Enough About Me...

It's been a while since I wrote about other people's money! I've been jotting down some notes over the last year or more about various situations I've encountered with friends or family whose finances fascinate me. The first one I'll tell you about is someone in my extended family. He and his wife are pretty down to earth people-- no fancy cars, no fancy clothes, and no expensive hobbies that I'd ever heard of until recently. They did do some nice travel with the wife's family, but nothing that seemed out of the ordinary for upper-middle-class people that wanted to treat their kids to a special experience. All in all, I'd describe them as people who certainly had lots of advantages in life and lived comfortably, but not someone that most people would look at and say "whoa, they are super-wealthy and have way more money than me."

But then one day, the wife casually slipped something into a conversation that did make me say "whoa." Without revealing too many identifying details, I'll just say that someone in an earlier generation of her family invented something pretty major-- major enough that unless there was some sort of unfair buy-out or other business dealing, the entire family would surely have a TON of money for generations to come. I could be wrong about that, as it's hard to know how family wealth will trickle down over generations, whether it's been invested well, etc. But I'm pretty sure I'm right, especially since the husband in this couple recently bought a plane.

Now the plane he bought is not a Gulfstream jet or anything like that-- it's a small plane that probably cost him less than some luxury cars, from what I could tell by googling the model. But still-- how many people just run out and buy planes?! In my circles, basically no one. I know one person who flies a plane because he works for a small local charter airline. And I think one of my uncles might have taken some flying lessons a while back. I myself gave Sweetie a one-hour trial flying lesson as a 50th birthday present-- I think it was about $85, and it was a really fun experience that I'd like to repeat with myself at the controls someday! But other than that, flying seems like a pretty rarified hobby. And to commit yourself to getting and maintaining a pilot's license, as well as fuel, maintenance and hangar parking for a plane that you own? That has to be a huge money pit. If you  do certain kinds of travel on a regular basis, I suppose you can avoid paying a lot of commercial air fares, but I would imagine it's extremely rare for owning a plane to work out to be cheaper.

So it was very interesting for me to go from thinking my relative was someone "like me" in terms of finances, in a very broad sense, to suddenly seeing him as being on another planet! I admire him and his wife for their lifestyle in general-- they are both smart and hard-working, certainly not anyone you'd scoff at as the "idle rich." And if the plane is the one crazy thing they want to blow some money on, it's fine with me, though I hope they are extremely cautious flying it!

Have you ever had to reassess your perception of someone's finances like this?

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