"The median price for an existing home plunged by a record 5.1% in October"

That's the beginning of the 2nd sentence in a USA Today cover story from yesterday. Alarming, isn't it, that home prices would fall 5% in one month? But of course that is not the case. Home prices were 5% lower in October than they were A YEAR AGO-- big difference. I was suprised that a major newspaper would state something in such a misleading way, and I suspect that a lot of people don't notice the difference-- see my Rule about numeracy. Whenever I see charts tracking the real estate market, I wonder how many people confuse graphs that track the monthly percentage change in prices vs. the previous year with graphs that track the prices themselves. Either way the news isn't that good right now, but it's not as bad as USA Today made it sound yesterday!

Ugliness.

I'm not sure I can face doing my next net worth recap. As of today, my net worth is about $20,000 lower than it was at the end of last month.

Ouch. (This is the polite translation.)

At this rate, I may not hit my original year-end goal, let alone my higher revised one. This is the downside to vigilantly tracking one's finances. It's also what goes with trying to invest aggressively: most of the time, you can feel like your money is growing, but it hurts like hell when the market goes down and you see your gains evaporate. In some ways it's almost worse than the feeling I get about over-spending. If I had SPENT that $20,000, I'd have something to show for it, even if it was only in my own memory of having had a really good time.
But of course, I do still have something to show for it: I still have the same number of shares in all those investments, plus a few more from the last of my 401k contributions and reinvested dividends. Those shares have lost some value, but they can regain value too. I just need to grit my teeth and wait it out. And I need to keep saving as much money as I can in the meantime.

What's Your Walk Score?

My friend Mortimer sent me a link to a website I'd never heard of called Walk Score. You can enter any address and it will score the neighborhood's "walkability"-- i.e., how close a variety of businesses and services are, such as bars, gyms, hardware stores, supermarkets and libraries.
Mortimer and I were both sad to see that in our recent moves to cheaper neighborhoods, we'd dropped 10 or so points down to in the 80s out of a possible 100. That's life in New York!
But New York City is a tough place to test an application like this-- almost anywhere in New York will probably score over 80. And as the "how it doesn't work" page warns, there are lots of limitations-- the program can't tell how safe the streets are, or whether the distance noted to a business happens to cross a body of water. And the map data isn't 100% accurate. I was pleased to note that I lived within a short distance of a couple of movie theaters, which was news to me. But one was incorrectly said to be on 2nd Avenue in Brooklyn when it's actually on 2nd Avenue in Manhattan. And I'm pretty sure the other is actually just an adult video peep show type place, where I probably can't see Blade Runner: The Final Cut no matter how many quarters I put in.

But why am I writing about this? Why does walkability matter? The site answers this question in terms of promoting better health via exercise, helping the environment by reducing the use of cars and increasing public transportation, and strengthening community by having stronger local businesses and more face-to-face interaction with neighbors. Of course I had to look at it from a personal finance angle instead!
Obviously, the big thing is that living in a walkable neighborhood can make a car totally unnecessary. Like many New Yorkers, I have never owned a car. On the rare occasions I really need one, I rent or borrow one. But I can take care of all my daily needs on foot or by using the variety of public transportation options that are made viable here by the high population density. Not needing a car saves me a huge amount of money.
But are walkable neighborhoods cheaper? Again, New York might be a skewed example, but rents and real estate prices are definitely higher in more walkable neighborhoods. Prices in stores might also be a bit higher, though I have found that often it's just due to stores carrying upscale brands-- sometimes in "poor" neighborhoods, prices are higher for the same item than they are in more affluent areas.
I also find that there are some things that I don't necessarily want to have in walking distance. If I lived in Brooklyn Heights, say, I could easily walk past a variety of nice clothing stores on my way home from work or on the weekends. Where I live now, I have no such temptation, which is a good thing!
How walkable is your neighborhood? Does walkability help you save money, or make you spend more?

What Are the Best Charities?

It's that time of year: all the fuss over Black Friday and holiday gift guides can lead to a certain level of disgust with rampant consumerism and greed. The story that did it for me was a mention of a woman who hurled her entire body onto a pile of $50 digital photo frames at WalMart to make sure she'd be able to buy one.

So what's a good antidote? Thinking about ways to help people whose needs are more basic, or organizations that do valuable work. I have given to a variety of charities this year-- I'm committed to donating all profits from this blog, and I'm finally getting to the point where my ad revenues are enough to increase my giving quite a bit. Here's some of the organizations I've given to this year:

DonorsChoose
Memorial Sloan-Kettering Cancer Center
American Cancer Society
WNYC New York Public Radio
Pan-Massachusetts Challenge
Heifer International

It can be hard to decide to whom you want to donate. In my case, it's often been that someone I know asks me to donate, and I say yes, knowing it's a major charity for a good cause. But sometimes I wonder if I should be doing more research about who uses the money best. I get so much junk mail from charities, how do I know which ones are deserving? Sometimes I just get lazy and want recommendations... so who better to ask than my wonderful community of readers?
What are your favorite charities? Who do you think deserves your money, and why? Please give a bit of explanation and hopefully this will turn into a good resource. And I will try to donate more ad revenue to the charities you recommend, since you readers are responsible for whatever comes in. Thanks!

Happy Thanksgiving!

I'll be taking a couple days off, as will most readers, I suppose... eating turkey, enjoying time with family and friends, and trying to face the nightmare known as Christmas shopping.

I am such an anxiety-ridden gift giver. I have a large extended family, and though none of us give each other expensive gifts, the overall spending can really add up. Fortunately a lot of them are big readers who don't know or care that I can get a lot of books for free!
But all those extended family members aren't the problem... there are a few people that I am closer to, and for people that are important to me, I hate giving gifts that seem impersonal or too run of the mill. And if I find something more unique, I'm terrified that I'll still have gotten it wrong, that the recipient won't like or appreciate it. As a friend of mine put it, I want to give gifts that say "I know you."
This isn't entirely about money. On the one hand, I tell myself that if I found the perfect gift, the cost wouldn't matter. But on the other hand, there are limits to that. Of course it matters! I can't just give someone a $700 gift just because I think it's perfect, at least not every year! Even if I can "afford it," I think giving large gifts drags you into a weird zone of stress about reciprocity. Does the recipient feel guilty because you spent too much on them? Do they then overspend on you? Does it turn into a spiral of gift inflation?
To me, as both a gift-giver and receiver, the perfect present is something that is unusual, personal, something the recipient might have wanted but didn't buy for him- or herself-- and on top of all that, not too expensive. One of the best presents I ever received was an antique hand-cranked drill-- sounds bizarre and useless, but it was a gorgeous object, and though it's too long a story, there was a reason it meant something to me.

Fortunately antique drills and such aren't the kinds of things offered at deep door-buster discounts on Black Friday...

A Pricing Analysis of Amazon's Kindle E-Book Reader

The latest publishing buzz is Amazon's introduction of the Kindle, a new e-book reader. At $399, it's a bit pricey: Sony's e-book reader is $100 less. And there are many e-books that can be read on PDAs-- even if you're dealing with text-only on a much smaller screen, you don't necessarily need a separate device. But the Kindle offers some pretty cool features, and the books and newspapers that are available to be read on it are discounted quite a bit compared to their print versions. Can the Kindle end up paying for itself?

I actually had a chance to play with one of these a few months ago. I thought the size and weight were ok, and the experience of using it was pretty impressive-- not perfect, but better than any other portable electronic reading device. I liked the fact that it was a stand-alone wireless product: if you're traveling or at the beach and you decide you want to read something, you can go online and download it without having to go back to your computer, and without having to subscribe to any sort of wireless plan or be at a hotspot since it's on a cell phone network. All in all, I was intrigued by what the device could do, but as a dedicated PDA user, I didn't see myself buying another electronic device to tote around. (Also, a large percentage of my reading is done in manuscript form before the book is actually published, and though I could probably do some of that electronically, I'm not necessarily the ideal user for this product.)

But when I tried the Kindle, I didn't even think about the costs that might be involved. A lot of early comments have focused on the fairly high price of the device-- is it worth the money?

Books: NY Times Bestsellers and New Releases are $9.99 on the Kindle. For hardcovers that are $25 and up (the new Ken Follett hardcover is actually $35, which seems like a shocking price for fiction, even if it is over 1000 pages!), you're saving at least $15 per book. If you buy 26 hardcover books, the savings offset the price of the Kindle.

Newspapers: the NY Times is $13.99 a month. I pay $40.80 a month for delivery of the print edition. 15 months of subscribing saves you enough to pay for the Kindle.

Magazines: The Atlantic is $1.99 a month on the Kindle. Amazon offers subscriptions to the print edition at $24.95 a year, or $2.08 a month. The cover price on a newsstand is $4.95. No big savings for subscribers, but if you'd been buying individual copies, your savings would pay for your Kindle in, oh, about 11 years.

Blogs: $0.99-$1.99 a month each. Well that's not much of a deal, is it? Blogs are usually free, so here's one area where the Kindle doesn't exactly win. But compared to the cost of having a wireless Internet plan that allows you to go online and read blogs anywhere on a laptop or handheld, it might be a good deal, at least if you only read a few blogs. Their current selection is not all that great. None of the personal finance blogs that I read are included. From a quick search, the only blog I read that's on there is Apartment Therapy, which is one of the $1.99 ones. Until My Open Wallet is available in Kindle format, obviously this feature of the device is useless.

Bottom line: if you are someone who reads a lot and likes to read current bestselling hardcovers when they first come out, the Kindle could save you quite a bit of money. It's also probably lighter and smaller than that doorstop by Ken Follett, so you might avoid some chiropractor bills too. And aside from anything else, it's a nifty new electronic toy that I'm sure will end up under the Christmas trees of many people whose loved ones wonder what you get for the person that has everything... What do you think? Would you buy one?

The Cost of Caring for Elderly Loved Ones

Here's an article worth reading from the New York Times: Study Finds Higher Costs for Caregivers of Elderly:

The out-of-pocket cost of caring for an aging parent or spouse averages about $5,500 a year, according to the nation’s first in-depth study of such expenses, a sum that is more than double previous estimates and more than the average American household spends annually on health care and entertainment combined.

Family members responsible for ailing loved ones provide not only “hands on” care but often reach into their own pockets to pay for many other expenses of care recipients, including groceries, household goods, drugs, medical co-payments and transportation. That nudges the average cost of providing long-distance care to $8,728 a year.

These caregivers, spending on average 10 percent of their household income, manage the financial burden by taking out loans, skipping vacations, dipping into savings or ignoring their own health care.

Here's another interesting aspect:

In addition to the telephone part of the survey, the report also includes detailed information and narrative accounts from 41 men and women who were paid $100 to keep expense diaries over the course of a month. This subgroup — not a representative sample because they were self-selected and were paid — reported sharply higher expenses than the telephone respondents.

The diarists spent an average of $12,348 a year — more than double the annual expenses of the larger, randomly selected telephone sample. In addition, the diarists who lived with their older relatives, spent the most — $14,832 a year, followed by $14,064 for long-distance caregivers and $8,496 for those who lived nearby.

That part may not be representative as far as appropriate survey methods are defined, but I wonder if it's closer to the truth than the average from the broader sample? I am a firm believer in keeping records of expenses, and I tend to think that when people estimate their expenses, they end up underestimating them, as it's easy to forget how much you've spent. Either way, these numbers are pretty daunting.

Question from Reader: Should I Take a $67,000 Pay Cut?

Wow, here's a doozie, left as a comment on "Okay I'm Asking":

OK here's a question for MX and all her helpful posters. Currently 102K as unhappy lawyer working 60 hrs/wk (sometimes 80-100). Should I quit for job with 40 hrs/wk where I am likely to be happier? Salary will be 35K so will have to make major lifestyle changes?! SF in big city so living costs currently v high

That is one hell of a pay cut! It's hard to give any advice here, since A) I am not a financial advisor and try not to play one on TV or on this blog, and B) there is a lot of missing information about the questioner's lifestyle, student loan status, etc.

I would tackle this by really analyzing my spending-- what do I actually spend, what can I cut, realistically. $35k doesn't necessarily go that far in a big city. Yes, a person can live on that amount and plenty of people actually do, but those major lifestyle changes might be really, REALLY major if you've been used to a six-figure income! If you're changing jobs to be happier, how is it going to affect your happiness to never be able to eat out in restaurants, or to have to move to a smaller apartment with a longer commute? Is the $35k job the only alternative to your current job as a lawyer? Might there be an in-between alternative with a smaller pay cut? All food for thought...

Anyone else have any ideas?

T.M.I. Friday: Money, Thongs, and Full Frontal Savings

This may cross the line a bit into too-much-information territory, but aren't you dying to know how a thong can save someone money? (Or perhaps make them spend it...)

I haven't noticed if any of our male blogging friends have done a financial analysis of their preference for boxers vs. briefs, but in the spirit of full openness, I'll admit that I have always tended to favor pretty boring underwear. No longer the rib-high baggy cotton ones with bumble bees on them that I had to wear in 4th grade, but I have stayed a bit closer to that end of the spectrum than to the little lacy racy things you see at Victoria's Secret. For years, my favorites were Calvin Klein cotton bikinis bought on sale or at an outlet store. More recently, I've been trawling the $3.99 bins at the Gap. My main concerns were that my underwear be cheap, comfortable, and not something that would embarrass me if I was hit by a bus and taken to the hospital, a worry instilled in me by my mother. (Hmm, in that case why did she make me wear those bumble bee ones???)

When various women in my life, including my sister, aunt, cousin, and a friend or two said they often wore thongs, I said no way, not for me. Not only did the concept strike me as uncomfortable, I thought it was a big rip-off, some clothing designer's scam to make women pay more money for less fabric.
Anyway, someone finally clued me into the main reason to wear these things, which is only indirectly related to sex appeal: no more panty lines!!! Once that little lightbulb went off in my head, (yes, female readers, perhaps this is a bit sad given that I'm almost 40... but hey, better late than never...) I raided those $3.99 bins at the Gap again to actually try this exotic undergarment. And what further developed upon trying on certain items of clothing, was that the absence of all that extra undie fabric and its associated panty lines allows me to fit into smaller pants.
SO! At Ann Taylor, I am no longer painfully between sizes! And they're having a big sale lately! I proceed to have this big orgy of trying things on that actually fit me for a change. Then it gets even better: they were offering a deal where if you spent $100, you'd get a coupon worth $50 off your next $100. Immediately I start to strategize about how I can milk this deal for all it's worth. I have over $200 worth of clothes I want to buy. Can I buy $100 worth now and then use the $50 off coupon on the rest? Turns out the coupon won't be valid until a few days later. Should I buy some of the stuff and hope the rest is still there in a few days? Very risky, but I decide to try it. This decision is made on a lunchtime shopping trip, and by 2:30pm I'm convinced I've made a big mistake. At 5:15, I'm back in the store buying the items I'd left behind, none of which, luckily, have been snapped up by other shoppers. So now I've got 2 $50-off coupons.
My new plan was to see if I could wait, repurchase the same items using a coupon, and then return the original ones. Also, in the meantime I'd showed one of the sweaters I bought to a friend who tried it on, loved it and said she wanted one too. Great! I thought, now I know what to give her for Xmas. I had no doubt that I would walk back into Ann Taylor in a few days and have no trouble using my coupons.
But no such luck. Women in New York are real sale-stalkers. By the time I went back, those lovely sweaters were gone, vanished, vaporized. As was a lot of other stuff. At the nearest Ann Taylor store, I couldn't find $100 worth of stuff to buy. I ended up going to 2 more locations before I found anything I wanted. But when I finally did, it was great-- I got a suit that would have originally cost me $384 for only $130. I got a couple other things too.
All in all, I got a suit (jacket and pants), 4 pairs of pants, 2 sweaters, and 3 silk shirts, one of which will be returned. I spent just over $500. Of course I was already a bit over my clothing budget for the year, but as long as I don't gain any weight (please- god- please- god- please- god- I'm- going- to- swim- and- run- and- do- yoga- every- day- for- the- rest-of- my- life), these clothes should get me through a couple more fall seasons. I'd realized lately that I was really running out of professional-looking clothes-- I can dress fairly casually if I want to, but I've been a bit too lazy about it lately, and it was about time I got some grown-up garb back into my wardrobe! One must always remember to dress for one's next job, not the current one!

So how about that magical thong, huh? It made me go to a good sale, it made pants fit perfectly instead of ickily, and it made me spend $500 to look better and hopefully get a big promotion as a result! Does that really count as saving money? Well, I had hoped I would go home and find several pairs of pants in my closet that I'd given up on that would now fit by virtue of wearing a thong instead of regular undies-- you know, my theory of going shopping in one's own closet... but that didn't really happen. I think I had already given all those away to the Salvation Army! So much for trying to streamline one's wardrobe! And of course on top of the $500 spent at Ann Taylor, I had to go back to the Gap and buy several more thongs...

Yes, this is the blog where all financial issues get FULL COVERAGE... or less...

Cooperative Snooping

I'm not always a nosy person but when it comes to this blog, sometimes I just have to dig into things! I was hanging out with a friend of mine who recently started serving on the board of the co-op apartment building she lives in. We were having dinner a day earlier than we'd planned because she would be interviewing the prospective buyers of an apartment the next night, and when she mentioned that she had all their documents in her bag, I said, "OOH! How much money do they make?"
My friend laughed but actually did quote me some figures. (Yes, this probably a bit unethical of her, but I wasn't told what the people's names were or which unit they were buying in the rather large building, so I suppose no harm was done.) The husband, a lawyer, had income of about $500,000 according to his last tax return, while the wife only made about $45,000 (I'm not sure what her job was). They are close to retiring and their net worth is a little over $3 million including home equity. They own their other home free and clear, with no mortgage, and no other debts.
Of course I had to sigh and rue the fact that I will probably never make $500,000 and never be in the position to buy a little pied-a-terre in New York City when I retire. (Not that I'd need one, since I already live here, but you get the point.) But I also thought "Shouldn't a $500,000-earning lawyer in his 60s have a higher net worth than $3 million? If all my savings projections, which are usually a little on the conservative side, work out, I expect or at least hope to have a net worth of about $3 million when I retire. And I'll be lucky if I ever make $200,000 a year, let alone $500,000!"
Given that this couple had been living in a less expensive area than NYC all these years, you'd think they could have saved more... but on the other hand, maybe they didn't think they'd need it, and were happy to just spend more money along the way. Their current financial position, plus a couple more years of working, will probably allow them to live a pretty sweet life. And they'll collect social security, and who knows, perhaps a pension too. Of course the apartment they are trying to buy probably costs over $600,000, with over $1,000 a month in maintenance costs... maybe the $3 million was their net worth not counting what they'd be putting into the new apartment? I don't know... now I wish I'd been even nosier!

This is one of the interesting things about living in a co-op building in New York. If you serve on the board, which I've done in the past, you basically know everything about your neighbors' finances. I didn't live there long enough to have to interview any new buyers, but I had access to records that at least showed me what some of my neighbors had paid for their apartments, and if I'd really dug through the archives I probably could have found everyone's original board packets which usually include tax returns, bank statements, letters of recommendation and a full recap of assets and liabilities.

Sometimes I wish I'd bought a co-op instead of a condo. I love my apartment and in some ways I'm glad not to have restrictions on being able to rent it out if I ever need to, but I wish I could have a say in who my neighbors would be. Also, by Brooklyn standards at least, I was a pretty good candidate for passing a co-op board interview: my income is steady, I had a good cushion of savings, I don't have pets, I'd been on a co-op board before, and I'm good at playing the part of a demure, quiet, responsible, professional young woman, rather than the freak I actually am-- a freak who likes snooping into other people's finances!

Get a Life... For $4,000 to $10,000 a Month

Another fun story about one way to burn several thousand dollars a month:

Looking for someone to curate your life? Need a personal concierge whose expertise is not picking up dry-cleaning but helping chose your wardrobe, your tastes, your friends? Ms. Storr calls herself a personal manager, but her duties go far beyond that. Her clients, all of them men, pay monthly fees of $4,000 to $10,000 to have her be their personal decider in nearly all things lifestyle-related.

I wouldn't mind a little help with a few things now and then: if I had that much money to burn, I'd want a chef and a personal trainer. But I'll choose my own friends, thank you!

Home-o-versary

I bought my home one year ago today! In the 12 months since, let's see, there's been a massive implosion in the mortgage market, home prices are down nationally and it only looks to get worse... but on the bright side, I have a lovely apartment and no regrets. Here's a couple of posts I wrote last year about my closing:

Closure on Closing
Closing: Morning Of

A commenter asked me to do a full timeline of my home-buying process, and I've had the post in draft for ages... I will get around to finishing it one of these days!

The Ethicist on Family Handouts

In the Sunday NY Times Magazine, this week's "The Ethicist" column had a question that struck me:

My beloved sister, a human rights worker in Central America, has long received financial help from our parents. I earn enough to support a comfortable lifestyle. May I ask them to make a reckoning of their aid to my sister, subtracting it from any bequest they eventually make her, so that overall, she and I receive equal amounts? — Name Withheld, Albuquerque

The ethicist's answer:

You may ask, but your parents need not comply. This is their money, not funds they hold in trust for their heirs....

However, he goes on to note that

No matter how genuinely you love your sister and esteem her work, if your parents underwrite her over the years, it’s hard not to ask why you should seem to subsidize her life choices. You might also consider that if your parents develop protracted illnesses and need financial help, it will fall to you, not your sister, to assist them.

That rang a bell with me! As I noted on a recent trip home to see my family, my sister has been getting a bit of help, not to mention all the money spent on her wedding. My mother has often joked that because of that, I'll get their house, but I'm not counting on it! I don't mind if my sister's family gets a few handouts-- I look at it as something that gives my niece and nephew a good childhood. But sometimes, when I find myself postponing a purchase because I don't feel I should spend the money, I wish my sister and her husband would share that attitude a bit more. If my parents ever need financial help, I'll definitely be the one left holding the bag! Oh well. I guess that's what family is all about...

Take That, Starbucks!

Can I get a skim semi-decaf eggnog hazelnut creme coffee? Chez Madame X you can!

I had been noticing recently that I was running low on coffee and wondering if I should buy some. I was holding off until visiting my parents-- though I have written a lot here about my total financial independence from them ever since I was a recent college graduate, I have to confess that I've actually been relying on my father for coffee supplies!

My dad is signed up for some kind of monthly coffee shipment from Gevalia. He gets both regular and decaf coffee, but since he doesn't drink coffee all that heavily, he had ended up with a growing stockpile, especially of regular coffee. He asked me if I wanted some-- since I was starting to run out of some coffees he'd given me for Christmas one year, I said yes, the result being that I haven't actually spent money on ground coffee for at least 2 or 3 years now! (I only drink 2 cups of coffee per week at home, sometimes even less.)
Unfortunately, my dad cut back on his Gevalia subscription and didn't give me any the last time I visited. So the last couple of weekends, I kept watching the supply dwindle but was reluctant to buy more. Should I just switch to decaf? I had plenty of that. While searching my cabinets, I also realized that I had three little tins of coffee that I had gotten as a Christmas present from my great-aunt. Each one is probably about a pot's worth of coffee, and they have Norman Rockwell paintings on them.

On a side note, aren't great-aunts wonderful for this kind of thing? Mine is 94 years old, and she's given me some fun Christmas presents over the years. My favorite was the set of four glasses, each decorated with a picture of a different Massachusetts Revolutionary War site. Three of them have broken over the years, but I treasure the one that's left!

Back to the coffee tins, one was just regular coffee, one was Eggnog flavored, and one was Hazelnut Creme. Last weekend, I decided I could extend the life of my nice Gevalia coffee by dumping the regular Norman Rockwell coffee in and mixing it up. It tasted fine.
This morning, it got to the point where I decided I'd better use the other flavors. I opened the Eggnog and it did have a rather cloying sweet smell. I opened the Hazelnut and it didn't seem too bad. But still, I thought they might overpower what little regular coffee I had left, so after dumping them in, I mixed in a lot of decaf as well.
The resulting brew did have a rather bizarre flavor, but it actually seemed kind of yummy in a festive, cozy, Norman Rockwell holiday kind of way.
At this rate, I might have enough to get me through to Christmas, and who knows, maybe then someone will give me another gift of coffee!

Moral of the story: do whatever you can to delay spending money for as long as possible, and if you're lucky, maybe you won't have to spend it at all!

Snobby Salespeople

A tip from reader Charles led me to this article and blog post at WSJ.com, about how salespeople in high-end stores perceive potential customers.

I was talking to a Jaguar salesman last week and asked him what the hardest part of his job was.

“You can’t tell who’s rich anymore,” he said. “It used to be if someone walked in with jeans and a T-shirt I could ignore them or ask them to leave. Now that guy could be a billionaire. You have to be nice to everybody these days.”

Tim Blixseth, the billionaire timber tycoon, once told me about the time he visited a men’s clothing store near Palm Springs to buy a suit for his son. When they walked in, wearing work boots and jeans, the salesman headed them off at the door and said “I think you’d be better off at the mall.” They eventually bought a suit, but Tim made sure to drive by the front door in his Rolls Royce and wave goodbye to the salesman.

Identifying the rich used to be fairly simple: They dressed, talked and looked a certain way. They had iconic last names like Hutton or Hearst or Phipps, often with Roman numerals at the end.

Today, wealth has been democratized and individualized, and the rich come in all ages, shapes, sizes and ethnicities. People often ask me, “What do the rich wear? How can you tell by looking at someone today if they’re rich?” Such questioners are usually recalling old myths about watches and shoes, but my answer is that there is no way to tell. The rich don’t have a uniform anymore. Today, they all wear their wealth differently, from the dot-commers in T-shirts to the hedge-funders in khaki to the CEOs in classic pinstripes.

In her Journal column today, Christina Binkley takes a stroll down Rodeo Drive to do an “emotional audit” of salespeople — i.e., to find out how nice and welcoming they were. A woman at jeweler Van Cleef “sent us out the door with little more than her scowl,” she writes, while a woman at Yves Saint Laurent didn’t offer a smile but a “single upturned corner” of her mouth. In other words: not welcoming.

The articles and comments get at a key issue frequently discussed in the personal finance blogosphere, namely that the more you spend on "looking wealthy" the less actual wealth you are likely to have.
One issue that doesn't really get mentioned much, though, is that of the snobby salespeople themselves-- except in the comments. Here's a couple of outtakes:

[An investment banker says] I care my clients see me as an economic equal. But, I couldn't really give a rats ass what some two -bit clerk at Bloomies thinks of me.

Many sales people in high-end stores are lower middle-class strivers with serious adequacy issues.

If sales people were so wealthy, they wouldn’t be salespeople selling luxury goods. They would be BUYING the goods from these stores. Never understood why sales people at upscale stores have attitudes. They are the ones who need to be working to get by (most of the time) - not the people shopping in the stores.

I'll echo what many of the other commenters said-- if you are working in any kind of store, you should treat everyone in a friendly, courteous manner. Yes, you may be working on commission and not want to waste your time, but it's a mistake to make assumptions about anyone's spending potential based on their appearance.
But that said, I've been on both sides of the counter. I worked in a clothing store when I was in college-- trendy but not high-end. What I learned from that job is that most customers treat salespeople like dirt. The NY Times "Class Matters" interactive graphic on class components puts retail salespeople at the 42nd percentile-- I was surprised it was even that high, as sales jobs are not usually thought to be very prestigious.
When I had that job, I didn't work on commission, so I didn't really have a stake in trying to latch onto rich customers. Most of the time, I was friendly because it just seemed to be the right thing to do. But other times, if I was tired or having a bad day, I didn't smile at people and I probably looked like I had an attitude sometimes. And I kind of did! I was barely making more than minimum wage and the job kind of sucked. Whenever a customer really talked down to me, it was some small comfort to think that I'd be going back to my fancy college where I'd be preparing myself to, I don't know, rule the world someday.
The point is, if people think they are being looked down upon, they may feel like looking down on others is their only defense. And as the comments and article showed, both sales people and customers seem to look down on anyone who doesn't, or doesn't seem to have money.

$800 a Month on Food = Obese??

An anonymous commenter questions my food spending and whether I'm obese... for the record, as I'm writing this I am wearing a pair of size 4 pants. I'll admit that I might be somewhat more comfortable in a pair of size 6 pants, or even an 8, depending on the brand, but this post is about food, not clothes, so let's move on. How can someone like me with a normal caloric intake spend $800 a month on food sometimes? (Also for the record, no bulimia issues here. That is one way in which it is really a shame to have money go down the toilet.)

Let's take a closer look at my spending, starting with a recent credit card statement, covering 8/25-9/25/07:
I made 5 trips to local supermarkets, totaling about $146 overall. I bought pasta (on sale), Sapporo beer, Gatorade (on sale), broccoli, prunes, maple syrup, peanut butter, bananas, shallots, garlic, chicken breasts, potatoes, tinned sardines, tomatoes, yogurts, apples, canned tuna, Clif bars, lettuce, lamb chops, and a steak. I also bought non-grocery items such as kleenex, dishwashing liquid, and laundry detergent.

I made 4 trips to upscale/gourmet markets (Whole Foods, Garden of Eden), where I spent a total of $40: $12 on fresh herbs, fancy mushrooms and heavy cream for a pasta dish I cooked for a guest, $7 on trout fillets and fresh spinach, $9 on trout fillets (again) and manchego cheese, and $12 on salmon fillets and apples.

Then there was the liquor store: 3 trips, $55, 6 bottles of wine.

That leaves the restaurants: 7 eat-in meals, and 2 take-outs. The whopping total on these? $605. This is an unusually high restaurant tab for me. One of these meals was when I bought dinner for my sister, her husband and two kids. A couple of the other restaurant meals were my share of a tab split evenly, and some were with a friend I go out with frequently enough that we alternate picking up the check. One of these meals was fairly expensive, a bit of a splurge with dessert and coffee. Usually, it's just an entrée each and 2 drinks each, and sometimes maybe a shared appetizer, in restaurants where the entrée prices range from about $12-22, and a glass of wine is $7 or $8.

So that was all the credit card spending. Then there's cash-- pretty much every weekday, I buy coffee and a bagel, or sometimes oatmeal, and a banana, costing me $3.25-$4.05, so that can be $80 or so a month. Then there's lunch, which can be $3.25 if I get pizza, $6 if I get a sandwich, $7.50 if I get a salad, or about $9.00 if I get sushi-- average it out and that can be over $100 a month, and I've been really bad about bringing lunches from home lately.

So you can see how a girl can easily spend $800 a month on food, or even more!

Contrast all of that with how I've been eating this week:

Monday:
Breakfast: coffee, banana and oatmeal for breakfast: $4.05
Lunch: cup o' soup from home, bought with coupon, so cost about $2, plus bagel $1
Dinner: chicken and rice with lemon sauce, and a salad: ingredient cost about $5 or $6. Washed down with a beer costing about $1.50.

Tuesday:
Breakfast: same
Lunch: same
Dinner: same but with sweet potato instead of rice, cost about the same. Again, $1.50 beer.

Wednesday:
Breakfast: coffee, banana and bagel: $3.25
Lunch: just soup this time, no bagel. about $2
Dinner: pasta and frozen spinach, cost of ingredients $2-3, with about $6 worth of wine.

Today I'm having the usual breakfast, lunch will be a business expense, and for dinner I might have a frozen Trader Joe's quiche or perhaps buy some fish, so the cost will probably be under $10, not including any alcoholic enhancement. If I ate like this every week, I'd be in great shape financially, but the reality of life is that I also like to go out and I'm willing to budget for that.

But enough about me... here's a question that I'd love to see some data on: who spends more money on food, obese people or skinny people?

"There's frugal and then there's being a cheap-ass".

My pal Frugal Zeitgeist has a way with words, doesn't she? That is a quote from her comment on my post about how a single and couple should share expenses. But it can apply to so many other situations! How do you define the difference between being frugal and being a cheap-ass? I noticed some debate about this on a post at The Simple Dollar about ways to spend less money on personal hygiene. Some commenters thought melting down remnants of deodorants in the microwave to combine them into a single usable deodorant somehow crossed the line. I personally don't want to spend time microwaving my old deodorants, but I don't think anyone who does so is cheap-- that to me still stays in the realm of frugality.
I think one key difference may be that it's frugal when you're cutting corners on things that affect only you, but it's cheap when other people are involved. For instance: I might eat sardines on toast for dinner sometimes as a frugal (and lazy) alternative to ordering take-out. But if I had guests over and served them sardines on toast, I think that would be cheap.
What about other things? Is regifting frugal or cheap? Is the guy who gives his girlfriend a Canal Street imitation of the designer bag she's been coveting frugal or cheap? Is dumpster-diving frugal or cheap? (And is being a "cheap-ass" way, way worse than just being "cheap?")
Let's hear your frugal/cheap stories, readers!

Carnival of Personal Finance

Be sure to visit this week's Carnival at My Two Dollars for an extensive collection of personal finance info...

October Expenses

Here's the breakdown of all my expenses in October:

Bank Charge 3.50
Business expense -492.35 (reimbursement for previous months)
Charity 220.00
Clothing 377.92 (a much needed investment in cool weather fabulosity)
Dining 785.72 (um, I was hungry?)
Education 96.61
Entertainment 36.66
Gifts Given 5.00
Household 30.25
Insurance 320.00 (property insurance for a full year)
Medical 102.42
Misc 245.42 (includes a new bag that will be returned, as well as stocking up on hair products)
Taxes 2,588.19 (higher than usual due to retroactive raise)
Subscriptions 63.25
Travel 295.00
Utilities 152.94
Housing 1943.84 (still no adjustment for tax abatement. grr.)

Total Outflows 6,774.37


Net Inflows/Outflows 2,752.38

This was a somewhat unusual month, in that my raise finally came through, including a couple months' worth of retroactive pay. I also had some one-time expenses, such as my condo insurance. But what it all boils down to is that I managed to save 30% of my gross income this month-- not bad, but given it's such a weird month, I'd rather see how things settle out in November with my new salary and hopefully more normal expenses... though I do need to start my Christmas shopping... ugh.

The Fabulous Moolah

Here's an obituary from the New York Times that I couldn't help noticing:

Mary Lillian Ellison, whose flying drop kicks, flying head scissors and hair-pulling “flying mare” body slams brought her renown as the professional wrestler the Fabulous Moolah, died Friday in Lexington, S.C., near her home in Columbia. She was 84.

So why was she called "The Fabulous Moolah?"

When she started in pro wrestling in the early 1950s, the promoter Jack Pfeffer decided a name change was in order. As she told it in “The Fabulous Moolah: First Goddess of the Squared Circle” (Regan Books, 2002), written with Larry Platt, Pfeffer told her “the name Lillian Ellison wouldn’t do. Not flashy enough.”

He asked her why she was wrestling, and, as she recalled: “Annoyed, I blurted out: ‘For the money. I want to wrestle for the moolah.’”

She elaborated on her wrestling technique as follows:

“Flying drop kick is when you jump flat-footed from the floor up as high as the person you’re looking at and kick them in the face or in the chest, wherever you want to kick them, and then you fall to the floor,” she told National Public Radio’s “Fresh Air” program in 2005.

“And then the flying head scissors is where you jump up, put both legs around their head and throw them forward as you come down. And a flying mare is when you get a girl by the hair of the head and pull her over your shoulder, then slam her to the mat as hard you can. And I love doing that.”

...

The Fabulous Moolah said she never minded the booing inspired by her roughhouse antics.

“I loved when they got mad at me,” she told The State newspaper of Columbia in 2005. “They called me all kinds of names. I said: ‘Call me anything you want. You don’t write my check.’”

October Net Worth

Ok, time to do the monthly numbers again. Quicken tells me that my net worth on Oct. 31st was $365,383, an increase of 2.6%. This is excitingly close to my year-end goal, however, it's a bit suspect as when I was looking at it the other day, my 401k showed a higher balance in the net worth report than it did in another screen. Anyway, for now, I'll take it. It makes me feel a little better given how much lower it is today after the recent stock market slump.
A commenter asked me to explain the composition of my net worth in more detail, so here is the full scoop:

Cash & Bank Accounts:

• Cash $37
• Chase CD 6 mo. to 3/08 $3,034 @ 3.92%
• Chase Checking $160 @ negligible interest rate
• Chase Roth IRA CD 48 month to 4/09 $3,020 @ 4.16%
• Chase Roth IRA CD 60 month to 2/09 $2,627 @ 3.25%
• Chase Savings $3,400 @ 0.8%
• E*Trade 2-Yr CD to 10/08 $5,899 @ interest rate 4.75%?? hard to tell, for some reason E*Trade is making it very difficult to see what my actual interest rate is! But it must be in that range given what my recent quarterly interest payment was (see Rule 17 about doing the math).
• E*Trade Money Market $5,001 @ 2.5%. I will leave this here for a couple of months, probably, but I plan to close this account soon and invest the money elsewhere. This may result in my being charge a higher fee per trade in my E*Trade brokerage account, but I hardly ever do any trades, so no great loss.
• FNBO Direct Savings $11,000 @ 5.05%
• Laundry Quarters $7

Investments:

• E*Trade $18,142 Return on this portfolio was 11.7% in 2006
• E*Trade Roth IRA $24,813 Return on this portfolio was 7.69% in 2006
• 401k $202,314 Return on this portfolio was 11.5% in 2006
• Treasury Direct & Bonds $4,482 This is all I-bonds, rates 3.63-4.18%

Other:

• Credit card balance -$2,646
• Home Equity $84,059

So that means about 60% of my total net worth is in stocks & mutual funds earning 7-11% last year, 17% of my net worth is earning in the 3-5% range or less, and 23% is home equity. If you look at it just in terms of my investable assets, about 77% is in stocks and mutual funds, and 23% is in cash/CDs/bonds, etc. At my age, I suppose I could nudge myself a little further into risky investments like stocks, but not too much further. I like knowing that I have secure, steady investments balancing things out-- but I do need to make sure I pay attention when my CDs mature to make sure I get the best rates available, and also watch my bank accounts to make sure I am maximizing my interest there too. I did some work on that this month, by opening the FNBO Direct account with money I'd had in the E*Trade money market account.

How Should a Single and a Couple Share an Expense?

Here's a question from a reader that I thought was worth sharing in its own post:

I attended a long weekend event in which friends (a couple) and I split a rental car. When it came time to pay, the friends split the bill in two then paid their half. Other people told me the fair thing would have been to split the bill three ways (similar to when you go out to eat with a couple, you don't pay for half the meal but a third.) What do you think--should I have said something?

My personal opinion is that the couple should have paid 2/3 of the cost. If everyone had taken the train or a plane to the event, the cost would have been per person. I suppose you could argue that if the couple had rented a car it would have cost them X dollars, or .5X per person. If the reader asking the question had rented a car, he/she also would have paid X dollars, or X per person. So the cost of sharing should be half the individual cost: .25X for each member of the couple and .5X for the questioner. But "sharing" doesn't necessarily mean "paying half," it means paying one's share, however much that is, and in this case, I think each person in the car should have paid an equal share. What do you think?

As for whether the questioner should have said something... I guess it depends how much money was involved, and how important the friendship is. Is it worth making a fuss, or would you just be prepared the next time to quickly volunteer to pay only 1/3 of the shared expense, rather than half? When singles and couples socialize, you can't always account for everything equally-- what if the single person invites the couple over for dinner sometimes, and they reciprocate with an equal number of invitations? The single person is still providing twice as much food, but does that mean the couple should invite the single over twice as much? As discussed in my Alone/Together post, singles can get hit with a lot of costs that couples can often split, but couples, at least those who are planning to have children, might often view their single friends as having more disposable income and not needing to pinch pennies as much.

I guess what bothers me about this story is that the couple seemed to view themselves as a unit equivalent to a single person. Scary! Have a little independence, people! Don't be that annoying pair that does everything together, wears matching clothes and finishes each other's sentences all the time! But perhaps I'm projecting a bit ...

Blogroll Updates

Periodically, I try to update my blogroll to add new links, delete inactive ones, etc. This time, I decided to also add a new feature: I have added a "F" to all the blogs written by women, and a "M" to all blogs written by men. Blogs written by teams or couples (or hermaphrodites) get a "MF."

While doing this, I noticed a few interesting things: first of all, my blogroll is a pretty even split of men and women. I was sort of thinking I might have more men, because people are always saying that there tend to be more male bloggers in the finance sphere. Then I thought I might have more women, because I am a woman and I sometimes find that I relate more to the way other women tend to write about finances. But I guess those two things balanced each other out!
The other thing I found funny was this: I have to admit that I don't regularly read every single blog I link to. Some are links that people requested I add, and some are things I found on my own and liked, but I just don't have time to read as many blogs as I'd like to. So when I was adding all my little Fs and Ms, there were a few sites I had to click through to to figure out who they were written by. Most blogs make the gender of the writer immediately obvious-- but some make it downright difficult to determine! There were a couple of sites that I had to really search to determine whether the blogger was male or female. And who knows, maybe I still got it wrong, but clues like talking about how one's clothes fit and wearing earrings, though ambiguous, hint at the writer's being female. (If I've gotten anyone wrong, let me know! Likewise, if you have a sex change and need an update...)

Nina of Sitting Pretty has talked about the difference in how finance articles are written for men and women in a post at BlogHer, and in a guest post at I Will Teach You to Be Rich, where "women and money" was the subject of a series of articles, prompted by Ramit's realization that his audience skewed more towards males. Trent at The Simple Dollar has also written a post on this issue, called Should Men and Women Receive Different Personal Finance Advice. The Digerati Life asks Where are the Female Personal Finance Bloggers and links to Don't Mess with Taxes's take on the topic.

I've never done a reader survey to see if my audience is more female than male, or to ask if my female readers might like to see more posts and links highlighting specifically female perspectives on money. But I thought it would be nice to highlight some of the many blogs written by women and make them easier to find. In the words of my favorite female rapper YoYo, "I'm all about uprightin' upliftin' the woman," at least to whatever extent I can do that with my little blogroll!

Rule #18: Alone and Together

I recently wrote about getting back into good habits, such as cooking at home and bringing lunch to work. I also went to the gym, read several books, and caught up on a couple months' worth of New Yorker magazines. I even took out my recycling, cleaned the house and did laundry-- so what happened? Did I suddenly run out to a phone booth and turn into Princess Awesome? No. What happened was that I spent a week being totally anti-social.

I know some people might have a hard time with this, but for me, it happened to be fairly easy-- a significant other thousands of miles away, as well as my other friends being busy or away (or I was just ignoring them). And I don't have kids, obviously. So I just spent some quality time alone, and realized this should be another one of my financial rules:

• Be Anti-Social

The great thing about living alone is that it gives you more time, and time is money! If you spend a lot of time alone, you're more likely to cook meals at home rather than going to restaurants. You'll also probably have lower entertainment costs. Some people don't mind eating in restaurants alone and going to movies, theater, etc. alone-- I myself have done these things, but when it comes down to it, I don't really like to and I'd rather just stay home. Being alone in public always seems a little weird-- being in a long-distance relationship really made me very aware of how most people like to do things as couples or with friends-- if you're eating alone in a restaurant, chances are you're the only person doing it. Even if you're on a business trip and in a hotel restaurant, it can seem very uncomfortable to eat alone. And most people probably choose to avoid that by ordering room service! Which brings me to the flip side of this rule:

• Be Social

Ordering room service for one is a lot more expensive than sitting in a hotel restaurant, where perhaps you'll meet others. And you never know, perhaps that could turn into some kind of career networking that could lead to money-making opportunities in the future!
Doing things with other people also allows you to spread out costs-- it may not be exactly true that two can eat as cheaply as one, but it's certainly easier to buy groceries for two, and to buy other items in bulk at lower unit prices. And you can order wine by the bottle instead of by the glass!
Traveling is another area where it definitely saves you money not to be by yourself. Most hotel rooms are designed to hold two people, and are priced accordingly. And how many times have you seen a really cheap price for a packaged trip where the small print always notes that the price is per-person based on double occupancy, and that the "single supplement" will double the cost of the trip?
Around the house, there are many ways you might save money by living with someone else rather than alone. First of all, studio and one-bedroom apartments tend to cost more than half what a two-bedroom costs, so having a roommate can save you money on rent. Then there are tasks like cooking, cleaning, and repairs. For people who live alone, doing all these things can start to seem burdensome and you're more likely to want to pay someone else to do them for you. But if you can share the housekeeping with someone else, it won't seem like as much work, and you're more likely to continue to do it yourself. In the case of repairs, it may even be unsafe to do things yourself without help-- if you fall off a ladder or something, the medical bills could end up costing you way more than hiring a handyman would have!


So, alone or together? Social or anti-social? Hermit or party animal? Once again, completely conflicting advice, but I do think it's possible to find a balance between these two extremes. One solution might be to find a partner who travels a lot!

Just do it. Then do it again.

This week, I've been on a little campaign of financial virtue. Well, okay, I actually spent some money on clothes and a new bag, but in other ways I've been good.
For four nights in a row now, I've cooked dinner at home. I also brought lunch from home every day I went to work. (There was a day I would have had to buy something but I ended up calling in sick.) As I write this, I'm prepared with enough groceries in the fridge to keep cooking for another 3 or 4 nights.
I also started off the week well by going to the gym, though having a cold prevented me from keeping that up. I'm determined to get back to it soon but it's frustrating to feel like I barely got going.
The point here is that just doing something, and then doing it again, and another time after that, can be very satisfying, and every time you do it, it becomes a little easier. It starts to become a habit. You start to wrap your brain about how to do it again. This can apply to exercise habits, eating habits and financial habits.
Am I going to stop eating out and ordering takeout forever? No, of course not. And there will be plenty of other choices I make where I spend money, perhaps more than I should, just because I want to. But that is what makes it all the more important to grab all these little times when I can save money. If I have that brief wavering moment and choose to go to the grocery store rather than to a restaurant, every time I make that choice it's money I've put in the bank. Money I can use later for something that matters more to me than the few extra minutes it will take me to cook a meal.