Money Match #2: "IM," Chicago female seeking male

Madame X the Matchmaker now introduces our first female single, a frugal lady known as IM:


Here's her message:

Frugal Fundamentals
Im a frugal girl at heart who loves nice stuff but loves her bank balance a little more. Im 28 and already own two properties, one investment and one condo. All of that was only possible by saving and not falling prey to crazy consumerism.

The thing that makes me happiest? - Finding an awesome piece of art at a local yard sale. I live in Chicago and am interested in finding someone who takes pride in being understated...yes...thats right...Im not impressed by flashy cars and $3k purses. He should love reading, be a dog lover and know how to balance his checkbook. (Besides being independent and cool...)

ps: NO I dont smoke...this was staged :)

Wow, a 28-year old who saved enough to buy two properties AND has a really hot photo? Chicago area gentlemen, this could be your lucky day! If you'd like to woo IM, email your frugal flirting response to openwallet1 [at symbol] yahoo [dot] com and I'll forward it to her. Who knows, perhaps you could be her solvent soulmate!

You too can send in a personal ad! Details in this post.

How Things Change: My Wacky Phone Spending

For the last few years, I was in a long distance relationship. Now, I'm not. You might suspect that I performed some sort of cost-benefit analysis of the relationship and made a calculated decision that it wasn't compatible with my financial goals, given that I have written here before about how expensive such a relationship can be. I can reassure you that I am not that cold and unemotional a person! There were many other reasons why I cut things off. But I'll confess the money aspect was a teensy tiny smidgen of a reason to shed a few less tears over it!

My ex- lived in another country. This led me to investigate a variety of strategies for cheaper telephone calls, including an international calling plan with AT&T and online calling cards. After moving to my current home a year ago, I never reinstated my AT&T international plan and just used the calling cards. Unfortunately, with those cards you sometimes get what you pay for-- the sound quality can be lousy. When you're trying to have a meaningful conversation about your future with someone, or lack thereof, it sucks to have to keep saying "what? I can't hear you!" So there were a couple of times when I called back on my home phone without thinking too much about it. I knew I didn't have the international plan any more but I thought, ok, maybe it cost 10 cents a minute with that plan, so without it, it will probably cost $1 or $2 a minute. Unfortunately, as I discovered when my phone bill arrived, it was actually about $5.00 a minute!

At this point, my volume of international calling has dropped quite a bit... but since we're trying to "stay friends," it hasn't gone away entirely. I decided to look into signing up for another international plan with AT&T so as not to have to keep committing myself to phone cards in $20 increments. Option 1, "Worldwide Value Calling," costs $5.00 a month, plus $0.08 per minute. Option 2, "Worldwide Occasional Calling," costs only $1.00 a month, plus $2.24 a minute. I used a little basic algebra to determine the break-even point:

Let X= the number of minutes
5+.08X = 1+2.24X
5-1= 2.24X - .08X
4= 2.16X
1.85= X

So, are we going to stay good enough friends to talk on the phone 1.85 minutes every month? I optimistically decided yes, and signed up for Worldwide Value Calling. I mean, I'd feel a little guilty relegating someone who's been so important to me to just "occasional" rather than "value." (At least until a decent period of time goes by!) If we talk one hour per month, I'll save $125.60 vs. the other plan. I budgeted $1,200 for telephone expenses this year, and am currently at over $1,300. Next year's spending should be far less... but keep an eye out for future posts on the costs of dating and new relationships, which I'm sure will wipe out any savings!

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!

Net Worth May 2007

As of May 31st, my net worth was $344,102.13. I'm less than $6,000 away from my year-end goal, so I think I'll have to revise that and challenge myself a bit more!

Here's how it breaks down:

Cash, including savings and checking accounts and CDs: $30,030.46
That is starting to feel like kind of a lot to hold in cash, even though about $10,000 is in CDs I can't immediately access without penalties. Assuming my monthly expenses will soon settle into more normal patterns, I think I may put some of this money into mutual funds and hopefully make it work a little harder for me.

Retirement, including 401k and Roth IRA accounts: $212,797.34

Stocks & mutual funds (that aren't in retirement funds): $16534.18

Bonds: $4482.40
This may be a little low, as it's been a couple of months since I checked the current values online.

Home Equity: $82,677.27
This is what I determined to be the present value of my condo minus what I owe on my mortgage. I haven't adjusted the value of my condo since first coming up with it after my closing: it's more than I paid, but may be less than it could sell for, if other prices in the neighborhood are any indication. But it's a moot point, as I don't intend to sell or try to borrow against it any time in the near future.

Credit Card: -$2419.52
That balance is always paid in full each month.

My net worth has increased by about $31,330 this year, despite the fact that I've been spending money like a madwoman, and am actually in the red by about $2,300 in terms of spending more than I earned in my net paycheck. How'd I pull off that neat trick? It's all the market, and the fact that I steer 18% of my gross pay straight into my 401k.
My 401k contributions total $8,528 year-to-date. Yet my retirement accounts are worth $31,388 more than at the end of last year. So that is $22,860 in interest, dividends and unrealized gains. Of course the market could take a downturn and it could all evaporate, but it does nicely illustrate the point that having money makes you more money.

So what about my goal for the end of the year, up til now set at $350,000? I'm going to think about that and post a new one when I do a mid-year recap next month.

Wedding Plans

My cup of joy is just overflowing at the thought of my approaching nuptials. I feel so lucky to have met Mr. Ghana... so lucky, in fact, that I may have to enter one of these Nigerian lotteries that many commenters have had such success with!
Thank you to everyone who has sent their kind wishes. Because I consider so many of you out there in blogland to be good friends of mine, I'd like to include you in my happiness by inviting you to join my wedding party! As you might guess, despite our impending wealth, my fiancé and I are very budget-conscious and don't want to have an extravagant wedding. So instead of registering for presents like towels and silverware, (which, annoyingly enough, I've been buying with my own money lately anyway) we're hoping that our friends will give us the gift of their advice and skills.

First of all, my blog bridesmaids:

Dawn-- my husband-to-be doesn't want me to max out my credit card until after we're married, (which is probably just as well, as I'm having this odd problem of it being declined lately, dunno why...) so I'm hoping you'll share your best suggestions on frugal clothes shopping, decorating, food for the reception, etc.

SingleMa-- you can be a bridesmaid AND plan the informal cookout I'm having a couple of weeks later for the B-listers!

Millionaire Artist-- one easy tip for a budget wedding is to make your own invitations, so I'm hoping you'll help me design them.

Frugal Zeitgeist-- your blog is new and I don't know you all that well yet, but I'd like you to be a bridesmaid because like me, you are EXTREMELY hot, and we all know how important it is to have lots of good-looking bridesmaids in the wedding photos.

BostonGal-- I'm always impressed by your gardening posts, so will you do my flowers?

Nina-- perhaps you'll have some tips on hotel room honeymoons.

Mapgirl, TiredButHappy, and Bitty: I am choreographing a sort of interpretive dance that I hope you won't mind performing at the reception. I'll fill you in on the details later.


As for the groomsmen:

I want Flexo to perform the musical entertainment at the reception.

Frank can read all the blessings and prayers.

And Mr. Ghana wants a big stag party, so I'm also inviting Cap, Moom, Jonathan, NCN, Trent, Justin, and Juan Millon, as well as the anonymous commenter whose marriage proposal I had to turn down, in hopes that there's no hard feelings.

Of course it is traditional for a Ghanian groom to show his appreciation to every member of the wedding party with a generous gift of cash or livestock. Since you'll all be traveling back to the U.S., obviously livestock isn't practical, so everybody just send me your bank account details and my fiancé will deposit your gifts via wire transfer. Can't wait to see you, RSVP soon!

Reader, I Can't Marry You

How sweet, a commenter on my Rule #16 post has proposed to me!

Will you marry me (If you're hot)? :) I'm your age with the same net worth, we can let our net worth multiply like horny rabbits! Yes?

Sorry, Anonymous. Though I'm EXTREMELY hot, I'm afraid I can't take you up on your offer of marital and financial bliss. I have just promised myself to a very nice man in Ghana that I met online, who is about to come into a very large sum of money. I've already sent him all my bank account details so he could arrange our marriage license at the registry in Accra and have half his inheritance immediately deposited in my name-- I know, sounds a bit odd, but they're so charmingly old-fashioned about the dowry thing in Ghana! He even wanted my Dad's bank account details so he could send him some money too! So although I'm sure you and your net worth are very nice, Anonymous, it's really too late for me to back out. Any day now, my hubby-to-be will be emailing me my flight arrangements to come and meet him for the wedding ceremony. In fact I thought I already would have heard from him by now, but I guess they have a lot of internet outages over there in Ghana, you know how it is...

Wedding Plans

Rule #16: Who Do You Think You Are?

• Don't be too sure.

We all see ourselves as part of a community-- or usually, many communities. We draw circles around ourselves, including some people and excluding others-- sometimes they're big circles, sometimes they're small. We see others as like us, or different from us, and these comparisons inform the way we live. It's a lot like those Venn diagrams you probably learned about in grade school:
In this example, the black dot in the middle is me. Some "communities," or groups, to which I belong, are the large group of all residents of New York City, the smaller group of upper middle class Ivy League graduates, and the very small group of people who live on my block. (Obviously the sizes of the circles aren't intended to be exactly proportionate to the real numbers of people represented.)
Depending on the situation, I might think of myself as identified with these groups to varying degrees. Most days, I don't feel like I have a whole lot in common with the group "New Yorkers." New Yorkers are a pretty diverse bunch, and most of us feel no need to smile at each other on the subway and say "Hey, you live in this city too! Howya doin'!" But if I was in a small town in Uruguay and overheard someone saying they were from New York, I might say "Wow, I'm also from New York!" Of course I don't always consider myself "from" New York, or I might downplay that identification, for instance if I was with family in New England who were all watching a Red Sox game.
We all have these shifting hierarchies of identity. We are citizens of the world, our country, our city, our apartment, or even just our corner of the room. So how does this relate to our financial lives?
For every identification we make with some group, we position ourselves within that group by our income, our consumption, our possessions. We like to know where we stand against others-- are we richer or poorer, is our house bigger, is our car newer, do we have more or less saved for retirement. And we think things like, "well everyone around me in this community that I belong to goes on vacation every year, so I should be able to do that too." And studies have been done that show that people often feel happy or unhappy not so much because of their own financial status per se, but because it is higher (happy) or lower (unhappy) than that of the people around them.

I try to think about these issues a lot. In this blog, I often say things like "I pay $80 for a haircut, but that's not that bad by New York standards." Or "I love my tiny studio apartment but my friends can't believe I live in such a small space." Or "publishing is an underpaid industry." These are all "true" in some ways, but if you shift the context, they seem all wrong. Someone in Africa could live for months on what I pay for a haircut. And they probably live in far less space than my old studio apartment... but someone in London might think my studio was actually relatively luxurious for the price, given that housing is even more expensive there than it is in New York. And someone who works at McDonalds or Walmart would probably be thrilled to make a publishing salary. What about the fact that my net worth is much higher than the average American's? Does that mean I can just relax and say I'm doing well? What if I compare my net worth to those Ivy League grads? Suddenly it looks like I'm way behind.

So part of this rule comes down to

• Judge yourself against your own standards and goals rather than comparing yourself to other people.

If my net worth and savings are on track to be able to pay for my kind of intended retirement lifestyle, it doesn't matter how it compares to anyone else. But that doesn't mean I shouldn't keep those comparisons in mind. It's important to

• Have a social conscience.

It's a no-brainer that all Americans are fortunate in relation to others in the world, and some Americans are more fortunate than other Americans, and we should all keep that in perspective.
Then there's that

• Don't worry about keeping up with the Joneses

thing. Again, it's pretty much a no-brainer that you shouldn't just try to do or buy everything your neighbors do. But sometimes it's not the neighbors you need to worry about, it's your own inner Jones!

• What you spend does not determine who you are; who you are doesn't have to determine what you spend.

That is the best way I can think of to put it. Don't box yourself in with your own notions of where you fit into the world. This doesn't mean you have to break all the usual rules, but don't let yourself feel too trapped by them. Realistically, this can be quite hard! I was brought up in a certain environment, reinforced by school and work amongst many other people brought up in similar or wealthier environments. I'm not just suddenly going to change all my standards. Am I going to wear rags and live in a camper van on the street just because it would save me money? I can comfortably answer "NO, because people like me just don't do that!" "People like me" being at least some of the inner circles below:

But what about some less extreme examples? Maybe "people like me," i.e. well-educated, somewhat tech savvy, employed in media field, financially secure bloggers, tend to replace their computers more often than every 10 years. Should I? Maybe "people like me" have cable TV. Should I? Do "people like me" have weddings that cost $10,000? Or $30,000? Or $500? Do we go skiing for a week every winter? Do we only buy our clothes at certain stores? Do we send our children to private school? Do we only live in certain neighborhoods? Do we pick up used furniture off the street? Do we have full sets of matching glasses and plates and silverware?

Everyone will have a different perspective on these questions, but I think we can all challenge ourselves to expand the definition of "people like me" to include "people who have less than me" rather than "people who have more than me," and spend less money by eliminating at least one thing in our lives that we think we "should" have, but don't really need.

Costs of a Long-Distance Relationship

The latest issue of Women's Health magazine has an article about long-distance relationships featuring this interesting statistic:

$278: Average total amount long-distance couples spend a month to keep love alive

That is quite a lot of money. For the last couple of years, I have been "seeing" someone long-distance myself, and I suspect my average monthly spending might be even higher, but you know what? I have no idea how much I've spent. Yes, despite my totally anal approach to keeping financial records, I do NOT have a Quicken category called "LDR," "Sweetie-pie," "Too-Infrequent Nookie," or anything like that.
Of course it's something my honey and I have joked about-- I've spent a lot of money on travel, telephone calls, gifts, etc., and there are times when I've grumbled to myself about how much it was costing me. (We've both spent a lot of money, but I've spent more, because I make a lot more.) At one point the relationship even made me consider leaving New York, which was part of the reason I didn't buy an apartment sooner. If you add in the amount of extra money I'm probably paying because I missed the lowest interest rates and found the place I'm buying when prices hit their highest, then my long-distance costs would truly be huge. But I can't quite bring myself to try to add up the number. It just seems wrong. You have to draw a line somewhere and love is something you just can't put a price tag on.
And yet the financial aspect of this relationship can't be ignored. As with any long-distance relationship, or any relationship at all, you wonder where it's going to go and if it has a future. As discussed the other day, financial compatibility is something to consider carefully in any relationship, and in a long-distance relationship, there can be even more at stake. To be perfectly honest, lately I think I've been starting to get to the point where the honeymoon is over and I wonder if my relationship will ever really work out. But I keep having to check myself: am I considering all the various reasons it might not work out? Or am I just being cheap!?!