Another Down-to-Earth Heiress

Consider this a sequel to my last post, in which a woman's family money seemed to be funding some luxuries for an otherwise frugal couple.

This time, the story is about a childhood friend of mine. I hadn't really kept in touch with him for years, but some years ago I was at a party in my home town and met his wife. She was a lovely person who taught in a local nursery school, just really sweet and friendly and exactly the sort of person you'd want your child's teacher to be. My old friend worked in what sounded like a mid-level corporate marketing job. They had a child and another on the way at that point. They were renting a house and hoping to find one to buy. It all sounded totally typical for a young married couple of my general world, which I'll again describe as mostly people who have had a stable, middle-class to upper-middle class upbringing, college grads-- people with many advantages in life but who would not be seen as particularly rich. People who probably aren't living paycheck-to-paycheck, but who have worries about the bigger financial goals in life such as helping kids pay for college, and retirement. People who can't take money for granted.

As in my last story, an offhand remark by the wife made my head spin-- I was telling a story about my own job, with an example of a regular task I had at that time, and I referred to a company name. The wife said "oh! That's my family's business! [Things associated with this company, one of which I had just cited,] are named after my sisters and cousins and me!" This company is not a household name but it's one of those things that is actually pretty major in a behind-the-scenes way, which you notice everywhere once you know where to look. I didn't pry into all the family tree, but from doing a little research afterwards, it appeared that the wife's grandfather was at that time the richest man in the country where this company was founded.

Being the richest man in that country is not like being the richest man in the US-- our billionaires are way richer. But still... he's a billionaire! I guess there is no law that says grandparents have to provide money to their grandchildren, and maybe this woman doesn't get a thing, but even if she is one of lots and lots of grandchildren, she would surely inherit something someday. And at that level of wealth, I'd be surprised if there wasn't some sort of trust fund distributing some money already.

At some point after that party, I asked a mutual friend if he knew about the wife's background. He was aware that she came from money, as apparently a group of this guy's friends always joked about how he must have sold his soul to the devil because he'd gone from being kind of a nerd in high school to marrying this beautiful and wealthy woman! But they didn't even realize exactly how wealthy her family was.

I was just looking up this couple to see what they are up to lately, as I haven't seen them in a while and don't know much more about them other than what their kids are doing in photos posted on Facebook. The wife is no longer a teacher, and has what sounds like a management job at a tech company. My friend seems to still have more or less the same job. When the wife was a teacher, I thought "ok, that is the sort of job that is emotionally rewarding if not remunerative, so it makes sense that she would do that." Obviously I don't know any details about her current job, but it sounds more like the kind of thing people do when they need to make money-- she may find it satisfying in other ways, but I guess it is my own bias showing that I think anyone who has some family money would want to be an entrepreneur, or work for a non-profit, or teach-- in general, do things that are too risky or low-paying to do if you really need a steady income. I wish I could ask her a lot of questions....

A Tree Grows in Brooklyn

I recently read A Tree Grows in Brooklyn for the first time-- it's an extraordinary book, and full of so many interesting thoughts about money. The main character is Francie, a little girl growing in Brooklyn in the early 20th century. Francie's father is a charming alcoholic who can never keep a job for very long, so they're always poor and scrambling for whatever money they can get. Francie and her brother sell old rags or metal (I forget which) to a junk dealer in order to get a few cents of pocket money for themselves, and here's what Francie does with hers:

Arriving at the store, she walked up and down the aisles handling any object her fancy favored. What a wonderful feeling to pick something up, hold it for a moment, feel its contour, run her hand over its surface and then replace it carefully. Her nickel gave her this privilege. If a floorwalker asked whether she intended buying anything, she could say yes, buy it and show him a thing or two. Money was a wonderful thing, she decided.

Here's an excerpt from a scene describing the family's mealtimes, where they each drink a cup of coffee. Francie often doesn't drink hers and her brother wonders why she's even given one. Here's Francie's mother's response:

"Francie is entitled to one cup each meal like the rest. If it makes her feel better to throw it away rather than to drink it, all right. I think it's good that people like us can waste something once in a while and get the feeling of how it would be to have lots of money and not have to worry about scrounging."
This queer point of view satisfied mama and pleased Francie. It was one of the links between the ground-down poor and the wasteful rich. The girl felt that even if she had less than anybody in Williamsburg, somehow she had more. She was richer because she had something to waste.

As she grows older, Francie is constantly aware of the need to save money. Her mother has learned this lesson from her grandmother, who insists that she should save whatever money she can, hide it in a coffee can nailed to a closet floor, and never touch it until someday there's enough to buy some land:

"It is winter, say. You bought a bushel of coal for twenty-five cents. It is cold. You would start a fire in the stove. But wait! Wait one hour more. Suffer the cold for an hour. Put a shawl around you. Say, I am cold because I am saving to buy land. That hour will save you three cents worth of coal. That is three cents for the bank...."

And then there's this painful scene, where Francie wants to win a beautiful doll that is being given away at her church by a girl from a rich family. They announce that it will be given to a "poor little girl named Mary" and Francie wants it so badly that she raises her hand and lies about her name, while having to publicly acknowledge that she's poor. As she leaves the church with her prize, she is tormented by the other poor girls:

Francie's eyes smarted with hot tears. "Why can't they," she thought bitterly, "just give the doll away without saying I am poor and she is rich? Why couldn't they just give it away without all the talking about it?"
That was not all of Francie's shame. As she walked down the aisle, the girls leaned towards her and whispered hissingly, "Beggar, beggar, beggar."
It was beggar beggar, beggar, all the way down the aisle. Those girls felt richer than Francie. They were as poor as she but they had something she lacked-- pride. And Francie knew it. She had no compunctions about the lie and getting the doll under false pretenses. She was paying for the lie and for the doll by giving up her pride.

If you've never read this wonderful book, I highly recommend it, and not just for the insights on money and class. There's great historical detail about old New York, and it's a fascinating portrait of a girl's coming of age.

Finances and the Family: The Earlier Generations

Thank you all for your advice and kind wishes after reading my last post. Obviously the family finance issue is on my mind a lot, and one of the aspects I was mulling over last night was how these things slide from one generation to the next: my mother's finances will affect mine, and mine could affect my niece and nephew. But what about the earlier generations? How did my grandparents' finances affect my mom and dad?

I've mentioned before that my mother grew up quite poor, with parents who divorced when she was a teenager. Her father was a barber-- he died a while back, and I never knew him well enough to know anything about how he spent what little money he made. Her mother is still alive, and seems to live very simply on a small income, I guess from Social Security, plus occasional checks sent by my mother and her 3 siblings. She is remarried, and lives in a small house that her husband bought. The mortgage is paid off. My step-grandfather supposedly has a few thousand dollars saved, but he won't tell anyone where it is-- as in, it's not in a bank, it's just in a coffee can buried in a closet or something. I don't think my mother's parents ever had much spare cash-- but nor did they have debts, as far as I know.

As for my father's parents, I don't think I've ever gotten around to writing much about them, and they are quite a different story.

My father's father was a lawyer. His parents were poor immigrants so he put himself through college and law school. He may have been the only one of their 9 children who got an advanced degree, though one of his older brothers was also successful and was actually in the House of Representatives for a term or two back in the 1930s. Probably because of this government connection, my grandfather ended up working for the Veteran's Administration. I don't know how much money he made-- a decent amount, I'm sure, but nothing like what we hear about corporate lawyers making today. My father has expressed some resentment about the fact that my grandfather volunteered for the Navy during World War II despite being well over the age where he'd have been drafted-- if he'd stayed home, his political connections might have led to an appointment as a judge, but by the time the war was over, his brother was out of office and had no strings to pull.
My father's mother also came from immigrant parents of what I guess you'd call a white-collar working class background (her father was a machinist but became some sort of supervisor). My grandmother graduated from high school but never attended college. She never worked until after my grandfather retired, when she did some part-time clerical work for her sister (who has an interesting story herself, which I'll have to tell later.)

But here's the kicker: my grandparents had 6 children, my dad and 5 sisters. They put them all through college and may have made some contribution to graduate school/law school costs for at least one or two of them. (3 of my father's sisters have advanced degrees.) Can you imagine paying for all that in today's world, on a middle-class government lawyer's salary? Education just cost less back then, and though all the kids went to Ivy League/Seven Sisters colleges, most of them were able to live at home while going to school, which must have been a big savings. And I suppose my grandfather would have paid for some weddings too, though I imagine they'd have been small.

How else did they make ends meet? My grandparents definitely had a depression mentality, and never threw out a scrap of food. But they weren't crazily frugal-- my grandfather gave my grandmother plenty of jewelry, and he played golf (though at a public course, not as a member of a private country club), and they had a comfortable house in an expensive area. They didn't really travel much, but I remember them taking a couple of winter vacations. I'm sure there were many years when money was tight, but by the time they were retired, they had a nice life.

My grandfather went into a nursing home and lived there for a few years til he died at the age of 90. My grandmother continued to live at home for about 13 more years, with part-time care from an aide for about 2 or 3 of those years. Then she went into a nursing home for about 9 months before dying at the age of 94. In the later years of her life, she gave each of the 6 children a few thousand dollars a year, and after she died, they each got a share of the proceeds from the house-- it sold for about $500,000 at the top of the real estate market, so each of the kids ended up getting over $80,000 in the end. (This inheritance makes up almost 1/3 of my father's current net worth.)

It just boggles my mind that they managed to raise so many kids and live so long and pay for nursing home care yet still not run out of money. My grandfather may have had a really good government pension. Maybe he invested well. He definitely left everything set up for my grandmother after he died, with some kind of annuity in her name. I would not say my grandparents were wealthy, but they were definitely prosperous.

The "American Dream" is for that kind of prosperity to increase in each succeeding generation, not evaporate. Yet that evaporation is what seems to be happening in my family. My parents have savings now, but they'll likely be gone well before they're even in their 80s, and then they'll have to tap the equity in the house. My sister and her husband are in their mid-30s with credit card debt and have probably barely made a dent in retirement savings or college funds for their kids. Our family's situation could be far worse-- some of stories told by commenters on this site make me feel like I have no right to complain. I guess it's just sad to look back at those early generations, on both sides of the family: their hard work after starting from nothing, their frugality, their willingness to live with less. They passed on an amazing gift to us, a gift that went well beyond money itself. I think they'd be sad to see that gift wasted.

More on Unemployment Benefits

After writing last week's post about unemployment benefits by state, I checked in with Mortimer to get his take on the subject, as he is still collecting unemployment himself. Here's what he had to say:

Benefits don't change at all based on single/family. It varies by state, so if you work in NJ you get more $ than NY and Mass gives even more $ than NJ (close to $600 per week I believe). Then most states calculate based on your last salary -- I think it's some sort of time frame involved like how much you made over the last 3 quarters. Most folks will get the maximum unless you are making like 30K or less. Max now is $405 plus the feds are adding $25 (not sure how long the $25 lasts). So single person making 200K and a family of 7 making 50K will get the same $405.

Not sure if there is a fair way to do it re families -- they would have to look at household income because you could be a family of 7 with another income in the house. Too complicated. NYS needs to up what it is paying -- they haven't done that in a number of years. They aren't even making inflation adjustments.

And while we're on the topic, there was an article this past weekend about unemployment benefits running out for a lot of people:
Prolonged Aid to Unemployed is Running Out

Over the coming months, as many as 1.5 million jobless Americans will exhaust their unemployment insurance benefits, ending what for some has been a last bulwark against foreclosures and destitution.

That's pretty scary. There may be some signs of light at the end of the economic tunnel, but stats like that don't bode well. If your job is gone and your savings are gone and you lose your umemployment benefits, what's left? Here's a few examples cited by the article:

Ms. Lampley, 40, who is married with three children, lost her job as a human resources officer in January 2008 and had been receiving $351 a week, which covered the groceries and gas. Even so, she and her husband, who still has work as a machinist, were sinking into debt. Now, still poorer, she feels devastated because they cannot buy their son a laptop to take to college and she cannot give her 9-year-old son money for the movies.

In Ohio, where unemployment is 11.1 percent, Cathy Nixon, 39, a mother of four teenagers from Lorain, has been out of work for much of the time since June 2007, and her benefits — $313 a week — run out in September. Ms. Nixon is already fighting foreclosure and said she feared that when the benefits end, “we’ll be homeless.” She was unable to afford summer camp and baseball activities for her children, despite scrimping on basics.

Raymond Crouse of Columbus operated heavy construction machinery but has found no work since 2007. Mr. Crouse is 72 and receives Social Security but said that was not enough to live on. The $190 a month he has received in unemployment benefits enabled him and his wife to hang on to the house they bought 15 years ago, he said. But with the benefits ending next month, he fears that they will not keep up.

The comments on the article get into quite a debate over some of these quotes, such as whether or not it's trivial to worry about getting a laptop for your child to take to college, or giving a kid money to go to the movies. (A lot of colleges require students to have a laptop these days. But while it sucks to have to deny a child little things they want, saying no to a movie might be a good lesson in reality.)
What if this situation goes on for many years? What do we now take for granted that we'll have to give up? Will we see more extended families living together under one roof? At some point, will our whole definition of middle class life change?

Is Eye Candy Always Expensive?

This post from The World of Wealth reminded me of something I'd been trying to write about a few months ago. First, an excerpt from MEG's post:

It's been over a month since I joined my new upscale gym, and I have never looked back!

It costs over $130 a month (compared to the $44 a month I used to pay for a regular gym), but I have not had even a twinge of buyer's remorse.....

Going to the gym makes me feel strong, healthy, and energetic, but this one in particular - like any upscale spa or designer boutique - also makes me feel pampered, composed, and worthy.

Also, there is plenty of good eye-candy!

That last line was the kicker for me (emphasis mine). The post I'd been working on several months ago was inspired by two lunches I had at places near my office, one being a typical NYC pizza joint, and the other an upscale, expensive, gourmet Italian cafe. I never got very far writing it, but the tentative title was "Where Do the Beautiful People Eat Lunch," because it seemed to me that the more expensive the lunch spot, the more attractive the clientele was, which seems to have been MEG's observation about gyms as well. Are expensive places really frequented by cuter customers? How might that work in terms of cause and effect, or mere correlation?

There's some logic to thinking people are more likely to be attractive if they can afford upscale lunches and gyms-- money can't create good looks, but it can certainly help enhance an otherwise average appearance. People of a higher socio-economic status are also more likely to be healthier and less overweight, which can improve one's looks. And in the case of restaurants, people who eat pizza for lunch every day might indeed be less healthy than those consuming organic salads from the gourmet place.

Then there's the question of who can afford the more expensive places: I'm sure I've read of plenty of studies showing that attractive people are more likely to be hired for jobs, and paid better. I can't cite any of those studies now, but I think this is something most of us would instinctively believe is true, whether or not it should be!

And there are psychological reasons-- if people value the things that differentiate upscale places from their less expensive counterparts, they are also more likely to prioritize appearance and wear the sorts of clothes or jewelry that might be judged fashionable or attractive by others. And from the perspective of the beholder, perhaps we are predisposed to find people more attractive because we think they have money.

Of course, all of this is very subjective-- everyone has different definitions of what is attractive in the first place. If your aesthetic tends more towards artsy thrift-store skinny-hipster chic, you might not find much eye candy at any gym, at least not in the weight room!

Where do you find your eye candy? Does it have anything to do with money?

A Weekend in the D.C. Suburbs

Not long ago, I spent a weekend down in the Washington, D.C. area. (Unfortunately I didn't get to say hello to SingleMa and Mapgirl.) Let's just introduce the family I was visiting, who are related to Sweetie:

Greg, a lawyer
Beatrix, who has a master's degree in international relations, but is now mainly a stay-at-home mom with a part-time job.
Flopsy (12) and Mopsy (10), their two daughters
Peter (8), a neighborhood friend who came over to play

The family lives in a nice suburban area not too far from downtown D.C.-- and when I say nice, I mean really nice-- large, beautifully manicured lawns surrounding what you'd have to call McMansions, most in brick with a vaguely Colonial look. The nearby public schools are good, but most of the kids go to private schools-- Flopsy and Mopsy already do, and Peter will transfer to one next year. The whole neighborhood gives an impression of upper-upper-middle-class security and it's hard to imagine these kids not remembering their childhood as idyllic-- and the kids themselves are smart and sweet and polite, with a certain pre-teen innocence that is refreshing and charming. I know this all sounds a bit too nauseatingly sweet to be true, but it kind of is! I think Beatrix is a really good mom and the girls don't seem at all spoiled-- at least, not yet!

But of course anything that seems so perfect really isn't. It's not that there's anything terribly dark to report, but Greg is constantly at work, and despite that, apparently doesn't have great career prospects because he's not billing enough hours or landing new clients. This has led to some anxiety about the family budget. Of course this is all relative: they have a great house with a pool, and two high-end cars, and take the kids on vacations to fun places. But those private school bills are a killer-- $30,000 a year each for the two girls. So they've postponed doing some renovations to the house for the moment until things stabilize.

One of Greg's ideas to make things stabilize was that Beatrix must get a full-time job that makes at least $100,000. He apparently doesn't realize that such jobs can't just be had with the snap of a finger! (He also refused to make any accommodations in his own schedule to help keep the household managed if she started to work full time.) Beatrix is highly educated and capable, but like many moms, her jobs have been steadily declining in prestige and challenge since she has prioritized taking care of her kids. At this point, she is trying to land a totally administrative job at their private school-- their education is her top priority, and she wants the discount on the tuition. Anyway, that is all I really know about the family finances, but of course I found it interesting!

Back to the details of my visit:
I have visited the family on several occasions and was quite a hit with Flopsy and Mopsy. They are really into art, and once they found out I could draw, they kept requesting pictures of various animals, girls in ballgowns, and fairies. They also seem to just like the fact that I'll meet them more than halfway in various sorts of imaginative play, unlike some of the other adults around, who don't really want to get that involved. If they want to play charades, I'll ham it up. If they want to play teacher, I'm a very silly student. And this time, they wanted to play "Town," a game which involved paper wallets full of play money-- little squares of green paper were $5 bills, and pink squares were $1 bills-- and we'd each run a business in the town and buy things from each other.
They immediately wanted me to run the "art store," which was fine with me. Flopsy set herself up with the town printing business, so I asked for some signage for my art store. Mopsy was running the post office, so I sent out invitations to my gallery opening. Peter was assigned to run a supply store, where I could purchase additional sheets of paper and avail myself of his pencil-sharpening service. I started cutting up small pieces of paper and doing small drawings on them. I created a price list for these beautiful works, as well as gift certificates for art lessons. And business was booming!
Then I decided to work in some financial education. I asked the stationery store to print up invoices and a sales and expense ledger for my art store, so I could keep proper accounting. I suggested that Mopsy run a bank as well as the post office, where we could deposit our hard-earned pink and green paper. Flopsy was assigned to print up bank books, and I had to explain that banks didn't always have electronic machines that would spit out a record of how much money you had! Then I got Mopsy to start lending out the deposits so Flopsy and Peter would have more money to spend at my art store. Playing town became more like playing "economy," and I think the kids got a kick out of all these new elements I'd introduced to their game.

One final note on the visit: we went out to dinner one night in the downtown area of their suburb. It was hopping! I was impressed that the downtown area seemed to be thriving and all the restaurants and stores were busy. Sweetie pointed out that it's probably because D.C. hasn't lost all the finance jobs that New York has. It's not like all the restaurants here are empty, but what's really noticeable in New York these days is all the empty retail space-- the difference was striking.

Well, that's my report from the trenches! It will be interesting to see how things go for this family over the next few years...

Overheard at BookExpo

As usual, I attended Book Expo America this past weekend. I didn't have a chance to do much scouting for new personal finance books, but I did manage to score a free copy of Chris Anderson's new book, appropriately titled "Free: The Future of a Radical Price."

The most interesting money-related moment of the show for me actually occurred in the bathroom. There was a very friendly attendant working there who was chatting with all of us waiting in line. Here's what she was saying while I was there, more or less:

I'm working here from 7 AM to 7 at night. No, I don't mind at all. I have another job too!
I go home after this job, I sleep for 2 hours, then I get up and go to my other job, cleaning offices at night. It's ok-- hey, my kids are all grown and out of the house.
I thank God that I have even one job in this economy. Nowadays, I laugh to see all these rich people who are scared! I see it in their faces, they're scared.
And to think, I used to feel intimidated by rich people. That's why they build all those tall buildings, so they can sit in them and look down on everybody...

Contrast this to another conversation I overheard, between two well-dressed young women who worked for publishers.They had obviously just run into each other after not seeing each other for a while:

Woman A: Hey, we have to get together! We still haven't done our Brooklyn thing!
Woman B: I know, I know! But I'm really broke again.
A: And I'm really busy...
B: Well, we have to find a time. Around the 15th of the month is a good time for me.
A: Ok, we'll find a time...

I guess Woman B was scheduling her social activities around payday. It's just fascinating how different people can be in their attitudes towards money and time!

A Blue-Collar Revival?

I've been noticing this trend bubbling up for a while as a kind of a hipster thing: cool chicks and bearded dudes who decide to make a living selling crafts, or making artisanal cheeses, or leaving NYC to grow organic vegetables. Now, within the past couple of days, there have been two related articles in the New York Times:

Many Summer Internships Are Going Organic

Erin Axelrod, who graduated from Barnard College last week with an urban studies degree, will not be fighting over the bathroom with her five roommates on the Upper West Side this summer. Instead she will be living in a tent, using an outdoor composting toilet and harvesting vegetables on an organic farm near Petaluma, Calif.

As the sole intern at a boutique dairy in upstate New York, Gina Runfola, an English and creative writing student, has traded poetry books for sheep.

The Case for Working With Your Hands

High-school shop-class programs were widely dismantled in the 1990s as educators prepared students to become “knowledge workers.” The imperative of the last 20 years to round up every warm body and send it to college, then to the cubicle, was tied to a vision of the future in which we somehow take leave of material reality and glide about in a pure information economy. This has not come to pass. To begin with, such work often feels more enervating than gliding. More fundamentally, now as ever, somebody has to actually do things: fix our cars, unclog our toilets, build our houses.

When we praise people who do work that is straightforwardly useful, the praise often betrays an assumption that they had no other options. We idealize them as the salt of the earth and emphasize the sacrifice for others their work may entail. Such sacrifice does indeed occur — the hazards faced by a lineman restoring power during a storm come to mind. But what if such work answers as well to a basic human need of the one who does it? I take this to be the suggestion of Marge Piercy’s poem “To Be of Use,” which concludes with the lines “the pitcher longs for water to carry/and a person for work that is real.” Beneath our gratitude for the lineman may rest envy.

I understand the desire to do tangible, physical work. I've never been paid to make or grow anything, but even food service work and retail sales can offer the uncomplicated pleasure of carrying out a task efficiently and well. To work on an organic farm or sell your hand-made knit hats adds the attraction of nurturing something, or having some independence and creativity, which is important.

But of course there is a certain degree of romanticizing going in these articles. These people think it's cool and fun to repair obscure vintage European motorcycles, but they probably don't want to fix Hyundais. When they become bakers, it's to make fancy pastries or nostalgic, authentic pies, not open a Dunkin Donuts franchise. And as the farm intern article points out, Ivy Leaguers on their summer off aren't necessarily willing to live in the same conditions as your usual migrant fruit pickers. And in general a lot of people are willing to do something "interesting" for a little while, but once reality sets in, "boring" starts to look rather attractive.

And I can just imagine how the parents of most of these people feel: "I paid over $100,000 to send you to Barnard and you want to milk goats?!?!?!?"

But, HELLO, there are a lot of people out there who work on farms and fix things and make things who aren't so self-conscious about what it means for global warming, or whether people think they're cool. They just want to make a decent living, and have some degree of satisfaction and status from it, even if the work isn't always fun. We seem to have trouble keeping some of those jobs on our soil. But as the writer of the "Working with Your Hands" article points out, there are some good jobs that can't be exported, and you don't necessarily need a college degree to get them. If more people are willing to consider such jobs, rather than shunning them as somehow beneath their dignity, that's a good thing.

People who provide a valuable service or product deserve respect, whether or not they are highly educated or have clean fingernails all day. Plumbers don't universally have lower IQs than lawyers. Not everyone who works in a cubicle is a miserable drone, and not every organic farmer is a saint. Not every CEO "deserves" a higher salary than a doctor or a teacher or a garbage collector. And ultimately, people should find their own right balance between happiness and material success or social status. If you can happily support yourself knitting beanies or typing emails or churning butter, organic or not-- I say go for it!

Trying to Be Middle-Class on $500k

Okay, yesterday I couldn't face commenting on recent news stories, but I have to tackle this one:
You Try to Live on 500K in This Town

Like most readers, I can't dredge up much sympathy for anyone who thinks it's tough to get by on $500k a year, even here in NYC. But hidden within the "oh it's so hard to be rich" crap like how to budget for summers in the Hamptons and a full-time nanny lies this valid point:

[In NYC, it] takes $123,322 to enjoy the same middle-class life as someone earning $50,000 in Houston...

Let's say you have a family of 4, and you want a 3-bedroom home, and one car. You want to send your kids to a school of decent quality. And maybe you'd like the kids to play a sport after school, and you want to take the whole family to the movies once in a while. For now, just forget all the extras like vacations and keeping up with the Joneses when it comes to designer clothes and spa treatments. If you want to live in Manhattan, or even many parts of the outer boroughs and New Jersey, you absolutely need a six-figure income to afford these things-- things which people in other areas might consider the bare minimum of a middle-class life.

I did a quick search for 3-bedroom apartments for rent in Manhattan, with 2 bathrooms and 1500-2000 square feet. Those currently listed on the NY Times website range from $3,000-$20,000 a month, with most probably falling in the $8-10k range. You'd have to pay around that much in monthly costs to buy a place too. If you want to keep housing at 30% of your income, you'd have to be making over $300k a year. (Even in Manhattan, the median income is only around $64k, and the average is about $121k.)

How about the car? Forget the cost of buying it and insurance and maintenance. Let's just focus on one thing: where are you going to put it? If you want your own driveway, expect to pay more than the housing costs above. That leaves the street or a garage. If you want to drive around in circles and have to move your car twice a week even if you don't need to use it, and risk damage and break-ins, go ahead and park for free on the street. A garage can easily cost $300 a month and up.

School: New York does have some good public schools, but you can't take it for granted that you'll be able to send your kids to one of them, so many middle-class families who want their kids to get into selective colleges opt for private schools. Some Catholic schools may only charge a few thousand a year, but some charge as much as $25,000 a year, and other private schools can be over $30,000 a year. See here for an evaluation of NYC's public schools-- only about a third get an "A" for the percentage of students passing state tests. I don't have any stats for what these schools offer in terms of sports and activities, but I'm sure budgets will be cut in the coming years given our economic situation.

As for the movies, adult tickets are $12.50 and children are $9.00 these days (over 30% more than ticket prices I found for Houston). Add some popcorn and soda and you're easily looking at $75 for a night out.

Many people will read this and say "well, it's crazy for a family of 4 to try to live in NYC," and however sad that might be, they are probably right. But some people need to work in NYC-- my career options would be severely limited in other cities, because most of the publishing industry is based here. If I had kids, I'd definitely have to move further out of the city, but then I'd incur costs of $200-300 a month for a commuter train pass.

But it wasn't always so-- New York was never cheap, but it didn't used to be this out of whack in relation to middle-class incomes. Those sky-high Wall Street bonuses have been part of the reason-- the tax windfall may have helped fill the city's coffers, but I think NYC is a perfect example of why rising income inequality is a bad thing. I'm not sure salary caps are the best way to fix it, but it will be interesting to see how this might change over the next few years.

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!)

Origins of Family Money

How would you feel if your family had some money from somewhat dishonest origins?
I was talking to a friend about her family background-- it's a fascinating story. One of her ancestors invented some sort of patent medicine and made a fairly large amount of money selling it before such things became frowned upon. Later generations of the family made a living in more legitimate ways, but certainly with the help of that ancestor's money.
Another branch of the family also had some money, but in this case, they were immigrants to the US who started a business that is still run by family members today, though not a branch that my friend is directly related to. There was a bit of a power struggle in the family, and my friend's branch was forced out, and possibly not paid their fair share of the company's value.
We got to talking about this because of a shared interest in genealogy. My friend's mother was very interested in learning more about her family background, but seemed a bit ashamed that there may have been some scandal in her family's past having to do with her ancestor selling fake medicine. But they dug up a lot of information about how active he was in his church and social and charitable activities, which made her feel a bit better about it. Nonetheless, she'd lived most of her life kind of turning away from a background of privilege, doing a lot of volunteer work and living very frugally. Her own children were brought up knowing they had a very small trust fund left by their grandparents, but other than that, they lived a normal, comfortable but not luxurious, upper middle class life. Their college educations were paid for, but other than that they had no handouts.
Money passed down in families can have all sorts of strange effects-- people can feel burdened by it, especially if they have qualms about its origins. Have you ever found yourself in that situation, or known someone else who has?

McInerney on Yuppies

Another article from the 40th anniversary edition of New York Magazine: Yuppies in Eden, by Jay McInerney. I have to quote at length here, with my own emphasis added:

Not long after my first actual sighting [of a supposed yuppie, in 1983], I would see the earliest DIE YUPPIE SCUM graffiti around the neighborhood, an epithet that was soon vying in popularity with that LES perennial EAT THE RICH. The vituperative tone with which the Y-word was pronounced on East Fifth Street was in part a function of rapidly escalating real-estate prices in the East Village; after decades of relative stability that had made the area a bastion of Eastern European immigrants and young bohemians, though, it’s easy to forget at this distance that it was also a war zone where muggings and rapes weren’t considered news. The Hells Angels ruled East Third Street, and after dark you went east of Second Avenue strictly at your own risk. The cops didn’t go there. East Tenth beyond Avenue A was a narcotics supermarket where preteen runners scampered in and out of bombed-out tenements. In fact, great swatches of the city were dirty and crime-ridden. Even the West Village was pretty gritty by today’s standards, and Times Square was a scene of spectacular squalor. Check out Taxi Driver or The French Connection if you want to get a sense of what this urban wasteland looked like.
It wasn’t just the way the city looked, though. New York was, on the whole, a much more parochial place back then, much more divided along ethnic and class lines. Little Italy was still mostly Italian, the East Village heavily Ukrainian. Wealthy Wasps still clustered on the Upper East Side, west of Third Avenue, and Harlem, of course, was 99 percent black, and many white people lived in mortal terror of nodding off on the subway and waking up at 145th Street. The white middle class was draining away from the city, heroin was epidemic, and crime rampant. When I first moved here, getting mugged was a rite of passage. Both of my first two apartments were broken into, and the 1966 Volkswagen my parents bought me for graduation was stolen not once but twice. This was pre-yuppie Manhattan, a city, dare I say it, in desperate need of gentrification.
In the latter half of the seventies, it was a semi-serious idea that the city would be abandoned by the affluent, the young, and the fleet, left to the poor and the halt and the aged. But sometime after the election of Ronald Reagan, in 1980, it became clear that New York had pulled up its socks and reversed the fiscal, physical, and psychic dilapidation of the seventies. The stock market began a steady ascent, which created new jobs on Wall Street. At some point, the influx of ambitious young strivers started to exceed the exodus, and while many of them gravitated toward the traditionally bourgeois neighborhoods of the Upper East Side, others began to reclaim the housing stock of previously marginal or downright dangerous areas like upper Amsterdam and Columbus, or to colonize old factory buildings in nonresidential neighborhoods like Soho and Tribeca and the East Village. When artists did this, it was called homesteading. When people whose day jobs required them to wear leather shoes (yuppies) followed the artists, it was called gentrification....

“Who are all those upwardly mobile folk with designer water, running shoes, pickled parquet floors, and $450,000 condos in semi-slum buildings?” asked Time magazine in its January 9, 1984, issue. “Yuppies,” we were informed, “are dedicated to the twin goals of making piles of money and achieving perfection through physical fitness and therapy.” The Yuppie Handbook, which had just been published, defined its subject: “(hot new name for Young Urban Professional): A person of either sex who meets the following criteria: (1) resides in or near one of the major cities; (2) claims to be between the ages of 25 and 45; (3) lives on aspirations of glory, prestige, recognition, fame, social status, power, money, or any and all combinations of the above; (4) anyone who brunches on the weekends or works out after work.”
Apparently, the creatures anatomized in The Yuppie Handbook were just common enough to elicit recognition, but not so general as to provoke a shrug. The concepts of “brunching” and “working out” were apparently new and humorous. A few of their defining characteristics—dhurrie rugs, potted ferns, pickled parquet floors—sound suitably dated. But many more—European automobiles, gourmet kitchens, computer literacy, designer clothing, and sushi—fail 25 years later to convey the exoticism that the authors seem to have intended. Oh, those wacky yuppies, eating raw fish and going to the gym.....

As much as the term conjures the eighties, the yuppie has never quite faded into history. In 2000, David Brooks tried to refine the concept, coining the term BoBo to describe an allegedly more enlightened consumer who combined the self-interest of the eighties with the liberal idealism of an earlier era, using the Y-word to denote a less enlightened group. In the meantime, the yuppie family tree has thrown off another branch, the hipster. Hipsters believed they were the ultimate anti-yuppies. Unlike their forebears, they wanted to be known not by their job or ambition but by their self-conscious disregard for either. If anything, the cult of connoisseurship was even more exaggerated in this subgroup. Their code, enshrined in Robert Lanham’s hyperironic 2003 Hipster Handbook, was inherently elitist, defining itself in opposition to the mainstream. Hipster consumerism championed the notions of alternative and independent, rejecting the yuppie embrace of certain consumer brands in favor of their own. So it was vintage T-shirts rather than Turnbull & Asser dress shirts with spread collars, Pabst Blue Ribbon over Chardonnay. But ultimately, whether you love Starbucks or loathe it, a world in which we are defined by our choice of blue jeans and coffee beans owes more to Alex Keaton than to Abbie Hoffman.

And as if to prove that the hipster and the yuppie are brothers under the skin, borough-bred columnists like Denis Hamill and Jimmy Breslin still find the yuppie label useful for bashing a certain breed of interloping effete New Yorker, the kinds of people who may in fact identify themselves as hipsters.

There probably are a few Budweiser-drinking union members left out in Brooklyn and Queens who guffaw at the idea of anyone belonging to a gym or buying coffee at any place other than a deli, but generally speaking, yuppie culture has become the culture, if not in reality, then aspirationally. The pods have pretty much taken over the world. The ideal of connoisseurship, the worship of brand names and designer labels, the pursuit of physical perfection through exercise and surgery—do these sound like the quaint habits of an extinct clan?

I think he nailed it. Maybe this is truer in New York than in other places, but pretty much everyone in this country is a yuppie now, or at least shares a lot of those values.

Related posts from the archives: What is a Yuppie? and Hipsters and Money.

Class Warfare in the Air

The New York Times recently had an article titled You Still Fly Commercial? That’s So Down-Market:

We are developing in this country an upstairs-downstairs air transportation system. Downstairs is the commercial airline industry — constricting, retrenching, ever more expensive to fly and struggling for survival.
Upstairs, for those who can pay the price, is business aviation — thriving and expanding....

In 2000, commercial airlines flew 79 million so-called premium passengers (defined as those flying first-class, business-class and full-fare coach) on one-way domestic trips. Last year, despite a sharp increase in overall passenger traffic, that number was 42 million. Premium passengers, incidentally, account for about twice the revenue per passenger mile as nonpremium passengers.

No wonder the airline industry is in trouble-- it's gone from being something that only the upper classes can afford, to being a mass-market mode of transportation that the upper classes would rather avoid, the result of which is that the highest-paying customers are being sucked away. (As an aside, I can't help thinking how this could compare to things like health insurance and Social Security: for these systems to work, you need a broad base of people paying in, some of whom don't get sick all that much, or die before they collect their full benefits. If people are able to opt out, you're left with the wrong balance of participants)

On the Wall Street Journal website, Robert Frank recently wrote about private jets, bringing up some other issues associated with the shift from commercial to private aviation which affect all of us, not just travelers:

A new report released by Essential Action and the Institute for Policy Studies — two left-leaning Washington think thanks — makes the case that America’s fleet of 10,000 private jets are extracting a huge cost from everyday Americans.... The reasons include:

POLLUTION — An hour of flying a private jet burns as much fuel as an entire year of driving a car, the report says, contending that four passengers flying in a Citation X from L.A. to New York will each contribute five times as much CO2 as a commercial-airline passenger.

TAXES — In 2008, the report says, the private-jet lobby won special tax breaks for purchasers of new aircraft, essentially allowing buyers to take larger tax deductions in the first year of their purchase.

SAFETY — Private-jet travelers don’t pay their fair share of costs associated with air-traffic safety, the report argues. A commercial flight from New York’s LaGuardia to Miami International would pay $2,015 in taxes. A corporate-owned Gulfstream flying from Teterboro to Miami would pay only $236, “even though they incur the same air-traffic control costs.” The report says commercial planes pay 95% of FAA air-traffic-control costs, even though they use only 73% of its services.

It's funny, airplanes used to be thought of as good opportunities to meet people and make business connections. I have a cousin who met a rich guy on an airplane and they ended up dating for a while, and on another occasion someone gave her his card and told her to contact his company about getting a job. It didn't hurt that my cousin was young, gorgeous and very friendly, of course, but how are young, gorgeous, friendly women supposed to get ahead if all the wealthy corporate alpha males are hidden away on private jets??? How many flight attendants can those private jets possibly employ?*

As for the rest of us who still fly economy, it sounds like we'll be forever doomed to rubbing elbows with other middle class stiffs, not to mention having to buy our own peanuts...

*Lest I be accused of perpetrating sexist notions of women in business, I have to add a link to an article that appeared after I'd finished writing this post: A Boss in the Private Jet is Likely to Be a Woman:

XOJet, the big private jet company, says that about 15 percent of its customers who contract for 100 hours or more a year in flight time are female. And while few keep precise statistics, all of the private jet companies I spoke with, including charter operators, said that women are a growing part of their market.
For women, ego and status seem to be less important as motivators than considerations like avoiding the problems and delays of commercial airports. Essentially, some say, you are buying time....

In Los Angeles, Nancy Furlotti, a psychotherapist and real estate investor, said she uses her private jet, an eight-passenger Cessna Citation X, when flying commercially would waste time.

“I have a private practice, but I’m also currently president of the C. G. Jung Institute in Los Angeles, and I have to do a tremendous amount of traveling to various conferences and things like that,” she said. “Many times I would not be able to get to these meetings and get back in time for my practice here, and for family.”

Many businesswomen who are balancing work and family responsibilities say a business jet solves logistical problems.

Recently, she added, her son’s wedding required getting her 87-year-old mother, 94-year-old mother-in-law and several other relatives to San Francisco. “Managing that on a commercial flight? A potential disaster,” she said.

None of this comes cheap. And the surge in private jet travel only underscores the growing disparity between the haves and have-nots in air transportation.

A 25-hour Marquis Jet card on the Hawker XP model that Ms. Swanson flies costs about $132,000 (plus trip taxes and government fees) as of Jan. 1. XOJet said that for a Citation X like the one Ms. Furlotti uses, a $375,000 upfront fee guarantees 100 hours of on-demand flying time over five years, with an additional hourly flying charge of $3,600 to $4,000.

Hipsters and Money

Quite a few months ago, TimeOutNY had an issue whose theme was "The Hipster Must Die." Of course this title was somewhat tongue-in-cheek, as they'd probably be killing off half their subscriber base, but it got me thinking about the financial aspects of hipsterdom.

First of all, it's a little unclear exactly what a Hipster IS these days. The various elements involved might include being involved in art or music or literature, wearing thrift store clothes, riding a certain type of bike, and generally adopting an attitude of being counter-cultural, or anti-Yuppie. The Hipster embraces a kind of anti-cool cool, and celebrates a certain degree of nerdiness.

New York is full of these types. It's as if the Statue of Liberty were beckoning to them, saying "Give me your tired, your poor, and those who were always being given wedgies in middle school." The supposed non-conformism of Hipsters is kind of a joke here, because they all look the same-- tight skinny jeans, extreme pallor, hats that are otherwise worn only by elderly Puerto Rican men, and retro-geeky sneakers.

(See, I am over it because I am old enough to have seriously wanted those same sneakers as an upscale, aspirational, non-ironic fashion item in the 1980s.)

Some of these elements of hipsterdom are closely associated with money.

For instance, Hipsters tend to like to buy clothes in thrift shops and say they are broke, unlike all those suit-wearing Wall Street types who are getting paid to be conformists. How many Hipsters really are broke? Do Hipsters drink Pabst Blue Ribbon and other cheap beers in cans because they can't afford Belvedere martinis? Or just because it looks cooler to get a bucket of PBRs? Hipsters used to move to Williamsburg because it was cheap. Then Williamsburg started to fill up with yuppies, so the Hipsters had to move on to Greenpoint and Bushwick and who knows where next. Again, is it really the money, or do Hipsters just prefer to have people reply "Where? Is that safe?" when they say where they live? I've already blogged about the tendency of Hipsters to ride the one-gear, no-brakes bikes known as "fixies." These bikes look simple, but they're not cheap: try $800 and up. For a bike with no brakes. In New York City. Smart, huh?

But despite this embrace of at least the appearance of poverty, Hipsters have become a target market, at least in New York. Perhaps recognizing that some of these people actually have trust funds, a savvy real estate company started offering "Home-Buying for Hipsters" seminars at bars in Williamsburg. Great derision followed at real estate sites such as Brownstoner and Curbed, including this gem of a comment:

once you buy a home, you are no longer a hipster. you're a mortgage holding wiener like the rest of us.

What say you, readers? Which would you rather be, a hipster or a mortgage-holding wiener?

Notes from a Business Trip

This past weekend, I attended the BookExpo convention in Los Angeles. You can see from this post what the show like a couple of years ago. This year, I didn't have a chance to scour the whole show for financial books, but of course money was still on my mind!

The first aspect of my trip that got me thinking was the route my car service driver took to JFK airport. From the areas of Brooklyn I've lived in, drivers usually opt for routes that are a bit circuitous but consist of major highways-- it's almost as if you have to go from 6 o'clock to 12 o'clock and you have the choice of going around the edge, clockwise or counter clockwise. But this time, my driver took a route along a lot of small local roads for the shortest possible trip straight through the middle of the clock. We hit lots of traffic lights and got stuck behind trucks, but I'm not sure it was a bad choice in the end. He might have avoided traffic jams on the highways, but more importantly, he probably saved on gas.
Car service drivers usually have to get as many jobs as they can, as quickly as they can, to make it worth the cost of renting or owning their car. But with higher gas prices, has the balance shifted? Would they rather take the route that conserves fuel even if it takes a bit longer?

On the long flight, I managed to do a lot of reading, including a couple of articles from the NY Times and the Wall Street Journal.

Of note in the NY Times was an article noting that while prices for many things are increasing, clothing is getting cheaper, at least for mainstream brands.

The Journal had an article about the Sex and the City effect on women's career wear. The ultimate verdict is that the kind of fashions the show espouses are more likely to look trashy than status-y in an office. Most high-ranking female executives favor a much more conservative style of dress, with nice details in the cut of a collar, or a swanky scarf or necklace jazzing up the look. I also had to note a mention of a "$3,000 Swarovski-crystal encrusted handbag shaped like the Eiffel tower." Forget professional vs. trashy, that just sounds hideous.

The Journal also had an interview with the CEO of Coach: "Coach Targets China-- And Queens."
The handbag retailer is planning to expand in China, targeting the emerging middle class, since their prices are lower than most European luxury brands. Meanwhile, they plan to open 200 stores in the U.S. over the next several years, bringing the total to 500. This means they will be branching beyond the locations traditionally thought of as high-end retail destinations. In the New York area, they'll be opening in Staten Island and Queens. Here's a few quotes:

"By convincing American women they need to buy several $300 handbags a year, Coach, Inc. has helped shape the "accessible luxury" retail category, producing $2.6 billion in fiscal 2007 sales."

CEO Lew Frankfort: "A lot of my team said, 'Queens? How can you do that?' But our target consumer shops in those stores. We aren't going to advertise it on our marquee: Staten Island, Queens, Tokyo, and Hong Kong... In the first six months, 30% to 50% of our consumers are first-time users. So we are able to attract, in those instances, candidly, a more aspirational consumer."

WSJ: How do you retain the very elite, New York, Madison Avenue customer?
Frankfort: She doesn't go to Queens Center. She doesn't know about it.....

Wow, can we just translate that? "Dear Middle-Class Coach Customer: Having one of our bags makes you look really high-class. Dear High-Class Coach Customer: We only sell to people who are as special as you, not just any old middle-class slob. Dear Coach Stockholders: We are going to sell a gazillion handbags to every woman on the planet."


And finally, at the airport on my way back, I faced a HUGE line for check-in. Those little electronic kiosks haven't helped a bit: now you just have to line up for those instead of for a person, and I had to check a bag so I wouldn't have to ditch my expensive hair product! But outside, the line for curbside check-in was practically non-existent, no doubt due to the new $2 fee. Many people just don't want to pay this fee. Others end up confusing it with the tips that were customarily given to the skycaps anyway, leading to those guys getting stiffed. Anyway, I decided it was worth it not to wait in line and forked over the $2 fee, plus a $2 tip. Funny how a few dollars can sometimes make a big difference!

What's Up with the Middle Class?

There seem to be two different angles on what it means to be middle class these days.

On the one hand, there is a sense that middle class people are greedy and spoiled. The middle class has its eye on the upper class, and wants all the luxuries that used to be seen as just for rich people. Everyone is trying to keep up with the Joneses, with bigger houses and fancier cars and clothes than the middle class used to have. They are better off than they've ever been but they can't appreciate it because they are greedy for more.

Then there is the sense that the middle class is squeezed. Today's middle class is worse off than their parents-- college and healthcare costs have skyrocketed, good jobs with benefits are more difficult to find and it's harder to make any real progress towards financial security and a comfortable retirement. For some examples of the changes a median family has faced from 1970 to today, check out Jonathan's post about a lecture called "The Coming Collapse of the Middle Class." The middle class is seen as being the segment of our society that needs the most help right now.

Who are the middle class anyway? When politicians talk about taxes, at least in the last few years, they tend to define the middle class as anyone making up to $200,000 or so a year. But only about 2% of households, I believe, make over that amount. It seems a bit too broad to define middle class as 96% of the population, excluding only the 2% who are the most wealthy and the 2% who are poorest. And actually there is a much larger percentage of the population who live at poverty level or below, usually about 12-15%. And the poverty level is defined as an income of just over $10,000 for a single person, $13,690 for 2 people, and only $20,650 for 4 people. That leaves an awful lot of people in the range of incomes between $20,000 and $200,000 to be considered middle class.

So maybe what many of us think of as "middle" is not truly in the middle? Rather than having an "upper middle class," maybe we have a "middle upper class?"

But money is not the only thing that determines class. You can still view the special report that the NY Times did a couple of years ago called Class Matters, whose interactive tools try to measure the way income, education and occupation all factor into social class. Is what we think of as middle class more about a certain set of values, like sending your children to college or owning a home or working in a white-collar job, or taking a vacation every year?

How do you define the middle class? Do you consider yourself middle class? Do you think the middle class is better off or worse off than 20 years ago?

6 Degrees of Wealth

How close are you to wealth? I was inspired to think about this question by English Major's post about her aunt, who she describes as "... rich. Like, rich rich. Like, lives off her investment income rich."
I thought, wow, I know some people who are well-off but I don't think there is anyone like that in my immediate circle these days. My family are mostly in various tiers of the middle class, and their income comes from working, or their own retirement savings. I can't think of many family members who are likely to have more than 5 figure incomes except one cousin who is a lawyer, one uncle who is successfully self-employed, and the husband of a cousin, who works in the insurance industry. I also have family members who are pretty working class and probably earn well below the US median income (which I believe is around $48,000). If I expand the circle to include friends as well as family, there are a few more lawyers, a Silicon Valley project manager, and a couple other people in the business world who do pretty well, but also a number of people who work in non-profit fields, or low-paying industries like my own.
If I broaden the circle even more, to college acquaintances who aren't really friends any more, then we'd have some bigger money. A bunch of Wall Streeters, one or two people born into wealthy families, a minor TV star, and a few very successful artists and writers. And I'm sure some of them are rubbing elbows on a regular basis with people whose wealth puts them in the stratospheric upper levels of richness. I know for a fact that one person I used to sit next to sometimes in a college class is now married to a celebrity whose earnings are in the millions. Which just seems really weird.
Many personal finance writers talk about how your friends can influence your spending habits. Does having or not having wealthy people around you influence your attitudes about your own wealth? Do you have a financially diverse group of relatives and friends, or is everyone more or less at the same level?

Bubbles' Hot Date

I finally got the scoop from my friend Bubbles about her date-- see this post for the full backstory, but to put it briefly, she meets this guy online, he seems nice, and he also seems like he might be very wealthy. Bubbles can't help but get her hopes up a bit, but is he too good to be true?

Many of the comments on the previous post echoed the same theme: proceed with caution. Was this guy, who I'll call "Tiny"... no wait, that's too weird and will give everyone the wrong idea about the punchline. Let's just call him "Mike." So was Mike dropping little tidbits into his emails to try to impress Bubbles? Is he some dangerous psycho who is trying to lure her with the promise of riches? Or is he, perhaps, a normal guy who might just be overworked, or shy or just straightforwardly trying to meet someone new? And if so, could Bubbles be about to meet Mr. Right and enjoy a future filled with golf outings, travel and all the other trappings of an upper class life? And would she actually enjoy that?

As I pointed out before, Bubbles is an independent, open-minded kind of gal, not someone easily swayed by swagger. She just wants a nice, reasonably cute boyfriend. And though she said Mike's emails weren't the most brilliant or fascinating emails she'd ever read, it seemed like they might have some things in common, and he did sound nice. He also sounded "real" somehow, she said-- he had mentioned his expensive sports and his weekend house in one of the early emails, but otherwise, he didn't seem to be trying to impress her at all and just seemed to be enjoying their banter. He never asked her to send him a photo, which, to her, was a good sign that he liked her personality and was not the type to write someone off just because she wasn't a supermodel. So she didn't ask him for a photo either.

I was a little surprised at that detail. I'd like to think I'm not superficial about these matters, and also, photos can be deceptive. But personally, I'd like to have some sense of who I'm dealing with before I agree to meet them, even if it's going to be in a well-lit public place. Bubbles said she had sometimes felt that way too, but that in this case, she just wanted to "go with the flow." She is pretty cute herself, and she liked the idea of someone being pleasantly surprised when they saw her for the first time, and hoped that would be the case with Mike too. But here's where Bubbles' bubble begins to burst.

When she first sets eyes on Mike, she thinks "Whoa, he looks kind of ... old!" She had thought he was going to be only a couple of years older than her, and given that her last boyfriend was younger, she had this weird moment where she suddenly began to question her own attractiveness, thinking "Yikes, is this what people our age look like? I have to face reality!" But the more she looked at him, the more she thought he really seemed not that well-preserved. But they sat down to dinner and started to talk. He was obviously nervous, which she found sort of endearing. He was nicely dressed, and not bad-looking, but he just seemed... old. And sure enough, within the first 15 minutes, he sheepishly confessed to being 10 years older than he'd originally claimed. Bubbles just said "oh, really?" and let it go. Inwardly, she was a bit disturbed: it wasn't like their age difference was all that extreme, though it was the first time she'd dated anyone whose age began with the number 5. I think she was perhaps less freaked out at the fact that Mike had been untruthful than at how narrow the gap had become between her and a 50-year-old! "He should be old enough to be my father," she said, "except, he's not!"
They ended up having a perfectly fine dinner. Mike was "nice," "polite," "a gentleman," and as far as she could tell, didn't seem to be lying about his position in life-- "kind of self-effacing" was a phrase she used. She didn't dislike him, but didn't feel like there was any chemistry, and though they chatted about all sorts of things, she didn't feel like they really got to know all that much about each other, and she felt like she was doing more than her share of the conversational work. Bottom line, she was disappointed. She couldn't help but think the guy might be some Prince Charming who would sweep her off her feet, just because he had money. I think she thought his wealth would translate to some kind of glamour, but it really didn't. And knowing that he was much older than she'd thought made it somehow less appealing-- like it wasn't as big an accomplishment to have achieved those things at a later age.
It's funny, Fifi (of the bachelorette party) briefly dated a MUCH older man who was wealthy. They actually did have a certain chemistry (which I personally found disturbing), and she was much more willing to consider becoming a kept woman than Bubbles is. (I found that disturbing too.) But the guy ended up not taking her all that seriously. In Bubbles' case, the lack of physical attraction just made her feel like an idiot for even thinking about the money-- her scale definitely tips in the other direction.
But guess what? Mike emailed her as soon as he got home that night and seems to really want to see her again. She hadn't actually set up another date with him when I spoke to her, but it sounded like she was going to give it another chance.
Poor Bubbles. When I spoke to her, she really seemed glad to have someone to talk to about this. I felt a little guilty that I was prodding her about her feelings and motivations, but I guess it made for a good therapy session for her, as well as good material for me! Bubbles, if you ever find this blog, I hope you'll understand!
(She'll probably just be mad that I called her Bubbles.)

Hot Date This Weekend?

As the weekend approaches, I am wondering how a friend of mine will do on her first date with someone she met online. But I'm even more fascinated by some of the email interaction before their meeting, at least as she's explained it to me. It's interesting how we pick up clues about another person's financial status, and how that might change our perception of them as a potential partner.
My friend, Bubbles (oh how I love making up these blog names!), is of a similar background to my own-- middle-class, well educated, well-employed but not raking in huge bucks as far as I know, as she works for a non-profit organization. People she's dated have fit pretty much the same mold. This time, she gets a response to her online profile from a guy who is around her age, who in addition to sharing her interest in films and seeing live music, says he plays squash and golf. Great!, she's thinking, as it's quite clear he means real squash and golf, not video game versions, as would have been more up the alley of her last boyfriend. Then in the next email, he reveals that he lives in a swanky neighborhood in their city and plays squash at some exclusive-sounding private club. She starts to think, whoa, I don't know many people who can afford stuff like that. It further develops that he owns a weekend house, travels a lot, and works for an investment bank.
Bubbles isn't quite sure what to think. Suddenly it is starting to sound like this guy might be A) really loaded or B) lying. And if he really is A) really loaded, why is he looking for dates online? Shouldn't he be able to meet plenty of single debutantes at his fancy club? Is he really single? Why is he single? What is wrong with him?
From what Bubbles has told me, the emails exchanged have been fairly brief. She didn't say anything about how charming and funny he was, just that they seemed to like some of the same books and movies, and that his emails sounded "nice" and were properly spelled and grammatical, which is always a good sign. But I can't help wondering if she'd have been as willing to go out with him without knowing more if he hadn't dropped these little signals of wealth. And some of the signals were subtle, but I mentioned it to another friend of ours who immediately said "Squash? Oh yeah, he's got money." And I kind of thought that myself-- I mean, hey, I read the Preppy Handbook back in 1981, when my entire junior high school, myself included, didn't quite get that it was supposed to be satire rather than instructional. Golf may be an expensive sport to play, but it's totally mainstream. Squash doesn't seem mainstream, it belongs to a certain world.
Bubbles is hardly the gold-digger type, and maybe I'm projecting too much here, but I could see her perhaps thinking that a rich boyfriend might be a nice change from her usual hipster-y, downwardly mobile type... and if I was in her shoes I could see myself feeling the same way-- and I was once in a similar situation where I did kind of feel the same way, but it only took that one date for me to know I didn't want it to go anywhere, regardless of the money! And if it had gone anywhere, I think I always would have struggled with enjoying what money can provide while wishing it was my own money doing the providing...

The Times Magazine Money Issue: Popularity and Ruby Payne

This past Sunday's NY Times Magazine Money issue was full of great stuff. An article called The Class-Consciousness Raiser particularly interested me:

She had already explained why rich people don’t eat casseroles, why poor people hang their pictures high up on the wall, why middle-class people pretend to like people they can’t stand. She had gone through the difference between generational poverty and situational poverty and the difference between new money and old money, and she had done a riff on how middle-class people are so self-satisfied that they think everyone wants to be middle class.

Interesting... why DO poor people hang their pictures high up on the wall? But more importantly, how will knowing the answer to that question help anyone?
The "she" referred to is a woman named Ruby Payne, whose best-known book, A Framework for Understanding Poverty, has been in the top 50 on Amazon for the last couple of days. Payne has made millions by doing seminars for teachers (and selling related products) to help them understand students who come from poverty. Her fans think she is doing great things. Her detractors say that her work is anecdotal, not researched, and that she is just perpetuating harmful class stereotypes.
The story about Payne has been one of the most-emailed articles on the NYT website in the days since it appeared, which I think is indicative of Americans' obsession with the mystery of class. We all know there are elements of money and education to it. Birth can matter, your job can matter, and then there are those other tricky aspects like the accent in which you speak, or whether you're anxious about knowing which fork to use-- because of course using the wrong fork could be very classy indeed as long as you did it with insouciance and panache and full knowledge that your fork-usage transgression was carried out in the spirit of delightful qualities whose names are deriven from French. We all seem to find it fascinating that we might telegraph these little signals about what kind of people we are, and we love trying to decipher those signals in others.

I have to confess that I am really tempted to read some of Ruby Payne's books, some of which focus on class/money differences at the office, and in relationships. I have always had a pet peeve about pictures hung at inappropriate heights, and when I moved in with a long-ago ex-, whose family background was a notch down the income/education scale from mine, I got really bossy about deciding where things should be hung, and always found myself insisting that they be lower! So for all that that detail seemed a little ridiculous, it definitely caught my interest! Perhaps there is a grain of truth in these stereotypes...

The other piece in the magazine that I found particularly devastating was the photo essay called Money Talks. Take this quote from a 17 year old boy:

You have to be popular, you have to be in style-- in order to be popular you have to be in style, so to achieve popularity, you have to have a lot of clothes, a lot of shoes. My parents used to give me the money, but they saw how I got out of hand with my spending, so I had to get a job and pay for everything myself. Sometimes it can go close to $700, $800 a month, just on clothes.

Perhaps I am just over the hill and naive, but I thought most teens would at least give some lip-service to the idea that popularity isn't everything, or at least that popularity can be determined by factors other than one's clothes! But I guess this kid was just being honest about it. Unfortunately, ever since the story came out, the guy has probably been ridiculed by all his classmates for breaking the rule of cool by being too nakedly ambitious in his quest for popularity, while the other popular kids suddenly insist that insouciance and panache are all that really matter...