Spring Update

What a busy few months it has been... for the first time in years, my job has been stressful enough that I started to question whether it was worth the money I make. Sweetie has been feeling the same way, and we often fantasize about ways we could escape the office grind and make a living in some other way... like winning the lottery! We are definitely prisoners of our lifestyle-- we enjoy having certain luxuries, but they have to be paid for, and it's not that easy to find jobs that would make us enough money to continue as we are. We know we could cut out some of those luxuries and still be happy, but they are things we enjoy. When we fantasize about quitting our jobs, it's so we'd have more time to do things like traveling and reading books-- but travel and books cost money. (Books might be obtainable for free at the library, but there is no travel library where you can borrow a plane ticket, unfortunately!) We're both grateful to have jobs in this economy, but when you go from being challenged and entertained by work to feeling like you're stuck in a Dilbert cartoon or just deluged with thankless tasks, it's hard not to question whether there's something better you could be doing.

This is all made more complicated by the fact that retirement seems to get closer and closer. Sweetie is older than me, and will have a nice pension, plus income from a 401k and other savings. I will have to rely on just a 401k and savings. Sweetie's retirement income will actually be pretty good unless the stock market totally tanks, but that would all change if there was less income in the in-between years. I'm still worried about whether my savings will be enough to live on by the time I retire, so the thought of early retirement doesn't seem very feasible. But we need to sit down and do some in-depth analysis and planning, which will be made easier by the fact that I finally got Sweetie set up with Quicken to track expenses.

In other news, one of the little luxuries we've currently been enjoying is a food delivery service. It's a weekly delivery in which you get all the ingredients for 3 meals, plus recipes. All you have to provide is your own pots and pans, salt, pepper, and olive oil. The cost works out to $10 per person per meal (including shipping), and you can pick a meat/fish plan or a vegetarian plan. We've been doing the vegetarian plan, and I love all the new ideas we've been getting for how to eat a well-balanced meal without meat. The portion control is helpful too. Sweetie is someone who can cook creatively and inventively, but I am not, so I love having someone else make all the decisions and just tell me what to do!

As for the cost, I've been thinking it would be interesting to do an analysis on whether this service is "expensive." A lot depends on the specific ingredients included each week, but even without getting too in depth, it's possible to draw some comparisons. Compared to a restaurant meal, $10 per person is definitely cheap. Compared to ordering takeout food, it could be about the same price per meal, depending on what sort of takeout-- it probably works out to be cheaper than most takeout in our area. Is it cheaper than buying our own groceries? Probably not, except in the cases where the recipe requires an unusual ingredient. If I had to buy a whole jar of a spice, it could easily cost $5 or more, so it's nice to get just the exact amount needed and not have to worry about waste. And occasionally the recipe and ingredients make enough food that we have enough leftover for a lunch the next day. When you factor in the convenience factor and the enjoyability of the meals, I would say it's a good value and certainly reasonable in relation to our current financial circumstances. But if we did lose our jobs and have to budget more carefully, I'd probably discontinue it and make more effort to cook at home with cheaper ingredients bought in bulk. (The service is called Blue Apron, if you're interested, and I have not been asked or paid to write about them.)

What else is new? Well, I think my mom is going broke, as predicted. She has had her cable TV service turned off to save money and occasionally says things about money being tight, but I haven't asked for details. It is just too upsetting to get into it with her. It really makes me ill that she couldn't listen to reason a few years ago-- she should have sold the house instead of pouring money into renovating it, and moved into an inexpensive condo. I think she still has a little money left in CDs that haven't matured yet, but I'm sure she'll cash them in soon if she hasn't already, and then she'll be stuck living on just Social Security and the continuing payments she gets from my dad's pension plan, which she'll find impossible to do without running up debt, so she'll end up having to sell the house anyway, and then she'll blow through that cash too. There is no satisfaction for me in being able to say "I told you so."

How about you? What are your financial plans and dreams and worries these days?

Wealth by Age

I found this chart fascinating-- so much so that I had to take a shaky pic of it on the subway with my phone!

Why did older people's wealth skyrocket then while others were stagnant?

2012 Income and Expenses

2012 was a great year in terms of income-- I hit another new high:

Salary $106,244
Bonus $18,239
Employer contributions to my 401K $8,119
Dividends $15,977
Realized Gain (from a fund change made in 401k) $11,347
Blogging income $4,402
Gifts received $100
Interest $208
Tax refunds $2,516
Total Income $167,152

Almost all the dividends and realized gains were reinvested, and sometimes I don't really even consider these "real" income. But I love seeing my money work for me-- that is over $35,000 worth of income made not from labor but from my own savings and 401K participation.

The other income I had this year was $10,000 in rent from the tenants in my apartment, but for this year, I am kind of looking at it as a defrayal of my housing expenses. I'll start breaking this out differently next year, as I'll be reclassifying some of my expenses as business expenses for an investment property rather than personal household expenses.

Now for expenses:

Bank Charge	$77
Charity	$1,153
Clothing	$3,062
Dining / Groceries	$11,296
Education	$458
Entertainment	$1,364
Gifts Given	$2,266
Gym	$2,249
Household	$1,792
Housing (net)	$11,974
Income taxes	$34,639
Medical	$1,714
Miscellaneous	$3,434
Newspapers and Magazines	$404
Travel	$8,421
Utilities Internet Access	$360
Utilities Telephone	$953

A few notes:

• Charity refers to my personal contributions. I also plan to donate all the blogging income from this site.
• Dining-- about $8500 of this is for stuff shared with Sweetie. (I have to admit that we have been indulging in fancier wines than we used to! We buy it by the mixed case and usually 1 or 2 of the bottles is a special treat, i.e. something in the $16-35 range, compared to the $9-12 range for the rest. But at least in restaurants, we tend to stay with whatever's cheapest.) The rest is mostly for my own breakfasts and lunches.
• Entertainment was pretty high this year, due to buying more tickets for concerts and theater, including a rather expensive one to see Madonna at Yankee Stadium
• Gym-- this covers a membership renewal for 2 years
• Household is mainly laundry and dry-cleaning, plus a new armchair for the apartment Sweetie and I now share
• Housing-- as noted above, I pulled together my housing expenses such as condo charges, property tax, mortgage interest, rent I pay to Sweetie, and gas and electric charges for my condo, and then subtracted the rent I receive from tenants to arrive at a net housing cost for the year. This does not include about $10,000 in mortgage principal I've paid off, as I view that as a transfer from my cash net worth to home equity.
• Miscellaneous included a new iPhone and a lot of art supplies, plus haircuts and all the usual little personal items
• Travel includes daily commuting, some family visits, and a 2-week summer vacation in Europe.

Total expenses for the year came to $85,616. This is also an all-time high. I think the new iPhone, big vacation, 2-year gym expense and new chair account for a lot of that, plus trying to take better advantage of all the culture NYC has to offer.

Net savings were $81,536, of which $10,125 is the transfer to home equity for paying off mortgage principal. This is NOT an all-time high, but it's second only to the year when I received a $25,000 inheritance, so I'm not going to beat myself up about it. I saved about $5000 more than I did last year,
and about $9000 more than I did in 2010 if you back out the inheritance.

As always, I could easily have cut back on expenses and saved more, and I always have these thoughts about how much sooner I could retire if I did, and whether I'll wish I had saved more when there's another economic crisis... but at the end of the day, I am comfortable enough with my savings and net worth so far to allow myself some luxuries. I feel very, very lucky and thankful for the good fortune that has come my way.

A 1968 Children's Book About Money

If you're not familiar with it, check out Brain Pickings, a source for lots of interesting tidbits, including this one:

In 1968, at the peak of “the century of the self” and the consumerism of the Mad Men era, while Alan Watts was busy bringing Eastern philosophy to the West and trying to convince Americans to seek purpose beyond money, a primary school supplement titled How People Earn and Use Money (UK; public library) — from the same Social Studies Program series that gave us How People Live in the Suburbs and How We Use Maps and Globes — set out to explain to children the basics of economic theory and its implications for everyday life.

Ahh the innocence of it all. Funky illustrations, though!

Food: Local, Organic and Unsustainable?

As I've detailed my spending on this site over the years, I've sometimes gotten a little flak from people about my food expenses. For quite a few years, the amount hovered in the vicinity of $8,000 a year, covering all my food and drinking, groceries cooked at home and meals bought at restaurants. That works out to around $150 a week, which is about $21 a day.

To most people, that would seem like a lot. If you're careful, you could easily feed a family of 4 on that amount, so it may seem crazy and indulgent that one woman can spend that much on herself. If I wanted to, I could easily spend way less-- but in the context of my financial circumstances and lifestyle, I choose not to. I have always justified this as spending money not just on the necessary calories to survive, but on convenience and pleasure. It costs more to buy a coffee and a bagel at a deli before going to work than to make coffee at home and eat bagels purchased in bulk at a supermarket, but the extra expense is not all that much, and worth it in terms of saved time. The same can be said for buying a sandwich or a salad for lunch vs. making them at home. Dinner in a restaurant is a little harder to justify because it's quite a bit more expensive and it's not in the middle of my busy work day-- but the fact of the matter is that my level of spending actually doesn't include that many restaurant dinners. I might get cheap take out one or two nights a week, and cook my own meals from scratch other nights, eating in a restaurant less than one night a week on average.

I should also point out that I buy pretty average groceries in normal supermarkets most of the time. I occasionally buy something at an upscale shop or greenmarket,  but I generally don't go out of my way to buy organic items or fancy prepared foods. But in the last few years, I have been amazed at the increasing variety of expensive artisanal food items available all over Manhattan and Brooklyn. Most recently, I went to a market called Brooklyn Fare-- it's a pretty full-service supermarket, with an emphasis on upscale, products, but what really blew me away was the selection of chocolate bars as you approach the cash registers. There must have been 100 different chocolate bars, maybe more. At prices like $6 per bar, maybe more. Chocolate is just one tiny part of the food universe, but it got me thinking about how these sorts of products have proliferated of late: cupcakes, chocolate, artisanal pickles and other such un-necessaries. Who on earth has enough money to sustain this business?

With all that in mind, I was gratified to read this article in yesterday's New York Times:

The Unaffordable Luxury of Food

Here's an excerpt that pretty much says it all:

Every generation of young New Yorker finds its own way to squander its meager earnings, and this one seems content to spend the money it makes on expensive, curated food with little sense that it is really squandering anything at all.

There is vast cultural support for this exercise, of course. We have long since moved past the vague idea that the personal is political to the notion that the epicurean is essential — for ethical cleanliness, environmental sensitivity and all the rest. Pleasure is mingled with obligation. “I don’t think about what anything costs,” Emily Gerard, a recent graduate of the University of Pennsylvania and a publishing assistant making the requisite salary, told me recently. “I’ll drop $60 once a week at the Greenmarket, which I would never do at a grocery store; I like supporting local farmers.”

We talk a lot about exquisite food but we rarely talk about a corollary to our fixation with it — the financial toll it takes on people who do not in any real sense have the income to afford it. Last week Yaffa Fredrick, who is 23 and a production assistant at MTV, broke down the finances of her passion for me. After taxes, she makes about $30,000 a year, a little over half of which goes to rent. In an especially frenetic dining week before the holidays, she went to Morimoto in the meatpacking district one night, Fig & Olive the next and Spice Market a few nights later, with a drinks evening sandwiched in between at Experimental Cocktail Club on the Lower East Side.

Typically, she told me, she spends about $250 a week eating in good restaurants, which amounts to about $13,000 annually, and this does not include the additional $50 to $100 a week she spends on cooking classes, wine tastings and cheese pairings. Because about half of her salary is given over to food, she works an additional 10 to 15 hours a week tutoring and baby-sitting to supplement it.

It surely comforts modern parents who have spent fortunes educating their children to know that these children are spending money on pork belly and not, for instance, cocaine. But what solace can it offer to realize that $300 a week put into an S. & P. 500 Index fund over the past five years would have provided an annual rate of return of 10.34 percent and grown to $100,354 today? Even saving $300 a week at a 6 percent rate of return would have yielded about $91,000, Mark X. Chemtob, a financial adviser at Ameriprise, said, adding that in both cases, the sums would qualify for a down payment on a starter apartment in New York.

I see these sorts of people in action all the time, yet it still blew my mind to actually read those numbers. These young women are making maybe a quarter or a third of what I make, and they are eating their way into debt! But it's cloaked in this mantle of supporting small local businesses and saving the planet. It's not that I don't believe those are good things to support, but where do you draw the line on how you support yourself first? And of course the fancy restaurants and cooking classes are purely hedonistic, without any real altruistic justification even if they do locally and organically source all their ingredients.

Of course this article focuses on a very thin slice of the world, a certain type of upper middle class New Yorker. There are many more people out there who don't eat this way because they can't afford to or have no interest in doing so. Yet there is a huge amount of mass-cultural attention paid to food right now, on TV, in books, and at least in my world, in store shelves. I keep asking myself if we are in some sort of food bubble, similar to the housing bubble a few years ago, because it somehow feels wrong and unsustainable in a way I can't put my finger on, just as the real estate market did back then.

And not directly related, but here's a book well worth reading on the topic of food, what it costs, and why:
 
The American Way of Eating: Undercover at Walmart, Applebee's, Farm Fields and the Dinner Table

2012 Year-end Net Worth

There is a hidden benefit to my recent lax-ness about tracking my net worth-- after not having calculated it for a few months, it was really fun to see the number rise by about $50,000 all at once!
Here's the last few months I'd put into a spreadsheet-- nice jump from July to December!

Part of this is due to my lower monthly expenses now that I'm renting out my apartment. I also saw a nice bump from the increase in value of my investments, and a few thousand dollars worth of dividends that hit at the end of the year. I didn't hit my goal of $700,000, but I had thought that was pretty aggressive all along. Still, my net worth increased by over $100,000 from the end of 2011's net worth of $565,459-- this is the first time ever that my net worth has increased by six figures in a year. My salary and bonus came to just under $125,000, and I haven't been especially frugal lately, which just goes to show you how having money makes more money. The snowball effect!

More details to come soon on my expenses for the year...

The Shoe Repair Guy

I always love going to my local shoe repair guy. I've used a few different ones over the years, whoever was closest to my office or home at the time. I love their cramped little storefronts full of random shoes, laces, polish, watchbands and other cheap items. These places are usually rather filthy and old-- their cash flow doesn't allow for snazzy renovations, and all the dust and shoe polish settle in and give things a permanent layer of grunge. I've found that the men who run these shops tend to be Greek or Russian, big gruff guys with enormous, permanently blackened hands. It's kind of amazing to me that these big hands can handle tiny delicate things like the pins in watch bands more dextrously than my skinny little fingers can.
I love these shops because to me they represent the epitome of a certain kind of old-fashioned frugality. They are all about re-using things, re-building things, refurbishing things so you can use them for many more years without having to buy new ones. I have shoes that I have been wearing for decades because I've had heels and soles replaced and repaired. Shoes just stay in better condition if you have them polished once in a while, and if you don't let the soles wear down too much. And the better the shoes you start off with, and the better you care for them, the more life a cobbler can squeeze out of them.
I remember having a weird feeling of pride when I handed a pair of loafers over to have new heels put on. The cobbler turned them over and over in his hands, examining them from every angle and prodding at them. He sort of grunted, "huh, English heels," and shot me a look. "You want I replace like that? It's more expensive." I said that was ok, and he asked me a couple of times if I was sure. Then he started scolding me that I'd let the shoes get too creased on the top of the foot. He said I should have been keeping them on wooden shoe stretchers the whole time so they'd keep their shape. I think it was almost offensive to him that someone wouldn't take the very best care of a good pair of shoes.
The other day, I went to a different guy with a watch that needed some links removed from its bracelet. Again, the man took my watch, turned it over and over in his hands, checking it out, nodding. Then he asked if I'd bought it. I said yes, thought technically I hadn't as it had been a gift from Sweetie, though we picked it out together. Then the guy asked how much I'd paid for it. I said a couple hundred dollars, which was roughly true, and represented a pretty good discount off the MSRP. He just grunted and went to work on the band. I was dying to know why he'd asked-- did he think it was nice and I'd gotten a good deal? Did he think it was a piece of crap and I'd gotten ripped off? (It was a Seiko, so not one of these fashion brand watches that just have a name slapped on them, but not a fancy Swiss watch either.)
After that watch was fixed, I also had him change the band on another watch, a cheap Timex I'd bought online thinking its red band would look cute, although it turned out to be ugly in reality. The band was still like new and I asked him to replace it with a black one. After putting the new band on, he asked if I wanted him to put the clasp back on the old band. I said I didn't even want the old band, knowing I'd never wear it. For all I cared, he could keep it or throw it out. But I could tell he really wanted me to take it, and he said, "you never know, you might want it. You could have it dyed black."
It would never in a million years have occurred to me to dye a watch band a different color, but I just loved that "waste not, want not" mentality.
I ended up paying $22 dollars for the watch band and the links being adjusted. That actually kind of seemed like a lot of money, but I haven't bought a leather watchband in a while, so maybe it's perfectly reasonable... but either way, it seemed a small price to pay for a pleasant reminder of a way of life that seems to be disappearing in today's culture of disposability...