Oops- can you cut my bill in half?

When I was first planning the wedding, vendor coordination had taken up most of my time allocated to wedding planning. While the thought that I had been making more phone calls than normal flickered through my mind, I hadn’t seriously considered the ramifications.

That is until- the email came.

You know, the one from Verizon that states you have a bill that is coming due soon. This one said we had over a $400 cell phone bill.

$400!!!!!

In all honesty I was freaked. I’m not working (for a salary that is) and paying unexpected bills when I’m not in control of the money situation- is scary!

My fiancé was surprisingly calm.
Eerily calm
I thought he must be about to explode!
While he scanned the breakdown of charges, I dreaded the results.

The score out of 700 shared minutes:
Him- 600 min.
+Me- 800 min.
=$400 cell phone bill

Then, he said, “I’m not paying this.”

My mind raced- “What?!” I croaked.

“I’m not paying this- it’s ridiculous! If we had originally paid $20 more last month to upgrade our plan we would have been fine,” He said.

So he called Verizon.

Slowly, I realized that he wasn’t mad at me (or really even at himself).

No, he was mad at the system- which for all intensive purposes we had picked.
It was the timing he was worried about. If we had checked a week ago, saw that we were over, and called Verizon to upgrade we would have been covered. The boundaries between when the billing period was over and when we received the bill were the issue. Not the $400.

He got a hold of a middle-aged doting southern lady, Ms. Belle, and explained that he had a fiancé who was planning a wedding and that he was strapped for cash.

It turned out Ms. Belle was twice divorced. The first husband had cheated on her for 15 years. The second had been into drugs. She told him to get lost by dumping all his personal items out the window and into the street (just like in the movies- I imagined!). She knew marital bliss was precarious and said she’d see what she could do.

She pleaded our case to her manager and after a long time on hold the manager came on the line. It turned out that Keith, the manager, was also a recent divorcee. After hearing our story he advised my fiancé to check my cell phone usage everyday- EVERY DAY!!! He sternly cautioned. But after telling the details of his failed marriage, he told us he thought he could eliminate half the bill. But he had to check with his supervisor and would call back on Tuesday.

On Tuesday, the call came and went to message:

“Sorry, man. We can’t take off half the bill like I thought we could….
….. we’ll credit you the whole thing!
Happy early wedding present from Verizon! Now, don’t forget my advic- (cut off by machine)”

Thank you Verizon, Keith, and Ms. Belle for giving us our most unusual wedding present yet!

Have you ever haggled your way out of part (or all of) a bill? Tell me about it!

Not so Minty fresh

In an effort to “meld minds” financially with my significant other, I’ve been trying to map out our finances to see where we are as individuals. I figured if we could see where our money is spent and saved we could further refine savings goals for the future. I’d been having a hard time, so I turned to the software program Mint to try and organize all our accounts.

It was working perfectly; it is a great tool- except for the accounts with additional security questions. For some reason, it can’t access those accounts.

This, of course, leaves us with an incomplete picture of our finances as a couple. It begs the questions:

Has anyone else had this problem?
If yes, how do you fix it?

And more importantly, do we have to have it all figured out before enacting steps to save as a couple?

Or should we start somewhere and figure it out along the way?

Merging finances

To get a better picture of our finances, I created a spreadsheet to see all of our accounts at once.

It turns out, when you merge your lives some things get easier (one home, not two) and others get more complicated.

I have:
One checking institution
Two savings institutions (keep in mind I have multiple accounts)
One investment institution
Four credit cards

He has:
Two checking institutions
Three savings institutions
Three investment institutions (multiple accounts @ one place)
Four credit cards

Grand total of:
Three checking institutions
Four savings institutions
Four investment institutions
Seven credit cards (In full discloser- we have one joint card normally used and each have one alternative card we use. The others sit in the safe.)

That’s a lot of places and accounts to keep straight!

Both he and I have tried to create a whole picture of our finances and are finding it quite hard. Are we diversified as individuals? As a couple? Do we have accounts with overlapping goals? Which accounts should be made joint? Should all of them be? Or should we keep some money individually?

While I’ve successfully integrated dreams, opinions, and vendors for our upcoming wedding, why is it harder to unite financially?

Him vs. Me

This blog has helped me focus in on my personal finances, but also on my married finances. Before we got engaged we talked very broadly about money. We both seemed to be savers in general, and we both disclosed our debts to each other.

Since my fiancé and I are to be married in about a month I thought it was about time that we talked about the future of our finances. What do we want to do with the money we already have? How do we want to save for a house? What do we want to do with cash wedding gifts? That sort of thing.

I should disclose that I prefer it when things are neat and organized. My fiancé believes that if something is left on the floor (btw- this could be a range of items from clothing to important paperwork) it should be left there so the individual can find it later.

These beliefs seem to carry over to finances. I like to pay bills as they come via online banking. He likes to automate everything so he never has to worry about it. I manage my investments myself at a discount brokerage; he has his investments actively managed at a large brokerage firm that also handles his parent’s investments. I like to have separate named accounts for my saving goals: Tithe, Oh @#!% Fund, Fabulous Things, and Baby-Needs-a-New-Car fund (I also have similar names for my corresponding CDs). He on the other hand has one savings account. One.

So the discussion went something like this:

Me: If you only have one savings account, how do you know that you’re saving enough to reach goals that you have?
Him: I don’t have to worry about it.
Me: (confused) What do you mean?
Him: Whatever I don’t spend, I put in my Cash account and I don’t ever touch it.
Me: When would you touch it?
Him: If I need to.
Me: What sort of things would you touch it for?
Him: I don’t know emergencies…
Me: (Thinking- oh it’s an emergency account)
Him: (continuing)… like when I bought your ring and the TV.
Me: But those weren’t emergencies, those were planned purchases!

Let’s just say, at this point, things dissolved. We eventually got things kind of figured out, but really I felt like I had more questions still than answers.

When merging finances it seems you not only have to sign up for the joint accounts, you also have to converge minds.

Anyone got any tips for newlyweds-to-be?

Maximizing interests

Reading Houseonimics by Smith and Smith hasn’t been the most exciting read. (My favorite antidote so far: the photos of the houses rented vrs. bought on pages 21 and 22.) Nevertheless, it does have great information about the home buying process. While we’re in no position to buy now, we hope to be in the next few years.

However, it was a point about leverage and investing that caught my attention:
“You will make money borrowing at 6 percent and investing at 10 percent; you will lose money borrowing at 6 percent to invest at 2 percent” p.84

An obvious statement, but it got me thinking about my stimulus check.
(Yes, I know, it was an odd jump, but that is how my mind works sometimes…)

I’ve got a later SSN, so I’ll be one of the last people to get my stimulus check. (Haven’t got yours either? Go to the federal website to see when you will). While I would l-o-v-e to already have it, the time lag has allowed me to think about how to best use it.

For me, I don’t need to spend it. I know that is what the government wants you to do with it, but that’s not in my best interest. I want do as Smith² suggest and maximize this “free” money that is coming my way.

Here are my options as I see them:
A) Beef up my emergency savings (earning 3% and I’ve got 2.5 months worth and I’m going for 6 months)
B) Contribute to my ROTH IRA (given the crazy stock market swings I’ve only earned 1% this year and I’ve got $1600 of a possible $5000 saved for 2008)
C) Pay down my college loan (@ 7% I’d be “earning” more than any of my savings and investments in the short term)
D) Divide my $600 among all the accounts

Choice C seems the most beneficial in the short term. However, what would that $600 be in 40 years if I put it in my ROTH? Given that my ROTH returns are uncertain year to year (but hopefully the markets will continue to trend upwards) and my loan is a set percentage, would it still be advantageous in the long run to pay down the debt?

Any opinions or ideas?

Small-town wealth

From LA to NYC to Jackson, CA.

Yes- it’s a big jump.

This once booming gold mining town has more recently seen a loss in jobs rather than economic growth. However, the poster boards in the real estate office window still promote ranches with streams that possibly still hold the prized mineral.

Jackson was the location for a baby shower for a couple that we have known and loved for years. As they are the first of our friends to get pregnant, we knew there was no way we would miss this hallowed event.

We had a lovely dinner with them entertained by stories of their peculiar new neighbors (who appeared to range in degrees of insanity) followed by a tour of their new home in this scrappy neighborhood.

It was a charming starter home: two bedrooms and baths with beautiful woodwork, large kitchen, and courtyard. After following my very pregnant friend through the halls and her vivid descriptions of decorating schemes, we found ourselves standing in their courtyard talking about their future plans.

It then occurred to me that wealth has a whole new dimension, beyond iconic status symbols and mathematical formulas: wealth can be a relative term.

For this dear couple, wealth was the ability to buy a bank owned house, and with the help of friends and family fix it up. When we toured the home the only completed room was for the future baby girl. Wealth was also the opportunity for Mom to be able to stay home with the baby. Dad maybe on the road for weeks at a time, but there are other young mothers on the block that she can bond with.

To them being wealthy was the ability to build their dream life, in a city filled with family and friends and see their future children grow up in the same fields and forests that they themselves did. Wealth wasn’t a specific number, or object, or even the most coveted address in the city.

Wealth was buying a slice of the American dream.

$ex and the $ity and me

My mom and I just got back from Sex and the City: the movie. I’ve always been a fan, and I enjoyed seeing the characters back on screen. It has been criticized as being a parade of couture items and events. However, this affluent lifestyle is a gorgeous backdrop for them to fumble through. Hedonic? Probably. Realistic? No.

As the ladies hit their 40’s (and beyond) it still makes fans feel like they’re earned their wildly wealthy lives. In NYC Sex and City makes it seem as if wealth is still characterized by Manolos, A list events and Fifth Avenue penthouses.

So what is wealth minus the cultural trappings?

The most mundane definition of wealth I could find is espoused by countless textbooks:
Wealth is the difference between your assets and your liabilities.

In other words, the amount of money you have minus any debts you have. Not a sexy definition, but one that is reasonably well agreed upon.

Using the last formula I was (unjustly) rich, but this one I thought would be grim. Grimmer than it was actually was, I was predicting it to be much worse. I knew my debt was there, but I’d been acting like I was an ostrich, throwing minimum payments at it, but otherwise keeping my head in the sand.

So here it is: I’ve got over $15,000 in assets, but almost $17,000 in liabilities (I financed my whole MA which is now growing at 7%). SO it was debt well spent. It got me first teaching job at the State U and I’m counting on it helping me get my next job at whatever community college will hire me. However, my wealth is still in the red.

If your wealth is a negative number, is it still really wealth?

Definitions of wealth

I’m starting a new section of this blog to compare and contrast the different ways wealth is defined. In an era of keeping up with the Jones, one’s wealth can be realized in many different manners. In SoCal wealth can be defined by zip codes, wheels, or silicon and nips-and-tucks. In other words- down here- wealth is the ability to buy stunning things.

However, I’ve just started The Millionaire Next Door by Stanley and Danko. While its’ data is outdated (I’d never let students turn in paper 100% supported by ten-year-old studies…), I think in 1996 it was a turn in the way this materialistic society thinks about money.

Their definition of wealth is:

(your age)(pretax income from all source except inheritance)/10 and compare this to the wealth you’ve actually got

If your wealth is twice this amount you are a very wealthy person.
If your wealth is half this amount you are an under-accumulator of wealth.
If you’re in between, you’re average.

So how do I stack up?
(25)(0)/10=0 and I’ve got more than that in the bank- in fact I’ve got thousands more than that amount!

Whoo-hoo! I’m rich!

Ah- so this calculation doesn’t work for the unemployed.
I’d suspect this definition has ceiling effects (what would a person who is 110 really need that much money for? They’re going to die soon…) and floor effects (does a five year old need more wealth than their weekly allowance?). But I see it as a good general rule of thumb.

I wonder how other people stack up using this rule.

Cheap meals

This is something that doesn’t happen often, but when it does I’m ecstatic!
Free food!!!!

Ah, maybe it’s the eternal college student in me, but I love free food.
Food takes up an estimated 30% of our budget, so when it is good and free for the taking- I don’t hesitate.

My parent’s retired recently, and threw a fabulous party for 80 people in celebration. They had the food catered by a local butcher and there was plenty of food leftover. Too much for a couple to eat by themselves. So I got to take:

2 gallon sized bags of cherries (courtesy of the Laurie’s backyard!)
2 gallon sized bags of chicken
2 gallon sized bags of beef
1 gallon sized bags of rice
2 bags of bagels
1 tub of cream cheese
1 tub of salsa
1 tub of BBQ sauce

I’ve managed to freeze some of this, and here are the meals I’ve made from it:

Meal #1
Mexican bowls
2 servings of beef + 2 servings of rice + 2 servings of salsa + 2 servings of Trader Joe’s refried beans with Jalapenos + 1 cup (or so) of shredded cheese

Heat everything in one big pan, serve layered in bowls, and top with shredded cheese.
Hands on time- 10 min.

Meal #2
Chicken and gravy
2 servings of chicken + 2 servings of rice + all leftover chicken sauce, stock, and gelatin + a couple tbsp. of AP flour + Trader Joe frozen green beans

In a large pot heat the sauce, stock, gelatin, and flour. Shred chicken. In a separate pan heat the green beans. Once the gravy has thickened add the chicken. Heat rice in microwave. Serve rice, green beans on the plate. Add the chicken and gravy on top of the rice.
Hands on time- 10 min.

Meal #3
Chicken salad
2 servings of chicken + 2 servings of ranch dressing + 1 bag of prewashed baby greens

Combine and serve.
Hands on time- 2 min.

Meal #4
BBQ beef Sammie
2 servings of beef + 2 servings of cheddar cheese + 4 pieces of bread + BBQ sauce
Toast bread in toaster. While toasting slice cheese. Once toasted lay the freshly sliced cheese on the hot bread. Heat the beef with the BBQ sauce in the microwave. Then top the bread and cheese with the BBQ beef mixture! Add the other slice of bread and enjoy!
Hands on time- 7 min. (unless you have a slow toaster…)

Meal #5
Mexi-ranch chicken sandwiches
2 servings of chicken + 2 servings of ranch + 2 servings of salsa + 4 pieces of bread + 2 servings of salad greens
Heat chicken, ranch, and salsa together. While heating chicken mixture, toast the bread. Assemble sandwich and enjoy.
Hands on time- 5 min. (unless you have a slow toaster…)

+ 8 lunches based around bagels
+ 4 servings of cake for dessert
+ 1 pie filling worth of cherries

Estimated cost of meals:
Five dinners at $6.00 each= $30.00
8 lunches $1.50 each= $12.00
4 dessert $2.00 each= $8.00
1 pie filling= $4.00
= $54.00 worth of food for free!

*Photo: From left to right and top to bottom
a- Fudgey layers of German chocolate cake- yum!
b- To store cake without sticking frosting to clear wrap, simply insert toothpicks into cake and then cover
c- Bagels and smear
d- Making Mexican bowls
e- Rice
f- Cherries
g- Mexican bowls
h- Freezing supplies
i- Chicken

Make luxurious curtains

If I could be a channel on TV, I would be Home and Garden Television (HGTV).
Thus, I’ve incorporated a few tricks into my own home décor. Curtains can be really expensive (several hundred dollars)! Especially if you’ve got doors that are over seven feet tall so they are too tall for the standard 84’ curtains and too short for standard 96’ curtains. While I do have a sewing machine, it’s probably rusting from non-use.

So that brings me to one of my favorite tools: the staple gun

Yes, these are non-functional curtains. We have a giant tree outside our window, and no fear of anyone being able to see in. If we had to close them, I simply pull the vertical binds shut.

I’ve had many people ask me where I got my curtains made, and they I laugh as they yank on them to close them. They are in fact, stunned to learn that these are dummy panels.
What’s nice about dummy panels is that you can make your window look a lot larger (and in my case- make it appear as if it is centered on the wall). So you can see in some of the photos that most of the area covered by the panels is actually wall.

Here are the instructions to make them yourself:
First:
Read all directions
Measure how long you want your fabric to be
Measure how long you want your board to be

Materials:
Fabric long enough to make two panels, and a piece to cover the hardware on top (think discount curtains, Ikea, sheets, shower curtains, remnants…) The fabric panels should be two-three times as wide as you want them to be and long enough to cover the window plus six inches to staple to the board.
Staple gun
A board deep enough to fit on top of your existing vertical bind hardware and long enough to span your window (and any area of the walls that you want to cover)
Screws long enough to go through the existing vertical bind hardware and into the board.
Screwdriver (electric or manual)

Assembly everything you need in one place.
First measure out the fabric and cut it if needed.
Take the two panels and staple them on to the edges of the boards. Make them pleat nicely by:

Measuring on the ends of the boards, how wide you want your panels to be. Also measure out the center and the centers of each half (aka measure your distance in fourths). Then staple the edges of the curtain panel on each mark. Then find the middle of the fabric and staple that to the middle mark on the board. Take the first half of the fabric, find the middle of it, and staple it on the ¼ mark on the board. Repeat for second half. Now you have ¼ worth loops of fabric stapled onto the board. Find the center of each of these loops and staple in the center of the space on the board. Repeat until you can no longer do this. Now you will have nicely pleated panels.

You should have two pleated panels on each end of the bare board. It’s fairly ugly at this point. So we want to cover all evidence of the frayed and stapled fabric.

To do this you’re going to staple the last piece of fabric you have to the side of the board that will be on the wall. Staple all along the backside. Now take the fabric on the front edge of the board and go to one side edge. Like you are wrapping a package pull back the fabric and secure it on the back edge with a staple. Do this to the other side.

To secure it, use a ladder and a friend to help you rest it on top you your existing vertical bind hardware. Now using the brackets screw up through the hole and into your board. Repeat for the center and the other side.

Depending on how expensive your fabric is, my curtains were custom made (by me) for less than $100. Get yourself a beer and enjoy your handy work!

*Photo: From left to right and top to bottom
a- The curtains! Can you tell that the window is actually small and not centered on the wall?

b- View looking up at inside hardware, note how the board extends beyond the window to make it appear larger and centered on the wall

c- Tools needed: measuring tape, screws, staple gun (and staples), screwdriver

d- Curtains with vertical blinds closed

e- Alternate view of curtains

f- Side view- you can barely see the staples!

g- Close up on panel

h- Close up on panel, see how much of the wall I've covered

i- View looking up, unless you get really close (as I did in picture b) you can't see any proof of the old blinds or the new homemade ones.

Role Models

While I’ve just embarked on this self-imposed fiscal education reading gurus suggestions; I’ve realized that some of this stuff I’ve always known, but it just wasn’t spelled out in a curriculum. Instead I picked up on it from my parent’s.

Yes, I’ve got financially responsible parents.

They owned their first house in their early 20’s
They moved up in quality of homes until the one they presently own (yes, they will own it outright very soon).
Both have graduate degrees, of which my Mom went back and got at age 50.
They also chose professions that they loved- teaching. Had good benefits and time to raise me, even if they could have earned more in another field.
In a world where women tend to make 70% of a male’s salary, my mom earned as much as my dad.
They have recently ended those careers to take on hobbies and other social pursuits at the early ages of 57 and 59.

I’ve already missed the mark of owning my home at such an early age, but I’m starting a career also in education which will allow me to be a forever student and have flexibility for family down the road.

I have a lot to live up to, and I’m thankful for their good example.

Happy retirement Mom and Dad!

Instant pay raise!

It appeared in the credit card statement, innocuous but once I saw it I knew what it was…

When my fiancé got his offer letter it clearly stated full health insurance for him and his future wife under group coverage. This was great because I have a minor heart problem and we were afraid I’d be denied coverage under individual plans. Then the way the company hired him, he actually had to get individual health insurance that they would reimburse him for.

We were glum.
We knew there was a chance that I wouldn’t be covered. After four faxes of information and release forms and many many phone calls, they finally had all the information they needed to make their decision.

Then, last night, my fiancé checked his credit card statements and low and behold there were two charges from the health insurance company (one markedly higher than the other, but none the less) Two!

Sure enough, I was accepted! The coverage looks great, and his company is reimbursing us for the monthly premium. It literally adds thousands of dollars to his salary. Since any job I get at a college will be adjunct (and won’t have any benefits) this reinforces that health insurance is an integral part of a salary package. This is like getting a 13% pay raise!

Young or Dumb?

Yesterday I came out and confessed my biggest financial blunder to date. While I’m in the process of fixing this situation (which I’ll write about later), I read something that made me think of this faux pas in a new light.

Summary from Your Money and Your Brain:

People who have damaged prefrontal cortexes (part of the brain that helps us think logically and reflectively; allows us to plan for future) tend to act in financially risky ways in order to gain a large short-term gain.

Now my Psychology background tells me that this area of brain doesn’t fully develop until mid-20’s.

This made me wonder: I made this decision in my young 20’s, it was certainly risky (all of my money was in it), and I was hoping for an immediate gain. Was I just immature or brain damaged?

My first money mistake

While I am new to this self-imposed self guided financial education, I have been investing for a while. Not very well, mind you, but trying.

I decided to open a ROTH IRA in 2005 and I had been hearing a lot on TV about emerging markets being hot. (Indeed they were- making 55.4% 2003, 23.7% in 2004, 31.7% in 2005 YMYB*)

So I went looking for a mutual fund that specialized in a less-developed country than our own.

I found Fidelity Japan Smaller Companies ( MUTF:FJSCX ) and it had lots of stars by it (courtesy of the impressive looking website called MorningStar). I also researched the country of Japan. Lots of national growth while I was a tot, but it had been in recession since the 1990’s. I found somewhere on the internet that recessions normally lasted about 10 years. So, Japan was due to come out and start having rampant growth. I thought I’d sleep on the idea of buying the fund.

Sounds fairly rational, to sleep on it, right?

The next time I looked at the fund again, and discovered that Fidelity was closing the fund to new investors. Today.

So I bought into it. At about $17 per share it seemed cheap- less than a meal out!
Using all the money I had, I met the $3,000 minimum to get into the fund. I was up for a while. I checked it daily, thinking how smart I had been to get in.

Then, it tanked. Over the next year it lost 20+%.

I was crushed. The news was still saying emerging markets were soaring. I then discovered something called BRIC (Brazil, Russia, India, China) and that these were the emerging markets with all the buzz. (Why hadn’t I found that out sooner?)

Japan was still in recession (and still is three years later…). I had really thought I researched this, that I was buying low and going to sell high. Just like everyone said. As if me buying into the stock would stop a national recession.

Good intentions, but not enough money savvy. I had a lot to learn.

*Your Money & Your Brain by Jason Zweig

Fun and cheap activity of the week

In my last blog I mentioned that we are not going to give up having fun in order to be financially savvy. We are interested in finding a balance of enjoying our city and preparing for the future.
You should know that we love food.
Really love food- so my suggestion for the fun and cheap activity of the week is:
Going to get frozen yogurt at 21 Choices.

Don’t look at me like that with those-oh-you're-such-a-Californian-yuppie sneers!

This place is quality- it’s incredibly thick and decadent.

They also have a variety of frozen yogurts like: Snickerdoodle (Made with warm cinnamon and sweet cookie dough) or Purple Pineapple (Non Fat: Made with boysenberries and pineapples) or even Chocolate Covered Banana (Made with fresh organic bananas, chocolate yogurt, and chocolate chips). Yes, those are just the frozen yogurts- you still can add stuff to them!

It’s also a local, responsible, and independent business that has lines out the door when one could walk into the nearby Cold Stone or Pinkberry.

Here’s how we do it:
~Go to the website and see the flavors of the day: http://www.21choices.com/ They change daily, but always have a basic flavor (vanilla or chocolate) and a fat-free flavor.
~Get on our bikes and ride to the Old Town area of Pasadena. 21 Flavors is located at the corner of Colorado & Delacey
~Stand in line and plan what goodies I want to add to my frozen yogurt.
~They will ask you if you want some samples. I recommend doing this! People routinely ask to try all five-six flavors. Live it up and try them all!
~Enjoy your creation!

Prices:
Small: $3.25
Medium: $4.25
Large: $5.25
Add-ins: $0.95
*Hint: If you just want frozen yogurt without any add-ins or toppings go over by the cash register. There is an express line that in normally sans wait time.

My favorite combinations:
The go-for-it combination: Double Oreo yogurt (Oreo and marshmallows) plus cookie dough
The my-pants-are-tight BUT I-need-a-treat: Peach yogurt (fat-free!) plus organic strawberries

We love riding our bikes here and it’s also accessible by Metro (Memorial Park or Del Mar). We like to go really late (11:30pm) and take it outside, lean on the building and watch the drunken clubbers, absurdly plastic women, and college kids walk by.

It’s everything the kids in you wants and it’s an experience for less than $10 per couple.

*Photo: From left to right and top to bottom

a, b, c- glamor shots of my melting cookie dough yogurt with Reese's peanutbutter cups added

d- view from across the street

e, f- shots taken inside

g, h, i- entry, sign, hours of operation

Budget blown

So- I was fairly excited about the David Bach budget.

That is, until I sat down with our expenses.

Granted, we’re living on one income right now, but we’re not saving anything.
Anything.
Nothing.
Nada.
Zip.
The last few months living in a more expensive city have been- well more expensive. Plus, before I was bringing in some income with student jobs and student loans. Now, I’m not.

So where do we cut back?
Housing expenses?
Move to a cheaper apartment? No way in hell. Moving was horrible. We argued more in those two weeks of moving than we did in the previous seven years. Not a chance.

Conservation?
We already have efficient light bulbs, prefer to open windows than air-conditioning, and don’t leave electrical appliances on. He has a fuel efficient car, and I bike everywhere… so I guess not here.

Cars?
His is almost paid off, and I’ve owned mine outright since I bought it. No cutbacks here either.

Phones?
No house phone, and He found a good deal when I updated my phone in January.

Food?
Groceries are so expensive here. This might be an area to cut back in, I’ve got an idea for a post on groceries stores later on…
Dining out. Yes, we do it once a week. We don’t order alcohol much or desserts or appetizers. I don’t see this as a place to cut back- we moved to downtown to live in down town. We want to experience it, not just live above it.

Personal expenses?
Yes, always there is room to cut back here. Wedding stuff isn’t cheap, but it will be done in two months (without any CC debit for us). So hopefully this will resolve itself. I like shopping as much as the next girl, but I’ve been the same size since I was 10-years-old. I keep wearing my stuff longer than I probably should. He is good about spending too, no over indulgences in boy toys.

So now what?
I guess this will be alleviated when I get a job. I’m applying like crazy and have been for the last four months. I’m hoping a Fall position will be in my future.
But until then….

A budget I like:

from The Automatic Millionaire by David Bach

The main idea: Pay Yourself First!
(Can you tell why I like this guy?)

To make a budget you decide what type of lifestyle you want in the future (i.e. how rich you want to be as compared to how rich you are now) and then use that percentage to save and invest. Then you live on the rest.

Want to live at:
Middle class- pay yourself 5-10%
Upper middle class-10-15%
Rich- 15-20%
Uber rich- at least 20%

Even if you want to be uberrich you just make sure your current costs that you have every month don’t exceed 80% of your income for that month. Does this really work? It seems so easy!

For example:

Average SoCal median income (US Cenus Bureau 2006): $ 70,502 per year
Bringing home (after 30% taxes): $4112.62 per month

Middle class- 5-10%
amount to save: $205.63-$411.26
amount to live on: $3906.99-$3701.36

Upper middle class-10-15%
amount to save: $411.26-$616.89
amount to live on: $3701.36-$3495.73

Rich- 15-20%
amount to save: $616.89-$822.52
amount to live on: $3495.73-$3290.10

Uber rich- at least 20%
amount to save: >$822.52
amount to live on: <$3290.10

Budget gripes, part 2

The other problem is that these budgets seem too be written for someone living in ittsy-bittsy-town-USA.

Who only spends 30% on housing costs like rent or a mortgage?

If we did this is, we would need:

Average home price in my city: $762,260 (source: Money Magazine).
Average monthly payment: $4,448.34 a month
(Assuming 5.750% and 30 year fixed source: www.mortgage-calc.com)
That means you would be making $14,827.80 a month or $177,933.60 a year.

Ummm… I don’t know anyone who makes that much a year.

But what about us renters?

The average rent for a 2 bedroom apartment in March, 2005 in Pasadena*, was $1,209 per month.
According to the 30% rule you should be making $4,030 per month or $48,360 a year.

More reasonable, but still…you’re paying someone else’s mortgage.

*However, most of the apartments we actually wanted to live in were in the $2,000-$3,500 per month range. Pasadena, like most big cities, has some places you would NOT want to live in. So we're in more of the 50% range for our apartment!

Budget gripes

I’ve been reading personal finance books like crazy lately with mixed emotions. They are helpful, but I’ve also got some bones with them.

Most financial books will tell you MUST start your financial future with a budget.
I hate this. It makes me discouraged and I want to put the book down.

I’ve tried them before and couldn’t stick to them. I also had a really hard time figuring out how my student lifestyle worked with a budget. Some months you get more hours at the coffee shop, another quarter you get a grant, but until now I’ve never had a dependable number that would come in every month. It seems most financial gurus believe everyone has a salary.

News flash- not everyone has a dependable salary!

Welcome to SoCalSavvy!

I’m a NorCal girl-at-heart and my life has taken me to the LA area. I’m GenY and learning how to survive financially in one of the most expensive areas of the country.

I’m an educator, but my recent move down here has put me out of work. On my finance’s salary alone, I’m trying to make our bucks stretch and still have a fabulous SoCal lifestyle.

This blog isn’t so much about personal finance advice, but more about my financial education progression. It’s a process, but I want to share what I’ve learned and get feedback from others.