A Whirlwind of Volatility

I'm not just talking about the stock market these last few days-- I'm talking about the last few months of my life.
You would think I'd have spent more time blogging lately, given that I quit my job and at least in theory have plenty of time on my hands. But the end of 2017 got a little crazy as we had to do a lot of work to put our apartment on the market, and then we sold it so quickly, it was a hustle to get ourselves packed up and moved out by the beginning of January!
I think we had pretty great timing, actually. We hit the market at a point when there weren't a lot of comparable listings in our price range. Within days we had multiple offers and a bidding war, and ended up with an all-cash buyer at above our original asking price. Seeing what's been going on with the tax bill and now the gyrations in the stock market, I'm very glad we weren't trying to sell now or later this spring.
The buyers wanted to close fairly quickly, but luckily we had also managed to find a house in an area that we liked, so we knew we'd have someplace to go-- sort of, anyway. The timing didn't totally work out and we couldn't move in right away, so our stuff (what's left of it after purging and donating and selling a lot) had to go into storage for a little while, but beyond that, the closing on our house went pretty smoothly too, since we were also paying cash. We also had good timing in that during our storage limbo, we decided to get away for a little mini-vacation in January when it got so cold and nasty in the Northeast, and not move into our new house til later in the month when it was better weather. And now we (by which I really mean Sweetie, whose apartment it was) are sitting on a big chunk of cash that we luckily didn't invest right before this stock market correction.

So we are just now settling down to the next phase of this new life, but still feeling a little at sea. Our expenses are going to be so much lower, it's kind of blowing my mind. Our HOA fee is a fraction of the maintenance on the apartment. The car insurance is cheaper, and parking is free. Even joining the local gym, which we did today, is going to be about half what we used to pay in NYC. The local grocery stores tend to have somewhat lower prices than in the city. Our utility bills may end up higher since we have electric baseboard heating. And at some point we may need to get a second car, depending on what we end up doing with ourselves in terms of jobs or other activities. So far, our main activities have been unpacking, exploring the area, and marveling at how beautiful and quiet it is here.
We'll see how it goes. I do miss the urban vibe of being in Brooklyn and going into Manhattan almost daily-- we drove back into the city for the first time the other day and ended up in a neighborhood I didn't know well and I kept thinking how nice it seemed and wondering what it would be like to live there if we someday decide we want and can afford a pied a terre. I kind of miss just watching people on the subway. It's weird to have to drive everywhere. But life also feels very peaceful now, and all the stresses of our former apartment, former jobs, and former expenses have just-- poof! -- gone away.

How to Save Money on Appliance Repair

Last night, I saved Sweetie and me about $200 with a fairly minimal amount of effort. Sweetie has a fancy fridge-- not a super-expensive SubZero or anything like that, but a not-cheap fridge with a few extra bells and whistles. So it's been very annoying that it has "broken" a few times over the years, and Sweetie has had to call an appliance repair guy at a cost of about a couple hundred dollars each time.
The last time he visited, the doorman who let him in said the guy had spent a lot of time defrosting the freezer with a hair dryer. So this time, when the fridge started losing its cool, I looked up that model online and found various websites with people discussing the problem. It seemed very likely that the auto defrosting wasn't working and that a build-up of ice was the culprit. With an old-fashioned cheapo fridge like I used to have, this is an easy problem to spot-- you look in the freezer and you see a hardened snowbank where the coils would be. You then attack it with a hairdryer and an icepick until it melts. But with these new-fangled fridges, all that stuff is hidden away, so you have to figure out how to open up whatever's covering them. This is where diagrams and manuals on the internet really help! Within a few minutes, we had figured out how to remove a back panel in Sweetie's fridge to reveal the iced-up coils in all their glory and started blasting them with a hairdryer. A few hours after that, the freezer was nice and cold again, all cleaned out and ready for us to buy new ice cream to replace the ones that leaked out all over everything.
This is just one example. I've fixed washing machines, lighting, toilets, faucets, clogged drains and more and saved hundreds of dollars in the process. And probably bragged about it in many other posts on this blog, because I'm always so psyched when it works!

So here's my simple tips:

• Watch and learn! If you have a home repair that you don't know how to tackle, and you do call a repairman/plumber, etc., pay attention to what they do when they get there. I've learned so much by watching what they do-- some problems tend to repeat themselves, and it's great to know that next time, I can just emulate something simple that I saw a professional do. I also grew up with people in my family who liked to do their own repairs. I took an interest in such things at an early age, and learned a lot of tips I still remember. If you have kids, teach them these skills-- it's not just a money-saving lesson, it teaches responsibility and self-reliance. Not to mention that it can be helpful to have an extra set of smaller, more agile hands, and it can be a fun bonding experience.
• Use the internet! It's amazing how many questions you can answer with a simple online search. "Why isn't my freezer cold?" "How can I stop my toilet from running?" "How do I rewire a lamp?" These and so many more questions are discussed at length in online forums. If you know the brand of model number of your appliance, add that to your query and you may be able to find specific diagrams and videos showing you exactly what to do. Not everyone who contributes to these discussions is always right, so check a couple of sources rather than just relying on the first answer you see.
• Be careful! If you really aren't sure what you are doing, proceed with caution. You don't want to flood your house or get electrocuted. Turn off the appliance, unplug it, turn off the circuit breaker, make sure you are prepared with the tools you'll need like pliers, or a bucket and some towels. Have a friend there to help in case anything goes wrong. Go slowly, and take notes if necessary to remember how to put things back the way you found them.

For so many minor household repairs, significant expense can be avoided with just a little common sense and a willingness to figure things out. And aside from the financial benefits, there's such a feeling of satisfaction when you can say "I fixed it myself!"

Now I'm Really a Landlady

The latest news: I am officially a landlady now. I have rented out my apartment, furnished, and my lovely tenants have already set up an automatic payment so the rent goes straight into my bank account every month. It exceeds my monthly costs by a couple hundred dollars right now, not counting tax deductions, though that will fluctuate depending on the utility bills. For better or for worse, I decided it would be simpler to keep the gas, electric, and internet in my name and just build those costs into the rent. I did write it into the lease that the tenants would have to pay for usage over a certain level upon my providing them with a copy of the bill. Even when heat and AC are higher, I think I'll still end up with positive cash flow almost every month, and on average for the whole year.
So having given up my apartment, I have officially moved in with Sweetie. Sweetie never asked me for any contribution to the household expenses, though I've tended to buy all the groceries and about half the meals out, but on my insistence, we figured out a fair amount for me to contribute, and I've set that up as a monthly outgoing auto-payment. My net housing costs are now going to be about half what they were, maybe less.

All this is good news in terms of my being able to save more money. I'm not sure what I'll do about my apartment long term-- I'm hoping I can rent it for a year or two and then maybe sell it, as real estate prices seem to be turning around a wee bit. I've actually already had an offer from a potential buyer-- someone who owns one of the other units in my building said he'd be interested in buying it, though he didn't say at what price. But if he's serious, that could be an interesting possibility, as I wouldn't have to pay a real estate agent's commission. But for now, I'm just glad to have that rent money coming in, and it was convenient to be able to leave most of my furniture there too. Since it would be a nuisance to deal with selling or storing the furniture, I may also consider shorter term AirBnB type rentals-- I'd make more money, potentially, if I could keep the place booked. And it would also allow me to block out time for when my family and friends might want to stay there. Sweetie's apartment is bigger than mine was, but we're a bit tight for storage space for all our stuff, and if my sister and her husband and kids come to visit, there will be quite a line for the one tiny bathroom!

It will be interesting to talk all this property rental stuff through with my accountant in the spring. She had suggested that I might need to increase my witholding, as I'll have a lot more income when you include the rent, and my deductions will now include depreciation on an investment property instead of mortgage interest on a primary residence. I'll fill you in in a few months!

Spending for Love

Does love make you spend money? I was thinking about this today as I returned from lunch with a bag full of largely unnecessary items. My Sweetie broke a glass measuring cup the other day, so I went to Bed Bath & Beyond to purchase a new one. While I was there, I remembered that Sweetie also wanted something for spraying on olive oil (theoretically, you end up using less than if you brush or pour it on, so it's supposed to be healthier). So I bought one of these, or something like it, for about $10. While I was at the register, I saw they had some little padlocks and since Sweetie just joined a gym and needs one, I bought one. I also managed to grab some of those little single-use packs of KrazyGlue, but that's for fixing my own broken watchband, not for Sweetie.

Sometimes it's just more fun to buy little everyday, non-occasion gifts for someone you love. If it was me who wanted the olive oil sprayer, I'd probably have thought about it a lot more, and perhaps experimented with some sort of cheapo spray bottle instead of buying this gimmicky one-- but since it was for Sweetie, I wasn't being that picky. Buying things for Sweetie activates my generosity, while in other situations, I feel very stingy. My usual rules of frugal, deliberative comparison shopping fly out the window when I'm shopping for sweetie, but when I'm shopping for myself, I tend to be very disciplined and often find it hard to commit to buying something.

Do you ever find your spending habits change when you're buying for a loved one?

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!

Changes in Household Spending

This graph appeared in yesterday's New York Times and I found it fascinating:


Look how much the share spent on food and clothing increased during World War II, and how much lower they are now than at any time since. And I was surprised to see the share spent on education being quite low, and not showing as much of a spike in recent years, despite other stats that show the price of college skyrocketing. This could be because not everyone goes to college, and because although the rack rates for tuition have skyrocketed, more and more people get financial aid in various forms to cover a lot of it. And of course health care costs have risen hugely, after being quite stable through the '30s and '40s-- but it still surprises me that on average we spend more on health care than we do on housing.

The article the chart accompanied mainly focused on the housing part of the budget, and whether this data suggests housing prices have stabilized or are still likely to fall. David Leonhardt says:

I can’t claim to clear up all the uncertainty. But I do want to suggest a framework for figuring out whether you lean bearish or less bearish: do you believe that housing is a luxury good and that societies spend more on it as they get richer? Or do you think it’s more like food, clothing and other staples that account for an ever smaller share of consumer spending over time?

If you believe housing resembles a luxury good, then you’ll end up thinking house prices will rise nearly as fast as incomes in the long run and that houses today aren’t terribly overvalued. If housing is a staple, though, prices will rise more slowly — with general inflation, as food tends to.

The difference between these two views ends up being huge, and it’s become the subject of an intriguing debate.

After digging into it, I come down closer to the luxury good side, which is to say the less bearish one. To me, housing does not rank with unemployment, the trade deficit, the budget deficit or consumer debt as one of the economy’s biggest problems. But you may disagree.

What do you think?

Cogitating on Cohabitating

Here's a topic that's been on my mind a lot lately-- how do you decide whether or not to move in with your sweetie? As I write this, mine is recovering from a knee surgery, and I'm playing nurse, maid, chef, and chauffeur. I haven't been home in a week, and I keep wondering if it's silly for us to live in two separate apartments, as this kind of situation highlights the need and desire to be together.
A while back, I tallied up the amount of space we occupy between the two of us-- 4 bedrooms, 2 1/2 baths, close to 1800 sq feet... in NYC, this is not necessarily palatial, but still rather luxurious for a childless couple. And yet, though we are a couple, we are also two individuals. We can each afford our individual lifestyle and we each have our preferences and desire for our own space. If two individuals are each living financially responsible lives on their own, does the fact of their being a couple change that and mean that they are financially irresponsible?
We'd easily save almost $2000 a month when you consider my rent and utilities. (Though I personally might not save all that much depending on how we split the bills-- Sweetie's expenses are somewhat higher than mine, and include things like basic cable TV, which I don't pay for at all right now.) We'd save on groceries. My plants wouldn't keep dying of neglect. And we'd save lots of time in not having to go back and forth. But how do you decide what the right balance is?
I feel rather self-indulgent thinking about how I need "MY SPACE." How many millions of people around the world don't even have a square inch to call their own, let alone a small New York apartment? But it's not really about a measured amount of physical space for me-- there is some consideration of that, of course, when you calculate how many books will fit on the shelves and how many hangers will fit in the closet. But for me, it's more about the mental space, and the feeling of control, or perhaps assertion of identity. I like having some sort of space, even if it's just a corner, where I am surrounded by my own things, chosen and arranged by me. Maybe it's books, objects, posters, or a combination of these things. And maybe I can find a way to have this in Sweetie's apartment, but I'm not sure. It's a bigger apartment than mine, but not that much bigger. And I don't want my moving in to mean that Sweetie has to completely turn the place upside down.
Ideally we'd just move to a different, bigger apartment together but there are a lot of good reasons not to give up Sweetie's place. So another thing I've thought about is renting the tiniest studio I can find within a block or two of Sweetie. I could use it as a sort of extra room, and if I had my sister's family visiting, it could function as an extra guest room. If I rented out my place, I could probably get a bit more for it than I pay in mortgage and maintenance charges. But a studio in the location I'd want would cost me anywhere between 2/3 to 3/4 of what I pay now for a two bedroom. That's a bit depressing, but would it be worth it for my own peace of mind? Would I actually have that peace of mind? Would I use the studio enough for it to be worth the expense? Maybe it would just be a transitional thing as we adjusted to occupying the same apartment and finding ways to fit in all our stuff without each sacrificing our preferences and habits.
New York is somewhat famous, I think, for being a place where couples move in together sooner than they normally would, and continue to live together long after breaking up, just because it's financially impossible to do otherwise. I don't want to make this decision based on money. But it's hard not to think about it...

In With the Old, Out with the New

Now is the time of year when everyone seems focused on renewal, improvement, and new stuff. And I have a couple of new things myself, but in two particular examples, they made me think about the value of keeping old things.

First, the butter dish. A couple of months ago, I bought a new butter dish for about $9 at Beth, Bath and Beyond. I had tossed it in a corner and kind of forgotten about it, which was probably the first sign that I didn't really need a new butter dish. I had thought about replacing my old plastic butter dish because it was starting to look a little scuffed up and old... because it IS old: I bought it in 1992 or 1993, when I was moving into my first apartment, and I've kept it with me through a few moves since then. When I moved in with a partner, it came with me, and when that relationship ended, it came with me. Now that's butter dish loyalty, isn't it!
Now I'm thinking I actually might keep using it, even though I've discovered the new butter dish-- I actually use two dishes, and my old one is used for margarine. The real butter is in a glass dish I bought about two years ago, which I've actually hated since the minute I started using it because the lid doesn't fit right. I never would have thrown out my nice old butter/margarine dish for that one, and now I'm starting to think that it's still more worthy of being kept. It probably cost me about $2.99 when I bought it, and it pleases me that something so cheap has done its job for so long.

The other thing is my alarm clock. I was noticing recently that my snooze button didn't seem to be working very well any more-- I am not a morning person, so my snooze button gets used a LOT! And my clock, I'm pretty sure, goes back even further than my butter dish: I'm pretty sure it's the same one I brought to college with me as a freshman, and probably used for a few years even before that. (I won't enumerate all the various ex-lovers who were also awakened by it!)

This time, I didn't have to buy a new clock. One of my father's many quirks was that he was always trying to find the perfect digital clock, and in the last few years before he died, he seems to have purchased about 20 of them. He had them stashed in different places around the house, and their various beeps and bleeps were freaking my mother out, so she gathered them all up and was going to get rid of them until I happened to mention that I could use a new one. In an admirable burst of frugality, my mother put 3 clocks each in my and Sweetie's Christmas stockings, and told us to keep whichever ones we wanted. (This isn't to say that Mom didn't go overboard on other Christmas spending, but that's a story for another day.)

These two examples may be a long and convoluted way of saying so, but it's just nice sometimes to enjoy the things you have and appreciate the value you've gotten from them, instead of only admiring things that are new and shiny. So many people just think "oh, I've had that for a few years, it's time for a new one," whether or not the item actually needs to be replaced. If you start adding up those $9 butter dishes and $20 digital clocks and who knows what else, it can turn into significant money after a while. So in this new year, why not resolve to appreciate the old, and keep it around for a bit longer?

Financial Housekeeping

Over the last couple of weeks, I've made some more efforts to streamline my financial life a bit.
I set up auto credit card payment on my cable internet and local phone bills. For some reason, I hadn't realized this was an option before, and was doing manual e-payments each month from my bank, but I much prefer having everything go on my credit card so I can earn frequent flier miles.

I canceled my long distance telephone service. I know this one will seem like a no-brainer to many of you who have long used their cell phones or Skype, etc., but I was still hanging on! One reason is probably that I had paperless billing. I'd get an email each month and say "Oh, OK, there's the AT&T bill and it's only about $15, no big deal." But when I recently bothered to actually go to the website and see what that $15 had bought me, I found that I'd only made one outgoing long distance call and the rest of the bill was fees and taxes. Minute per minute, that call had become way more expensive than I thought it was, and that was the last straw! I don't like relying on my cell phone for all calls, but I'll just use my Zaptel calling card if I really want to make a call on the landline.

And yes, I know I should probably cancel my landline but I'm just not ready to do that yet. It's another pretty moderate cost and for the time I spend making local calls, it is worthwhile, as I'd have to upgrade my cell minutes if I didn't have the landline. But the annoying thing was that a few months ago, I'd finally had to replace an answering machine I had since college. I bought a phone with a digital answering machine built in, for about $30. Unfortunately, this piece of shit stopped working after a few months and recorded nothing but static. Emails to the manufacturer went unanswered and I'd been procrastinating about buying a new one. Then I started to think about how many people call me on my cell phone anyway, since I'm often not home. A lightbulb went off in my head: I ordered call forwarding service. Yes, this actually costs me about $4.00 a month, but now if I don't pick up, my calls go to my cell phone voicemail, so no answering machine needed, and it's cheaper than using Verizon's voicemail service. And though I could use Google Voice, that would mean telling everyone I had a new number-- this way, I don't have to change the phone number I've used for years and my calls will find me wherever I am. A few dollars spent for a convenience is sometimes worth it.

It's good to take a few minutes to stop and think about these little things. And it goes to show that even someone as financially anal as me can easily miss small money leaks if she doesn't pay close attention to every single bill!

Weekend With the Parents

It was a couple of weeks ago now that I went to visit my parents. It had been a couple of months since I was there, which seemed okay since my father's health has been relatively good, but I was getting anxious about visiting again so I'd have a chance to check on my parents' finances! I'd been hearing lots of stories about all the things my mother was trying to get done around the house, and was starting to worry about how much money she was burning through.

You may wonder why my mother would be doing all this. She's a full-time caregiver to an invalid husband, so where does she find the energy to deal with hiring people to paint the house, pull out trees and shrubs, replace the windows, and put up a new fence? She also had people giving her estimates for repaving the driveway, putting a new roof on the porch, and gutting the one full bathroom in the house. She did acknowledge that this last item was crazy to do given my father's health situation-- which is why she was also getting an estimate on expanding the downstairs half-bathroom into the garage and adding a shower stall.

My mother is just manic when it comes to home improvements and decorating-- it's a bit scary. My father has always checked her impulses to do these things, but now he doesn't have the energy. My mom was also quite inspired by our estate planning conversations with the lawyer several months ago. He said that if my father was about to go into a nursing home, it would be a good idea for us to spend down some assets so he'd be eligible for Medicaid sooner, and that putting money into improving the value of the house was a good way to do that-- music to my mom's ears!

After spending some time going over all my mother's credit card receipts, I had to tell her to put the brakes on any further projects. At the rate she's burning through money, my parents will be broke within 10 years, and this is not even counting major expenses for the house, or funerals, or potential costs like a nursing home. My mom is only 65, so this is a major problem.

When my father first got sick almost a year ago, I went through all their accounts and bills and put together a budget that I thought would allow them to live very comfortably, without changing any of their habits. I was happy to see that the budget would stretch their savings out to last over 20 years. I knew they'd have to be careful about major expenses, but I also knew that some of their expenses would decrease as they got older, so I wasn't too worried. But unfortunately, when I made that budget, I made two major errors. First, I didn't account for the fact that my mother hadn't actually been living with my father for almost a year. I thought it would be enough to take his grocery spending and more than double it. I might even have tripled it, just to be safe. This came to a budget of $775. But now that my mother's back, her actual spending on groceries tends to be more like $1500 a month!

To be fair, she doesn't only buy groceries at the supermarket-- she buys cleaning supplies, paper products, and sometimes plants and cosmetics. But still, it just boggled my mind that she could spend that much, especially since my dad was on chemo for most of the past 6 months and didn't have much of an appetite. I'm still a bit baffled-- she's not eating caviar and steak all the time, and most of her spending is at Stop and Shop, not Whole Foods. I think she just somehow consumes a lot.

The other budget item I got wrong was medicine. Although my dad has supplemental insurance and a prescription plan that gives him better coverage than Medicare, he has so many ailments and takes so many medicines that his co-pays seem to be coming to over $300 a month. I had budgeted about $50 a month, which I should have known was way too low.

When I re-ran all my budget numbers, I felt almost nauseous. It was the same kind of stress I felt when I learned several years ago that my mother had run up $50,000 in credit card debt. I thought since then that she had learned a lesson, and that my openness about the family finances would have cleared up her illusions about there being unlimited funds for her to spend. And in a way, she is being more conscientious-- she's spending money on the house because she thinks the lawyer told her she should. And as far as the rest of the budget went, the problem is that her idea of normal and necessary spending is just different from mine. But it was just extremely frightening to me to feel like my family was speeding towards a financial disaster. I was so wound up and frustrated one night, I ended up just crying in Sweetie's arms.

The next day, I sat my mom down for a talk. I tried to include my dad, as he sometimes seems to feel insulted when he's left out of things, but he walked away halfway through the talk, as if he just couldn't handle being involved. My mother had been jokingly referring to me as "her accountant" and telling the contractors who gave her estimates that she had to "get permission from her bookkeeper" but I tried not to get too dictatorial with her. I told her that I'd looked at over 6 months of her actual expenses and that they were much higher than the budget I'd originally done. I said she could go ahead with having the outside of the house painted, which would have been done already if not for the rain, but that I wanted her to put a total stop on any further household improvements for 6 months, and try to see if she could cut back some areas of her spending, emphasizing that it was her money and her choice in how to spend it, but that once it was gone, there would be no bailout available to her. She could make some moderate changes now, or she'd have to make drastic changes later. I explained that there was not much buffer for emergencies and that the only other source of income she'd have would be a reverse mortgage, which still wouldn't cover her spending at her present level. She didn't seem too happy about it, but asked for a printed out copy of the budget and said she wasn't sure how she could cut back but that she'd try.

I thought I'd gotten through to her but a couple of days later when I was back in New York, she called me at work and then said "you know, I'm still going to just go ahead and have the driveway repaved, it's only a couple thousand dollars." I just lost it. "No, Mom, do NOT repave the driveway. The driveway is fine. This does NOT add value to the house. You can NOT afford it. Would you rather eat for a couple of months or have a smoother driveway?" I was probably a little too harsh and she got off the phone in a bit of a huff but I think sometimes I have to be harsh to get through to her.

I talked to my sister ZZ a little while later and she said "Mom's kind of depressed. She's freaking out about the budget stuff." ZZ also can't get her head around the immense amount spent on groceries, but she did have one good idea for cutting some money out of the budget. My parents spend several thousand dollars a year to have someone do their landscaping and shovel in the winter. ZZ pointed out that she and her husband could just visit more often to mow the lawn in the summer, at least, and that they could probably pay some neighborhood kid much less to help shovel in the winter. We'll see how this works out. I hadn't originally thought the landscaping was something to be cut because I was focused on not causing my parents any extra stress or discomfort, but I need to think more creatively about it. We'll all be trying to find ways to balance their budget over the next few months... we'll see how it goes.

Links I Liked

A few recent fun and useful links:

Get Rich Slowly has a nice roundup of online bank interest rates

My Money Blog on how to build a balance portfolio using ETFs

Moneyapolis shows off the crazy colors of her not-yet-renovated mansion.

Advice for making the switch to self-employment from The Simple Dollar.

The Wealth Report on "The Rise of the Poorgeosie"

And just had to update this to add Single Ma's post Father's Day Without a Father, which will bring a smile to every face and a lump to every throat.

Three Names on the Doorbell

I guess you could sing that to the tune of "Three Coins in the Fountain," but it's not a song. To me, it was an economic indicator. I noticed that two apartments in my building, both two-bedrooms occupied by roommates, have gone from having two names on the mailbox and doorbell to three.

These are not large apartments but I guess they are trying to make ends meet by squeezing in a third roommate. It's interesting to see these small signs of tough times. Have you noticed people around you making money-saving changes in their lifestyles? In what ways?

May 2009 Spending

Here are my May expenses, to complete the monthly wrap-up I started the other day.

Outflows
Business expense		$ 19.45
Clothing		$ 890.79	*
Dining:
Breakfast	$ 36.52
Dinner	$ 272.70
Groceries	$ 109.69
Liquor	$ 132.65
Lunch	$ 113.36
Total Dining		$ 664.92
Entertainment:
Movies	$ 5.41
Entertainment - Other	$ 40.00
Total Entertainment		$ 45.41
Gifts Given		$ 78.77
Household:
Laundry	$ 23.50
Household - Other	$ 52.00
Total Household		$ 75.50
Housing		$ 4,074.17	**
Investment Exp		$ (19.99)	***
Medical:
Dental	$ 5.56
Doctor	$ 60.00
Flex spend	$ 41.66
Health Insurance	$ 74.20
Total Medical		$ 181.42
Misc:
Personal care	$ 100.00
Misc - Other	$ 73.17
Total Misc		$ 173.17
Taxes:
Federal	$ 891.14
Medicare	$ 113.74
NYC tax	$ 207.78
SDI	$ 2.60
Soc Sec	$ 486.31
State	$ 354.12
Total Taxes		$ 2,055.69
Subscriptions:
Internet Access	$ 29.95
Magazines	$ 49.95
Newspapers	$ 42.40
Total Subscriptions		$ 122.30
Travel:
Commute	$ 76.00
Total Travel		$ 76.00
Utilities:
Gas & Electric	$ 61.48
Telephone	$ 76.64
Total Utilities		$ 138.12
Total Outflows		$ 8,575.72

Nothing too weird this month. Clothing was high because A) it's just that time of year when I want to buy new clothes, B) I bought 3 pairs of shoes from Zappos which have already been returned and C) I bought Sweetie $300 worth of stuff for which I'm being reimbursed here and there via meals, groceries, and miscellaneous stuff like plants. Housing is a whopper this month because I sent an extra payment of $2,000 towards the principal of my mortgage. The negative amount for investment expense was a refund of a trade fee from E*Trade.

My salary for the month was $8,017, and I had a couple hundred dollars additional income from interest and dividends. That makes it look like I'm in the red for the month, but that $2,000 to the mortgage wasn't really a true expense, as it goes into home equity and contributes to my overall net worth. I also contributed over $1,400 to my 401k this month.

Next month I'm planning to do a 6-month recap of my expenses vs. my budget, as well as a comparison to my expenses in past years. Should be fun!

Small is Cool at Apartment Therapy

It's that time again... Apartment Therapy's annual Small Cool Apartment contest. Living in less space can be a great way to spend less money, and the apartments showcased in this contest are always inspiring! Though there may be a few design touches that aren't cheap, Apartment Therapy usually has a lower-budget aesthetic than other home design resources, so it's been a web fave of mine for years.

I currently live in under 700 square feet. My previous apartment was about 240 square feet. Neither place would win this contest, but I have always felt that I had a neat, cheerful and cute apartment that I was happy to come home to.

How big is your living space? How much do you pay for it monthly? Tell us where you live so all the New Yorkers won't start having heart attacks!

The Economics of a Starter Garden

This looks like it will be a fun series on the NY Times website: The Starter Garden: A Novice in Search of Bounty.

...I resolved to plant a brand new vegetable garden. The plan is to transform my family’s diet, save a few coins, make over the property — and, maybe, receive a congratulatory note from Michael Pollan for my new green virtue. To keep sentimentality at bay — I’m thinking of all those paeans to the sensual pleasures of loam — I intend to unloose my inner bean counter. This means keeping a strict account of how much money and time I bury in the garden, and the cash value of the produce I pull out (at Whole Foods prices).

I am itching to get a garden going myself. For the last couple of months, I've been attempting to start some herbs using a Chia Herb Garden that I bought on a 50% off sale at Rite Aid. One of the pots was a non-starter, and I managed to kill two others, but I'm left with a pot of parsley that seems to be off to a healthy start.
The question is, what next? The summer before last, I had a nice tomato plant on my balcony. Last summer, my garden more or less died when I went off on my 2-week vacation without enough watering arranged. This year, I'm itching to have lots of flowers and vegetables, though I don't want to go overboard planting things that won't survive. And I'm also trying to figure out where I'll put them, as Sweetie has a bit of a yard where we could plant a few things. Does anyone have recommendations for good plants for a very hot, sunny balcony, and a kind of rocky, shady yard?

Do You Have a Crisis Plan?

What would you do if you lost your job or had some other sort of financial crisis? What would be the first thing you'd give up?

I was thinking about this the other day when Sweetie and I were joking about whether we'd move in together if either of us lost our jobs. I have savings I could live on for a while if I lost my job, but I don't think I'd want to count on them. Since I live in a 2-bedroom apartment by myself, I think the first thing I might do would be to get a roommate-- I could probably get $800-900 a month, or maybe even more. That would make a big dent in my expenses, and though it would be a big lifestyle shift, I could probably handle it as I'm spending less time at home these days anyway. If things came to the point where I really did decide to move in with Sweetie, then I'd consider selling some furniture and putting a few things in storage in order to make it work.
As an aside here, I don't think financial necessity is a good reason to move in with someone, but I'm sure it is often a big part of the decision!

What else would I do? I pre-pay my gym membership for a year, and though I really wouldn't want to give it up, I'd consider suspending the membership or letting it expire. I'd definitely cut back on restaurant meals and takeout and be a lot more careful with my food shopping. I might give up my land line and just use my cell phone. I'd give up my French lessons. I'd be careful about all other incidental spending, such as clothing, magazines, etc. But all of that would be far less significant than changing my housing situation.

Sweetie said "ugh, a roommate? That wouldn't be much fun," when we were talking about this. My response: "well of course it's not much fun! It's a CRISIS plan, and it's supposed to just be temporary." I'm lucky to live in a place where I could rent out an extra room, and lucky to have someone who could handle me moving in-- not everyone has this kind of flexibility. But in other areas, I feel like my expenses are relatively low and I don't have much room to cut back-- I can't have a lower cable TV bill than zero, for instance.

How about you? Do you have options to make major changes in your lifestyle if circumstances demand it?

How About Keeping Your Money ON TOP of Your Mattress?

What do you think of this little home accessory? It's a pillow, in case you weren't sure:


Actually I think it's more "not" than "hot." I'm afraid I'll be spending my decorating budget elsewhere!

(Courtesy of Apartment Therapy)

In Praise of Tiny Kitchens

Hooray for Mark Bittman, who reminds us that you don't need a gigantic, expensive kitchen to cook well.

So Your Kitchen is Tiny. So What? (NY Times 12/13)

My own kitchen, which is what many New Yorkers would consider halfway decent (and is much like the one my mother cooked in when I was growing up), is about 7 feet long and 6 feet wide. It has a moderate-size refrigerator, what was once considered a full-size stove (as opposed to the compact “apartment-size” stove or the monsters recently gaining popularity), annoyingly little counter and storage space (yes, I sometimes must remove the stored pots and pans before using the oven) and even a small dishwasher.

I complain, but I make do. And it’s here where I develop and test most of the recipes for my cookbooks and articles. So imagine my surprise when I posted a picture of my kitchen on my blog a few weeks ago and received a flood of e-mail messages from readers who wondered how someone could write large and evidently useful cookbooks, even a weekly column for The Times, while suffering such deprivation. (In the middle of all this, a young journalist called and asked what, after all, I considered essential in a modern kitchen? “A stove, a sink, a refrigerator, some pots and pans, a knife and some serving spoons,” I answered. “All else is optional.”)

Sounds very similar to my kitchen set-up. In my old studio apartment, I had an even smaller kitchen, probably about 5x5'. I will never come anywhere close to Mark Bittman in terms of cooking skill, but I totally agree that it is very possible to cook good meals with minimal equipment and space. I can see why people like to spend money on kitchens-- gadgets can be fun and labor-saving, and if you spend a lot of time cooking, a nice kitchen will be more pleasant.
I know someone who has gorgeous cabinets in her kitchen, very high-end-- she has a lovely built-in spice rack and other customized storage spaces, and everything feels heavy and solid. You can tell it's good quality woodwork that will last way longer than the cheap cabinets at my place. But when it comes to the actual experience of preparing meals, there's no real difference between my kitchen and hers, and hers must have cost a heck of a lot more.

Selling My Stuff

I've made about $100 on Ebay recently-- maybe a bit less when you take out the fees, but not bad. I've been trying to clean out some of my old gadgets-- I'm kind of attached to them, but I hate feeling weighed down by too much stuff, and I can always use more closet space. I love achieving two goals-- more cash and less clutter.
Unfortunately, it's a bit of a nuisance to deal with selling things. It takes time to photograph and list them on Ebay. It takes time to pack them up and ship them. It takes time to answer emails with questions, but I usually describe things in such exhaustive detail that I don't leave too many questions unanswered in the listing itself! I sold one higher-value gadget, and I'll probably try to sell my old computer, but beyond that, I may just bring some stuff to the Salvation Army or one of those recycling drop-offs for old electronics.

Aside from the little stuff I can sell on Ebay, I'm tempted to try to get rid of some larger items. I recently bought a new dining table and chairs (only $300 at Target.com!). I'd been wanting something a bit larger, and I needed extra chairs for guests. But now I have to figure out what to do with my old table and chair. I may just keep them to use as a desk, but that will create a whole set of spatial arrangement issues I'm not sure I can deal with! So I'm wondering if I should just sell the table on Craigslist instead.
I'm also having doubts about my bed. I got it last year from Room & Board, and it's very cool-looking, but my bedroom is tiny and I'm wondering if I should have gotten something smaller that didn't have a footboard. If I tried to sell the bed, I doubt I'd get anywhere near what I paid for it, even though it's in like-new condition. Do I want to spend hundreds of dollars basically just for the privilege of changing my mind about a bed? (Or should I just make my mind up about the bed and lie in it?!)
The problem with selling furniture is that you have to be at home for people to come and look at it, and they have to be able to deal with transporting it. And with the bed, I'd also need to find a new one to replace it. I don't think I really want to deal with it right now.

Do you sell stuff you don't want or donate it? Or just decide to live with it? How do you decide? How valuable does something have to be before it's worthwhile for you to sell it?

Bonus! And How to Spend It...

I found out this week that I would be getting a nice bonus this year. I'd been hoping it would be at least as big as last year's or perhaps even bigger, but I was trying so hard not to count my chickens before they were hatched that I was actually quite surprised by the final amount, which was slightly over $15,000 gross.

First of all, it's just great to get an amount of money like this in one lump sum-- it makes it so much easier to just stick it in the bank and not spend it. But of course I'd like to spend a little bit of it! Getting a bonus feels like getting a reward, and it makes you want to give yourself a little treat. Given that I'd only budgeted myself to receive $7,000 gross bonus, I started to think maybe I didn't have to postpone the new computer purchase that I'd pushed off to next year, and of course other fun items also came to mind. I'm already giving myself the present of an expensive vacation this year, and this makes me feel a little better about that! But I still couldn't help wanting to spend some money!

So here's what I ended up doing, after work on the day I found out how much my bonus would be: I went to Pier 1 to try to buy a couple of baskets. Whoooo, big spender, right??? And here's what's even more pathetic: they didn't have any nice baskets in the size I wanted, so I walked out empty-handed!

Why did I want baskets? Well, I only have two real wastebaskets in my apartment: one in the bathroom, and one in the kitchen. In both bedrooms, I have small shopping bags from Banana Republic that I've been using as wastebaskets, and in the living room, a crumpling shopping bag from Ann Taylor has been holding all my newspapers until I tie them up for recycling. A friend commented that it was a bit of a mess, and why didn't I just buy some cheap baskets to hold the avalanche of papers and magazines. Yeah, I thought, why don't I?

This is the kind of minor spending that I tend to avoid. When faced with spending $10 or $15 on a basket to keep my recycling tidy, I think "ugh, these little things add up and it's a waste of money. A paper shopping bag does the job pretty well, and maybe one of these days I'll happen to find a cool box or bin of some sort on the street somewhere, so why should I buy anything?" (And in fact I did find a very nice wine crate recently, but that is currently serving as a makeshift nightstand.) But getting a bonus of $15,000 made me think it was ok to allow myself to buy a basket or two, and now, of course, I am so annoyed that I couldn't actually complete the purpose!

I've been fantasizing a bit about what it would be like to spend my bonus. I'd never just spend the whole thing, but what if I just spent the $8,000 that was above my budgeted amount? After taxes and 401K deductions, it would probably end up being about $4,000 net. If I got a really snazzy 17" MacBookPro, that would be about $3,000 right there. This is probably more computer than I really need. I could get a refurbished one for about $2,300 probably, when you factor in tax. But maybe I could just go for a lesser model-- I wanted a 17" one because I don't have a TV and I've always used my computer to watch movies, but now that I'm seeing someone who has a TV, maybe it's not as big an issue! So let's say I just get the cheapest new MacBook at about $1,100.

Then I thought I might get some curtains. I saw some cute ones at Pier 1-- they didn't actually have them on the shelf, so I jotted down the name and thought I'd just try to order them online. Well, turns out Pier 1's website is totally lame. A lot of their products aren't online, and you can't search their online catalog. No wonder the company isn't doing well-- step up to the plate, people, if you want to sell me some curtains! Maybe I'll try Pottery Barn instead. I'll take a wild guess and figure it will cost me $1,000 total for all the windows I want to cover.

Ok, what else. How about a new bike? I've been thinking it would be good to replace my folding bike with a full-size one now that I have more storage space, but given that I hardly ever ride it anyway, maybe that is a dumb idea.

Oh-- a new camera! I just bought one, on sale for about $140, thanks to a tip from The Big Picture. I did this right before bonus time, but I'll count it anyway.

A bookcase: I could use another one to hold my ever-growing collection. I'd like to have one made to match what I already have, which I bought unfinished and then stained myself. Sounds very cheap but the way it actually worked out, the cost of a new bookcase would probably be at least $450.

Umm, umm-- how 'bout some clothes! I still want some Seven jeans, (which could come to as much as $200) even though I just picked up another pair of Lucky jeans on Ebay for less than half price. Unfortunately I have been gaining a little weight lately and if I don't lose 5 pounds, I'm afraid many of my other recent purchases aren't going to fit.

Ah! And that gives me a good solution as to how to spend the rest of my bonus, since I'm having such trouble trying to come up with things! I'll buy some personal training sessions! I think I have $490 left. At my gym, I think you can get a package of 10 training sessions for about $800-- that will put me a little over my bonus amount, unfortunately... and given my atrocious level of exercise discipline lately, I don't know if having some muscle-bound person exhorting me to "push it" or whatever will really get me any closer to losing the 5 pounds!

You know, it might just be easier to just SAVE all the money after all...