Seven Years of Earning and Spending

In the comments on my December 2009 net worth post, someone asked about the change in my net worth since 2003 and whether I'd gotten a higher paying job or had changed any of my spending habits to enable my net worth to grow as it did. It prompted me to tackle a project I'd been thinking about for a while: a long-term analysis of my income vs. expenses.

2003 is the first year for which I have full data in Quicken so I looked at that seven year window, and the results were quite interesting! First, let's just look at after-tax income vs. expenses (click on image for larger view):

I thought it would be easiest to take taxes totally out of the picture, so my income is net after all those deductions, and the taxes paid are also taken out of my expenses. (I also backed out my tax refunds from the previous year's taxes paid.) Income includes salary, bonus, gifts received and interest earned on bank accounts. It does not include dividends and investment gains as those are reinvested into my investment accounts.
As the graph shows, my income has been gradually increasing, and my expenses have been much more flat, and tending to increase in proportion to my income-- just what I wanted to see!

So what made up my expenses? First of all, let me explain the category definitions here, as I've grouped things slightly differently than in previous expense breakdowns.

• Household: mostly laundry and drycleaning but also includes some minor decorative stuff like curtains (not new furniture, as noted below)
  
• Education and Information: this is a new one, which I thought made a good catch-all for newspapers, magazines, books, music, French lessons, internet access and other miscellaneous entertainment. (I actually meant to name the category "Entertainment and Information")
• Travel and Vacation includes commuting, family visits and trips for fun.
• Food & Liquor includes restaurant meals, take-out, and groceries for home cooking
• Miscellaneous includes haircuts and other random "stuff" like art supplies and electronic gadgetry, etc.
• Housing includes mortgage payments (to interest and principal), condo charges, property taxes, homeowner's insurance, and gas and electric bills
• The rest are pretty self-explanatory.
  

In the chart below, I'm including taxes again just to get the full picture, though again the refunds have been backed out of the previous year's taxes paid. The next largest expense is housing.

I then did another chart of the expenses without housing or taxes, so you could get a larger view of all the types of expenses that are more variable and controllable. Here, I tried to order the different expense categories so that the bottom of each bar is the stuff that stayed really steady from year to year, with the things that changed the most on the top. It's amazing how consistent some things are!


A few things to note:

• My pay is part salary, part bonus. I got an unusually large bonus in 2004 that slightly skews the always-up trend of my income.
• I started this blog in 2005 and my expenses went down noticeably that year: did the self-scrutiny make me more frugal? Probably!
• I moved at the end of 2006 so I've had higher housing costs since then. For the purposes of this exercise, I did not include some large one-time expenses relating to my condo purchase and moving (like closing costs, moving & storage charges, and new furniture, all totaling almost $30,000 over 2 years) but I did include minor stuff like hardware store items and lots of cleaning supplies under "Household"
• I bought a new laptop in 2008, which is why miscellaneous expenses spiked.
  
• My "Gifts Given" expenses were high in some years because I bought my mother plane tickets at a point when she was separated from my father and having a hard time making ends meet.
• I took a big vacation in 2008, and another significant trip in 2004. My travel budget was also affected by the end of an international long-distance relationship in 2007.
• In 2008 I started spending more and more time with a new, local sweetie. We tend to alternate paying for things kind of haphazardly, which has blurred the line between grocery and restaurant expenses and some household stuff, even though we don't live together.
• My medical expenses have increased gradually over the 7 years, mainly due to higher health insurance costs for what's not covered by my employer.

But here's the best part: the bottom line. That differential between income and expenses is all savings that went into my 401k and other savings and investments accounts (and this time I DID include all the the one-time condo purchase expenses, including about $75,000 that went into home equity, so I still "have" some of that money in a different way).
It's great to be able to say that I saved more in 2009 than I ever have before:

2003	$27,558
2004	$34,664
2005	$5,210
2006	$-13,429
2007	$29,699
2008	$35,559
2009	$43,214

I'm sure I'll keep staring at all this data and digging into individual years and categories to see more detail-- it is weirdly fascinating! The whole thing was fun to pull together and I highly recommend that you try it for yourself!

December 2009 Net Worth

I am finally getting around to posting my year-end net worth. Drumroll please...

$408,490

Yes, I finally crossed the $400k mark! That is a good feeling... though it is slightly diminshed when I remember that in January 2008 I was hoping to hit $410k by the end of that year!

During 2009, my net worth increased by 37%-- a pretty nice recovery from last year's dismal performance. The NetWorthIQ graph says it all:


December 2009: $408,490, up 37% from '08, up 13% from '07
December 2008: $298,700, down 17% from '07
December 2007: $360,008

If you just extrapolate the trend I was on until 2007, I'm still not quite back on track, but the economy isn't the only factor affecting that, as I've had higher housing costs since then. And who knows, if I hadn't bought my condo, I probably would have been even more exposed to the crash in the stock market-- I think my home value has actually held up better than some of my investments.

Here's the breakdown for year-end 2009:

Cash & Bank Accts	$56,442
Retirement	$241,708
Stocks	$20,898
Bonds	$5,091
Home Equity	$86,318
Credit Card	-$1,967

My cash and bank accounts are almost $18,000 higher than they were a year ago, so it's not just investment performance that has bounced back-- I've saved cash, too. One thing that's actually lower than in December '08 is my home equity, as I took that down by $10,000 a few months ago due to sales data on comparable apartments in my area. My credit card balance is slightly less than it was a year ago, which I guess means I spent less on holiday gifts!

I'll post my 2009 expenses and income soon... and after I get my head around that, I will have to tackle setting some goals for the rest of 2009. Stay tuned!

Economic Indicators

So, what's the mood out there? Do you find yourself noticing little things that might be signs of the recession?
Here's one I've been thinking about over the last week or so: crowds at the gym.
I remember last year at this time, when it seemed like people were really panicking about the economy. So many companies in New York had been laying people off and things looked pretty dire. For me, my gym membership seems like one of the easiest expenses that could be cut if I had to economize, so I wondered if I'd notice a decline in the attendance at my gym.
As it turned out, I didn't. Last January, my gym always seemed to be packed. January is always a busy time in gyms, when people make New Year's resolutions and are still sticking to them. And the bad economy even increased that effect: when people lose their jobs, they have more time to go to the gym, and perhaps more desire to feel successful in weight loss and fitness goals, since their career goals are undergoing a setback. Also, many people probably pre-pay for a year's membership since it's cheaper than going month to month. The gym allows you to suspend your membership, but most people probably figured that the money was already spent, so they might as well just keep going.

So what about this year? When I returned to the gym on January 4th, I was dreading the crowds-- I'm always rushing to get a spot in the pool without having to wait, so having to compete with even more people beyond the usual regulars was not appealing. But the pool was no more crowded than usual, and the locker room seemed quieter than usual. And it's been that way every day since-- I keep waiting for the crowds of people to be jostling each other for lockers, waiting in line for showers, searching for empty treadmills... but it's just been pretty quiet and relatively empty.
Is it because people have found new jobs and don't have time to work out? Or is it because more and more people have let their memberships expire as they remain unemployed longer and longer? Somehow, I suspect it's the latter. New York just doesn't feel like it's bouncing back from the recession anytime soon... How about you? What sorts of economic signs do you see in your everyday life?

Bail-out Bankers' Compensation

This is a fascinating-- and infuriating-- article from last Sunday's New York Times Magazine:
What's a Bailed-Out Banker Really Worth?

Here's a few outtakes from this story, which details how Kenneth Feinberg went about negotiating (rather than czar-ishly dictating) compensation packages for top executives at companies bailed out under the TARP program:

Citigroup and Bank of America, for example, concluded that everyone in their executive suites [deserved multi-million dollar compensation packages because they were] above average when compared with peers at other giant banks that didn’t need a bailout. Or there was A.I.G.’s behind-closed-doors argument against Feinberg’s directive to pay its top people in large part with A.I.G. stock. The company’s reasoning? That the stock — trading briskly at the time at around $40 on the New York Stock Exchange — was actually worthless.

How does anyone actually say that with a straight face? "I want my $10 million bonus in cash from the US government, because the stock of the company I'm running has no value!"

Here's another gem:

That Dodd led the attacks on A.I.G. when what came to be called the retention bonuses were revealed infuriates [an unnamed friend of the author's, who works at A.I.G.]. He says that his boss asked everyone at A.I.G. Financial Products “to contribute the maximum to Dodd, because he was so important in Washington in terms of regulating the products we sell.” My friend went on to say: “Before he attacked us, Dodd was in our office” — in Wilton, Conn. — “giving a speech telling us how great we were. And our checks were in envelopes stacked up right there.”

Federal Election Commission filings show 31 maximum $2,100 contributions to Dodd during the last quarter of 2006 from employees of A.I.G. Financial Products. My friend’s former boss, A.I.G. Financial Products’ head, Joseph Cassano, who is listed as giving $2,100, did not return calls to his home, nor did his lawyer return calls seeking comment.

Asked about the event, and about checks stacked on a table, Dodd said: “Yes, it happened. I remember having a fund-raiser there. . . . I can’t finance my own campaigns. I have to raise money,” he added. “But what does this guy think? That if they give me money I have to do what they want me to do? That tells you something about them.”

Of course this sense of entitlement isn't just an issue at TARP companies-- almost all big corporations now operate in this rather closed world where all their top executives sit on each other's boards and reinforce the idea that they "deserve" more and more money:

“The boards of these companies just don’t have an arm’s-length relationship with these executives,” says Lucian Bebchuk, a Harvard Law School expert on executive compensation who advised Feinberg. Board members are frequently executives or board members at other big corporations, Bebchuk explains, and therefore are likely to be steeped in the same entitlement culture. Indeed, they are lavishly paid, too; in 2008, A.I.G. board members earned an average of about $300,000 for their work in 2007, the year when apparently unsupervised trading in toxic financial products destroyed the company.

“No director wants to be the skunk at the garden party,” says Sonnenfeld, the Yale Management School associate dean. “And the headhunters, whose compensation, by the way, is based on how much executives make, won’t pick them for boards if they’re going to be dissenters.”

Which leaves us with this stat:

Over the last 50 years, the ratio of top pay to average pay at public companies has multiplied roughly 11 times (24:1 to 275:1). That’s more pay in one workday for the chief executive than his average employee makes in a year.

Are top executives really working that much harder these days? Are they really delivering that much more value to shareholders? I don't think so, and I just don't understand why more people aren't furious about it. Everyone who holds shares in public companies, in the form of stock or through mutual funds in your 401k, is affected by this-- this is millions and millions of dollars that could be paid out in dividends to shareholders, or invested in more workers and new technology to help the company and the economy grow. Instead, it's going into the pockets of a tiny, well-connected group of people who think they can use that money to buy politicians and elections, not to mention an awful lot of personal luxury (not all of which is necessarily stimulating the economy within our borders).

I have no problem with people getting rich. There will always be a small number of people at the top of the pyramid, and many of them will have done something extraordinary to get there, something that will have provided value to millions of other people, in the form of money or convenience or entertainment, etc. But something is seriously screwed up when executives who have destroyed value, destroyed livelihoods and nearly destroyed an economy still think they deserve to earn more every single year than 90% of Americans will ever earn in a lifetime-- even when their big paycheck is coming straight out of taxpayers' pockets.

The article ends on a slightly optimistic note, hoping, as I do, that there's a way to use the ideas of people like Kenneth Feinberg and Warren Buffett and others to more fairly structure compensation on a broader scale, to appropriately reward good performance and encourage innovation while curbing the kind of risk-taking that leaves taxpayers holding the bag when things go wrong. But a lot of attitudes are going to have to change for that to happen.

In With the Old, Out with the New

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

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

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

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

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

Saving Saves the Day

Happy New Year everyone! I thought this article from the NY Times was well worth sharing: For Savers, It Was Hardly a Lost Decade. As everyone looks back at the '00s, there will be lots of talk about how the stock market came full circle and at least in terms of overall averages, isn't worth any more than it was 10 years ago-- but as Ron Lieber points out, that doesn't have to mean that investing is a lost cause.

If you invested $100,000 on Jan. 1, 2000, in the Vanguard index fund that tracks the Standard & Poor’s 500, you would have ended up with $89,072 by mid-December of 2009. Adjust that for inflation by putting it in January 2000 dollars and you’re left with $69,114.

But that is not how most real people invest. They don’t pour everything they have into just one type of asset and then add nothing to it for 10 years. Instead, they buy stocks of all sorts, and bonds and perhaps other things, too. And many millions of them dutifully add more money regularly, usually into a retirement account that they won’t touch for longer than a decade.

For those people, it was not a lost decade at all. Even those who started with a low six-figure balance could have doubled their money in the last 10 years.

I don't have accurate data going back 10 years, but I'm sure my net worth was less than $50,000 at the beginning of the 2000s. Today, it's somewhere around $400,000. It's certainly not because I'm an investing genius, and it's not because I saved $350,000 in cash. It's because I spread my investments among different kinds of assets, and made sure to save at least some percentage of my income every month with automatic deductions. If you keep your portfolio balanced and regularly add to it with monthly savings, you can weather pretty much any economic storm.

Should You Pay as Much as a Celebrity?

From my new favorite website, Not Always Right... as in "The Customer is Not Always Right." If you've ever worked in retail or food service (as I have), you will especially enjoy it!

Me: “Hey there, can I help you out?”

Customer: “Were these products on Oprah?”

Me: “Yes, they’ve been featured.”

Customer: “Celebrities use them, right? So they must be really expensive…like $500 a pop or something, right?”

Me: “No, not at all. This one here only costs $40 before tax, and none of the products exceed $150.”

Customer: “So, when the celebrities buy them, they only cost $40?”

Me: “Yes.”

Customer: “And when regular people buy them, they only cost $40?”

Me: “Yes.”

(A moment of silence passes as the customer glares at me.)

Customer: “COMMUNIST!”

New York Neighborhoods: How Many People Can Afford to Live There?

Found via Curbed, this is a VERY interesting interactive map of New York city, showing income ranges in different neighborhoods and how many families would be able to afford a certain level of rent. Try it out!

Single Ma Wants Me to Write About Booze.

It's actually not a bad topic for a post this week...

The other night, I went to see a play at St Ann's Warehouse in Brooklyn (The New Electric Ballroom, well worth seeing. You can get discounted tickets using a code from Broadway Box). Before the show, we went to the nearby Water Street Restaurant. It's a convenient place for a pre-show meal, and they have really good burgers, but we were incredibly disgruntled by the wine!

First of all, the wine list is very limited, especially if you just want a glass-- they have a much better selection of beers. But I knew if I drank beer, I'd be wanting to go to the bathroom during the no-intermission play! So I had one glass of wine-- $8 for a fairly mediocre glass of Argentine Chardonnay. There was no Pinot Grigio or New Zealand Sauvignon Blanc by the glass, which would have been safer. And the $8 Coppola Chardonnay was terrible, and the $7 American Sauvignon Blanc was almost undrinkable.

Even worse, these glasses of wine were small! Some restaurants at least give you a generous glass of perhaps 8 or 10 ounces, but these were probably 6 ounce glasses, and not especially full.
We got into a discussion of what the going rate is for glasses of wine-- $6 is probably a standard amount in New York, for something cheap but acceptable. Sometimes you'll see a $5 house wine, maybe even $4, but it's usually pretty bad. And of course if you go to a place that fancies itself more of a wine bar, you can often choose from a selection of glasses from $7 -10, and even higher. This may seem pricey, but sometimes I think it's nice to be able to sample interesting wines-- I'd rather pay a little more occasionally just to taste something a little unusual.

In many cases, it's better just to opt for a bottle of wine. The price of a bottle will tend to be about four times the price of a glass, though the volume of wine is usually closer to 5 glasses, unless you're in one of these places that pours very big glasses. If you don't want to consume an entire bottle, don't forget that at least in some states, most restaurants are now happy to let you take a partial bottle home with you-- they are required to re-cork it and seal it in a plastic bag along with the receipt, usually-- I think the law varies by state. But boy, were we glad we hadn't bought a whole bottle the other night! (For what it's worth, the Water Street waitress told us they just hired a new manager who was planning to vastly improve their wine list in the near future.)

And if you do happen to go to St. Ann's Warehouse, don't feel you have to get all your drinking done in the nearby restaurants-- they actually have quite a nice little bar area right in the lobby by the box office. And we were quite chagrined to see that they serve Root 1 wine there, which happens to be one of our favorites. And they only charge $6 a glass.

Now Single Ma, you just let me know if you have any other requests! xoxo

Free Water, Expensive Notebook

I got a kick out of this article from the NY Times yesterday: Commuters Overlooking Free Treasure:

I might not have appreciated the marvel of the Grand Central Terminal water fountain if it hadn’t been for the notebook.

I had run into Posman Books after getting off my train and finding myself without a notebook, and grabbed what Moleskine, the high-end paper packager, calls a reporter’s notebook. I’m a reporter; it spoke to me. Until I got to the counter and learned it cost a cool $17.95 plus tax, a sum no reporter I know would shell out for a notebook, even if it came with the story already written in perfect Pulitzer-worthy prose.

I put the notebook back, and felt a flash of frustration. Now I needed a notebook and a drink of water. For most of my adult life, I’ve either commuted through Grand Central or lived within five blocks of it, but I didn’t know of a water fountain in the place.

I was on the brink of buying a bottle of water along with my not-quite-as-overpriced notebook at Rite-Aid, but balked. It’s not just that bottled water is a waste of money and plastic; I also never need as much as a bottle carries, so it would either go to waste or I’d lug it around all day, with a lot of overpriced liquid weighing down my bag.

Maybe the saleswoman knew where a water fountain might be. She didn’t, but asked someone. There was one right by the Chase A.T.M.’s.

There, just a 30-second walk from the saleswoman, who surely must occasionally feel thirst, was the perfect water fountain. The spout juts out from the cool, beige Botticino marble wall of Grand Central, a handsome basin below it, a marble relief of some natural harvest above. Water was arcing above the spout, so high that I felt reassured no thirsty germy toddler had mouthed the metal at the base. A fluid piece of accessible history, that fountain, I later learned, has conveniently been spouting water almost continually since the terminal opened in 1913.

The reporter ends up observing the fountain for a while, and it turns out that hardly anyone ever uses it, which probably won't surprise you. Americans have become so conditioned to drinking bottled water, and to thinking public things are germy (not to mention socialist).

I remember that at one of my previous jobs there was an old-fashioned water fountain-- I went to drink from it one day, not long after I'd started working there, and someone cried out "eww, don't use that!" I never saw anyone else use the fountain, since bottled water was provided by the company. They later switched to using water coolers to save money.

I've also filled a water bottle from fountains while traveling in Europe. I probably wouldn't do it in other countries but it somehow seemed safe there-- every town square seemed to have a fountain. And once, on a mountain hike, I was running out of water when we came to a pipe just sticking out of the side of the mountain, pouring water into a small basin-- I had my doubts about that, but my friend drank it and said for all we knew it was probably from the best, cleanest mountain spring in France!

Anyway, one of the first posts I wrote on this site was about saving money by skipping bottled water, and it's still a rule I try to follow. But unlike that Times reporter, I'm still a sucker for nice notebooks, and I've also written about buying Moleskines! However, I've never paid $17.95 for one, and I recently discovered a much cheaper and almost equivalent brand called Piccadilly, sold at Borders for about 1/3 the price of a Moleskine. So whether it's water or high-end notebooks, never think there aren't ways to shave a few dollars off your budget!

October 2009 Monthly Recap

It's a bit late to be getting to this but here's a look at October's results!
My net worth at the end of October was $383,344, a decline of 1.5% from last month. The decline was entirely due to the stock market being down a bit. Also, my credit card balance was a bit high due to business expenses of over $1,000 that I haven't been reimbursed for yet. But I did okay in terms of saving some cash.

Expenses were as follows:

Condo	$ 1,835	maintenance charge just went up
Bank Charge	$ 71	stupidity: ATM fee and late charges
Business expense	$ 1,060
Charity	$ 100
Clothing	$ 301
Dining/Groceries	$ 828	a very social month, eating out a lot!
Education	$ 26
Entertainment	$ 5	Just Netflix
Gifts Given	$ 55
Household	$ 72
Property Insurance	$ 335	once a year charge
Medical	$ 127
Misc	$ 147
Taxes	$ 2,073
Subscriptions	$ 149	renewed the New Yorker
Travel	$ 76
Utilities	$ 167

If you back out the business expenses, my total outflow was $6,366, so I saved $1,651, or about 20% of my gross salary. We're heading into the home stretch for the year, and I have a holiday vacation planned, plus Christmas shopping, so I may not be saving a whole lot more... but hopefully I can still manage to end the year at or close to my all-time net worth high... we'll see! Onward and upward!

My Great-Aunt Minnie

I've been thinking a lot about my Great-Aunt. I've been meaning to write about her ever since starting this blog, as I mentioned in this post (I gave my great-aunt a water buffalo.), but for some reason I never have. She's now 95 years old and sadly, her health is finally fading and she won't be around much longer. Maybe this is a good thing, in a way-- it must be hard to live so long and feel the pain of losing so many people before your own time comes. My Dad was her nephew and I'm sure she never thought she'd outlive him. But she's never lost her strong spirit, and she's actually been a great financial role model in many ways.

Minnie has always been a great aunt, and a great great-aunt, probably because she never had kids of her own and never married. (Perhaps she was discouraged from doing so by seeing her sister pop out six babies in ten years!)

Minnie would have been referred to as a "career girl" in her youth. After graduating from high school, she started working. I don't know the full details of her early jobs, but I assume they must have been more or less secretarial, as that would have been the norm for that era. At some point she must have shown that she was very capable and not on the marriage track, so she started to be given more responsibility. I remember her telling me she'd worked for a large corporation in the 1940s and was sent to live in New York for several months to set up a new office there. She spent the last 25 or so years of her career working her way up to the position she held until she retired, a very prestigious job that she was the first woman to hold.
I remember visiting her in that office when I was about 8 years old. Minnie always dressed very casually when I'd see her on the weekends, so it was funny to see her wearing a formal skirt suit, with reading glasses on a gold chain around her neck, and I was very impressed to see her doing these important, business-y looking things. Everyone in the office called her "Miss B." rather than using her full last name. This was back in the days when people tended not to call the boss by his or her first name, so this was actually quite informal, but I think Minnie was the type who could allow that kind of cheekiness while still seeming very authoritative! She is a very warm person, always cheerful and easy-going, but she has a certain sporty toughness about her too-- she always used to like to pretend we were boxing right before she'd grab me into a big hug.

I didn't think much about it at the time, but in retrospect, I think it was quite important to me to see a woman running things as someone's boss. She wasn't anyone's mother, she wasn't a teacher or a nurse or a doctor or a store cashier-- I came of age at a time when women already had a lot more options for careers, but other than Minnie, I wasn't close to anyone who went beyond those roles.

Though Minnie worked hard, she never let the job become her life. She had a group of friends she would take vacations with, spending a week each summer at the beach and traveling all over the world, always bringing back little souvenirs, some of which I still have. She always loved sports, and used to swim and play tennis and golf, and I remember her being really good at bowling too! She also went to Red Sox games and got tickets to the Olympics a few times. Every other weekend, she'd be at my grandmother's house when my family visited, and every Christmas, she'd be have to be dragged out of the kitchen and forced to eat instead of serving everyone else. She moved back in with her elderly parents to take care of them at the end of their lives, and ended up staying in that apartment, which was rented, until a few years ago. I sometimes wonder why she never bought a house or a condo, but I suspect there was so much history there that she never wanted to move, and the rent was quite low. The apartment was full of things that my great-grandparents had owned, including a few items I now have in my own home, like a little handmade stool, and an old Saltine cracker tin.

Minnie, of course, grew up during the Depression and like so many others, never lost that frugal mentality. I have no idea what her salary ever was or how she might have invested, but she retired with a pension and I know she must have saved quite a bit of money. Every birthday and Christmas, I'd get $20 or $25 from her, as my many cousins must also have, and I know she gave my father and his sisters larger amounts. When I was in college, I remember her taking me aside once just to give me a $10 bill, "for some pizza," she said. And another time, when I'd gotten a $75 speeding ticket on my way to visit her and my grandmother, she again cornered me secretly to give me the money to pay the ticket-- not that she wanted to encourage me speeding, and not that she was ever the type to spoil anyone-- I guess just because it made her happy to do odd little things like that when you wouldn't expect it.

About 10 years ago, Minnie moved in with my grandmother, and one of my aunts moved in with them. After my grandmother died, her house was sold and my aunts helped Minnie find an assisted living facility. At first, she didn't want to do it-- she was still quite spry and she was horrified at how expensive assisted living was. But as she herself admitted, she was "deaf as a haddock," and she didn't want to become a burden to anyone, so she ended up moving to a lovely community where she dove into every activity that was offered: shopping trips, lectures, concerts, fitness classes... Even a few weeks ago she was still going to tai chi regularly because she knew the instructor would be disappointed if she didn't show up. And here's another thing one of my aunts told me: Minnie recently said that maybe this coming year, she'd finally give up doing her own taxes and have her lawyer do them instead!

As I grew older, Minnie was always interested in my progress. She was very proud of me when I started to work, and when I got my first business card, she was thrilled when I gave her one. Every time I've gotten a new card since, I've always given her one. She has always been far more interested in my career than my own parents, and now that I know her time is limited, I find myself wishing I could reach one more big career milestone, just so I could tell her about it. She also has loved hearing about my travels, and whenever I see a sporting event, I tell her about it-- she's even quite tolerant of my having turned into a Yankees fan! In our family, I am pretty much the only female of my generation who followed in her footsteps as the unmarried "career girl" and it's become a bond between us, something I feel very lucky to have had.

An Avatar's Open Wallet

Here's an interesting concept: spending virtual dollars to live an online live that is much more luxurious than your real one: No Budget, No Boundaries: It’s the Real You

It may be raining pink slips, and some people may be hard-pressed to make the rent, much less splash out on a pagoda-shoulder jacket from Balmain, but Vixie Rayna is hardly feeling the pinch. Not a month goes by in which she isn’t spending as much as $50,000 on housing, furniture or her special weakness: multistrap platform sandals, tricked out in feathers and beads.

Recession or no, Ms. Rayna isn’t reining in her fantasies, or her expenditures — at least not in the virtual world. In a simulated universe like There.com, IMVU.com or Second Life.com, the granddaddy of avatar-driven social networking sites, Ms. Rayna, an avatar on Second Life, and her free-spending cohort can quaff Champagne, teleport to private islands and splurge on luxury brands that are the cyber equivalent of Prada waders or a Rolex watch. Real-world consumers may have snapped shut their wallets. But in these lavishly appointed realms it is still 2007, and conspicuous consumption is all the rage.

All this is not to say that online spending is purely virtual: people spend real money on this, albeit not as much as these things would cost in real life:

In most virtual worlds, memberships are free, but players trade real money for virtual currencies, used to buy products, save up in an account or eventually redeem for real money. About 70,000 Therebucks on There.com, or 10,000 Lindens in Second Life, each about $40, can buy a choice of simulated wares, from several pairs of thigh-high boots to a plot of land. What’s more, as Mr. Wilson pointed out: “Everything fits; things don’t wear out. The virtual world represents a different value proposition.”

In their day-to-day lives, shoppers like Mandy Cocke, Vixie Rayna’s real-life alter ego, have sharply trimmed their spending. When times were flush, Ms. Cocke, a nurse in Virginia, parted with as much as $1,000 a month on designer shoes and clothing. Lately, though, “pretty much every possible expense makes me ask, ‘Do I really need this?’ ” she said.

But online, their acquisitive lust rages unabated, fueling a robust economy driven mostly by avatar-to-avatar transactions estimated at between $1 billion and $2 billion a year in real dollars. Second Life, the most successful and most familiar of such sites, does not disclose retail revenues. But it reported a 94 percent surge in its overall economy in this year’s second quarter over the same period a year ago.

I've never tried out Second Life and don't really have any desire to, but this has made me very curious about it! What fascinates me is that if these online avatar worlds are booming exactly when the rest of the economy is tanking, it has to be because people need to spend less money in order to buy an equal or greater feeling of spending money! Some people just enjoy the idea of spending money and having stuff, even if it's totally imaginary. They'd rather spend $50 a month on the equivalent of $20,000 worth of virtual clothes than $50 worth of real clothes. Personally, I don't get this, especially with clothing-- to me, half the pleasure of good quality, expensive clothes is how they feel against your skin, not just how they look. If you're just seeing something in pixels, the whole concept of a high-end brand vs. a knockoff is totally meaningless.

Readers, I'd love to hear comments from you if you've tried this-- how much money are you willing to spend on an online avatar as opposed to your real self?

Coping with a Pay Cut

A poignant article from the Times: Still on the Job, But at Half the Pay.

The dark blue captain’s hat, with its golden oak-leaf clusters, sits atop a bookcase in Bryan Lawlor’s home, out of reach of the children. The uniform their father wears still displays the four stripes of a commercial airline captain, but the hat stays home. The rules forbid that extra display of authority, now that Mr. Lawlor has been downgraded to first officer. He is now in the co-pilot’s seat in the 50-seat commuter jets he flies, not for any failure in skill. He wears his captain’s stripes, he explains, to make that point. But with air travel down, his employer cut costs by downgrading 130 captains, those with the lowest seniority, to first officers, automatically cutting the wage of each by roughly 50 percent — to $34,000 in Mr. Lawlor’s case.

But here's some bits that disturbed me:

“I don’t want to be a 50-year-old pilot earning $40,000 a year,” he said, adding that his wife does not want to be married to a pilot with so little earning power.

That seems a bit harsh, don't you think? From the rest of the article, the wife doesn't really seem to be taking that view-- she's worried about their loss of income but she also gives her husband kudos for helping out more around the house when he's working less. They're stressed out, as anyone would be, but it's not sounding like she's ready to divorce him if he doesn't get a raise.

Another quote that bothered me:

Bryan and Tracy Lawlor, who is also 34, have hidden their straitened circumstances from their four young children, mainly at his insistence. But as their savings dwindle, Christmas, a key indicator in the Lawlor family, will mean fewer presents this year. The Lawlors have made a practice of piling on toys and new clothes for their children at Christmas, buying relatively less the rest of the year. That will make a cutback noticeable this holiday season, and the parents are concerned that their children will begin to realize why.

“You don’t want to see disappointment on their faces; that makes me feel horrible,” Mr. Lawlor said. “You can be the best pilot in the airline and make the best landings, and in their eyes, I am not going to be as important as I was.”

I don't mean to criticize this guy-- he's in a tough spot, one that I can't claim to have been in myself. I do know how much fun it can be to give my niece and nephew presents, and I can imagine how my heart would sink if they seemed disappointed. But it's just sad that he seems to place all his self-esteem in his earning power and ability to shower his children with presents. I hope he doesn't really think his kids and his wife only respect and love him because of his rank and salary.

September '09 Monthly Recap

I can't believe it's October... but here's the dirt on my September spending and net worth. (I tried to post it on Networth IQ but the site seems to be down. Anyone know what the deal is?)

Total Net Worth: $389,166
Cash & bank accounts: $51,248
Stocks/Mutual funds $20,339
Bonds $5,091
Retirement $228,634
Home Equity $85,307
Credit card -$1,453

As always, the credit card is paid in full every month. I moved a few thousand dollars into E*Trade recently, so the increase there isn't just market gains. As for home equity, I reduced the value of my apartment by $10,000, based on a recent sale of an almost identical apartment nearby (it actually sold for slightly more than I paid, but I know the seller paid some of the closing costs). It's a bummer, but it's also reassuring because it could have been worse.

But the good news is that for the first time in ages, I've hit a new net worth high! It's nice to feel like I'm not just trying to pick up lost ground, but actually moving ahead again. My net worth is almost $50,000 more than it was a year ago. I'm still worried about what the next few years will bring, but all is not lost.

And I'm still trying to keep major expenses at bay. Here's this month's totals:

Taxes	$2,056
Housing	$1,805
Dining	$566
Travel	$276
Misc	$184
Utilities	$182
Gifts Given	$158
Medical	$148
Subscriptions	$75
Household	$67
Entertainment	$53
Education	$41

That's it, a total of $5,611. My salary for the month was $8,017, so I managed to save quite a bit of it: 30% of my gross income.

This has been a year of trying to keep expenses under control and adjust to the economic environment without totally killing all the fun in my life-- so this month is very gratifying, because I can finally feel like the efforts have succeeded in bringing my net worth to a new high. That could change any time if the stock market tanks again, but it feels good nonetheless. Onwards and upwards!

The Cost of Being Gay

The New York Times has a very interesting analysis on the higher costs gay couples (or unmarried heterosexual couples, in some cases, though they of course have the option to marry) may face for things like health insurance for a partner, having a child, etc. Their calculation for the worst case lifetime loss? Almost half a million dollars! Of course the numbers will vary depending on each individual situation, and same-sex couples fare better on federal income taxes because without their marriages being recognized, they aren't subject to the "marriage penalty."
Here's one example:

Health Insurance

In our worst case, the lower earner’s employer did not provide health insurance and her partner’s employer didn’t cover domestic partners. So the lower earner had to buy coverage on the private market, while the higher-earning partner provided coverage for herself and the two children. All this cost the gay couple $211,993 more than their heterosexual married counterparts, who were able to take advantage of the higher-earner’s family coverage.

In our best case, health coverage cost the gay couple $28,595 more. We assumed both gay partners were eligible for employer-provided coverage. The higher-earner’s employer also provided domestic partner coverage, which covered her partner for the five years she stayed at home. When she returned to work, she used her own employer’s insurance.

Even though the couple paid nearly $29,000 more in premiums than an identical heterosexual married couple, it was cheaper than using domestic partnership coverage throughout because of the onerous tax implications, according to Mr. Williams of the Tax Policy Center. A nondependent partner’s coverage is taxable income, and she can’t use pretax dollars to pay the premiums, according to Todd A. Solomon, a partner in the employee benefits department of McDermott Will & Emery in Chicago.

But as the article points out, it may not always be about the money: the emotional cost of not having one's relationship recognized and validated is something you can't budget for.

Whaaa?? The Gift that Does NOT Keep on Giving

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

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

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

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

The Freedom to Ignore Money

I think part of the reason I haven't been posting much is that concerns other than money have been more prominent in my life lately. This is probably a good thing. The reason I started this blog in the first place was that so many concerns in my life seemed to relate to money in some way-- family, relationships, career, friends, housing, creativity, etc. That is still the case in many respects, but the money stuff has fallen more into the background.

My father's death really highlighted this. In the months before he died I'd really been at a high anxiety level about my mother's spending, their budget, and how ends would ever meet. Then when he went into the hospital, I couldn't help thinking about how my mother's compulsion to spend money fixing up the house related to the cause of his accident. But after he died, it was like my anxiety just evaporated. You'd think I would have been even more anxious-- after all, this means my mother's income is cut in half way earlier than we expected it to be, so she'll be spending down her savings even sooner. But there will be time later to worry about that, and right now we just need to be at peace.

I'm still very conscious of money, of course, but it's like I'm floating above it a bit right now. And this in itself is part of what I've always aspired to in how I manage my finances: the freedom not to worry. Sometimes financial security means you can put things on auto-pilot a bit, at least for a little while. My dad left my mother well-enough provided for that we don't have to panic, even if we will have to be careful and make some changes within the next few years. And my own finances are such that I don't have to be hyper-vigilant about them right now. My income exceeds my expenses, I have a good cushion of cash in the bank, and my investments are muddling along as well as can be expected in line with overall market conditions. I still need to worry about whether I am saving enough money to meet my long-term retirement goals, and ignoring that is definitely not something to take lightly, but right now, I can give myself a bit of a break.

I've obviously been giving this blog a break too! I've been thinking about different ways to approach it, perhaps writing more substantive posts less frequently rather than posting lots of quick links and commentary-- we'll see. Thank you to everyone for all your kind words and sticking with me through good times and bad!

Fancypants Lawyers

Literally! Here's a nice light-hearted topic for a change:

Women lawyers at City firm Clifford Chance have been given a £90 lingerie allowance. How should they spend it?

Women lawyers at top [London] City firm Clifford Chance are bucking the trend for reduced expenses now that their £90 lingerie-and-blouse allowance, if they work later than 11pm, has been reinstated. Inevitably dubbed the "90 nicker knicker allowance", this may or may not be the most reliable indicator yet that the credit crunch is over.

Now that is a fascinating benefit I've never heard of any other company offering. At current exchange rates, £90, aka 90 nickers, is about $144, which should suffice to buy some very pretty panties. But what about men? Do they get to expense their undies if they work late too?

Still Here...

For those who have noticed the deafening silence here for the past month, just wanted to let you know I will be back someday soon. As you might have guessed, my father died, and for some reason, it seems to have knocked me out of orbit a bit as far as this blog is concerned, though I'm doing okay otherwise. I guess money issues just haven't been top of mind, but of course they never completely disappear... so bear with me and I'll get back to writing more soon.