Hair today, gone today (at least some of it)

Is $80 too much to spend on a haircut? Hey, this is NY, I could do worse. I like how Time Out NY always asks people how much they'd be willing to spend for a haircut, in their little seen-on-the-street fashion feature. The answers vary wildly, from $0 because people cut their own hair, to well over $100.
I justify it as such: it is my only major grooming expense. I do my own manicure and pedicure, don't buy much makeup, don't go to tanning salons, and waxing, well... whoa, whoa, TMI...
No, really it is justified because I look FAAAAHHHHBULOUS.

But while at the salon, I discovered that my cash on hand is off from Quicken by about $8.00! Horrors! This drives me nuts, when I track things so carefully and then somehow still an error creeps in or I forget to note something. But last year's total balance adjustments only came to $26.25 unaccounted for, so that isn't too bad.

Coney Island of the Stomach

Hot dogs, corn on the cob, fries, beer, cokes, and fried chicken= $20.57 (glad I'm counting pennies and not calories)
Sun, sand and sea are free. But what makes them more enjoyable is one of my more extravagant purchases of recent years, a Tilley hat. The $60 price tag made me gasp when I picked it up. Could I have been equally as well protected from the sun by any of a million free promotional baseball caps, or the straw hat I bought at Woolworth's years ago for $1.00? Probably. But it just wouldn't be the same as having this nice hat that actually fits and won't blow off. And it's so great that the grommets are rust-proof! And someday it will come in handy that I can store stuff in the pocket inside the crown. And I know I'll meet other fascinating travellers who are wearing Tilleys, and they will invite me to dine with them in St. Tropez. We'll eat fine foods and drink fine wines, and afterwards probably all die when we drive our convertibles off those winding Cote d'Azur roads.

Housing bubble burst: bring it on

I keep trying to figure out if the housing market here is about to take a downturn. For so many reasons, it seems like it has to. Bubble Meter is very reassuring on this topic! I set up a little grid to track how many apartments are listed on the NY Times website each week, so I can see if supply might be starting to outpace demand. I'm kind of passively apartment-hunting right now, just checking out different neighborhoods that I might need to consider, trying to figure out what might still be comparatively a bargain. It's hard to believe that the bubble-burst, when/if it comes, will be a drastic cut in prices, but there has to be some kind of dent in the long-term upward trend line. So do I wait? Buy now in an up and coming neighborhood where I can get more space and prices have more room to grow? Buy now in a well-established neighborhood and get less space but perhaps less risk of loss of value in a downturn?

I also found this article -- it certainly hit home with me. My rent, which includes gas and electric, is $850, for a small studio in a decent area, not too far out in Brooklyn. For this same monthly cost, assuming a 20% down payment and $450 monthly maintenance, the selling price would have to be around $120,000, which is about half (or less) what studio apartments go for in this area, and still a lot less most than studios even in areas quite a bit further out. I could rent a small one-bedroom for less than it would cost me to buy a small studio anywhere near here.

Water

Spent most of the day lounging in various spots along the Hudson (and in a bathroom while it poured). Snacks: $7.26 (bagel, water, hot dog, lemonade) The water is what gets on my nerves. Usually I bring a bottle filled with tap water from home. I may not be one of those people who swears NYC's water is the best in the world, but I think it is perfectly fine and it blows my mind that some people probably spend $800 or more a year on bottled water. 365 days X 2 bottles a day X $1.59 actually comes to $1,160.70.

Origins

Genesis of the Daleks...
Batman Begins...
Birth of Venus....

I found an amusing spreadsheet in a dusty corner of my computer: one of my first attempts to systematically summarize my expenses, from 1998. It's not set out in a very user-friendly manner. Oh how things have changed since Quicken came along. I'm posting it on Yahoo.

Worksheet to calculate cost of rent vs. ownership

I just created a Yahoo group (see link at bottom right) so I could post an Excel file that I use when I'm checking out real estate. (If anyone knows of a better way to make this available via blogger, let me know!)
I set it up so I can enter various factors, including sale price, maintenance, tax deductibility, tax bracket, interest rate, salary and budget items, and it calculates monthly and yearly costs, tax savings, etc, and gives me a yes or no based on my savings goal. It assumes a 30-year fixed rate mortgage. Still a work in progress-- I'm trying to figure out a formula that would backtrack to generate how much I could afford to offer to meet my savings goal, if the seller's asking price is too much.

I have this saved up on my desktop computer, and it synchronises to my Palm via Documents to Go, so I can run the numbers while visiting apartments. Or for my own amusement while on the subway or whatever!

What I spent...

This past week was pretty good. I was better about bringing breakfast and lunch from home, though I ate dinner out 2 nights. Groceries came to about $60. I bought some used books-- 3 for $23. I donated $100 to a worthy cause (sponsored a friend's lobbying efforts with the Nuclear Information and Resource Service, to prevent nuclear waste dumping on Native American lands). I bought new glasses-- $149, but that doesn't include the lenses and eye exam that I need because my prescription is too old. And I discovered a cheap treat: 25-cent ice cream sandwiches at the local deli. I bought one on my way home from watching the fireworks, and at first I thought the guy had made a mistake. Then because I was so shocked, I guess he decided that I must be a foreigner and asked me where I was from. He laughed really hard when I said "Two blocks over!"

Rule #1: Credit card use

• Use a credit card for every expense you can possibly charge.
• Use a card that gives you frequent flyer miles or some other benefit that you'll actually take advantage of.
• Only charge as much as you can pay off in full every month-- don't carry a balance.

I know this is controversial-- a lot of people caution against credit card use, saying that it's easy to go crazy spending money without seeing how it affects your bank balance. They'd rather use cash or debit cards, thinking this will keep them in control better, and for some people, that may be the right way to go. But if you can keep your expenses in perspective and not spend more than you can pay off, here's why it's a good idea:
-- you are basically getting a free short term loan for a few weeks, as no finance charges are due if you pay your bill in full every month.
-- you get a printed record of exactly what you spent your money on, monthly and usually a summary at the end of the year. It's harder to keep track of cash. Knowing what you spend your money on is the first step to being able to see where you can save.
-- if you use Quicken or another financial tracking program, you can set up online access and download your transactions right into the program.
-- if the card has a good rewards program, you can save a lot of money. I use a United Airlines Visa, and between credit card use and actual flights, I've earned enough miles for an average of one international round trip for each of the past 5 years. Some of this was based on business use reimbursed by my company, but that's at least $3000 or so that I've saved on airfare. My card has a $50 annual fee but it pays for itself!

Obviously, if you can't pay off the card every month, you should avoid using it, and if you have a credit card balance, you should do everything you can to pay it off, before the high interest buries you! When I was in my early 20s, I ran up a balance and switched cards a few times to take advantage of those "no interest on transferred balances for the first 3 months" kind of offers. But as soon as I had any cash, I tried to pay off the cards. I have known people who had built up some savings, and still carried large credit card debts. "But my savings are earning interest!" they'd say. It makes sense to keep some savings for emergencies, but you're probably paying 10 times more in interest on the credit card balance than your savings is earning, so just pay off as much as you can.

Free annual credit report

Just added a link for a site where you can get a free annual credit report. It's not available to people in the Northeast until Sept. 1, 2005, but the rest of the country can already use the site. Always a good idea to check for any irregularities and be prepared to deal with them before trying to buy real estate, get a loan, etc.
If you have credit cards you don't use, make sure the accounts are really closed, otherwise they may be counted against your total credit limit.
When I rented my current apartment a few years ago, I found a few dormant but still open accounts that needed to be cleared up, and I consolidated my credit cards down to 3-- one Visa that I regularly use, one spare Mastercard that I rarely use, and an Amex for those rare occasions when that's the only card they'll take.

An apartment

Apartment listing

Here's a decent looking studio. $240k, $440 maintenance. But even if I put 20% down, I can't afford it. I'm not too far off, but the monthly costs would work out to about $1,555, which means I'd spend every penny of my paycheck unless I made some fairly significant lifestyle adjustments. Would it be worth it? Is it realistic to expect that I could really spend a lot less on my other expenses than I did last year? Hmmm....

The best laid plans...

I intended to go home and cook dinner last night but at the last minute, a friend called and we ended up eating out. $42. (It was just a noodle place but I picked up the check for both of us.)
Today I spent $3.10 on breakfast, but I was good and brought my lunch from home again.

Food is a big budget item for me. Year to date I've spent the following:
Groceries: $1,071 (the usual items for meals at home)
Dinner out: $1,375 (including liquor consumed with meal)
Lunch: $944 (usually a sandwich, sushi, soup or a burger)
Breakfast: $423 (coffee, bagel, fruit, yogurt, etc)
Liquor: $288 (drinks with friends and wine for home)

Unfortunately, when I'm feeling outgoing and social, I really see a hit on my finances! I go out to dinner or order takeout maybe 1-2 times a week, at varying levels of restaurants, rarely extremely expensive but we're not talking Burger King either. And lunch is the worst-- I almost always buy lunch and it can easily be $7-8 or more. I'm working on that. I feel like a lot of people my age and younger go out a lot more than I do, drink more, eat lunch out everyday, and I just don't know how they manage it.

And even with groceries, though I try to clip coupons here and there, I'm not good about looking for foods that are on sale, and I like good steaks and lambchops, which can be $12 a pound or more. Sometimes I'll also buy prepared foods at places like Garden of Eden or Whole Foods. Salmon, for example, is about twice as expensive pre-made vs. just buying raw to cook myself. I rationalize this by telling myself it's still so much cheaper than eating out!

I Bonds from Treasury Direct

Here's a nice conservative way to sock away some savings. You can buy US treasury bonds online. I still have one paper savings bond at home, but they are now transitioning to online accounts-- much better than worrying about losing a paper bond if the house burns down. At TreasuryDirect.gov, you can buy EE and I Bonds. I like the I Bonds as they are indexed to inflation. You buy them at face value and they earn interest until they mature in 30 years. Currently the rate is 1.2% above the rate of inflation, or 4.8% total. This is better than most CDs, I think.

Just another basket to put your eggs in!

Next juicy bit: my net worth

As of 12/31/03: $162,040
As of 12/31/04: $206,375
As of 6/29/05: $229,722

What it costs to live well-- supposedly

According to Forbes.com, I make about 1/3 of what it costs for a family of 4 to "live well". Interesting, if a bit irrelevant to the way I live (i.e. no kids, no college costs, no car, no weekend home). And though they do admit that it is not ideal, their hypothetical family only saves 1% of their income.

Forbes.com link

CNN story on world's most expensive cities

New York City, we're reminded, has the highest cost of living in the US, even though it's only #13 worldwide. Los Angeles is a distant second at #44, well behind Bratislava and Shanghai. That kind of surprises me.

CNN.com link

What I spent today

Breakfast: $1.60 for coffee and a banana, after eating cereal and a yogurt at home
Lunch: $0, brought it from home
Dinner: $0, will cook at home
Sailing lesssons:$195 for 4 weekend afternoons in Connecticut. They are less than half the price of sailing lessons in Manhattan.

Today's fun to necessity ratio: very high!

Studio apartment

I thought this was an interesting view of life in a small studio apartment. Actually it looks bigger than the one I live in.

Apartment Therapy studio apartment slide show

First juicy bit: salary & bonus

Ok. My salary is currently $79,000. I also get a bonus that can be about $8000 or a bit more if business is really good.

This puts me above the median income for the US, and also for Brooklyn. (And I am single, with no dependents, thank God!) But in the scheme of New York salaries, for people with my years of experience and educational background, it's not that great. Did I mention that I work in publishing, everyone's favorite example of a noble but underpaid industry? I enjoy what I do and don't feel like a wage slave, but publishing salaries don't cover the cost of living in NYC very well. But plenty of people do fine on even less than I make-- I have no sympathy for a nameless friend-of-a-friend who supposedly said that he couldn't quit the law firm job that he hated because "it's impossible to live in New York on less than $70k a year."

There are basics needed to survive--food, housing, clothes. Then there's the stuff that makes you feel civilized, like you have a real life rather than being a subsistence-focused worker bee, or things that just make life a little easier-- entertainment, better food, fancier clothes, charitable giving, self-improvement such as education or fitness activities, and in NY anyway, I'd put having a car in this category. Then there are the luxuries, that make you feel like you are really living well-- maybe it's a Cartier watch, or a sailboat, or travelling around the world. It's interesting to see where different people put the dividing line between the civilized life and luxurious life.

NY Times editorial about mortgages

Here's an editorial from the Times that I totally agree with. I know people who have bought places with 100% financing and interest-only loans, and it just seems dicey to me. If I find a place to buy, I will gladly take a 30-year fixed mortgage and put some money down, the good old-fashioned way. Building equity is the whole point of buying a place, and I don't want to have to count on the market always being so overheated in order to do that. And interest rates are so low right now, there's no where for them to go but up.

NY Times editorial "Risky Mortgage Business"

What and why

What is on everyone's mind, when it comes down to it? Money. The ultimate voyeuristic pleasure? Knowing how much people have, and how they spend it.
I am a mid-30s single woman living in Brooklyn, NY. I will be using this site to anonymously tell the world exactly how much money I make, what I spend it on, how I budget, whether I feel rich or poor, where I fit into the class continuum, etc, etc. Since real estate is a current obsession, and an outrageously huge proportion of most New Yorkers' budget, I'll be spending a lot of time on my search for an affordable apartment to buy.
This will not be a "how to pinch pennies" advice column. I believe in saving for a rainy day, but I also believe in having a little fun, and allowing oneself some luxuries while living within ones means. I hope this site will help people think about their own finances and how to live well on a budget, and I hope readers will write back with information about how they spend their hard-earned cash.