Happy Holidays!

My goodness, it's been a busy month. So much for my good intentions of posting at least once a week! I can't say I've had any exciting financial news to report. Here's some off-the-cuff items!

At Thanksgiving, I got one final check for a couple hundred dollars that was the final settlement of my great-aunt's estate.

I've been finding that my cash balance in Pocket Money /Quicken is often way off, by several dollars or more. I'm still pretty good about tracking every penny of my spending so this is starting to make me paranoid. Is there a bug in the program? Is someone stealing money out of my wallet? It's weird.

My year end net worth goal of $600k just isn't going to happen. I'm still saving a good portion of my earnings, but the stock market has been so up and down this year.

I've done all my holiday gift shopping and probably have spent a bit less than usual, though I haven't totaled everything up just yet. I gave small gifts to a few people in the office. I bought my niece and nephew each a sweater, two books, and some wacky wax stuff you can make little sculptures with. My sister and I will give our mom an iPhone for Xmas. I'm not giving my extended family any gifts as I won't see them this year. Sweetie and I are taking a little trip over the holidays that is basically our present to each other. Though of course there have also been veiled mentions of "a few other little things" that have my all anxious about how little those other things are compared to the other little things I bought! But I guess holiday gifts are no fun if you take ALL the surprise element out of it!

Best wishes to all of you and your families for a happy, healthy New Year!

Happy Valentine's Day

I can't believe it's February 14th already! I just ran out at lunch to buy a card for Sweetie, and was happy to find a good one for under $3 after thinking I might have to spend $7!
Sweetie and I both liked this article from the NY Times this past weekend: When Love Outgrows Gifts on Valentine's Day, and were agreeing with the philosophy of only giving gifts when you feel inspired to do so, rather than out of obligation on certain holidays. Yet after talking about it, I blurted out "we're not exchanging gifts for Valentine's Day, are we?" There's always that little doubt, that one person will do something when the other least expects it! But a card always seems nice. I just wish I'd gotten my act together in time to make one instead of buying one. Oh well, there's always next year!

2010 Year End Recap

Well the year came to a close in an interesting and good way.

First of all, let's look at my net worth as of 12/31/10:
Cash and Bank Accounts: $66,039
Retirement (401k and Roth IRA): $320, 626
Other Investments (mutual funds @ E*Trade): $51,294
Bonds $5,197
Home Equity $82,592
Credit Card Balance -$2,615
TOTAL: $523,133

Now you may be thinking, as I did, whoa! Her net worth as of a month before was only $479,273! Did her net worth really increase 9.15% in one month? Well, I did receive $9,000 more of my inheritance from Great Aunt Minnie, and the stock market did ok... but what I also discovered is that I had the wrong symbol in Quicken for one of my mutual funds and therefore the wrong price, so my net worth has been understated by several thousand dollars for I don't know how long. So I not only blew away my original year end goal of $450,000, I sailed past the half-million dollar mark, which was totally unexpected. Pretty cool.

As for my income and expenses, here's a look at the totals for 2010 vs. 2009:

	2009	2010	Var.	% Var.
Income
Bonus	$11,765	$17,288	$5,523	47%
Gift Received	$1,309	$24,200	$22,891	1749%
Interest Inc	$776	$502	-$274	-35%
Other Inc	$6,503	$6,386	-$117	-2%
Salary	$96,206	$99,373	$3,167	3%
Tax Refund	$4,211	$2,873	-$1,338	-32%
Total Income	$120,770	$150,623	$29,853	25%
Expenses
Bank Charge	$160	$97	-$64	-40%
Business expense	$0	-$7	-$7	N/A
Charity	$468	$1,055	$586	125%
Clothing	$1,639	$2,648	$1,009	62%
Dining	$7,895	$8,552	$656	8%
Education	$406	$455	$49	12%
Entertainment	$663	$448	-$214	-32%
Gifts Given	$962	$1,924	$963	100%
Gym & Fitness	$1,317	$1,361	$44	3%
Household	$1,337	$760	-$577	-43%
Home Insurance	$335	$335	$0	0%
Housing	$14,384	$14,171	-$213	-1%
Medical	$1,938	$4,556	$2,619	135%
Misc	$2,215	$3,412	$1,197	54%
Taxes	$30,325	$34,053	$3,728	12%
Subscriptions	$956	$743	-$213	-22%
Travel	$1,712	$4,803	$3,091	180%
Utilities	$1,936	$2,454	$518	27%
Total Expenses	$68,648	$81,819	$13,171	19%
Net Savings	$52,122	$68,804	$16,683	32%
% of Gross Income Saved	43.16%	45.68%

A few notes:

• As noted elsewhere, I received a $24,000 inheritance from a family member.
• Other Income is matching 401k contributions from my employer.
• Interest is down because I shifted quite a bit of money from bank accounts into investment accounts.
• Charity and Gifts Given are up for reasons explained in this post.
• Medical is way up because I had a crown and root canal and exceeded the annual cap on my dental insurance.
• Miscellaneous is up mainly because I bought an iPhone and some apps.
• Travel is up because I didn't do much of a vacation last year, but this year I went to Turkey and splurged a little on hotels even though my air ticket was purchased with frequent flyer miles.
• Utilities is up because of the higher monthly costs of the iPhone.
• Subscriptions is down because I canceled my NY Times delivery at home, since I spend so much time at Sweetie's place. Household is lower for the same reason
• I'm pretty consistent but I let a few categories creep up a bit without any real reason, particularly Dining. I still like eating out and drink too much-- everyone has to have a vice, right?
• Clothing was also higher but I really needed some new work clothes and shoes, so I'm not too concerned about that.

But the bottom line is that I continue to save a lot of my income. If not for the inheritance, I would have saved less than I did last year, but at least some of that was due to more giving, and higher taxes because I earned more. It's not like I went crazy buying tons of stuff, even if I did allow myself a few treats like an iPhone, some clothes and a vacation.

Now I have to look ahead at 2011... what should my next net worth goal be? Should I make any changes to my budget? This could be the year when I rent out my apartment and move in with Sweetie, which could change things a lot. And I need to take a close look at my investment allocations, which I haven't done in a while. So much to think about! And write about here... I'm going to try to post more frequently this year. So happy 2011! As always, onward and upward!

November 2010 Recap

It's a bit late for this, but I'll get it out of the way before I have to move on to December!

First of all, it was a big month for income: $23,536 in total. In addition to my salary, I received $15,000 as part (not all) of my inheritance from Great Aunt Minnie. (I had thought that would be the full amount, but I got another $9,000 in December. I continue to be bewildered, amazed and grateful whenever I see these numbers.)

Gift Received	$15,000
Interest Inc	$36
Salary	$8,500

As for expenses, nothing too dramatic to report. I returned a few pairs of boots I'd bought from Zappo's last month, so the clothing line is negative. Travel is high because Sweetie and I settled up what we'd spent on our vacation back in September and I owed about $800. And I started doing a wee bit of Christmas shopping.

Taxes	$2,830
Housing	$1,716
Travel	$1,066
Dining	$769
Utilities	$176
Medical	$113
Misc	$100
Gifts Given	$80
Subscriptions	$58
Household	$43
Entertainment	$26
Business expense	$9
Clothing	-$759

The net is that I saved $17,309 in November, which is pretty good even without the $15,000 inheritance.

As for my net worth, it increased $20,493 from last month (+4.47%) to $479,273.

	10/31/10	11/30/10	Var.	Var. %
Cash	$45,665	$59,662	$13,997.00	30.65%
Stocks	$49,780	$49,704	-$76.00	-0.15%
Bonds	$5,091	$5,197	$106.00	2.08%
Retirement	$282,052	$284,341	$2,289.00	0.81%
Home	$81,856	$82,223	$367.00	0.45%
Credit Card	-$5,664	-$1,854	$3,810.00	-67.27%
	$458,780	$479,273	$20,493

So far, the inheritance has just gone into cash savings, but I'll probably add some more to mutual investments soon. The only other change of note here is that I finally updated my savings bond values, which I don't do every month.

December will probably not be a big savings month, considering charitable donations and holiday gift-giving, but I think 2010 overall will look pretty good, and I should exceed my year end net worth goal even backing out the inheritance. But what's next for 2011? We'll see...
Onward and upward!

Giving (including $500 to YOUR favorite charities!)

After writing the last post, I realized that another happy effect of my sense of financial comfort is that I'm more comfortable giving generously. Of course this is the time of year when charities are asking for money, and I want to increase my donations to some of the causes I usually support. It's also when a lot of tipping goes on. I've already put much larger amounts in the office collection for the cleaning ladies than I ever have before, and I've made a list of other people I deal with regularly that I want to give something extra to as a holiday tip. I've bought small gifts for people I work with, although my office doesn't usually have a big gift-giving culture.
In past years, I found myself feeling more constrained, worrying that lots of little gifts added up too fast, and feeling grumpy about the rampant waste of holiday consumerism. I've also tended to worry about giving to charities now when there's so much uncertainty about needing to help my own family with that money later. But this year, at least, I just want to spread my good fortune more freely.
And in order to spread my giving even further, I'd like to thank the readers of this blog by donating $500 to charities you suggest-- please leave a comment about your favorite charity and why you think they deserve it. Depending on how many comments I get, I'll split the $500 into as many as 10 donations of $50 each to the charities you choose, picking random recipients if I get a lot of responses. (The $500 will come from my "personal" charitable giving, not the ad proceeds of this blog.)
I'll take suggestions until Friday Dec. 17th at 11:59 PM EST and post the final list of donations next week.

An Apology from Telemarketers... with a Bonus

I received the letter below a week or so after a phone call I vaguely remembered, where I politely hung up on a telemarketer, telling them I did not want to participate in their survey:


And yes, that is a real dollar bill they sent me. I was happy to get the dollar, and I guess it's a nice gesture, but what I really want is for them to stop calling me, which hasn't happened!

Whaaa?? The Gift that Does NOT Keep on Giving

Hey, I've got a deal for you! You will lend me $50. In order to do this, you will have to pay me a service charge of $3-7. If I keep the money for longer than a year, I'll owe you $2 less every month. If I don't pay you back in 3 years, I'll owe you nothing at all! Great deal, huh?

You'd think no one would be crazy enough to lend that money, but it's actually incredibly popular to do exactly that: millions of American Express gift cards are sold every year. You give American Express money up front that they don't have to repay to a merchant until later-- essentially you are giving them a loan, but they will charge you for the privilege.

I noticed this story in today's business section-- fortunately, American Express is eliminating the most obnoxious of those fees, the monthly charge for not using your card for over a year. But they still charge a purchase fee of $2.95-6.95. (More info on gift card fees.)

I think I've only been given an American Express gift card once, but I thought $50 was $50-- I had no idea how much of that could be eaten up in fees. If you want to give someone a gift, just buy them an actual present, or give cash.

Helping Out in a Health Crisis

Sometimes I look at the past year and wonder if all the good luck I've had in life is turning out to be a loan that's been called in by the bank. Nothing bad has happened to me personally other than losing some money in the stock market, but I feel like misfortune has been getting closer to me, in the form of bad things happening to my friends and family. In addition to my father's brain tumor and friends losing their jobs and getting divorced, I've had a cousin and a friend diagnosed with very serious cancers. Things were very scary for a while with both of them. Now, miraculously, things are looking pretty good. But none of this came without a cost, both emotional and financial.

Both my friend and my cousin have health insurance, one through an employer and one privately purchased as she is self-employed. But that didn't mean their treatments were affordable. In one case, there was chemo and radiation and major surgery. In the other, there were chemo treatments, a special diet, and a lot of long-distance drives to doctors. Both had to take time off work, unpaid in at least one case. Both of these people have spouses, but neither were making much money. Both couples also had another dependent, either a child or an aging parent. What all this comes down to was that even with insurance, the illness put them in debt.

But here's the upside to this depressing story: people helped. Both my cousin and my friend knew people who organized fund-raising events for them. They were each fortunate enough to have a lot of family and friends who could donate their talents or their services or their products or convince others to do so. In each case, a whole community came together and donated money and showed their support and love in a truly special way. They raised thousands of dollars, but it ended up being about more than just the money, somehow.

All this reminded me of an article I bookmarked months ago: Helping Out With Cash: A Delicate Art (which was an follow up to an earlier article Not Laid Off? How to Aid the Less Fortunate. Both of these articles give some excellent suggestions on how to handle the delicate issue of offering help to someone who may need it, but feel awkward about asking for it or accepting it. It's a more and more common issue these days. I just hope my usual sphere of good fortune will return and no one else I know will need this kind of assistance! How about you? Have you ever been involved in a situation where friends helped raise money for someone in need, or been the recipient of such aid?

Gift and Estate Taxes

In the post on my parents and Medicaid, I said that after my father's death, my mother might want to give my sister and me cash gifts up to the maximum allowed amount. Commenter Moom asked if we really needed to limit ourselves to that maximum because my parents' estate would be too small to be subject to the estate tax anyway. I thought the maximum annual amount still applied because my sister and I would have to pay taxes on it if it was over that amount-- but I just looked into that a bit more, and it seems I was wrong:

No tax payable by the person receiving your gift or
bequest. Generally, the person who receives your gift
or your bequest will not have to pay any federal gift tax or
estate tax because of it. Also, that person will not have to
pay income tax on the value of the gift or inheritance
received.

But in general, the person giving a gift does have to pay taxes on it unless it meets certain criteria:

Gift Tax
The gift tax applies to transfers by gift of property. You
make a gift if you give property (including money), or the
use of or income from property, without expecting to
receive something of at least equal value in return. If you
sell something at less than its full value or if you make an
interest-free or reduced-interest loan, you may be making
a gift.
The general rule is that any gift is a taxable gift.
However, there are many exceptions to this rule.
Generally, the following gifts are not taxable gifts:
• Gifts, excluding gifts of future interests, that are not
more than the annual exclusion for the calendar
year,
• Tuition or medical expenses you pay directly to a
medical or educational institution for someone,
• Gifts to your spouse,
• Gifts to a political organization for its use, and
• Gifts to charities.

The annual exclusion amount for 2008 was $12,000.

[IMPORTANT NOTE: coming back to Medicaid issues again for a minute, you have to remember that this gift limit only relates to taxation. For the purposes of Medicaid eligibility, you can't give away any money at all other than maybe a few hundred dollars here and there.]

I won't get into any details about the estate tax--for 2009, your estate has to be $3.5 million or more, so it is relevant to only a tiny percentage of people, and certainly not my parents, alas! But you can read more about gift and estate taxes in the IRS document linked below.

IRS publication 950, Introduction to Estate and Gift Taxes

Fessing Up to Family Money

Check out World of Wealth, for what I think is a totally unique post in the personal finance blogosphere, at least from what I've seen. MEG's blog is always quite frank and personal, and now she has disclosed something that few people are brave enough (or lucky enough) to admit:

So here it is: my family gives me money. I'm not talking about the garden variety plane ticket home, $100 for "dinner," help with the rent money. I'm talking about estate planning, gift tax avoiding, maximum annual gift exclusion money.

There were lots of comments on the post, mostly congratulating her for obviously being a hard-working, sensible person who hasn't become lazy and spoiled by her family's generosity (it's worth pointing out that she's only in her mid-20s). One commenter wanted to know how much of MEG's net worth came from her own earnings vs. her family's wealth, which she answered in a follow-up post:

Only about $20,000 of my net worth has been saved by me personally, half of which is my 401k at work. Without my family's assistance I may have been motivated to save more - or unable to even save that much due to loans and other obligations. Who knows??

Since her net worth is currently around $317k and was as high as $390k earlier this year, I would guess she must have gotten close to $300k in family gifts, which is pretty amazing. I almost can't imagine what I'd do if I'd been given that kind of money. She's used a lot of it to buy investment properties and max out retirement savings accounts, which is very admirable.

And yes, I'm so jealous I totally want to slap her!
(Only kidding about the slap, MEG!)

Holiday Notes

I'm enjoying a year-end break, trying to relax without to much computer usage-- just doing lots of reading, baking pies, and today, watching it snow!

But here's a little update on how the holidays went:

First of all, my father was in the hospital the whole time. Taking care of him meant my mother hadn't had much time to do Xmas shopping, so once I showed up to share the visiting duties, she went to town! Literally-- she went to the downtown shopping area of my hometown, and within a couple of hours, spent over $1000! As I've probably mentioned before, I have a very large extended family and my parents give presents to every aunt, uncle, cousin and second cousin, which at this point is over 40 people not even counting me and my sister and her family! At least this year, my father didn't do any of his own shopping, as in the past, he and my mother sometimes each bought their own gifts for some of these people! I really wish my family would come up with some way to reduce all this gift giving insanity, but no one ever seems to want to go for it. It all seems like too much to me, but the flip side of this is that my parents really are very generous and thoughtful in their gift giving, which I do appreciate. While my mom was wrapping some jewelry for the aunts and cousins, I saw where she'd bought it and couldn't help blurting out "Isn't that store really expensive?" My mother claimed the jewelry was inexpensive, and I realized I'd better shut my trap-- it's her money and it's not my place to be a Scrooge about her gift-giving.

This year, the other factor that influenced my mother is the idea that there is this large sum of money that will be "taken by the government" if she doesn't spend it. As I have tried to explain to her, this is a maximum amount of money that we would have to spend on a nursing home, should my father need one, before they become eligible for Medicaid. Given his health situation, the likelihood of actually spending ALL this money on a nursing home is very small, but of course my mother is quite inclined to spend it all on other things just in case!

As for my share of the holiday loot: my parents gave me a very nice large covered frying pan, which I've been asking for for years-- the last few years I've been given a few smaller pans without lids, but this year they finally got it right! My mom also gave me two Banana Republic gift cards-- the one I have partially redeemed already was for $100, and I suspect that is the value of the second one too. Then there were some stocking stuffers, including some art supplies, assorted makeup, and a little candy. Then there was the huge box that I started to open until I saw that it came from "Toys to Grow On." "Uh, Mom," I said, "Why are you giving me a set of wooden blocks?" Whoops! Those were for my niece and nephew but she'd mislabeled them! And finally, my last gift was a check for $900, since the lawyer said anything under $1000 wouldn't be considered a non-qualifying transfer by Medicaid. She gave $900 checks to my sister ZZ, her husband, and each of their two kids too.

I feel weird getting this kind of money from her. She definitely is giving it as an advance on our inheritance, but I'm setting it aside in a "Mom and Dad" fund, as I still am so anxious about whether their assets will be enough to support them. I have suggested to my sister that she establish a similar fund for any gifts from our parents, but I'm afraid she'll be putting the money to other use: she didn't tell me this herself, but Mom told me that ZZ and her husband's credit card debt is now $15,000. This news just killed me-- ZZ shared all my anguish when Mom got herself into debt, and I never thought she would let her own situation get that bad. The debt is not due to any sort of crisis or catastrophe-- it's just letting regular household expenses get out of hand while living on one income.

So I couldn't help stressing about money a lot over the holidays, though I tried to set it aside and just focus on enjoying the company of my family. After leaving them, I spent a few days with my sweetie's family, which was a huge contrast in many ways, finances and attitudes towards gift-giving included! More on that in a later post, but for now, I'll sign off until... next year! May you all have a happy and safe New Year.

Giving the Gift of Charitable Giving

What is your opinion on giving people a donation to a charity in lieu of a personal gift? If they didn't ask you to do it, is it still ok? Does it matter if they have ever done it for you? Check out some other people's opinions in this discussion at Reddit.

I've been agonizing over this topic quite a bit. Last year, I did a donation as a gift for one relative (see "I Gave My Great-Aunt a Water Buffalo") and it went over well. So this year, I decided I would give all my aunts (5 of them) and my great aunt a small token gift (inexpensive items purchased on my trip to Africa) and include a card saying that I was making charitable donations in honor of our family instead of larger gifts. But in the past week or so, I started to have second thoughts.

My aunts tend to all give me a small gift every Christmas. Some of them have better taste than others (see "Gifts Gone Wrong") and the spending range seems to be all over the place. I had a back-and-forth email with one of the aunts last year as to whether we'd exchange presents at all. I'd already bought her something small and told her so, but said she didn't have to give me anything, though she still did. I would never be so rude as to say this directly, but I'd love to tell my aunts that I would be thrilled if they'd give money to charities rather than giving me crappy cheap gifts. Of course, one person's idea of a crappy cheap gift might be someone else's idea of something really nifty! And maybe my aunts like getting presents, and would think it was presumptuous and preachy of me to give donations in their name instead!

So the other night I had a moment where I thought I'd ditch the charity idea, just do my own donations for my own sake and then run out to some holiday market and find some other inexpensive trinkets to give along with the Botswanan bracelets, etc. But I think I've just changed my mind once again. I am going to stick with the donation idea. Two people in my family are dealing with serious forms of cancer and it just seems worth acknowledging that with a bigger donation. And with the economy the way it is, yes, one could argue that I should be buying more consumer goods, but I'd rather try to make an impact by supporting charities whose donations will be affected. So here's the note I'm going to enclose with the token gifts:

Merry Christmas!
I hope you like this token gift, brought back from my trip to Africa. Instead of giving larger gifts to extended family this year, I thought it would be a good time to donate to these organizations instead, and if you ever want to give to these charities instead of giving me a present, I'd be honored.

Dana Farber Cancer Institute
Heifer International
The Nature Conservancy
Direct Relief International
National Public Radio
First Book

If there are any other charities you prefer to support, please let me know!
Love,
Madame X

I hope they'll be pleased-- I don't think any of my aunts are particularly materialistic and I'm sure they like supporting charities and won't miss the crappy little gifts I might have given them! Actually, the amount of money I'm donating to these charities would have bought them much nicer gifts than I usually give-- I guess I won't make that clear in the card!

By the way, all these organizations get good ratings at Charity Navigator.

Happy Holidays, everyone!

Expensive Cufflinks

I've been trying desperately to figure out what I'll give my sweetie for Christmas. Among other ideas, I thought a nice pair of cufflinks would be a good idea, and probably relatively inexpensive. I happened to pass by Paul Smith yesterday, and thought, ooh, I'll bet they have some snazzy cufflinks. Now, I knew Paul Smith is not cheap. But I thought in this economy pretty much everyone is trying to appeal to the price conscious consumer, right? Well... not so much.
The Paul Smith cufflinks started at about $125 a pair, much like the ones listed on their website here. But most of their selection was actually $200 and up... and they even had some that were about $600!
For some reason the idea of spending $600 on cufflinks just blew my mind. I suppose many people wouldn't consider $600 an outrageous amount for an item of jewelry like a ring or a necklace, but cufflinks seem so much lower-profile! And it wasn't like the $600 ones were encrusted with emeralds or anything...
I personally have never spent more than $200 on a piece of jewelry, for myself or as a gift. And that level of spending is rare-- in my whole life I've probably only spent under $500 on jewelry for myself, not counting watches. But that's me-- I wear jewelry, but I'm just not that into it, and my favorite things are simple pieces. I'm sure many other women would have a totally different perspective on this topic!
Meanwhile, anyone have any ideas for where to buy nice cufflinks?

More on the Family Finances: ZZ's TV

I can't help feeling judgmental sometimes...

When I was home for Thanksgiving, I was having dinner with my sister ZZ and her husband and they happened to mention that they were getting rid of my mother's old TV. This TV is an enormous monstrosity of a TV. She bought it 3 or 4 years ago, when she first moved into her own apartment. When she was furnishing that place, she went all out-- she believed that my father had some secret stash of wealth, so she spared no expense in buying furniture and decorating, even to the point of spending money on new appliances and refinishing the floors for her RENTAL apartment. But I digress... one of her big expenses for the apartment, which she could actually take with her when she left, was this huge Sony TV, or perhaps I should call it a media center. I think it's a 48" screen, high definition, and has all these speakers and stereo components that go with it. It cost a few thousand dollars when she bought it, I think.
When my mom had to give up her apartment, my sister and her husband got the TV. First they had it in their living room, then they moved it down to the family room in the basement. It was great for them-- they have friends over to watch sports quite often, and the kids loved watching movies on it. So why would they get rid of it? I knew they had cancelled their cable at one point to save money, but that wasn't the reason. Was it broken? No, it works perfectly and the picture is beautiful. So why? Here's what my sister said:
"We just realized it takes up so much room down there! That thing is huge, and now they have all these nice flat screen TVs that we could just mount on the wall, and they've gotten so cheap! And we're not buying it, Todd's (her husband's) parents are giving it to us for Christmas."
Now, my sister's family room is not all that cramped. And the TV takes up maybe 8-10 square feet of floor space at the most. And my sister freely acknowledges that she and her husband are in debt. My parents are paying her a couple thousand dollars a year for the kids' nursery school, and have given her the use of one of their cars, which costs them almost $300 a month.

"Can you sell the old TV?" I asked. "Well, we can try, but probably no one will want it, since it's not a flat screen and those are so cheap now. We'd only get a couple hundred dollars for it, it's probably not even worth it."

The rampaging WASTE of all this just kills me. My mother's folly might have been somewhat redeemed by the TV going to good use with my sister's family, but now they want to just chuck it. And Todd's parents could be spending their money on a gift they really need, like sharing the nursery school costs, perhaps! All to gain a few square feet of basement space and have a swanky new wall mounted TV like everyone else has.

For the most part, I have always refrained from criticizing my sister's financial choices, and I haven't said anything to her yet about this, but I may try to gently hint that she needs to start thinking about money differently.

Weird Weekend Spending: Sponge Animals

Of all the presents I brought back from Botswana (and yes, that is where I went for my expensive vacation and the post is in draft and someday I will finish it and share the story with you all!) the ones that seemed to be the biggest hit were some little sponge animals for my niece and nephew. You've probably seen similar ones: little capsules that you soak in water so they expand into animal shapes. I gave each of the kids their own little box of them, and they were just enthralled watching the tiny sponges pop out into little giraffes and lions and elephants.
They wanted to just keep dumping more and more capsules into the water. We told them not to use them all up at once but of course that didn't work for long! They finished up all their sponge animals, and a couple of weeks later, my mom called me to say that my nephew had liked them so much that he wanted some more and had asked her if "maybe Auntie X can go back to Africa and get us some more of those little animals?"
I had a good laugh at that, but it was so cute that I immediately began to search for closer, less expensive places to buy them. I went into a couple of toy stores-- the first one didn't have the little sponge animals, but they did have some eggs that hatch into large animals after soaking in water for a few days. I thought there might be an attention span issue there, but I bought a couple of them anyway. At another store, I found some more sponge capsule thingies more like what I was looking for-- they expanded into airplanes, not animals, but again, I bought some anyway. Finally, I found a store that sold various animals and dinosaurs in expanding sponge capsule form. They were exactly what I was looking for, so I bought several packages of each kind.
When I got home and totaled up my purchases, I was surprised to find that I'd spent about $32 on expanding animals! It occurred to me that there could be a market for some kind of gag gift involving little sponge dollar bills that expand when you soak them in water-- and then they dissolve into nothing! But anyway, $32 doesn't seem like all that much, really, to make my niece and nephew happy for a few hours... and as you'll see when I finally do that post about my vacation, it's much cheaper than going back to Africa!

Gift-Giving

I've been thinking a bit about the dilemmas involved in exchanging gifts. I recently celebrated my birthday and was given something rather extravagant and wonderful by my sweetie, who then added another small but thoughtful gift at the last minute, which really put things over the top. Of course I enjoyed this on one level, but in another way, it made me squirm a bit. Why?

I think it can be difficult to accept gifts when there is a sense of not being able to reciprocate financially. Sometimes one person literally can't afford to match the dollar value of the gift. Sometimes it is more that they prioritize their spending differently and would prefer not to spend so much on gifts, as it might cut into savings plans.

But either way, many people will counter this by saying "it's the thought that counts." And yes, this is true. But if one person spends more on gifts, it can leave the other person feeling like they have to be extra creative, extra thoughtful, and extra unique in their gift giving to make up for it. Now which do you think is easier, spending the big bucks, or being incredibly creative, thoughtful and unique with a birthday or holiday deadline looming?!?!

I'm already racking my brains about Christmas!

The Office Collection

Over the years, I have contributed to many a collection in the office. Whenever the hat is passed for a baby shower, bridal shower, going-away party, charity walk sponsorship, etc., I always pitch in. But until now, I have never been the one responsible for doing the collecting, and I found the experience quite fascinating!

This week I sent out a message about a gift for someone, asking people to chip in if they desired. The person we're collecting for is well-liked, so the donations started rolling in quickly, but I was surprised at some of the amounts. The first few people gave $5 or $10. One of these people was a younger, more junior person, but another $5 contributor was someone quite senior, and I couldn't help thinking she could have afforded to give a lot more! Suddenly I wondered if I'd been going overboard by always giving a $20 bill for these things!
After the first few contributions, other people often gave $20, including some assistants who I know don't make much money, and other people who I've often heard discussing their general tendency to be broke and have credit card debt. There was no rhyme or reason as to who gave more or less, at least not by their probable ability to pay. I think the factor that correlated most to the donation amount was age, but contrary to what you'd think, the younger people were the ones who tended to chip in more.

My conclusion from this was that the younger people in the office have perhaps grown up in a culture that is more inclined to over-spend. They are used to excessiveness in weddings, parties, home sizes, cars, etc. They are used to the idea that everyone spends beyond their means and has credit card debt. They like to live large-- not just in selfish ways, but in generous ways. The older generations are perhaps not quite caught up with inflation, and still remember the days when $5 was a very generous contribution, because most people only gave $1! But also, the older people in the office may just tend to have slightly different values or norms about how money is spent.

Only one person, a guy of about my age who I know must have a six-figure salary (and who used to be the boss of the person who the gift was for), asked "how much are people giving? What's appropriate?" I told him the $5-20 range and he gave $10. Everyone else just handed me money without any question or doubt as to the amount.

How much would you chip in for a co-worker's gift? Have you ever seen how much others tend to give? Does it matter what the occasion is or how popular the recipient is with others in the office?

Mom's Christmas Present

I finally gave my mother her Xmas present-- I sort of gave it to her back in December, when I handed her a box with a slip of paper in it which I had illustrated to look like a fancy gift certificate for a plane ticket to visit her family. But I knew she wouldn't use it right away.
Giving my mother this kind of gift always ends up being a bit more expensive than I'd like, but it seems worth it. It's always a challenge to find gifts for my parents, but for my Dad there are always books and classical music CDs he wants, and my mom usually seems happy with jewelry or a gift certificate to her beloved TJ Maxx. But I would rather give my mom something I know will make more of a difference in her life right now. And since my parents live together in a state of barely contained warfare, a plane ticket for her is actually a gift to both of them, a gift of peace of mind!

Last week, my mom announced that she had figured out dates for her trip and said I could start looking for a ticket for her. Given my mom's destination, I'd always figured I'd just get her a one-way ticket on Jet Blue, and then when she was ready to come back, I'd buy her another one-way ticket for the return. In the past, she's spent more on ticket change fees than the cost of the original round trip! And of course the cheapest ticket for a direct flight was on Jet Blue. But there was only one direct flight, leaving at 8am. My mom said that was too early, as she's not a morning person and has a lot of makeup to put on. So given her constraints of not wanting an early flight, and not wanting any stopovers, her roundtrip ended up costing me over $400 instead of about $250. I was talking through some of the options on the phone with my mom, so she was aware that the gift was becoming rather pricey. At first I was a little annoyed because she just didn't seem to care, but by the end of the whole process she thanked me and sort of apologized for it costing more. She still wasn't entirely thrilled about her return flight being slightly earlier than she wanted (10am!) and said "oh well, I'll probably just end up changing it anyway!" She's on her own for however much that costs!

Part of me thinks, geez, don't look a gift horse in the mouth, Mom! If someone gave me the gift of a plane ticket, I might not love the time options but I'd take whatever cost the giver the least money, or offer to make up the difference if there was some reason it really didn't work. But this is my mom we're talking about-- she has always been incredibly generous with me, and everyone else in her life. And she's been having a rough time with my dad over the last few years. Longtime readers may remember the countless posts I've spent agonizing over my mother's debts and spending habits and the family stresses that are rooted in money. I suppose all of that is part of the reason I can't help groaning whenever I have to spend extra money on something, but it's also the reason I have to give my mom a break and just suck it up... until the next bit of family drama comes along!

The Gift That Keeps on Taking

Have you ever been given a gift that cost you money? My favorite example of this is an iPod.
I was given my first iPod several years ago. It was just at the point where I'd started to think having one might be sort of cool, but I wasn't planning to spend money on one. This sort of surprised some people, given that I could be quite obsessed with gadgets like Palm Pilots & things, but I guess I just hadn't caught the digital music bug badly enough yet to want to spend a few hundred dollars.
Anyway, when I received the iPod, I was excited. Sometimes my favorite kind of gift is something that I really need and want and have asked for so I don't have to spend my own money on it. But sometimes, an even better gift is the thing that you kind of admire but have written off as being too expensive or there is some other reason you are never going to buy it for yourself, so it's a delightful surprise when someone makes that decision for you!
However, with my first iPod, I soon discovered that the gift came with strings attached. First of all, I had to buy a separate connector cable that would work with my work computer. Then, once I'd connected the iPod at home, it turned out that the operating system on my Mac was too early a version and I'd have to upgrade. Once I finally got everything to work, I started downloading lots of songs from iTunes. Then I decided I would need a protective case for the iPod. Then I wanted a cable to connect it to my stereo. Then I bought a radio transmitter thing so I could listen to it in a car. Then I realized that the hard drive on my iBook was full due to all the music I'd loaded up, and that I'd need a new computer if I ever wanted to fully take advantage of the iPod's capacity.
All that probably happened in the first couple of months I owned the iPod. I enjoyed using it, but I don't tend to listen to music on the subway everyday or at the gym, so I used my iPod mainly on long plane or car trips and plugged in to the speakers at home. As all the new iPods came out, I'd sometimes covet one, but never enough to trade up, even though the old iPod's battery life got worse and worse. For the way I used the iPod, I just didn't care about spending any more money on one.
But lo and behold, I was given a new one this year. The minute I opened it, my first thought was, that's nice but there are lots of other things I could have used more, but by thought number two, I'd transitioned into full-blown "ooh, isn't the color screen pretty" techno-lust, and immediately thought about whether I'd want to spend money downloading movies and TV shows. So far, I have not spent a penny on this new iPod. I did download some more songs from iTunes, but that was with a gift card someone else gave me. I do need a new case, but for now, I can sort of use it in the case that I bought for my old iPod. But unfortunately, what I really do need even more now is a new computer, since my old Mac is now totally incompatible and I don't know if it can even handle being upgraded to the latest OS.
So my first free iPod cost me a couple hundred dollars, and my second free iPod may cost me well over $1,000! Not that I'm really going to complain if people keep wanting to give me iPods...

Miscellaneous Updates

Happy New Year, everyone! I've taken a longer than usual holiday from posting this year, due to visiting family and friends. Here's a little report on what I've been up to, as it relates to personal finance:

I had a short conversation with my Dad about whether or not he has a will. He doesn't, which is probably not a good thing for a man in his mid-70s, with serious health problems and a financially irresponsible wife. He does have the name of a lawyer and I offered to visit again and go with him if he wants. I think I've at least goaded him into taking some action and he seemed glad I'd brought it up, even if he doesn't end up involving me in the whole process.

I deposited checks totaling $220, which were Xmas gifts from my parents and great-aunt.

I gasped in horror on New Year's Eve when I saw a TV news report about how much the stock market had dropped yesterday. As I write this, I have not yet updated Quicken to see what the damage was and whether I'll make my year end net worth goal.

I listened to my mother's worries about my sister. My mother, whose own shopaholic tendencies put her in quite a bit of debt, says that my sister is "even worse." She said she advised my sister not to overspend, which I'm sure Sis took as the pot calling the kettle black. Of course my mom always has her own spin on things-- she's worried that my sister's husband, who she adores, will get stressed out by having his earnings eaten up by my sister's spending. Though my sister is a stay at home mom right now, she and her husband discuss and share all the financial decisions. That may not mean he approves every item she brings home from Costco, but my mom is obviously putting their relationship into the context of her own marriage, in which the husband earned the money and controlled all the purse strings. I'm not sure I'm explaining this very well, but I guess to me, it just showed that my mother couldn't see controlling one's expenses as something worth doing for its own sake, but just as a way of making sure your husband doesn't think you're some kind of shrew!

And speaking of Costco, I went there for the first time over the weekend. The friend I went with is a member but doesn't go too often. She said it herself: "the prices are great on lots of basic things it makes sense to stock up on, but every time I go, I always end up buying some high-priced special item and when I check out, I can't believe I've spent hundreds of dollars." And sure enough, between the two of us, we did some damage. My purchases: two pairs of much-needed pajamas ($17), half of a two-pack of those racks that hold brooms ($2.50) and the new Mary J. Blige CD ($10). Her purchases: a mini-stereo system ($150), a book ($15), the other half of the broom holder two-pack ($2.50), some stick-up lights for inside closets, ($10, I think) and jumbo packs of toilet paper, paper towels, AA batteries, Power Bars, and a number of other food items including a $10 shrimp cocktail package that we ate as a post-shopping snack. The total was somewhere over $300. I was glad to have an opportunity to pick up a couple of things I needed/wanted at very good prices, but it's probably just as well I'm not able to shop at Costco more often!

I also did some other shopping, buying a couple of new pillows to replace the flattened out ones currently on my bed, and a new answering machine to replace the 20-year old one that just recently broke. I also picked up a cute little pizza-making kit for kids that was on sale for $2.50 at Bed, Bath and Beyond-- it will be perfect for my niece's birthday.

That's it for the moment-- I'll be returning to my regular posting schedule soon. Now it's time to do some work in Quicken so I can have a net worth update ready for later this week... will I be able to hold to my $350,000 net worth goal? Oh, the suspense!!!