Moneyapolis

2010 New Year's Resolutions

2009-12-31T09:30:00.005-06:00

Before I get to 2010, I had to pay a visit to my old blog to see what I wanted to accomplish in 2009. Let's see how I did. My goals were as follows:

1. Max out my 403(b) and Roth IRA (for both DH and me).

I more than met this goal. I used an unused vacation time payout from my NYC job to fully fund my 403(b) back in May, and also put a lump sum from my savings into my Roth ING to max it out before I moved (and became unemployed). Then when I started my new job in the Midwest I was able to contribute even more to a 457 plan.

DH also accomplished this goal, too, but only after a few really good knock down, drag out fights. Every time he was short on cash -- usually from eating out too much -- he would insist he was saving too much for retirement and needed to cut back his contributions. (Subtext: I was a monster for forcing him to do this awful thing of saving.) Fortunately, he never actually stopped contributing and now that his savings are starting to add up, I think he appreciates the discipline. At least I hope he does.

2. Get a new job in the Twin Cities earning at least as much as I was making in NYC.

Much to my surprise, I accomplished this goal despite the lousy economy and not getting a huge response to all the resumes I submitted. Even though my annual salary is a thousand dollars or so less than my NYC salary was, the fact that I have an even more generous employer contribution to my retirement fund more than compensates. I'm very pleased about this one.

3. Sell our Brooklyn co-op.

Done, thank God. We also unloaded the Philly house for a small profit, which is a huge relief.

4. Buy a house in the Twin Cities.

Done, and it's an awesome house. Unfortunately it's not a duplex, like I originally wanted, but we are on track to pay off the mortgage early. Although it would have been nice to have rental income, I don't miss dealing with tenants.

5. Invest outside our retirement plans.

Alas, there never seems to be extra money for this goal. Even the profits from our Brooklyn co-op and Philly house have gone entirely to renovating our new house. Probably not the best choice.

6. Rebuild my emergency fund (and build DH's).

This has been an ongoing struggle. Although I wanted us to have $20k combined by the end of this year, DH never seemed able to save any money and my account is currently at $7,800.

Recently, I think I've even been intentionally sabotaging my savings by spending lots of money on frivolous stuff like clothes and jewelry. I've resented being the only one with an emergency fund to turn to for stuff like travel, vet visits, and internet, while DH continues to have an unpaid speeding ticket, credit card debt, and zero savings despite earning more money than me.

Fortunately, DH finally set up automatic transfers to ING of $400 per paycheck, so he should have nearly $10k by the end of 2010. And I'll contribute $100 per paycheck to my own fund to get above the $10k mark.

7. Sell or continue renting the Philly house.

Sold. Whew.

8. Travel.

We did take a nice long weekend trip to San Francisco and we went back and forth a billion times between NYC and Minneapolis. We also visited Chicago to see family a couple of times. But nothing more exciting, unfortunately, because travel ain't free.

9. Get laid off from my NYC job just as my co-op is selling so I can move to the Twin Cities with a huge severance package and $405/week unemployment.

Alas, no pink slip for me. I had to resign.

As for 2010, here's what I'm thinking makes sense:

1. Max out Roth IRAs and 403(b) plans (both DH and me).

Scheduled and on track to do this, so long as no one loses a job.

2. Build emergency funds above $20,000 combined.

We'll probably be shy of this goal considering we still have some home renovations to pay for, but we'll try.

3. Pay an extra $19,500 towards the mortgage principal.

Should be doable provided I keep my job. I allocate $750 per paycheck.

4. Pay $6,000 towards my student loan debt.

On track to pay $500 per month, a little more than the $290 minimum payment required.

5. Travel to two new U.S. cities and Mexico.

I want to extend one work trip in the fall with DH and attend a friend's wedding in Mexico. We also want to plan one winter getaway to a warm destination like Miami or San Diego in the next few months. I'm watching the fares and hope they come down in January. I have an airline credit I have to use by February, but AirTran is a bitch to book.

6. Be a more socially interesting person.

Okay, this is a weird goal, I know. But here's the thing. I'm socializing a lot these days and it's a constant struggle to meet new people. I'd like to focus on little things like remembering names and making good conversation. This will also help me professionally as I build new networks. I'm not bad at this, per se, but I think there's always room for improvement. And since I'm naturally more of an introvert, it's definitely something I have to work on.

7. Be nicer to DH.

Enough said.

Do as I say, not as I do

2009-12-30T09:25:00.009-06:00

I'm about to confess how I succumbed to every marketing trick in the book. You all know I've been a bit of a shopaholic lately (and for those of you who missed it, the numbers will be plain as day in my December spending report in a couple of days). You might even call me a bit obsessed (moi?), between the great holiday sales and my discovery of Etsy. Not to mention my need for an entirely new winter wardrobe in this frozen tundra I now call home.

Fortunately I may have finally kicked my shopping bug, thanks to some horrible customer service from one online retailer. But that didn't stop me from blowing a last hundred and thirty bucks. Consider it my last hurrah before my year of austerity begins in 2010.

Here's what happened. It's been a slow week at work and I have no one to talk to, so of course I'm tempted to search sales online. Perhaps I need a new hobby because how many personal finance articles can you read? So I've been surfing store sites. It's like I'm competing to find the best prices on stuff.

I had this $100 American Express gift card that I received from being involved with an online focus group panel. I was psyched to get this card because I figured I could re-gift it to my parents for the holidays. Except the stupid thing had my name on it.

I debated about whether to use it for mundane stuff like groceries and almost did the last time DH and I were at the store. Except then he paid and I didn't object. After much debate, I finally gave myself permission to use the dang thing for fun stuff for myself.

I tried using it with one Etsy seller but PayPal declined the card and said the seller would only accept direct bank transfers. Then I tried using it with another online retailer (for something practical that I can't remember now), but they declined the card because the billing address didn't match the address on the card. Why is it so hard to use this gift card???

Victoria's Secret is having a sale and I've been so happy with my recent sweaterdress purchases, I decided to buy some more. DH even admitted he liked my sweaterdresses (he initially thought dresses were a stupid thing to buy in winter, except then he saw me wearing one and realized they're really warm and comfortable). Plus I have like four pairs of boots now to go with them, it just makes sense to buy more. (I used to not buy dresses because I didn't want to have to buy shoes to go with them, but now that problem's been solved.)

I had my eye on one sweaterdress and one cardigan sweater, both on clearance for $19.99. Except I needed to spend $50 to get free shipping, so I found another sweaterdress for $19.99 and was set to order. I decided to go to lunch first to think about the colors.

When I got back from lunch the $50 free shipping deal had been raised to $100. Dammit! I waited several days but the $50 free shipping deal never came back, so I finally picked out a couple more sweaterdresses so I could get free shipping. (Yes, that's exactly how they get you to spend more money, I know!) I figured then I would just use the entire gift card balance of $100 and be done with it.

Except Victoria's Secret will not accept more than one credit card per order. I even called their customer service rep so I could use the balance on the AmEx gift card and my debit card for the rest, but she and her supervisor said no. Why won't anyone take my money?!

Then I had the brilliant idea to buy a Victoria's Secret eGift card, since that can be combined with another credit card. I submitted an order online for $100.

I got a phone call saying the card had been declined (augh!!!), so I had to call American Express to find out what was going on. Remember my attempt to buy something on Etsy with PayPal? Turns out American Express dinged me $1 for the privilege, so the balance on the card was $99.

Victoria's Secret won't let you buy eGift cards for $99 - they have to be in $5 increments. But they also won't let you buy one for $95. Just as I was about to go apeshit with the nineteenth customer service rep I was talking to, she suggested I buy one for $50 and another for $45. Aha!

I clearly have some kind of online shopping compulsion. Most normal people would have given up three to five paragraphs ago.

Just as I purchased the two eGift cards, I noticed that Victoria's Secret had the $50 free shipping offer code back on their Web site. Of course!

Oh, but I'm not done with my gift card nightmare. By now I was totally attached to three sweaterdresses and the cardigan sweater, totalling $118. And I was so worn down that I also added another cardigan to my shopping cart that was on clearance for $9.99. I made DH take a look at it, thinking he would talk me off the edge, but instead he just said, "It's only $9.99. Just buy it." Thanks, Enabler.

I finally clicked the PURCHASE button long after DH had gone to bed. Guess what? They screwed up and charged me for shipping. After all that!! The shipping charge wasn't listed on the final order review page, but then when I got the confirmation screen the total amount charged was $150-something instead of $133. I had to call customer service again!

By now, I've probably spent another $5 in minutes on my pay-as-you cell phone. Supposedly I'll be reimbursed for shipping in 3-5 business days.

The worst part? I still have a $4 balance on that stupid AmEx gift card to spend. I think I may just eat it.

New Year's resolution? No more shopping online! And let this be a lesson to all of us to give people cash instead of these freaking gift cards.

Holy crap! I doubled my money.

2009-12-28T09:28:00.008-06:00

Boy, am I anxious to see how my retirement investments fared this year. I happened to look back at my retirement savings on January 1 and noticed they were a paltry $69,700. Today, they're at $142,646. I literally doubled my money this year.

Well, kind of. Let me take a little more detailed look. Here's what I (and my employers) contributed in '09:

My contribution to 403(b) at former job: $16,500
My contribution to Roth IRA: $5,000
Employer contribution to pension at former job: $12,569.75*
My contribution to pension at former job: $762.28
My contribution to 457 plan at current job: $4,445
My contribution to pension at current job: $673.10
Employer contribution to pension at current job: $3,500

*My pension vested in '09 so this reflects the amount my former employer contributed over two and a half years.

Total of my contributions: $27,380.38
Total of employer contributions: $16,069.75

Plugging the numbers into this investment performance calculator, I see that my actual investment return is 32.26%. Not bad! Certainly better than the -33.15% return I had last year.

Moral of the story? Keep investing regularly and save as much as you can. Eventually it might actually add up.

Weekend articles

2009-12-26T16:31:00.000-06:00

Here are my favorites from this weekend's New York Times:

At Tiny Rates, Saving Money Costs Investors

Doing Good by Paying Forward

Recession? Teenagers Get It, and Are Cutting Back

Resolution: Get a Deal on a Gym Membership

Thinking Hard About Retirement and Death

Health Care Changes Wouldn't Have Big Effect for Many

Can Touching Your Toes Test Your Arteries?

When Mom Is Just Floors Away

Fewer Wrinkles. Plenty of Worries.

Four Stories, With Plenty of Room for Imagination

Space for Friends, Outdoors and In

Grandma's Gifts Need Extra Reindeer

What Iceberg? Just Glide to the Next Boardroom

In Search of Work, but At What Cost?

Patience, Please, With That Investment Plan

Sorry, Shoppers, but Why Can't Amazon Collect More Tax?

Back From the Brink (but Watch Your Step)

Happy holidays!

2009-12-24T08:14:00.004-06:00

Here's a fun holiday from Laura Rowley on Yahoo about the money lessons we can learn from Santa Claus: Santa's Got His Finances in Order and So Should You

1) Santa Claus doesn't use credit cards. Many years ago, a bank (which shall remain nameless) sent him one suggesting he could "Live Richly" by borrowing money at a variable rate of interest. He just ho-ho-ho'd at that, shoved the plastic in a drawer, and put the company's entire marketing department on the naughty list.

2) Santa doesn't bother to keep up with the Joneses. For example, he's into simple classics, sticking with the same signature red suit year after year. He's never felt the need to replace his trusty sack with a one-night Fendi rental from Bagborroworsteal.com. He built his castle himself with high-quality construction materials and isn't tempted by granite countertops or a California Closets makeover for his toy storage. Admittedly, there aren't many Joneses at the North Pole; most of them are in New York, New Jersey and Connecticut, which explains why these states ranked at the bottom in a recent study of personal happiness. However, even if his castle was in, say, the Meatpacking District, he would not be looking to get past the velvet ropes at the Boom Boom Room, because he knows status envy is diametrically opposed to the true spirit of Christmas.

A little happiness in time for the holidays

2009-12-22T09:10:00.005-06:00

Here's some encouragement from Laura Rowley of Yahoo: Bouncing Back in Uncertain Times

Gretchen Rubin, author of the book "The Happiness Project," which comes out at the end of this month, has seen more than a few posters on her blog talk about how the economic downturn has made them happier.

"It's because they feel that they're more in touch with what really matters," she explained in an email. "When their financial situation became rocky, they realized how lucky they were to have a supportive spouse, or a warm family, or good friends and neighbors. When everything's going well, it's easy to forget how important these very basic relationships are, but when times are tough, they see again how central these bonds are."

Wicks says someone dealing with a stressful change like a job loss needs a circle of friends (or one or two close ones) willing to play different roles. Initially, someone who is "sloppy sympathetic -- who says 'you're totally right' is supportive and listens and encourages so you can ventilate," he says. "Once you're done mourning, the second friend is someone who can try to get more clarity in terms of what strings are pulling you, someone more prophetic. Third is someone who teases you, because on the way to what's important in life we take ourselves too seriously. Finally, you need an inspirational friend that will call you to be all you can be, without embarrassing you that you are where you are."

H.C., a married mother of two, got involved in flipping real estate in Florida with her husband back in 2002. It worked for a while. They'd buy fixer-uppers, and he did the work himself, putting the repair costs on a credit card. But they got out too late, and ended up selling one property at a loss and giving two back to the bank. They also had $66,000 in credit card debt. Through stringent budgeting and working overtime, they whittled it down to less than $11,000 in three years.

"Money is just a tool -- not an absolute have-to-have anymore," she says. "I don't have to have the best house, the best car, the best everything. It's not important. A home with love, a great marriage, my dog -- what's more important is people, not possessions."

Says Wicks: "It's not the amount of darkness in people's lives or even in the world that matters -- it's how they stand in that darkness."

I'll try to keep this in mind the next time I'm worrying about potential job losses or not having a big enough emergency fund. I've been a bit of a paranoid nut lately, although I finally got some relief when I looked up maximum unemployment benefits in Minnesota: $585/week. (For some reason I keep forgetting that if I lose my job, I'll be able to collect unemployment.) Now I can relax a little because at least I'll be able to keep paying the mortgage.

Glad I'm not underwater

2009-12-21T14:31:00.008-06:00

Here's a candid story from the Wall Street Journal: Confessions of an Underwater Homeowner

When we started looking, one of the first things that struck me was how expensive even run-of-the-mill two-bedroom homes were–$450,000, $625,000 and more. A house going for less than $350,000 was rare, and what we found in that range would give pause to even the hardiest of fixer uppers. It was distressing. These weren't impossibly large homes either, at least not to this lifelong apartment dweller. Buying in tony Metuchen was out of the question.

We weren't oblivious to the fact that people were stretching to buy homes. We were adamant about getting a fixed-rate loan–rates really had nowhere to go but up, so why would we want an adjustable rate? (That line of thinking turned out to be an epic fail–30-year fixed rates have been at less than 5% for weeks lately.)

We were concerned about the down payment. My wife and I had just wiped clean our tens of thousands of dollars in college-loan debt. The nearly $20,000 we had saved seemed like a king's ransom. In reality, it would be less than 10% on any home we could afford. Getting to 20% now, with our three new arrivals, was way out of reach.

After reading this guy's story, I just feel very fortunate that DH and I were able to recently sell two East Coast properties (that we bought in the real estate frenzy of '04 and '06) for a profit. Maybe because we always buy low?

Weekend articles

2009-12-19T18:02:00.011-06:00

Here's what I'm reading in this weekend's New York Times:

Not All Drugs Are the Same After All

Americans Are Finally Saving. How Did That Happen?

The Lesson of 2009 Is That We Can't Foresee 2010

Nice Gift, but Ask if You Can Return It

These Days, Countries in Misery Have Lots of Company

For Many, Utility Bill Is One More Casualty of Recession

The Wealthy as Crusaders for Justice

Agent or No Agent?

For Jersey City Hunter, Nothing Else Compared

Because Sobriety Is Denial Enough

Art House

Stuffed

Can Anybody Make a Movie for Women?

I'm addicted to Etsy

2009-12-18T15:29:00.008-06:00

I'm late to the party on this one but I've finally discovered (and become addicted to) Etsy! I made my first purchase last weekend and have been obsessively combing the site ever since. I'm sure it's just a matter of time before Etsy is bought by some evil corporation, but for now it's an awesome collective of independent folks selling beautiful hand-made wares.

So far I've purchased five pairs of earrings for myself and one beautiful pair for a former boss in New York. (She surprised me with a holiday gift in the mail so I had to reciprocate, and thankfully Etsy was on my radar!) All of the earrings I bought cost under $3 each including shipping, and the earrings for my boss were $21. What a steal!

Although I'd visited Etsy before, I found all the options for searching for stuff overwhelming so I never really spent a lot of time there. Then I bought some earrings at a local craft event in Minneapolis, and noticed that the artist had an Etsy page. So I reconnected and now I'm hooked.

I think I'm going to give myself an Etsy budget of maybe $20/month. Otherwise the temptation to keep buying pretty things (my "favorites" list is huge!) is just too overwhelming. Where does it stop???

Then, just as I was fantasizing about quitting my day job and becoming a full-time jewelry maker/seller on Etsy, the New York Times had this article: That Hobby Looks Like a Lot of Work

QUIT your day job?

To some craft enthusiasts that is just the name of a popular blog on Etsy, the fast-growing Web site that serves as a marketplace for crafts and vintage goods.

But to Yokoo Gibran, it was an epiphany.

Ms. Gibran, who is in her 30s, had been selling her hand-knit scarves and accessories on the site for less than a year when she decided last November to quit her day job at a copy center in Atlanta. Thirteen months later, she would seem to be living the Etsy dream: running a one-woman knitwear operation, Yokoo, from her home and earning more than $140,000 a year, more than many law associates.

Jealous? How could you not be? Her hobby is her job. But consider this before you quit your day job: at the pace she’s working, she might as well be a law associate.

Is education worth it?

2009-12-17T08:07:00.002-06:00

A fellow art school graduate sent me this ABC News story: Some Debt-Laden Graduates Wonder Why They Bothered With College

Percell never dreamed that this is what would happen after she graduated from college. She grew up hearing that education pays. A government study once claimed that a bachelor's degree was worth $1 million over a lifetime. Even political figures like Hillary Clinton were touting the benefits of a college degree.

So Percell borrowed enough money to pay about $24,000 a year to attend Rivier College in Nashua, N.H. She's about $85,000 in debt.

"I was told just to take out the loans and get the degree," she said, "because when you graduate, you're going to be able to get that good job and pay them off, no problem."

But for three years, Percell has struggled to find a job with her degree in human development. And the recession has made her search even tougher. To pay the bills, she took a low-level desk job with an insurance company, doing work she says she could have done straight out of high school.

When asked if going to college was worth it, she replied with an emphatic "No."

For me, college was worth it because my parents footed the bill and I graduated debt-free. But I definitely could have skipped the MFA degree I borrowed nearly $50k for. In retrospect, I should have gotten a cheaper and more pragmatic master's degree, like DH did. But at least having that much debt to pay off made me very financially motivated!

In my next life I want to be a man

2009-12-16T14:08:00.008-06:00

The title of MP Dunleavey's latest MSN article is something I've been trying to explain to DH for a while: Why it costs more to be a woman

For example, Barbasol Soothing Aloe shaving cream, 11 ounces, sells for $1.69. Barbasol Pure Silk shaving cream for women, 9.5 ounces, sells for $2.49.

As a Barbasol rep explained, "80% of women like to shave in the shower," so the product needs a rust-resistant aluminum-bottom can. The company also adds more fragrance. These things cost more.

OK, fine. But why is Neutrogrena's Hydrating Eye Reviver eye cream (0.5 ounce) selling for $10 when its girly twin, Ageless Essentials Continuous Hydration Eye (also 0.5 ounce), goes for $15?

Because we're suckers?

That's part of it. Didn't I once admit in this very column to paying some horrifying amount for deluxe shampoo and conditioner?

But there is a lot more going on beneath all this lather.

Here's my example: I had to pay $35 for a haircut this weekend and just spent $40 on vital products so my hair stops looking like crap. And I'm overdue for highlights.

DH, meanwhile, cut his hair himself this morning in about ten minutes with an electric shaver.

Life is so unfair.

Must fly south

2009-12-15T14:50:00.007-06:00

I just got this mailing about a one-week retreat in Costa Rica next month. I am so tempted! The cost would be $950 plus airfare, which seems like a bargain to me. Anything to get out of this cold weather! Whoever sent it must have known it was one degree outside right now.

Maybe I'll check the prices of flights, just for fun. Even if I don't go on this particular retreat, the idea of traveling to Costa Rica sounds pretty perfect right now. I could stay there until April...

Pissed off spending money

2009-12-14T15:28:00.008-06:00

Do you ever get pissed off after going out to eat? DH and I ended up at a bar we'd been meaning to try over the weekend and decided to have a couple of beers and an early dinner. The sandwiches seemed cheap, like $6-$7 each, and the beers didn't have a price listed. Seeing as how it's Minneapolis, where mixed drinks average five bucks, I didn't think it would be too spendy.

So imagine my surprise when the total bill, with tip, came to nearly $50. For four tap beers and two lousy bar sandwiches! I was so mad and the bill brought up a host of other things:

I was mad at the bar for thinking it was all that and charging $6 for a pint.
I was mad at myself for spending all my extra cash on long underwear and winter boots.
I was mad at DH for continuing to have only $30 in his savings account and a $300 unpaid speeding ticket and $1,000 in credit card debt.
I was mad at myself for not verifying how much the beers cost before ordering a second round.

Mostly, I was mad that I spent $50 on a mediocre meal out. I could have ordered three additional pairs of long johns, on sale here. Or had a decent meal at a real restaurant. Or ordered my awesome MOP hair product from the UK (alas, it's been discontinued in the states). Or bought four of my own four-packs of Surly beer, since it's surprisingly better out of the can than out of the tap!

Instead, I got two pints of beer and a crummy BBQ mock duck sandwich, alongside a bunch of frat boys watching sports. Dammit.

Weekend articles

2009-12-13T08:05:00.009-06:00

Here are my favorites from this weekend's New York Times:

The Lure of Store Credit Cards, and the Hook

Redeem All of Gift Card, or Give Store a Present

Americans Owe Less. That's Not All Good.

Buying? You?

A Home Without Prince Charming

Post-Industrial Order

Picking (Up) Winners Without Placing a Bet

Now They're Cooking

Fewer Gifts and Frills Are Expected in a Rough Economy

A Joint Account That Underwrites Our Marriage

Colleges Turn the Economic Crisis Into a Lesson Plan

To Feed the Hungry, Keep the Can, Open a Wallet

A Lesson in Frugality, From the Tenements

Now Entering Phase 2 of the Market's Comeback

Tax Cuts Might Accomplish What Spending Hasn't

Interest Rates Are Low, but Banks Balk at Refinancing

Queen for a Day in Rented Finery

The Homeless Are Wherever Jobs Vanish

Renovating a Rental as if It Were Their Own

Continuing to build my winter wardrobe

2009-12-12T10:15:00.015-06:00

I started coveting Glacier boots after my feet nearly froze off and two people recommended Sorels. The Glacier boots are supposedly good to -100 degrees. They usually cost $140, but I found them for $100.

Then I did some more research and decided I preferred the Snowlion style, even if they're only good to -40. Snowlions retail for $100 but I found them for $62, with free shipping. (I must have got the last pair because they're no longer on the site.) I love comparing prices online.

And no, I can't afford them. I know I'm supposed to be done shopping but I can't stop. I may return the two pairs of Totes boots I ordered since I know they're not good to -40. The total of that order was almost as much as the one pair of Sorels.

All this was prompted by my decision to try biking into work this week. (I had to test my limit, right? The air temp was -4 and the wind chill was -20.) I can now officially say that I require at least double digit temps. I was crying in pain when I got to work Thursday and think I got frostbite on my toes, despite stopping at a bike shop to buy those disposable toe warmers.

DH just said he knew the cold weather would defeat me. And then he biked to work again the next day while I caught the bus. Did I mention he rides 7 miles farther than me each way? Damn husband.

I've heard women have extremely warm cores because they have babies, but their toes and feet freeze. That's definitely been my experience. I don't even need to wear my warmest coat when I'm on my bike and my core is fine. I even found a mitten solution that works; my feet are just the problem. Hopefully these Sorels will fix that.

I've also heard about battery powered socks that warm your fee, which may be my next purchase. We'll see how these Snowlions feel.

Now I just need a few more pairs of long underwear and I'll be all set for these Minnesota winters.

Back to the Land

2009-12-08T11:14:00.003-06:00

Here's an interesting real estate trend discussed in the Wall Street Journal: Green Acres Is the Place to Be

Motivations can vary, but typically there are three groups: young people buying land as an asset or investment, with vague hopes to live on it someday; exurban commuters who have jobs in big towns or cities but want to escape the sprawl; and back-to-the-land types who want to dabble in hobby farming. While the 76 million-strong baby boomers eyeing retirement represent the largest ruralpolitan segment, they're being joined by a growing contingent of 20-to-early-40-somethings freshly imprinted by this recession's pain.

Kathryn O'Shea-Evans, a 25-year-old freelance writer, moved from Portland, Ore., to New York on Dec. 31, 2006. When the economy began floundering, she was frugal—living in a $650-a-month boarding-house room, buying clothing in resale shops, and socking away part of each paycheck.

Then, this past August, she flew to Montana to look at a place to invest those savings: a $12,000, 12-acre parcel of land.

"From the minute I landed in New York City, every job I've had I've been worried will end any moment," says Ms. O'Shea-Evans, who is now working on a "permalance" basis as an editorial assistant at Travel + Leisure magazine. She passed on the 12 acres but is continuing her rural-property search. "It's totally worth it to put every extra dime into buying something that I will know is there," she says. She is now looking for something with a house on it.

Brrrr!!!

2009-12-07T09:29:00.009-06:00

I've been on a bit of a spending bender lately and am ready to come clean. But here's the thing. I don't consider buying base layers and wool socks to wear in the frigid temps "shopping," per se. I'm just stockpiling for survival.

And yeah, the weather here has turned ugly. My love affair with the Twin Cities has frosted over as highs barely reach 20. And it's only December!

This cold weather means I have to shop because there's nothing like having your toes freeze during your bike commute to make you willing to spend whatever it takes to get warm again. And spend I have. Here goes:

$109 Lands End for winter coat I can bike in ("warmest" coat to negative 20), base layer (legs), and waterproof/coldproof shoes
$22 Two pairs of leggings to layer under sweaterdresses and wear on my bike commute
$54 Two pairs of Totes boots to keep my feet warm and dry
$102 Three sweaters, three long-sleeve crew neck shirts, and one cute party dress (on clearance for $19.99)
$46 Wool mittens, deer skin mittens (ewwww...but this vegetarian is cold), and wool socks purchased at construction worker supply store as "the warmest option"
$16 Wool hat
$168 Sweater dresses and knee high boots
$25 New watch (okay, perhaps this has nothing to do with cold weather, but it's a really cute watch)

Total: $542

You may be thinking, huh. Sweater dresses don't exactly seem "vital." But ladies and gentlemen, please consider my position that if I'm going to be frozen over 6 months out of the year, I at least want to look cute. I also spent $26 on earrings as part of my look cute in the cold campaign.

Admittedly, I may have fallen into some of the shopping traps described in this Star Tribune article: Booby traps to part you, your money. However, my sweater dresses are adorable and I got free shipping.

A fellow transplant friend is contemplating spending $350 for a winter coat, which makes me feel better about my own splurging. At least I got an entire winter wardrobe for that price.

Weekend articles

2009-12-05T16:24:00.000-06:00

Here's what I'm reading in this weekend's New York Times:

Married (Happily) With Issues

The Jobless Rate May Have Hit Its Peak

Foreclosures Can Offer Deal, but Buyer Beware

Questioning a $30,000-a-Month Cancer Drug

Recession Resolutions, Like New Year's, May Be Hard to Keep

Knowing What's Worth Paying for in Vitamins

A 20-Something Makes a Mint (and Sells It to Intuit)

The Big Mistake

House Hunters Wanted a Place for Baby

The Art of Sparkle

Newly Married, In Search of a Style

Scholarly Investments

A Real Find

How to Run Up a Deficit, Without Fear

Economy's Loss Was One Man's Gain

How to Turn Downtime Into Job Offers

A Social Worker for Pets

November Spending Report

2009-12-02T10:39:00.003-06:00

'Tis the season to spend lots of money and I binged big in November. But I keep forgetting to mention that I'm contributing $635 every paycheck to my work retirement account, so I'm not all bad.

November Income:

$3,091 Day job
$1,310 Philly escrow money (since we sold the place)
$40 Fitness rewards (two payments in November!)
$103 Transfer from savings to cover spending binge

November Expenses:

$1,500 Extra payments to mortgage principal
$18.31 Netflix
$500 Student loan
$20 Tree House charity
$135 Pocket money
$157 Groceries
$16 Wool hat
$6 Coffee
$48 Home decor
$438.70 Art
$35 Additional charity
$45 Dry cleaning
$187 Restaurants
$111 Bike accessories for new bikes
$38 Gifts
$168 Clothes and winter boots
$26 Watch
$1,182 New computer (used the Philly escrow money)
$26 Earrings
$18 Theater tickets
$181.31 October over

Total Income: $4,544
Total Expenses: $4,858.32

As further proof that it's not about what you earn but what you spend, I'm over budget by $314.32 despite having more income than usual this month. Those internet sales got the better of me and I'm obviously in the holiday (shopping) spirit.

December Net Worth Report

2009-12-01T14:47:00.003-06:00

My December Net Worth took a turn for the worse thanks to an Ikea kitchen shopping trip. I thought Ikea was supposed to be the cheap way to re-do our kitchen? Somehow everything still cost over $8,000, despite their clever kitchen designs that imply it will only cost a couple of thousand bucks. False advertising! The total was so high my debit card was declined at check-out.

Assets

Cash: $21,644

Retirement: $136,515

Home: $175,750

Personal Property: $4,000

Liabilities

Home Mortgage: $134,412

Student Loans: $19,352

Total Assets: $337,909

Total Liabilities: $153,764

Net Worth: $184,145

Weekend articles

2009-11-28T16:36:00.000-06:00

Here's what I'm reading in this weekend's New York Times:

Site-Hopping for Holiday Savings

Some Indians Find It Tough to Go Home Again

Hiring Is Rising in One Area: Low-Paid Interns

Seeking the Best Prices in Medical Care

At Odds Over Land, Money and Gas

Forgotten by Time and Termites

Accessorized With Stroller and Rake

Apartment Hunter With Lucky No. 13

Forget Car Insurance, Does It Have Medicare?

36 Hours in Austin, Tex.

A Rally That Needs More 'E'

Cupcake dreamin'

2009-11-26T10:03:00.005-06:00

Here's a fun New York Times article about the realities of opening that cupcake shop: The Latest Entrepreneurial Fantasy Is Selling Cupcakes

In 2006, selling 20 kinds of cupcakes, Tiffany Bacon, a former software entrepreneur, opened Toot Sweet Cupcakes in Austin, but quickly decided that she wasn’t going to make it on cupcakes alone. After four months in business, she started selling lunch fare, too.
Last year, Ms. Bacon and her husband rented a new kitchen near the store, equipping it with 80-quart mixers and other professional baking items they bought at auctions. They also fixed up an adjacent room where Ms. Bacon home-schools her six children. “They pitch in and help on big orders,” said Ms. Bacon.
She has the backing of a big-time investor — Donald Yacktman, the once high flying mutual fund manager who now runs an Austin-based investment fund. Mr. Yacktman first lent Ms. Bacon $5,000 to buy a professional oven and mixer. Later, he committed a sum in the mid-five figures for a 25 percent stake in the business. “I was so impressed with her energy and work ethic,” he said. “Plus, I sampled the product.”
Ms. Bacon pays her $2,400-a-month rent by selling an average of 10,000 cupcakes a month. She charges from $1 to $2.50 a cake, depending on the size. Business had been increasing 300 percent each month until last spring, when Dell Computer shut down a nearby manufacturing operation. After that, business fell off 10 percent in June.
Ms. Bacon and her husband, who works with her, take a combined salary of $36,000 to $50,000 a year. Any extra money is rolled back into the business. “There are no vacations,” said Ms. Bacon. “We’re working 80-hour weeks.”

I continue to be confused by the numbers for small businesses. On the one hand, many of the millionaires profiled in The Millionaire Next Door seem to have gotten that way by owning their own businesses. Yet then I hear about all these coffee shop/bakery/restaurant disasters, with folks using their life savings to go into business for themselves only to fail miserably.

Is it certain types of [non-sexy] businesses that lend themselves to success? Or does the media just focus on the extremes and many other small business owners are doing just fine?

I am a spending maniac

2009-11-23T13:30:00.010-06:00

I just got my new favorite splurge, a $2 medium mocha from Caribou Coffee on Mondays featuring white, dark, or milk chocolate.

Speaking of splurges, have I mentioned that I've been spending money like a crazy person? It all started last Wednesday when I decided to treat myself to a Starbucks latte in the afternoon to get through a difficult work project. Problem is, my treats have continued every day ever since.

Three lattes, countless restaurant meals (technically we don't have a kitchen -- see above before & after -- but we do have a rice cooker, hot plate, and toaster oven), four pieces of art from the awesome MCAD art sale ($438), two pairs of earrings ($26), chocolate sauce ($8.50), and a wool hat ($16) later, I feel a little sick to my stomach. The high is gone and now I have the spending hangover.

Actually, I was doing okay with all of the above purchases. I was even doing okay with the $1,100 new Apple laptop I bought and haven't mentioned here yet, since our old Apple is on the fritz and it was time to replace it. It wasn't until DH and I visited Ikea yesterday to buy our kitchen cabinets that the spending frenzy caught up with me (and I took a look at our tattered bank balances).

The stuff for the kitchen cost about $8,000. I mentally expected it would cost $5k-$6k. We have about $14,000 left from our real estate profits, which is mostly earmarked to pay the guys for doing the work on the kitchen. And we still have to buy countertops, which are probably going to cost about $3,000. Gulp.

My own savings account is at around $7,600 after I transferred the money to cover the [totally gratuitous?] art I bought. That's probably going to help cover the kitchen costs and any other surprises.

At least we'll have an awesome kitchen? And most of the other "big" stuff is completed, except for sanding and staining our hardwood floors. DH took a week off work to do that in December and we can probably use a $400 Menards credit to cover most of those costs.

Man, I can't believe we blew through over $100k already buying and fixing up the mansion. At least we didn't have to finance anything?

Weekend articles

2009-11-21T16:45:00.006-06:00

Here's what I'm reading in this weekend's New York Times:

From Leader to Laggard in Just Over a Decade

Experienced in Love and Money

How to Find Mental Health Care When Money Is Tight

Two Heart Surgeries Strain a Couple's Finances, but Not Their Bond

Duck! It's the Holidays.

Becoming the Alpha Dog in Your Own Home

Start Small and Think Long-Term: Saving Energy

Where Punchlines Pay the Rent

Shifting Priorities

Not Taking 'Not Hiring' for an Answer

The Boundaries of a Breakup

Is There Such a Thing as Agro-Imperialism?

The Forest, the Trees and Your Portfolio

The Great Unknowns of Credit Card Bills

What if a Recovery Is All in Your Head?

How to get rich. Really.

2009-11-20T11:37:00.000-06:00

I have to add Thomas Stanley's (author of the classic, The Millionaire Next Door) newest book to my reading list. Check out Liz Pulliam Weston's recent MSN article about it: Stop acting rich, start getting rich

The neighborhood in which we live influences a lot of our spending. The more expensive the house, the bigger the mortgage tends to be, and the more we'll spend on heating, cooling, insuring and maintaining the place.

But we also feel pressure to match our neighbors' spending on cars, vacations, furnishings and other trappings.

The "keeping up with the Joneses" mentality means the fancier the neighborhood, the less wealth we may accumulate, Stanley said. The opposite is also true: When our surroundings are more modest, we tend to spend less, regardless of our incomes.

"The propensity to spend," Stanley said, "is directly related to the typical home price in that neighborhood and to the price you paid for the house."

Interestingly, most of the people Stanley surveyed who lived in $1 million-plus homes weren't millionaires.

"They may have a big mortgage," Stanley said. "They don't have a lot of money."
In fact, Stanley found that three times as many millionaires live in homes worth $300,000 or less than live in homes worth $1 million or more.

"People who have a tendency to accumulate wealth live in neighborhoods that are easy to live in," Stanley said. "That's a hallmark of an accumulator."

I heard some gossip recently that really confirms this. There's this family who lives in an amazing house, and the wife stays home doing volunteer work while the husband works in this high-paying professional field. I always assumed they were loaded, but it turns out they're mortgaged to the hilt. They paid more than $400k for their home 10 years ago and financed over a million dollars on renovations! The husband is going to be working long past retirement age to pay that off.

I also found this part of the article really interesting, especially after living in NYC where my sister would frequently tell me "just get a country home" when I expressed frustration at being stuck in a one-bedroom:

Most millionaires have just one house. Many people associate a second or vacation home with having arrived. In Stanley's surveys, though, 64% of millionaires had never owned a second home. The net worth of second-home buyers at the height of the real-estate boom was actually considerably lower: a median of about $380,000, Stanley estimated.

Houses cost a lot to run and maintain. Stanley postulates that money-savvy millionaires find one home to be enough and prefer not to pour money into a property they may not use often -- or might feel pressured to use more often than they want to.