's expenses vs. budget. Overall, I'm doing ok against the budget, though I set the bar pretty high. I was basically just trying to stay within what I spent last year. Some categories are up vs. last year, particularly the phone bills. Telephone is a big budget item for me, because someone I'm very close to is overseas and I make a lot of international calls. I researched calling cards and get a really good rate, but it still adds up to a huge expense. I'd like to cut it back a bit, but it's something that is really important to me, so I have to allow for it in the budget.
Food, as already discussed, is another big item. I'm being a little better about shifting the bills from the "prepared food/delis/eating out" lines (breakfast, lunch, dinner) to the "groceries" line. A couple of weeks ago I was doing well-- brought food from home for breakfast and lunch every day for a week, but then I kind of fell off the wagon. But I still try to find small ways to save money, like bringing a bottle of water from my office, instead of buying a drink along with my sandwich. I need to get my dinners out under control a bit more. But I keep thinking I cook at home way more than most other New Yorkers I know, and this is in a kitchen that is all of 30 square feet, that only has a 3/4 size fridge! It's not like I have the option of buying family packs at Costco!
Under "miscellaneous" I'm doing comparatively well this year-- see how I have a separate category for "Palm"? Yes, I am a Palm addict and last year I bought a new one, and I loved it so much I bought a spare (since they discontinued that model: Sony Clie TH-55), and then I had to buy some new software and accessories to replace old ones that weren't compatible with this model. (Some of the old stuff was given to friends or put on Ebay.)
Taxes: I have to look at why these are so over-budget, as they should just have been modeled on last year's, and since I got a smaller bonus this year, I would think they would be under budget.
Goal: come in at least 10% under budget for all categories in the 2nd half of this year.

Interest rates

It's been a while since I shopped around for better interest rates. For a while, E*Trade Bank seemed pretty competitive, but I'm hearing a lot on other finance sites about better rates out there now and it may be time to make a switch. I have more cash on hand than I probably should, but I've been thinking I should keep it available in case I do find an apartment to buy. I have some in a money market, and some in a 3-month CD and a 6-month CD. I've just been letting the CDs roll over, though with my longer term ones, I do check for the best rates before letting it automatically renew... but I think I need to be a little more hands-on right now... if anyone reading this has any suggestions, I'd love to hear them.

Jan-June budget vs. actual

This is also posted in Excel at the Yahoo group. The investment-related inflows are a bit suspect-- I think Quicken may have a bug in calculating realized gains.

	Actual	Budget	Difference
Inflows
Bonus	8,176.00	8,000.00	176
Gift Received	225	0	225
Interest Inc	773.52	450	323.52
Other Inc	3,292.40	0	3,292.40
Salary	39,500.04	39,500.00	0.04
Tax Refund	2,486.00	1,200.00	1,286.00
•Div Income	131.08	0	131.08
•Div Income NT	1,138.17	0	1,138.17
•Int Income	0.22	0	0.22
•Int Income NT	0.06	0	0.06
•Long CapGnDst NT	1.62	0	1.62
•Realized Gain	900	0	900
•Realized Gain NT	2,062.58	0	2,062.58
Total Inflows	58,686.69	49,150.00	9,536.69
Outflows	Actual	Budget	Difference
Insurance- Home	75.96	78	-2.04
Insurance - Other	0	25	-25
Rent	5,100.00	5,100.00	0
Telephone	835.91	750	85.91
Bank Charge	65.75	0	65.75
Business expense	17.35	0	17.35
Charity	7	175	-168
Clothing	1,539.10	1,250.00	289.1
Dining: Breakfast	417.12	600	-182.88
Dining: Dinner	1,327.91	1,200.00	127.91
Dining: Groceries	1,022.57	900	122.57
Dining: Liquor	246.35	300	-53.65
Dining: Lunch	908.81	900	8.81
Dining - Other	18.02	0	18.02
Education	188	450	-262
Entertainment: Books	75.39	60	15.39
Entertainment: CDs	86.69	90	-3.31
Entertainment: Movies	71.19	60	11.19
Entertainment - Other	89	90	-1
Gifts Given	582.15	600	-17.85
Gym & Fitness	250.54	600	-349.46
Household	513.71	250	263.71
Medical: Dental	21	35	-14
Medical:Doctor	0	15	-15
Medical:Flex spend	72.94	0	72.94
Medical:Health Insurance	241.68	312	-70.32
Medical:Medicine	31.16	120	-88.84
Medical - Other	52.1	0	52.1
Misc: Palm	129.3	175	-45.7
Misc: Personal care	363.08	480	-116.92
Misc - Other	442.42	300	142.42
Payroll tax: Federal	7,183.90	5,400.00	1,783.90
Payroll tax: Medicare	680	540	140
Payroll tax: NYC tax	1,356.64	1,008.00	348.64
Payroll tax: SDI	16.9	24	-7.1
Payroll tax: Soc Sec	2,907.58	2,400.00	507.58
Payroll tax: State	2,310.52	1,560.00	750.52
AOL	143.4	144	-0.6
Magazines	0	32.5	-32.5
Newspapers	197.3	260	-62.7
Travel- commute	450	456	-6
Travel- non-vac	0	350	-350
Travel - Other	1,255.74	120	1,135.74
Vacation: Lodging	0	500	-500
Vacation- travel	0	1,000.00	-1,000.00
Total Outflows	31,294.18	28,709.50	2,584.68
	Actual	Budget	Difference
Overall Total	27,392.51	20,440.50	6,952.01

Risky mortgages

Another article in today's New York times about risky mortgages, with a good comparison chart of the longer term costs vs. a traditional 30-year fixed mortgage.
Though I do believe that everyone should be able to own a home and live the American dream and all that, I also don't like the situation these mortgages are creating. If even a dancing monkey can get a mortgage, the additional demand for houses drives up prices for everyone, making it harder for people like me who want to buy a home the good old-fashioned way! Owning a home is a great goal, but I think many people feel entitled to have their cake and eat it too, to run up massive debts to support a lifestyle they think they have to have. Now I don't mean to say that anyone who signs up for a no-interest mortgage is to blame for unraveling the fabric of our society. But maybe we all need to look at our priorities-- didn't people used to say things like "we're saving money for..." a new car, or a vacation, or a down payment?

I heard that somewhere in the Arizona desert, there are acres and acres of land covered with unwanted surplus piggy banks...

Today in the stock market

Yes! GM is finally only about 15% down from when I bought it!

For the most part, I'm pretty happy with the investments I've made via E*Trade. I have tried to teach myself a few basic things about how to evaluate stocks, but I have a long way to go. A couple of years ago I read a great article in Bloomsberg Personal Finance magazine (which seems to be defunct now?) about how to calculate what should theoretically be the downside price of a stock. Being fairly conservative when it comes to finances, I like the idea of value investing. I bought a couple of things based on that advice and it panned out well. McDonald's (MCD) is up 67%! I also bought Lucent (LU) because at $1.69 a share, why the hell not! It's now at $3.16. (I wish I'd bought more than 200 shares!)
GM was a more recent purchase-- it seemed like a no-brainer. The dividend yield was better than most savings accounts, and I thought, hey, big blue chip kinda thing, should be solid as a rock. Within a week or two, I began to be proved wrong! At one point I was down by about 45%. At this point I was really glad I'd only bought 50 shares!
I do have funny timing sometimes. Two days after I bought McDonalds, the obesity lawsuit against them hit the papers. A week after I bought Lucent, there was some FCC ruling that I didn't understand, but which was considered a blow to their chances for a turnaround. So I've had my "oh shit!" moments, but at least they've mostly worked out in the long run!

Budget Travel

I've been trying to figure out if I will take a trip this summer. I already did a California trip to visit family, but the last 4 years, I've managed to go to Europe for about a week each summer. (3 trips to France and 1 to Portugal, all done with frequent flyer award tickets to London, and then cheap flights on EasyJet or RyanAir from there-- fortunately I have friends to stay with in London. If you have to pay for a hotel there, it's not as much of a bargain.)
I used to subscribe to Budget Travel magazine, but after a couple of years I let it go. Some of the info was good, but I got tired of reading tips like "my wife and I saved tons of money by packing our own beanie weenies and avoiding restaurants!" That is not my idea of experiencing a foreign country! If you don't eat the local foods, you're missing half the fun! You can still have a very cheap picnic with fruits, cheeses, sausages, sardines, breads, etc. from markets if you don't want to eat in restaurants. Grocery shopping in a foreign language is great practice, too.

Rule #2: Online access

• Use online access for all your banking, investment and credit card accounts

This is another thing that really changed my financial life. Probably a no-brainer for most people by now, at least anyone who might be reading this site, but it's so much easier to be able to access bank accounts, investments, credit cards, etc. online. No more paper statements causing clutter and having to be shredded. I have repeating transfers set up between savings and checking to cover regular bills, and I save the cost of stamps by paying bills online directly from my checking account. And I time the payments and transfers as close as I can to the due dates, so I can maximize every one-millionth of a penny of interest I can earn in my savings account (and feel like I'm socking it to The Man).
I have a repeating reminder in my calendar to make sure I download and reconcile everything at least monthly, though I tend to download credit card transactions weekly. Again, it's seeing the spending and being able to analyze it easily with Quicken, that really motivates me to try to change my habits. Most major banking and investment institutions offer account activity downloads in Quicken's format, as well as Microsoft Money.
Online access has also particularly made a difference in how I understand my investment and 401k accounts, and really keep track of how they are doing vs. my bank accounts-- a good prompt to reallocate assets if they're not earning what they could be.

Hair today, gone today (at least some of it)

Is $80 too much to spend on a haircut? Hey, this is NY, I could do worse. I like how Time Out NY always asks people how much they'd be willing to spend for a haircut, in their little seen-on-the-street fashion feature. The answers vary wildly, from $0 because people cut their own hair, to well over $100.
I justify it as such: it is my only major grooming expense. I do my own manicure and pedicure, don't buy much makeup, don't go to tanning salons, and waxing, well... whoa, whoa, TMI...
No, really it is justified because I look FAAAAHHHHBULOUS.

But while at the salon, I discovered that my cash on hand is off from Quicken by about $8.00! Horrors! This drives me nuts, when I track things so carefully and then somehow still an error creeps in or I forget to note something. But last year's total balance adjustments only came to $26.25 unaccounted for, so that isn't too bad.

Coney Island of the Stomach

Hot dogs, corn on the cob, fries, beer, cokes, and fried chicken= $20.57 (glad I'm counting pennies and not calories)
Sun, sand and sea are free. But what makes them more enjoyable is one of my more extravagant purchases of recent years, a Tilley hat. The $60 price tag made me gasp when I picked it up. Could I have been equally as well protected from the sun by any of a million free promotional baseball caps, or the straw hat I bought at Woolworth's years ago for $1.00? Probably. But it just wouldn't be the same as having this nice hat that actually fits and won't blow off. And it's so great that the grommets are rust-proof! And someday it will come in handy that I can store stuff in the pocket inside the crown. And I know I'll meet other fascinating travellers who are wearing Tilleys, and they will invite me to dine with them in St. Tropez. We'll eat fine foods and drink fine wines, and afterwards probably all die when we drive our convertibles off those winding Cote d'Azur roads.

Housing bubble burst: bring it on

I keep trying to figure out if the housing market here is about to take a downturn. For so many reasons, it seems like it has to. Bubble Meter is very reassuring on this topic! I set up a little grid to track how many apartments are listed on the NY Times website each week, so I can see if supply might be starting to outpace demand. I'm kind of passively apartment-hunting right now, just checking out different neighborhoods that I might need to consider, trying to figure out what might still be comparatively a bargain. It's hard to believe that the bubble-burst, when/if it comes, will be a drastic cut in prices, but there has to be some kind of dent in the long-term upward trend line. So do I wait? Buy now in an up and coming neighborhood where I can get more space and prices have more room to grow? Buy now in a well-established neighborhood and get less space but perhaps less risk of loss of value in a downturn?

I also found this article -- it certainly hit home with me. My rent, which includes gas and electric, is $850, for a small studio in a decent area, not too far out in Brooklyn. For this same monthly cost, assuming a 20% down payment and $450 monthly maintenance, the selling price would have to be around $120,000, which is about half (or less) what studio apartments go for in this area, and still a lot less most than studios even in areas quite a bit further out. I could rent a small one-bedroom for less than it would cost me to buy a small studio anywhere near here.

Water

Spent most of the day lounging in various spots along the Hudson (and in a bathroom while it poured). Snacks: $7.26 (bagel, water, hot dog, lemonade) The water is what gets on my nerves. Usually I bring a bottle filled with tap water from home. I may not be one of those people who swears NYC's water is the best in the world, but I think it is perfectly fine and it blows my mind that some people probably spend $800 or more a year on bottled water. 365 days X 2 bottles a day X $1.59 actually comes to $1,160.70.

Origins

Genesis of the Daleks...
Batman Begins...
Birth of Venus....

I found an amusing spreadsheet in a dusty corner of my computer: one of my first attempts to systematically summarize my expenses, from 1998. It's not set out in a very user-friendly manner. Oh how things have changed since Quicken came along. I'm posting it on Yahoo.

Worksheet to calculate cost of rent vs. ownership

I just created a Yahoo group (see link at bottom right) so I could post an Excel file that I use when I'm checking out real estate. (If anyone knows of a better way to make this available via blogger, let me know!)
I set it up so I can enter various factors, including sale price, maintenance, tax deductibility, tax bracket, interest rate, salary and budget items, and it calculates monthly and yearly costs, tax savings, etc, and gives me a yes or no based on my savings goal. It assumes a 30-year fixed rate mortgage. Still a work in progress-- I'm trying to figure out a formula that would backtrack to generate how much I could afford to offer to meet my savings goal, if the seller's asking price is too much.

I have this saved up on my desktop computer, and it synchronises to my Palm via Documents to Go, so I can run the numbers while visiting apartments. Or for my own amusement while on the subway or whatever!

What I spent...

This past week was pretty good. I was better about bringing breakfast and lunch from home, though I ate dinner out 2 nights. Groceries came to about $60. I bought some used books-- 3 for $23. I donated $100 to a worthy cause (sponsored a friend's lobbying efforts with the Nuclear Information and Resource Service, to prevent nuclear waste dumping on Native American lands). I bought new glasses-- $149, but that doesn't include the lenses and eye exam that I need because my prescription is too old. And I discovered a cheap treat: 25-cent ice cream sandwiches at the local deli. I bought one on my way home from watching the fireworks, and at first I thought the guy had made a mistake. Then because I was so shocked, I guess he decided that I must be a foreigner and asked me where I was from. He laughed really hard when I said "Two blocks over!"

Rule #1: Credit card use

• Use a credit card for every expense you can possibly charge.
• Use a card that gives you frequent flyer miles or some other benefit that you'll actually take advantage of.
• Only charge as much as you can pay off in full every month-- don't carry a balance.

I know this is controversial-- a lot of people caution against credit card use, saying that it's easy to go crazy spending money without seeing how it affects your bank balance. They'd rather use cash or debit cards, thinking this will keep them in control better, and for some people, that may be the right way to go. But if you can keep your expenses in perspective and not spend more than you can pay off, here's why it's a good idea:
-- you are basically getting a free short term loan for a few weeks, as no finance charges are due if you pay your bill in full every month.
-- you get a printed record of exactly what you spent your money on, monthly and usually a summary at the end of the year. It's harder to keep track of cash. Knowing what you spend your money on is the first step to being able to see where you can save.
-- if you use Quicken or another financial tracking program, you can set up online access and download your transactions right into the program.
-- if the card has a good rewards program, you can save a lot of money. I use a United Airlines Visa, and between credit card use and actual flights, I've earned enough miles for an average of one international round trip for each of the past 5 years. Some of this was based on business use reimbursed by my company, but that's at least $3000 or so that I've saved on airfare. My card has a $50 annual fee but it pays for itself!

Obviously, if you can't pay off the card every month, you should avoid using it, and if you have a credit card balance, you should do everything you can to pay it off, before the high interest buries you! When I was in my early 20s, I ran up a balance and switched cards a few times to take advantage of those "no interest on transferred balances for the first 3 months" kind of offers. But as soon as I had any cash, I tried to pay off the cards. I have known people who had built up some savings, and still carried large credit card debts. "But my savings are earning interest!" they'd say. It makes sense to keep some savings for emergencies, but you're probably paying 10 times more in interest on the credit card balance than your savings is earning, so just pay off as much as you can.

Free annual credit report

Just added a link for a site where you can get a free annual credit report. It's not available to people in the Northeast until Sept. 1, 2005, but the rest of the country can already use the site. Always a good idea to check for any irregularities and be prepared to deal with them before trying to buy real estate, get a loan, etc.
If you have credit cards you don't use, make sure the accounts are really closed, otherwise they may be counted against your total credit limit.
When I rented my current apartment a few years ago, I found a few dormant but still open accounts that needed to be cleared up, and I consolidated my credit cards down to 3-- one Visa that I regularly use, one spare Mastercard that I rarely use, and an Amex for those rare occasions when that's the only card they'll take.

An apartment

Apartment listing

Here's a decent looking studio. $240k, $440 maintenance. But even if I put 20% down, I can't afford it. I'm not too far off, but the monthly costs would work out to about $1,555, which means I'd spend every penny of my paycheck unless I made some fairly significant lifestyle adjustments. Would it be worth it? Is it realistic to expect that I could really spend a lot less on my other expenses than I did last year? Hmmm....

The best laid plans...

I intended to go home and cook dinner last night but at the last minute, a friend called and we ended up eating out. $42. (It was just a noodle place but I picked up the check for both of us.)
Today I spent $3.10 on breakfast, but I was good and brought my lunch from home again.

Food is a big budget item for me. Year to date I've spent the following:
Groceries: $1,071 (the usual items for meals at home)
Dinner out: $1,375 (including liquor consumed with meal)
Lunch: $944 (usually a sandwich, sushi, soup or a burger)
Breakfast: $423 (coffee, bagel, fruit, yogurt, etc)
Liquor: $288 (drinks with friends and wine for home)

Unfortunately, when I'm feeling outgoing and social, I really see a hit on my finances! I go out to dinner or order takeout maybe 1-2 times a week, at varying levels of restaurants, rarely extremely expensive but we're not talking Burger King either. And lunch is the worst-- I almost always buy lunch and it can easily be $7-8 or more. I'm working on that. I feel like a lot of people my age and younger go out a lot more than I do, drink more, eat lunch out everyday, and I just don't know how they manage it.

And even with groceries, though I try to clip coupons here and there, I'm not good about looking for foods that are on sale, and I like good steaks and lambchops, which can be $12 a pound or more. Sometimes I'll also buy prepared foods at places like Garden of Eden or Whole Foods. Salmon, for example, is about twice as expensive pre-made vs. just buying raw to cook myself. I rationalize this by telling myself it's still so much cheaper than eating out!

I Bonds from Treasury Direct

Here's a nice conservative way to sock away some savings. You can buy US treasury bonds online. I still have one paper savings bond at home, but they are now transitioning to online accounts-- much better than worrying about losing a paper bond if the house burns down. At TreasuryDirect.gov, you can buy EE and I Bonds. I like the I Bonds as they are indexed to inflation. You buy them at face value and they earn interest until they mature in 30 years. Currently the rate is 1.2% above the rate of inflation, or 4.8% total. This is better than most CDs, I think.

Just another basket to put your eggs in!

Next juicy bit: my net worth

As of 12/31/03: $162,040
As of 12/31/04: $206,375
As of 6/29/05: $229,722

What it costs to live well-- supposedly

According to Forbes.com, I make about 1/3 of what it costs for a family of 4 to "live well". Interesting, if a bit irrelevant to the way I live (i.e. no kids, no college costs, no car, no weekend home). And though they do admit that it is not ideal, their hypothetical family only saves 1% of their income.

Forbes.com link

CNN story on world's most expensive cities

New York City, we're reminded, has the highest cost of living in the US, even though it's only #13 worldwide. Los Angeles is a distant second at #44, well behind Bratislava and Shanghai. That kind of surprises me.

CNN.com link

What I spent today

Breakfast: $1.60 for coffee and a banana, after eating cereal and a yogurt at home
Lunch: $0, brought it from home
Dinner: $0, will cook at home
Sailing lesssons:$195 for 4 weekend afternoons in Connecticut. They are less than half the price of sailing lessons in Manhattan.

Today's fun to necessity ratio: very high!

Studio apartment

I thought this was an interesting view of life in a small studio apartment. Actually it looks bigger than the one I live in.

Apartment Therapy studio apartment slide show

First juicy bit: salary & bonus

Ok. My salary is currently $79,000. I also get a bonus that can be about $8000 or a bit more if business is really good.

This puts me above the median income for the US, and also for Brooklyn. (And I am single, with no dependents, thank God!) But in the scheme of New York salaries, for people with my years of experience and educational background, it's not that great. Did I mention that I work in publishing, everyone's favorite example of a noble but underpaid industry? I enjoy what I do and don't feel like a wage slave, but publishing salaries don't cover the cost of living in NYC very well. But plenty of people do fine on even less than I make-- I have no sympathy for a nameless friend-of-a-friend who supposedly said that he couldn't quit the law firm job that he hated because "it's impossible to live in New York on less than $70k a year."

There are basics needed to survive--food, housing, clothes. Then there's the stuff that makes you feel civilized, like you have a real life rather than being a subsistence-focused worker bee, or things that just make life a little easier-- entertainment, better food, fancier clothes, charitable giving, self-improvement such as education or fitness activities, and in NY anyway, I'd put having a car in this category. Then there are the luxuries, that make you feel like you are really living well-- maybe it's a Cartier watch, or a sailboat, or travelling around the world. It's interesting to see where different people put the dividing line between the civilized life and luxurious life.

NY Times editorial about mortgages

Here's an editorial from the Times that I totally agree with. I know people who have bought places with 100% financing and interest-only loans, and it just seems dicey to me. If I find a place to buy, I will gladly take a 30-year fixed mortgage and put some money down, the good old-fashioned way. Building equity is the whole point of buying a place, and I don't want to have to count on the market always being so overheated in order to do that. And interest rates are so low right now, there's no where for them to go but up.

NY Times editorial "Risky Mortgage Business"

What and why

What is on everyone's mind, when it comes down to it? Money. The ultimate voyeuristic pleasure? Knowing how much people have, and how they spend it.
I am a mid-30s single woman living in Brooklyn, NY. I will be using this site to anonymously tell the world exactly how much money I make, what I spend it on, how I budget, whether I feel rich or poor, where I fit into the class continuum, etc, etc. Since real estate is a current obsession, and an outrageously huge proportion of most New Yorkers' budget, I'll be spending a lot of time on my search for an affordable apartment to buy.
This will not be a "how to pinch pennies" advice column. I believe in saving for a rainy day, but I also believe in having a little fun, and allowing oneself some luxuries while living within ones means. I hope this site will help people think about their own finances and how to live well on a budget, and I hope readers will write back with information about how they spend their hard-earned cash.