Sunday, December 23, 2007

Happy Holidays!

I'm driving to Bahston this evening, so PiggyBankBlues will go dark for a few days at least. Everybody have a safe and happy holidays!

Thursday, December 20, 2007

'Tis the Season

I live in a city with 1.6 million people living below the poverty level (1 in 5 New Yorkers). And for what it's worth, the federal poverty rate is currently a family of 3 surviving on $16,600 a year. Can you even imagine? Over half of all babies born in NYC are born into poverty. Poverty rates soar while public assistance has plummeted. Only 44 percent of students in NYC graduate from high school in 4 years (it costs $13,755 to educate a NYC student per year). 40 percent of children in foster care end up in prison (it costs $100,000 to incarcerate a person per year per--you do the math). And as it says on NYC non profit Robin Hood's homepage, 34,000 people slept in shelters last night, nearly half of whom were children. One cannot live in NYC and not understand that the poverty is staggering.

I don't come from money. I grew up in a working class family in a proudly blue collar neighborhood. It was during the devastation years when the big factories like Bethlehem Steel closed down and threw Buffalo, NY into the brink of economic oblivion. I grew up with government cheese (those bright orange bricks were mighty tasty!) and gas lines in nearby Canada that went for miles. Like any other kid, I thought my life was perfectly normal and relatively happy. If you don't count high school. Then, as the first kid to go to college in my family, I arrived at a swank Northeast liberal arts college and gawked at the students who arrived in limos, at moms decked out in Chanel suits speaking Portugese with a Brazilian lilt. There was a lot of gawking that first month for me. Eventually I became immune to stories of fox hunting with the Rockefellers and when my mom asked me tentatively over the phone, how I felt coming from a lower class, I sincerely answered that I was proud of where I came from.

But I had advantages that many do not. I know that my family, as working class WASPs, sheltered my brown immmigrant ass from a lot of torture. As many of you know, I was adopted as a baby, so while I'm ethnically Filipino, coctail hour and -albeit government- cheese plates in my life was absolutely de rigeur. Because my own complicated identity crosses a lot of borders, I know in the marrow of my bones that if it weren't for some serious life changing luck outside of my control, my life would be very very different. My mom, my sister, and I moved into my grandparents' house when I was six. My mom chose this over public housing when her husband left her high and dry with two kids. If I did not have my grandparents, who were able to buy and pay off their house without predatory lending, if I did not have my mom who was able to get a job as a church secretary during a time of double digit unemployment with the basic but necessary skills she learned at the local high school, if I did not have the cheap local track team to keep me busy and sprinting my way through childhood, the backyard to safely play football, the after school programs at the local church, the free lunches at school, the well stocked shelves of the local library, then my life would be markedly different. And make no mistake, a working class suburb hugging North Buffalo is not the same as Brooklyn.

My grandparents passed away in 1999 and 2000, and I think of them every day. I miss them terribly during the holiday season. And it is because of them that I will never forget where I come from. There was a lot of giving thanks in my childhood, and this time of year was when you remembered others. So thank you, Nema and Grandpa, for making my life so fortunate. Hopefully somebody up there can explain the word "blog", because we were stuck on translating "answering machine" and never made it to "internet"...

That's an important word, Fortunate- Receiving good from uncertain or unexpected sources. While hard work and an honest education may be a best selling ticket to prosperity, there's a lot of division among the uncertain and unexpected sources. Non profits and charities help bridge this division. This is our city, our country, our world. And even if I have piggybankblues, I am fortunate enough to even have a piggybank. Whether it's a religious/cultural holiday, or simply the retrospection of filling up the new year's dance card, 'tis the season to remember that ten dollars a month to your favorite charity is $120 worth of annual giving. Just remember- charge it to a no-fee rewards credit card, and pay it off in full each month :)

Here are a few of my favorite charities that allow monthly giving in smaller amounts, please feel free to share your own.

Food Bank for New York City

Robin Hood

New York Asian Women's Center

Transportation Alternatives

Astraea Foundation

New York Cares- search engine to volunteer in NYC

Charity Navigator- evaluates the financial health of charities nationwide

Wednesday, December 19, 2007

Lewis Cho Sample Sale

If you are searching for an affordable but fashionable dress for that Christmas dinner or that New Year's Eve soiree, look no further than the Lewis Cho sample sale.

I just got back from it and M is quite pleased, as am I since she looks gorgeous in her new duds! Sample sales are a killer way to peruse the racks of NYC's hottest young designers without becoming piss poor in the process.

The last day is tommorrow-
Thursday, December 20th from 12pm - 7pm
Lewis Cho
225 W. 36th Street (between 7th & 8th Aves.), Suite 701
212.629.9329

Monday, December 17, 2007

Costco In Brooklyn (what to do during alternate side parking)

I just got back from Costco. No, it's not exactly like going to a toy store on Christmas Eve, but I am so tired I am typing this with my eyes half mast. Don't get me wrong, I love shopping at Costco. I buy my glucosamine, saline sloution, shrimp, laundry detergent, etc. there. But Christmas presents?

Today I went to look for a Christmas present that I can't name here, so let's just call it the box set of Englebert Humperdinck. It wasn't there, which didn't surprise me because Englebert is sold out online. So I go downstairs to checkout and I wait on line, which is kind of like bumper cars with carts on Ellis Island, then check out my few things and head over to some customer service counter. The frazzled lady looked up my item and told me there were three box sets of Englebert Humperdinck left, so I take my cart and make my way back to the second floor. Which is like on the other side of the Continental Divide.

It's high noon and Costco is mobbed by now. And here I am like a moron frantically digging through enormous boxes of merchandise, looking for the last three copies of Englebert Humperdinck. The boxes are dusty and I'm allergic so I have itchy eyes and I'm breaking out in hives. Clearly the most attractive shopper in the store. I have to throw my jacket in my cart because I'm sweating up a storm by now. On cue, every customer within twenty feet of me suddenly thinks I work there, and get indignant when I look up from my mad search to reply that no, I do not work there. Like I'm lying to them.

After about half an hour, and a few fallen boxes later, I leave without finding Englebert. I drive back home, slip the car onto the right side of the street, and take me and my things up five flights of stairs. And then I think, maybe some things are worth full price?

Friday, December 14, 2007

Why Playing Lotto is NOT Saving & Other Retirement Reality Checks

Today I picked up some wine for the pot-luck party M & I are throwing tommorrow and out of habit I glanced at the lotto machine by the cashier. The jackpot wasn't above $200 million, so I wasn't tempted, but there is always a steady stream of people scribbling in their numbers. Lotto is obviously gambling, but it's also, in a warped sense, a form of saving and investing for many people. And that is the scary part.

The 2005 Retirement Confidence Survey cites 14 percent of Americans who are not saving a penny for retirement play the lottery at least once a week. Whoa. The current undulations of the Dow have better odds than one in a million. Face it, if you play lotto you are a disciplined investor, someone who removes a dollar or two from their wallet, like clockwork, with the hope that it will come back to them in a bar of gold. Kind of like Apple stock, or AT&T, or a company that makes solar panels. The obvious difference is that one involves suspension of reason, and the other does not. But the discipline is there, it just got hijacked by better marketing. Because the reality is that a lot of people who play lotto daily are working class and/or poor. Fidelity, Vanguard, Fortune magazine, and MarketWatch are not exactly targeting them for marketing and education on how to properly save and invest for retirement.

By being cut off from the world of investing, like NYC's bartenders and waitstaff, you tend to think that you can't save. What, you think some white collar cubicle jockey gets to decide what percentage of her paycheck goes to health insurance? What percentage towards her 401K in order for the matching investment to kick in? You think they want to take home a smaller paycheck? They're not necessarily better at saving, they just have the opportunity to have less choice in the matter.

My feeling is this, whether you're a hair above the poverty line buying lotto tickets every day or the Maître d' at Balthazar tipping $20 each free round of drinks at a friend's bar, disposable income is disposable income, and that's the part that you slice up for savings. You don't need to be wealthy to invest, you need to have disposable income and discipline. And guess what, mutual fund company T. Rowe Price will take as little as fifty bucks a month with no money down. You can read more of my it's easy-to-save-for-your-retirement tirade here.

So let's put it this way, $20 a month in lotto tickets for 30 years will get you jack $h*T, and $20 in an index fund returning 9% a year for that same period will get you $34,288. It's not enough to retire on, but this example, like playing lotto, is no retirement plan. It's just an illustration of what jack $h*t could look like instead of, you know, jack.

The Financial Planning Association is a professional group for financial planners, and they have a great list of stats that are a good wake up call. Here are some of my favorites-

"20 percent of Americans actually believe winning the lottery is their best shot at accumulating several hundred thousand dollars over their lifetimes."
- 2005 Consumer Federation of America and Financial Planning Association consumer survey

"[Americans] have the lowest personal savings rate since the Great Depression - in January 2006 it dropped to minus 0.7 percent."
- April 2006 Workforce Management

"A large percentage of American workers see that the U.S. retirement system is going through major changes, but many are not taking steps that are likely to leave them well-positioned for a comfortable retirement."
- 2007 17th annual Retirement Confidence Survey (RCS)

Creating wealth by saving a little at a time over a longer period of time is not the same as hitting jackpot, but it is the odds on favorite. If you like dreaming big, just dream that Steve Jobs is gonna keep on inventing computerized crack and buy his stock. And this part is important- like playing lotto, you don't need to be wealthy to have that discipline. It's getting close to New Year's resolution time. Time to max out your 2008 Roth IRA and steer yourself towards retirement and away from the lotto line.

Wednesday, December 12, 2007

Kara Walker on a Budget

Last Friday I went to go see the Kara Walker exhibit at the Whitney Museum of American Art. Admittedly, I did not go during the pay-what-you-wish hours, but I was leaving just when they kicked in. I was shocked. No, not by the art, but by the pay-as-you-wish line. There was a queue to the sidewalk, but no wrap around the block and south to Georgia type of line. Winter, it seems, despite the deluge of foreign tourists happily spending their cheap-o dollars in the city, is the time to see museums for "free".

Okay, I know museums support themselves on their knees. So if you can afford to pay, then pay. But this is my wayward way of thinking- I've worked in the art world and I know that they're flush. It is so effing flush, like hedge fund king and close relative of a Queen kind of flush. The private art world sets the market value of art, the private art world should financially fund the open-to-the-public museums. Annual balls for beggars does not count. Nevermind the fact that I'm not (check out my blog's title) flush. I'm no starving artist, but I struggle and hustle as much as the next. And I feel that as a cultural contributer, no matter how under the radar one might be, then I get to have the artist discount. New Yorkers also get the New Yorker discount. Because we pay three taxes. End of wayward thought.

I have never been to MoMA's "free" night, but I've been warned off numerous times. And the MoMA is the zoo york of all the museums. Moreso than the Met, which always gets my quarter. But if you pick a day that's cold and dreary, my bet is that you're in for a treat. You can check out a list of of pay-as-you-wish times at NYC's museums here.

I'm not going to write a Kara Walker review, you can read Holland Cotter's in the first link of this post if you need one, all I can tell you is to just GO. Pick up the free headset on the first floor, maybe read up a little on Walker beforehand. And yes, with the Whitney's normal $15 entrance fee, go on a Friday evening from 6pm-9pm and get in with your pocket change.

    photo by lotu5 via flickr

Monday, December 10, 2007

Financial Personality Quiz

Okay, it's not quite as riveting as Cosmo's "How Lindsay Lohan Are You?" quizzes, but who needs riveting? The Independent has the quiz What Is Your Financial Personality?.

Turns out I'm An Analyst, "It is not enough to know how to ensure that your money grows, you have to make the right decisions to allow it to do so in abundance and support you and your interests fully." It is a fair (albeit simple) assessment. It was pretty easy to gravitate toward what my answer would be, but like all quizzes there were moments where I was fractionally between two choices. The best part about the quiz for me wasn't the result, but the multiple answers. It was interesting to see the different ways people could think about money.

Sunday, December 9, 2007

Library Fodder Roundup 2007

The New York Times 100 Notable Books of 2007 has been out for a week now, and I've been thinking all week that I must have a yen for unnotables. Bringing you PiggyBankBlues 100 Nugatory Books of 2007... Well, see, I can't even remember them because they were so nugatory. Avid readers of this blog (both of you) already know I pillage such lists and click on the catalog of the Brooklyn Public Library (or the NYPL), and request a book of interest to be delivered to my local branch. A lot of libraries let you hold books online, not just NYC's, so check out your local library's website.

But back to the nugatory. Fellow blogging buddy Tenured Radical scanned the list as well to tally up how many hits she had, so I am not the only one keeping track. Like her, I only have read 4 out of 100. Maybe I was reading 2004 notables? Well, okay, so once a month I read a quote unquote fast paced thriller. Not so notable. But other than that I tend to lean towards literary fiction. Anyway, enough about me, my sagging bookshelf is starting to feel insecure.

So here's a roundup of best books of 2007 lists. Save yourself some money, whip out your library card more often than your credit card, and blow hours and hours of 2008 catching up on the best of 2007.

New York Times 100 Notable Books of 2007

Publisher's Weekly Best Books of the Year

St. Louis Post-Dispatch Best Books of 2007

Book Sense 2007 Picks Highlights

The Washington Post Holiday Guide- best books of 2007

The Economist Books for the Year 2007

Paste Magazine Signs of Life 2007: Best Books

Boston Globe Best Fiction and Nonfiction Books of 2007

National Book Critics Circle Best Recommended 2007

Christian Science Monitor The 2007 Books We Liked Best: Fiction

LA Times The Joy of Reading: Favorite Books of 2007

The Village Voice The Best of 2007

Saturday, December 8, 2007

What's A Moderately Priced Restaurant?

Last night some friends were visiting from out of town and we went to Perilla in the West Village for dinner. Our friends, D & L, watched Top Chef winner Harold Dieterle compete through the show's first season, garnering its first Top Chef title.

The food was one of those Christopher Columbus moments, were you're like wow I am the first person to realize that there is such a thing as tasting every ingredient, as though you've discovered flavor itself. The interior was a nice balance between unfettered and elegant. Unfortunately, we sat in the back near a draft that kept us cold throughout the meal, but I didn't let it "ruin" the meal. Definitely, I would request a booth next time. I ordered the seared sea scallops as an appetizer and the jerk grouper as an entree, and I can still taste it in my mouth as I type these words. It was a great evening.

So suffice it to say, I blew my budget big time for going out. A bottle of wine, apps, entree, dessert, came out to $122 per couple. So while it is not Per Se, it sure as heck aint Sri Pra Phai.

During dinner we were talking about what we considered an expensive meal and a cheap meal. Personally, in New York if I can eat under $20 (which includes tax and tip) then I consider that a cheap meal. An entree above $20 is moderate to me (which is what Perilla's price point is), and a non-steak entree above $30 to me is expensive.

The thing that is hard about a moderately priced restaurant is that the food usually is good so I jack up the bill ordering more than just an entree. I'm not really willing to "try out" a moderate meal, I need to know ahead of time that it comes highly recommended because honestly I just don't roll like that. So once I'm eating good food, it's on. I want to try the apps, the desserts, have a nice sip of wine before I break out in hives, the whole works. So a moderately priced meal becomes, for me, expensive. There are exceptions, of course. Nearby Al di Là has moderately priced food and I am capable of only ordering one dish.

But I guess that when it's all said and done, I don't really know what is moderately priced until the bill comes. Do you?

Wednesday, December 5, 2007

Housing Works Bookstore Sale

Housing Works Bookstore is having a 30% off everything sale. It's going on now through this Sunday, and I just picked up a couple more Christmas gifts. If you are not familiar with Housing Works, 100% of their profits from both the bookstore and the thrift stores are used to provide well needed services to homeless New Yorkers living with AIDS. It's a good cause, and I have to admit that their fiction shelves were well stocked with great reads.

Tuesday, December 4, 2007

Cringe Reading Series


Tommorrow night I'm going out for some free entertainment. The Cringe Reading Series happens the first Wednesday of every month at a local bar. The readers are ordinary folk who are crazy enough to read from their own high school diary. The place is supposed to be packed, and the entertainment value will be about as funny as John Hughes deep throating are-you-there-god-it's-me-Margaret. I will have to post a follow up review, and who knows, maybe a few too many Brooklyn Lagers and Dear Diary introductions will solve Louis Menand's paradox of representation-
    "But (a paradox of representation) we would actually feel that we had a more intimate sense of Virginia Woolf if we read about her in someone else’s diary. Woolf described from the outside by another person is likely to give us a more vivid picture of what Virginia Woolf was really like than Woolf described from the inside by herself. Introspection is not as reliable as observation. (That’s why we have shrinks.)"
Well Mister Menand, I beg to differ. The high schooler of us all is another person (just ask our moms), and the high school diary is all observation with some shallow-as-a-puddle-in-the-Sahara introspection. An alien and a lost cause. And for one raucous evening, a celebrity. Who says you can't have fun in the city with no money?

Monday, December 3, 2007

The Economic Cost of Political Apathy

The other evening I was at a dinner with someone we'll call Ramona. Ramona is an old friend of mine who just had a baby, lives in Connecticut in a McMansion, husband is a partner at a midtown law firm, and she is by all accounts, not the least of which my own, a really nice person. She is fun, kind, and down to earth. I like Ramona a lot. The after-dinner conversation turned to the next Presidential election. Ramona is a lively conversationalist, so her sudden silence was noticeable. Afterwards, M was commenting that Ramona, for all of her good intentions and glowing reports of purging her closets every season for clothes that would fit the starving folks in Africa, was probably going to vote Republican. M couldn't understand it, and wished she could connect the dots for Ramona.

I come from an Upstate NY blue collar lifelong Republican family, so I understood it only too well. Connecting the dots for the self-interested voter is virtually impossible. And voting for your own self-interest is, I think, a debilitating casualty of political apathy. For the record, I like to declare myself a Social Capitalist, though M insists that such a thing doesn't exist and how could I even put those two words together. I think she's coming around, though :) So yes, once in my short-ish lifetime I voted Republican (a local election). That would be the time I didn't vote for my self-interest, but for the long term benefit of the city I live in. While it has meant that I haven't been happy regarding a lot of stuff, it also means that my city is solvent post September 11th, 2001. I divulge this info just to be clear that, despite my left wing name tag, I'm not a thoughtless partisan that mechanically votes.

This is what I think: If you live in a leafy suburb where there is no class diversity, no cultural diversity, nothing but a mirror of your very own lifestyle, class, and more often than not, color, then political apathy becomes tantamount to blindness. Throwing more money at the problem of public schools seems unnecessary (despite the amount of school tax your wealthy enclave pays), because, quite frankly, your schools work great(!) under No Child Left Behind. When you go and vote at your nearby public school, you aren't reminded of the architecture of a federal prison, nor are your children targeted to end up in one. Your neighbor is financially stable, as is your neighbor's neighbor, and subprime mortgages were never even thrust upon you when you bought your home. Nobody from your town is in Iraq or Afghanistan, but you have a yellow ribbon magnet on all three of your cars. Being patriotic is in and of itself concern for others. And since you own three cars for two drivers, the federal funding for public transportation seems just fine to you. You are a good person, so poverty is most assuredly not your fault, and therefore not your problem. America is safe and great, just look around you. And boy would it hurt if your tax cut was reversed.

The cruel starkness of wealth and poverty in New York City is hard to ignore, but people do. Connecting the dots for people is hard no matter where or how they live. I love my family, their Republicaness and all, and I grew up at a dinner table where three generations (I grew up in my grandparents home) would disagree with me. What is most striking is that my family is the opposite of Ramona. They were, until quite recently (thank god for pensions), the working poor. Everytime Reagan announced the new poverty line, my mom would quip, "Well, we missed it again!" And yet, like Ramona, they believe in The American Dream, whose power seems to hold sway to those who are living it and those who aren't. I learned very early on that I am not smart enough or articulate enough to help them see that who they vote for is hurting their very own self-interest. Because really, if I cannot pin national interest unto the lapel of self-interest, then I have lost their attention.

Speaking of attention, I've gone and probably lost yours! So I brought you this long-ass-never-ending post because I just read a great article that just might help me the next time I sit down with my family for tuna fish casserole. Joseph E. Stiglitz, the Nobel Prize winning economist and best selling author of Making Globalization Work and Globalization and its Discontents, wrote a piece in the latest Vanity Fair- The Economic Consequences of Mr. Bush. It is a little long, and one may or may not get it all, but if ever there was a time to connect the dots, this would be it.

    photo by QXZ via flickr

Saturday, December 1, 2007

November Net Worth Update

After a month of blogging about the economy being one big toilet flush, I tallied up my net worth for November and my jaw dropped. My November net worth is $28,570, a loss of $442. My chart looks like the black diamond side of Aspen Snowmass. Thank god I saved money for Christmas gifts. There are rumors the Fed is looking to lower interest rates again. I'm going to move most of M and our savings into 6 month CDs just in case.

Okay, so even though every month like clockwork I put a dinky amount of money into my Roth, and pay down my student loan, until last month when I started posting my net worth I never really paid attention to it. All I knew was that I saved the annual max for my Roth, I paid X amount on my student loan to pay it off in half the time, I saved for a rainy day (and sure enough it poured), and I knew I paid off my credit cards in full every month. Which is why I felt like I didn't need to do a net worth in the first place. I was doing all I could, and frankly I didn't want to see how low my net worth was after all that.

But as I said last month, it makes sense to track my progress. Or my retreat, as it turns out. Because you see the real effects of the bigger picture. For example, my Roth IRA lost $805 in one month! I thought that was kind of staggering given that there's only sixteen grand and change in there. But then my ING gained over a hundred dollars in interest alone, and my student loan shrank by over 8%, so jaw dropping aside, the overall damage was minimized to a loss of 1.52% this past month. It puts perspective on the headlines, and the panic, and the depressed interest rate on my savings account, and it re-enforces the multiplicity of financial health. Save, invest, pay off debt. Here's to hoping for a December rebound to push me over the $30K mark!

Friday, November 30, 2007

Battle of the Sweaters

I'm reading yesterday's WSJ because yesterday I got sucked into the virtual vortex known as Facebook. Yes, I exert no self control over my laptop. So this morning I'm catching up on the news, and I came across an interesting article on the battle of two cashmere (a fancy word for Mongolian goat hair) sweaters. One is Land's End and cost $99.50 before shipping and handling. The other is Brunello Cucinelli and cost $950 before tax and valet parking at Saks Fifth Avenue in Beverly Hills.

While quality and feel is marginally better with the more expensive cashmere sweater, the cut and style is far better with the $950 sweater. Also, the author received no compliments on the Land's End sweater. Which, really, comes as no surprise. It's not like Land's End makes an appearance in Bryant Park during Fashion Week. And while neither do places like H&M, their bread and butter is knocking off the runways.

I was fascinated with the re-tracing of the journey from Mongolian goat, to bales, to auction blocks, to Chinese factory floor or 17th century castle in Italy. Land's End made opaque references to quality control and high standards, without offering information on the exact whereabouts and specific conditions of its factories in China. Small nation that it is. On the other hand, Cucinelli details the work hours, 90 minute lunch break, and invites the author to visit the factory.

I have to continually remind myself that while I am paying for the quality of item purchased, I am also paying for the quality and conditions of those who make what I buy. Grotesquely large CEO compensation aside.

The Five Billion Dollar Election

The 2008 national elections are expected to cost 5 billion dollars. And this is for a democratic process that American voters have a fickle relationship with. Some would say insignificant.

Voter turnout for national elections is appalling compared to other countries. Since 1945 the average voter turnout for all US elections is 48.3%. That's a big fat 139th place for us. Right behind Burma/Myanmar, for chrissakes. But we may be trending upward. The last Presidential election had a voter turnout of 60.7 percent, the highest since 1968 (Kennedy vs. Nixon). Even so, we hardly deserve a pat on the back, let alone $5 billion dollars worth of "information" overload.

From Arms Race article on Bloomberg:

    Spending for the national campaigns, presidential and congressional, will top $5 billion, as many of the Watergate-era reforms -- public financing of presidential elections and limits on expenditures -- vanish.

    The U.S. spends more per capita on these elections than any other industrialized nation, with the exception of Japan and sometimes Israel. The benefits are dubious.

    ``It isn't clear that we have any comparative advantage from all this freedom to spend money,'' says Thomas Mann, a political scientist at the Brookings Institution who has researched and published a book on money and politics in major democracies.

    Voter turnout is lower in the U.S. than in other major countries, and it's difficult to argue that Americans are better informed. The most expensive campaigns are often the most negative and depress voter interest.

    The current election cycle will look like this: The Republican and Democratic nominees combined will spend more than $1 billion by next November; other presidential hopefuls will fork over another $400 million; congressional candidates can be counted on to spend in excess of $1.5 billion, and the various Democratic and Republican party committees will part with more money than that.

What is more appalling to me is that five billion dollars won't necessarily get us a better election, and that yet again the division of wealth in this country follows us everywhere. Even into the polling booth.

Tuesday, November 27, 2007

Secondhand Gift Cards

I just got back from Uniqlo. Last year I bought M some clothes, which of course she didn't like (because I really am just good at picking out t shirts...), but no worries because I returned them all for a gift card. She's been wanting a new pair of pants so I told her I'd meet her there after work. I got there early and decided to wait on line and just check and make sure how much was on the card. Maybe $160? So the checkout lady swipes the card and gets an error message. I'm starting to sweat bullets. I have no other proof that this card has money on it. She tries to hand me the card and tell me it has nothing on it, and I'm like It has $150 to $160 dollars on it! Like my mom likes to say, believe you me! So the lady sees I mean business, and the third person to help her finally just punches the card's number in and it comes up $158. Phew! But it got me thinking that I need to tuck a receipt in with a gift card, whether it's from a return or a gift, because I'm a paper not plastic kind of gal.

Then I handed her another gift card. This one, however, I got on eBay. I knew I was going to Uniqlo this week so I searched for gift cards, and there was only one for $50. The minimum bid was $39.99 and I ended up being the winner. No, it's not another acre of land in Arizona, but still. $10 off of a $50 purchase is pretty good. After Christmas eBay is flooded with iTunes gift cards. I'm all over that, believe you me!

Sunday, November 25, 2007

My Birthday

I hope everybody had a great turkey weekend!

Tommorrow is my birthday, so I probably won't post. Last year I went to Woodbury Common Outlets and had a blast. Of course, it hit my wallet a little hard, and since I just went nuts the other weekend in Northampton I thought I should avoid the urge to shop. So I think I'll have lunch at the MoMA with M, check out the exhibits, maybe go to a movie. While I love parties, I do not like parties that are about me, so I usually do something very low key.

Yesterday I went to Coney Island with M and some friends. It was so nice out, the water was this deep blue and the sky was clear. I get kind of retrospective around my b'day, and this year has been a little hard, to say the least. Nothing like a gorgeous walk along the shore to ease me into my new year. We walked the boardwalk from Coney Island to Brighton Beach and ended up eating in this grand Russian dining hall, Primorski Restaurant. The beef stroganoff was divine, well worth $12. We were there for lunch, so we missed the live music. That could be a very good or bad thing...

I was thinking soup dumplings for dinner tommorrow, any suggestions?

Wednesday, November 21, 2007

The Federal Reserve, What Is It Good For!

I was reading the headlines this morning, and I can save you the trouble of doing so yourself. Economically speaking, it's all in the crapper. Dollar disappoints, growth will be slower than expected (and you can be assured those expectations weren't exactly Himalayan), various big companies report disappointing earnings, another bank is feeling the pain of sub-prime mortgage hangover, and the Fed is doing this and that. Which got me thinking, what exactly does the Fed do and why does everyone care so much?

Okay, so I know a vague answer. But not enough to post on it, so I thought I'd take a stab at it. And hours of online research later, here we go... The US Federal Reserve was started by my buddy, historically speaking, Alexander Hamilton. You gotta love a guy that was an orphan and an immigrant (just like me!), a born-out-of-wedlock leading architect for both the US Constitution and the US economy, a Revolutionary War hero who fought alongside George Washington at a time when wars were fought with bayonets, and a New Yorker with a gun and a slow draw at an inconvenient time. Nevermind the fact that the Federalist Papers are nothing to sneeze at. I bring up Hamilton because the beginnings point to the present.

The American Revolution was largely fought over economic reasons, one of which was the right of the colonies to print their own currency (denied). To say that after the American Revolution the economy was in shambles is putting it lightly. To fight the war, practically starving minutemen were robbing and stealing from households as they marched along. The war was financed by the printing of Continentals, and to keep up with expenses they just kept printing and printing like the Energizer bunny. By the end of the war a Continental was worth one thousandth of its nominal value. It's like leaving home to go shopping with a thousand dollars in your pocket, and by the time you get ready to pay it's magically been reduced to a one dollar bill. The chaos between creditors and lenders was more than dramatic, it was often violent. During colonial times, actual British currency was scarce (hence wampum and certificates for tabacco), the Spanish peso was widespread, and after the flood of Continentals it was all a mess. The US Federal Reserve was created to bring peace and harmony to an economic mudslide. It is a role it competes for to this day.

The Federal Reserve is the central banking system of the United States, who first and foremost directs the traffic of money flow. And here's the part where you can lose interest. So let's talk about the here and now.

Open market operations- If the Fed sells US Treasury bonds, people like your grandma will buy a bond and for the next fifty years, or however long it takes you to find where you hid it, that money she handed over to the gov't for your bond is out of circulation. This would help curb inflation's enthusiasm. The formula goes like this, when the Fed buys government securities (ie you finally found Grandma's bond and want to cash it in) it is putting money into circulation, so there's more money around, interest rates go down, and more money is borrowed and spent. The reverse- when the Fed sells a bond to your grandma, Grandma's money is taken out of circulation, interest rates go up so it's harder to borrow money and spend. Substitute Grandma's bonds with China's US Treasuries, and we're talking our entire federal budget for years on end. In other words, some unfathomable amounts of currency are put in and out of circulation.

The alteration of reserve requirements. Yikes, there's a mouthful! The Fed decides what percentage of a bank's (ie Citibank) deposits must be held in reserve at a Federal Bank (there are 12 scattered around the country). The percentage only applies to transaction accounts, like your checking account, not savings and time deposits (CDs). The reserve requirement is currently 10% for big banks- so again it is a way to remove money from circulation, which theoretically means lower inflation. I say theoretically because banks can pay the Fed a premium to borrow the reserves it needs, but that's another story.

And most famously, the Fed decides key interest rates. I won't get into them all because my poor brain is tired by now (and hooray to you for reading this far!), but the most famous one is the recent spotlight hog, the nominal federal funds rate. Remember that previous 10% I mentioned? Private banks lend money to to each other, yes it's just a one night stand, and it's that interest rate that has everyone's panties in a jam. Which is why you hear phrases like key short term interest rate that impacts consumer loans.

So what's the big deal? Well, if you lower the rate at which a consumer can borrow money you supposedly let us all go hog wild and shop until we drop. Which is exactly what we've seem to have done (that would be the headlines about consumer spending slowing down). The other thing, banks make big money loaning each other money overnight. And you thought it was your direct deposits. So when things like "credit crunch" and "liquidity fears" are tossed around, you better believe that the rate at which they can borrow money is important.

So that's the long and the not at all short of it. Now you know why the news just says "The Fed lowered the interest rate"! There are much more informed individuals out there who can wax mathematical poetic on the rate cut (feel free to chime in), and there's plenty of basics I still don't get. But with an unkempt economy, any action of the Federal Reserve is both an ongoing discussion and, apparently, a lesson for me in economics.

Tuesday, November 20, 2007

Spitzer Holds Subway Fare

In a startling turn of events, the MTA once again has quote-unquote accounting issues. Today, Spitzer held a press conference to urge the MTA to hold the subway fare at $2. Spitzer has been a verifiable swan dive of high expectations in his first year as governor of New York, and the timing of this announcement sure is convenient. But I have to admit, the MTA is my public enemy number one, and their methods of accounting make the Sopranos look spic and span. Any ammunition to badger them into fiscal transparency is fine by me. Now they have $220 million surprise money in their budget, and Spitzer wants it redirected back to the straphangers.
    At a news conference in midtown this morning, Mr. Spitzer said that under a new plan, the agency would still be able to raise some fares, including the cost of weekly and monthly bus and subway MetroCards, commuter railroad fares, and bridge and tunnel tolls. But he said that an unexpected increase of $220 million in the agency’s budget forecast should enable it to forego its plan to raise the base fare next year from $2 per ride to $2.25.

photo by blhphotography via flickr

Sunday, November 18, 2007

My First Christmas Shopping Spree

It wasn't on purpose, but I bought a fair amount of Christmas gifts this weekend. I went away for the weekend to visit M's folks in Springfield, MA and we drove up to Northampton. Lucky for me, it was Bag Day. I guess other towns might do this (I know NYC doesn't), but it's a cool idea. You get a bag as an insert in the local paper, and then participating stores will give you 20% off any one item. Most stores end up giving you 20% off everything. I'm a bookstore whore, and I have to admit I went in and out of every bookstore in sight. Since Northampton is a college town nestled within the recently annointed Valley of the Literate, there are some good books to be had.

I kind of like buying used books as Christmas presents. I usually get them at Housing Works, but this weekend was a boon for presents (am I the only one that gives recycled presents??). I ended up getting bags and bags of books, only 3 of which were for me. I'd write more, but I have to go read some books now.

Thursday, November 15, 2007

The Haves and Have Nots

The leading factoid in The Atlantic's "Primary Sources" reveals that more and more Americans are Doubting the Dream.
    Americans doubt that they live in a land of equal economic opportunity, according to a new study from the Pew Research Center. It reports that Americans are nearly twice as likely as they were 20 years ago to describe the country as divided between haves and have-nots. This change is particularly significant, the authors argue, since Americans have traditionally “turned a deaf ear” to narratives of class warfare, seeing individuals— not society—as responsible for their economic fate.

It used to be that middle class meant comfortable. In 1988, 68 percent of middle class Americans counted themselves among the haves. Today, that number has dipped to less than half, resting at 43 percent. But as the article points out, it's a poll on self-perception. The middle class hasn't shrunk as much as their ego has. What is more interesting to me is to ask why the categorical shift?

    You can read the Pew report here.

Wednesday, November 14, 2007

Steak, Carbon Monoxide Well Done

Here's some ewwwww news. Lawmakers are debating the use of carbon monoxide in meat. Why would you put tailpipe exhaust in meat, a reasonable person might ask. Well, to keep it pink, of course. At one point during the hearings, a congressional member presented the meat industry execs with two pieces of equally fresh looking pink beef, one of which happened to be 2 years old thanks to a carbon monoxide injection.

First, full disclosure. I hate vegetables. And fruit. Which pretty much leaves me on the meat and carb diet. Hence my email address :) So yeah, when someone is mucking about with my dinner I get a little upset. If they were putting carbon monoxide in brussel sprouts, I'd be like Good for them. Anyway, I digress. So the beef is injected with carbon monoxide to keep it pink. Meat naturally turns a darker color when it is exposed to oxygen, but consumers buy meat largely based upon appearance. Sure we take a glance at the "best used by" date, but I know I'm looking at the meat itself.

In all likelihood the practice won't be banned, but will probably be labeled accordingly. Which I'm fine with. In the meantime, consumer trepidation has led Harris Teeter, Safeway, Giant, Stop & Shop, and Tyson foods to discontinue the practice. Target, however, simply asked the FDA to label its meat as carbon monoxided. And if that isn't a verb, it is now.

Tuesday, November 13, 2007

Sexism in Financial Chit-Chat

Last night at work I was talking with "Carlos", one of the delivery guys, about opening up a bank account. Carlos is maybe twenty, but probably younger, he works 7 days a week and is paid in cash. Now throughout this conversation, it's Ben, Carlos, Chef, sous chef, and I just standing around the open kitchen. I can tell they are jockeying around, flashing words of wisdom to Carlos, mostly about their own situation which is so far from where Carlos is coming from.

First he starts asking another guy, "Ben" about banking. Carlos has never had a bank account, so we're starting from scratch. Ben says the most important thing is to pick a branch with the most ATMs, which in NYC is Chase. So I pipe in my $.02. I'm like, no, the most important thing is that your checking account has no minimum and no fees, and it is close to your home/work. Which is Washington Mutual or Commerce Bank. So then Carlos starts asking about debit cards. I mention overdraft fees and he is surprised that you're not allowed to spend more than what is in your account. I say something like, Carlos, I'm going to tell you something very important and you better memorize this- whether it is your cash or your credit, you never ever want to spend more than you have. There's a conversation stopper...

But the conversation, sans Carlos, turns to mortgages and credit fraud. And this is where I wanted to pull my hair out. I swear to god, every time I said something I was completely ignored. I'm not being sensitive or weird here, it was the strangest thing. I felt like I was that person on TV in the coma with everyone talking around them like they're not there and I'm the voiceover saying $h*t like "I'm here, I'm here!" And then they would pause and move on like nothing happened, even though they sense something else was said in the room. But sometimes they did address me, and then they would talk to me like I didn't know anything. Does this happen to anyone else??

I find that men speak to other men as financial equals, assuming that they are from the get-go. They may not assume to know everything, but they assume intellectual equality enough to converse. But then they'll talk to me like I'm dumb and dumber, slow and deliberate, explaining everything they say like, you know what a sub prime mortgage is- it's blah blah blah until I interrupt and say I know, but one can only do that only so many times before you seem indignant. Which is exactly what one is at that point.

Oftentimes I'll leave a social setting with M and we'll be talking about certain exchanges that had happened, and she's like, god if they only knew you read the Wall Street Journal every morning. And I think, god, if they were only reading the same blogs by both men and women I read they would be many times the wiser.

Monday, November 12, 2007

Why You Need To Start Saving NOW

I was talking with a friend this weekend about financial stuff. It started with a simple question, how do you save and pay off debt at the same time? A simple question begat a long ass answer and, many emails later, I think she is on her way to a monthly spending diary. Because the first answer to any question is, do you know how much you spend?

It's a good question, though. And I kind of think the answer is you can't afford not to save. In 2008 the max on your Roth IRA is five grand a year (again a warning to bartenders, waitresses, and other cash cow hustlers- you cannot contribute more than you earn, as in what's reported to the IRS). So I did a quick calculation and came up with the following.

If you were to start saving in January for your retirement, you're starting with zero balance, and you were to max out your Roth IRA contribution at $5,000 a year for 30 years, could you retire? Drumroll please... The answer is with $713,182 (assuming 8% annual returns). Great, you say. Not so fast. The same calculation, but with 3.1% inflation, and you get $264,353. What?!

Well, remember that time way back when and you took the subway with a token and it was a buck and a quarter? Or that time when you gave the movie theater a ten dollar bill and got change back? That is called inflation, the nasty fact of life that a dollar today is worth less tommorrow. The adjusted figure is what $700,182 is worth in today's dollars. $264,353. I know I've harped on this before. Blogger redundancy. But with oil near $100 a barrel, major banks and lenders on market welfare (aka the sub prime loan mess), and recession arguably on the radar, all of which means the smarty pants with MBAs are defecating bricks right about now. Since they're the ones running the economy, it might be prudent of us to to take care that our own finances are in order.

The first step to any financial plan is to track your spending and then make a budget. So my friend will submit her monthly budget, and I'll start posting on the practical side of how to pay off debt and start saving for your future.

Saturday, November 10, 2007

Fee Riddled Credit Card Scam

A scam implies illegality. Unfortunately, when it comes to credit, it's the wild wild west out there, and what should be illegal is not. Today's NY Times article, Big Fees for Little Credit, shows how some credit card companies are taking people for an expensive ride.
    Some issuers of credit cards are “quietly collecting hundreds of millions of dollars in profits selling nearly worthless, predatory credit cards targeting vulnerable consumers, including those with bad credit,” according to a report published this week by the National Consumer Law Center (consumerlaw.com)...

    A typical example the law center offered was this: a card issued with a credit limit of $250. After a $95 program fee, a $29 setup fee, a $6 monthly “participation” fee and a $48 annual fee, the consumer winds up with “an instant debt of $178 and buying power of only $72.”

It's called fee harvesting, and it's not just random companies that are doing it. Capital One was listed in the report, though they deny any wrongdoing. CompuCredit is the biggest culprit, collecting $400 million in fees on $4 billion in debt. Again, they deny the charges, and there is a link in the article to NPR in which they defend their practice.

The reality is that predatory lending is a very big business. Until it's properly regulated, the competition between what is morally okay and what stinks to high heaven will be a slam dunk for the latter.

Friday, November 9, 2007

A Food Blog

Everybody knows that cooking dinner at home is less expensive than eating out. I've recently read a lot of posts on PF blogs that have stomach gurgling recipes, and while I'm no cook, I love to eat. So here's my contribution, courtesy of Mama Juani- The Smitten Kitchen. This mouth drooling food blog has great recipes and beautiful photos. From its site:
    "The Smitten Kitchen is 80 square feet of fourth-floor circa-1870 New York City walkup tenement building joy with a skylight on top. It has one counter, a small stove, a pot and pan rack we nabbed from a former apartment, a marginally obsessive spice rack and a grapefruit knife with actual grapefruits on the handle. My favorite things in it are a set of stainless steel measuring cups and spoons, the very first kitchen-related item I ever bought myself to cheer up a blah day, and a husband who picks at things as I chop them."

They even have a handy conversion page that lets you know things like 1 pound onion = 2½ cups sliced or chopped. And best of all, for the month of November it looks like a recipe every day! I never thought of food blogs as a great way to plan meals and shop within a food budget, but I've got my fork ready. Any other favorite food blogs out there?

Thursday, November 8, 2007

A Mutual Fund for Hipsters

toothpaste for dinner
Reading Gothamist this morning and I choked on my coffee. Why, hello there Thrasher Fund, the GenX mutual fund. Excuse me while I roll my eyes back and gaze at my sockets. I am so going to the free 30 minute consultation.

Their GendeX Mutual Fund (GENDX) has a 1.00% management fee, a 2% redemption fee if shares sold within first 12 months, and a $100 minimum with $50 minimum automatic investment every month. Fine. What's not cool is the $2/month fee for accounts below $2,500. Holdings include Apple, Gucci, American Apparel, Uniqlo, and China Mobile. Hence, the fund's name.

Well, this was all very entertaining. Hipsters are probably the most middle class counter culture generation in recent history. They are so not falling for this.

Wednesday, November 7, 2007

Jay-Z + Greenspan = Bling

In a huh moment, the Wall Street Journal reported yesterday that Jay-Z's new video, Blue Magic, featured the hip hop mogul "flashing stacks of 500-euro bills".

Of course, the ensuing maelstrom is that Jay-Z is the straw that broke the camel's back- as in now we know there's a recession a coming. I hate crap like this, like lamenting that even a rap star is dissing the dollar, as though Jay-Z has become the lowest common denominator in financial literacy. Let's be real here, yes I love his music, but the man is also a smart businessman. He's bringing the Nets to Brooklyn for basketball god's sake. And not for nothing, but a stack of fifty grand in US dead presidents vs. $72,000 in US currency for the same stack of 500-euro? Can't knock the hustle.

Performance Pay, Irregardless of Performance

The New Yorker's latest Financial Page article, Performance Pay Perplexes, looks into the obscenely large amounts of pay market movers and shakers are raking in. A quick glance at the headlines will let you know that performance pay isn't quite working right now.

    The havoc on Wall Street following the collapse of the subprime-mortgage market boils down to a simple truth: for years lots of very smart people took lots of very foolish risks, betting borrowed billions on dubious mortgage derivatives, and eventually the odds caught up with them. But behind that simple truth is a more surprising one: the financial whizzes made bad decisions in part because that’s what they were paid to do.

The article is interesting because it breaks down just how things get paid out. Hedge fund managers, for example, get 2% of asssets under management as their fee, plus they get to keep 20% of the profit (above a certain benchmark). Problem is, their bonuses are obviously not exactly return to sender, and so the next year when the fund tanks they're sitting pretty on forty million. He also breaks down CEO compensation pay.

    Not surprisingly, a recent study of almost a thousand companies by the management professors W. Gerard Sanders and Donald Hambrick found that C.E.O.s whose compensation was made up mostly of stock options tended to “swing for the fences,” making investments and acquisitions that were riskier than those made by other executives. As a result, the performance of the companies run by the risk-takers was far more volatile, and not for the good of the companies: the risky strategies were more likely to end in a big failure than a big gain.

Essentially, the payoff for hitting that big score is so astronomical, and the chance of financial risk hitting their own pockets is pretty nominal. Hello, market cluster f*¢k. In this day and age, I'm sure we would all love those odds.

Tuesday, November 6, 2007

DRIPs- Buy Stock Direct (for free?)

I posted yesterday about my forays into buying stock. One of the cheapest ways to do so through a company's dividend reinvestment plan (DRIP or DSP). It's how I bought BP, and I own Johnson & Johnson, Pfizer, Costco, and my personal favorite, the Cubes- the NASDAQ 100 index (QQQQ). Direct reinvestment plans are not for market timers or short term investing. It's great for people who only have a little chunk of change at a time and want to build wealth over the long haul. If I don't think a company won't be around when I retire, I'll buy it through a broker, not a DRIP.

PROS

You are buying directly from the company- so you bypass the broker fees. Not all dividend reinvestment plans are free, but the one dollar or so fee per purchase is still cheaper than a broker (even Sharebuilder, which is $4). Fees eat up your returns. Think of it like your savings account. Would you rather pay ING, or whomever, no money or a buck or two every time you made a deposit, or ten dollars? Same deal. Fees for any investment, mutual funds, stocks, etc., should not exceed the 2% benchmark. Frankly, I think it should be closer to 1%, especially if you don't have a whole lot of money to begin with.

You can buy stock with only a little money at a time. Most plans have a minimum investment of $25 or $50, oftentimes you can buy online. Note that you are usually buying in whole dollar amounts, so it will be fractional shares.

Dividends are reinvested every quarter to help your money grow. The max 15% tax on dividend earnings is encouraging other companies to start paying them out. Costco just paid its first dividend a couple years ago.

You can invest automatically. Most plans let you invest at least once a month directly from your checking account. Dollar cost averaging will boost your returns, forcing you to buy even when the market is low, thereby decreasing the average cost you paid for the stock. Like all savings, dividend reinvestment plans can become a habit that you don't even feel pinching your pocket. Well, at least not too much.

CONS

Fees. There is often a start up fee. Because companies almost always require that you already own a share in order to participate, there is a fee for the use of services to put that stock in your name. The links to the stock I mentioned is for Moneypaper, the service I used to get that first share and then enroll me in the company's plan, but there are others out there. Some plans even have fees to purchase dividends! Again, the fees are not usually high, and certainly not as high as a broker. But dividend reinvestment plans speak to the little guy and gal, and our returns get squeezed by any fee, no matter how small. Fifty bucks a month on a plan with no fee is ideal. Fifty bucks a month on a two dollar plan is not so ideal. It means the stock has to increase 2% just to break even. Of course, you could counter it by increasing how much you invest by another fifty bucks, but an easy way to invest each month might then make you pause.

Buying that first share or meeting the minimum. For the most part, it is easy and relatively affordable to purchase that first share. However, some plans require several shares, or even $500 and up worth of stock. Just make sure you read the plan's minimum requirements.

Record-keeping. You need to declare things like taxable gains or losses based on your cost basis. In other words, keep every monthly, quarterly and year-end-statement, and look out for your 1099-DIV from the company at the end of each year. If you do your own taxes, you will need to figure out your own cost basis, which can be a headache. I hand mine off to an accountant, and if I sell a lot of stock, it's usually an extra ten bucks for him to figure it out.

RESEARCH. Dividend reinvestment plans are a great low-cost way to buy stock automatically. You have the freedom to start or stop an automatic purchase plan, and it's an accessible way to increase your net worth. You can search for participating companies through Moneypaper, Computershare (formerly Equiserve), AST, and Mellon, or here for the Cubes. And while Sharebuilder is not officially a DRIP, they are philosophically best friends. At $4 a trade, you purchase dollar amounts (ie fractional shares) and dividends can be reinvested for free. At $4 a trade, however, it would be best to aim for a $400 purchase. The obvious benefit is that they are an online broker and you can buy virtually any stock. Even Berkshire Hathaway, or at least fractions of it.

See, it's not so bad. And it's kind of fun to go shopping for stock. Check out the lists of available companies, whittle down the free and no cost plans, research a company's financials before you purchase, and buy and hold to your heart's content.

Monday, November 5, 2007

PetroChina and my IRA

A few years ago I was buying stock. Not a lot. I was mostly doing a hundred bucks here or there through Sharebuilder. Sharebuilder is an online broker that buys dollar amounts of stock, as opposed to number of shares. Because they buy stock in "street name"- as opposed to Ms. PiggyBankBlues, you end up with fractional shares. After the tech crash I was buying up internet stocks, etc. and after a year or two I would sell them. Because I had an emergency without an emergency fund, I ended up using that money. Thankfully, I didn't touch the stock held in my Roth IRA. Eventually, I switched to Scottrade after Sharebuilder began to charge annual fees for IRA accounts. And then I forgot about it.

Recently Warren Buffet sold off his shares of PetroChina. I sort of remembered that I had bought some shares a few years ago. Because I only sort of remembered, I was like you really need to get your crap together and figure out what stock you own and don't own, ya numbnut. But that was last week and this is this week. And then I saw this morning that PetroChina is now the wealthiest public company in the world.

    On PetroChina’s first day of trading on the Shanghai Stock Exchange, it surpassed the combined capitalization of Exxon Mobil and General Electric, the world’s next two most valuable companies.

Because I was buying such low amounts of stock, I knew that if I still had it I probably only owned one share. So after hunting around for my Scottrade file with my account number, I logged on to my account and found out that indeed I owned a single share. I bought it for $53.69, and it is now worth $227.07. And for what it's worth, during the time I started writing this post and the time I'm writing this sentence, the price went up two dollars. Which leads me to my question, now what???

I will be the first to admit I am just an average to considerably below average stock picker. In fact, any misconstrued-as-advice I give or tales I tell in relation to stock you should never ever take as sound advice for purchasing said stock. You should be entertained by my efforts, at most. Which is why, I might point out, my Roth IRA has only been invested in mutual funds over the last few years.

I am not a fan of oil stocks. They are profitable, but they throw my moral compass off a bit. It's an unreliable compass and I don't venture on its sole direction, but still. I made a decent amount, a couple thousand dollars, off of BP stock two years ago. I sold it in order to go away for a month to a writer's colony. So while BP has refinery fires and oil spills and god only knows what else, I still drive a car and bought and sold its stock. But that writer's residency was an experience of a lifetime, and I would not have been able to afford to take the time off at the time had I not bought the stock. So I draw the line and the line moves. For now, no war profiteering stocks.

And PetroChina? Well, I think I'll revisit that stock in another five years. I've never had any stock quadruple in value! In the meantime, I have $205 I forgot about in available funds to buy stock. Hmmm, Apple?

Friday, November 2, 2007

Finding an Apartment in Manhattan for Elvis

A good friend of mine, who shall be called Elvis, recently told me she was curious to know what it would take to buy in Manhattan. She co-owns her own fashion line, is married, and currently lives in a studio rental apartment in the East Village. The thing is, because she has lived there for a very long time, her rent is around a grand. Also, because she has a businees that's profitable relatively recently, I'm going to assume that she doesn't have a whole lot of cushion. So it got me thinking, is it even possible for those with piggy bank blues to be able to buy an apartment in Manhattan?

So the non-negotiable thing is location, she won't move to Brooklyn. She also stated that she wants to remain at $1,000 a month. I used Bankrates's mortgage calculator and if she found an apartment for under $150k she could pay close to a grand in monthly mortgage payments. Elvis, I love you to bits, but this is not realistic. As you know. But not to fear, all is not lost!

Option #1, Buy a 2 BR and rent out one bedroom. If Elvis got a 2BR for $440,000 (yes, it's possible, but not easy to find), put $40,000 down, and took out a $400,000 mortgage, she would pay around $2660 a month. And I'm telling you right now, you're living so far uptown you'll get nosebleeds. So for the love of god, will you just get over your disdain for the subway, and recognize that a commute from Inwood to midtown is no better than a commute from Brooklyn. The difference in quality for your price range is significant. But fine, okay, I'm talking to a wall. At least the food is good. So moving along, then she should rent out the other bedroom to her sister. Or some other sucker. This seems a little high for Elvis, and $40k down is nothing to sneeze at, but if she could increase the downpayment and lower the mortgage, this is an ideal situation. Nobody buys an apartment thinking it's going to be the only one they ever own. But there is something to be said for buying something and being able to grow into it as your life grows. What if there's baby Elvises? What if Mr. Elvis wants his own music studio? While you don't ever want to buy more home than you can afford, you want to buy as much home as you possibly can.

Option #2- Stay in a studio. Studios can be had in Manhattan for $300k. I don't like this idea, frankly. It drops your monthly payment by less than a thousand, it's still a studio, and while it is an investment it's not like you're exactly moving on up. It may even be one of those cases where it is cheaper for you to rent than to own, given your particularly low rent.

Option #3- Stay where you are and save for option #1, without having to rent out the second bedroom. Hopefully by then your business will have flourished to the point where you can afford to carry the whole mortgage. Use a savings calculator to determine how much you can save in 2 years. For example, $500 a month at 4% is over $12,000. Of course, to get that $40k downpayment, you'd have to save $800 a month at 4% for three years.

And last but not least, just like getting an apartment isn't just paying first month's rent, buying an apartment isn't just about the mortgage. New York City has the highest mortgage fees, $3830 for $200k, so if you doubled that you're looking at $8,000 in closing costs. Also, you must include maintenance in your monthly mortgage calculations. Which means it matters what the maintenance is when you're looking at places to buy. And obviously, the 10% down is an ideal situation, it's not always the norm. All in all, just research up the wazoo while you're dreaming big. One place to start- even though she's an occaisional nut job, Suze Orman has an informative piece on Rent vs. Buy.

So short answer to a long post- it's possible. It may not be easy or quick, but it is defintely within your grasp.

Learn a Language for Free

Well, okay, so you won't really learn it, as in you'll be fluent. However, there is a way to learn for free. It's through the BBC and while you won't be reading Proust in French, you will be able to be a decent American tourist. You can learn online or by email over 12 weeks. You can even download MP3s.

I'm already working on my Urdu to charm taxi drivers into taking me to Brooklyn (um, like they're legally bound to do but, like driving within a lane, simply refuse. Not that driving within a lane is nearly as important as going to Brooklyn...). Check me out!

    Assalam-o-Alekum. Bara-e-Meherbani Brooklyn, Shukria.

Thursday, November 1, 2007

October Net Worth

I was resistant to posting my net worth, not for reasons of privacy (or lack thereof), but because I thought it would be too depressing. Then I realized, what they hey, everybody else is doing it! And now I kind of like it. I like that I have a little reminder once a month to track my progress. So I bring you October's net worth to the tune of $29,012.

But here's the sad part, I only started saving six years ago. Before that I was pissing away my money on food and fun and cleaning up a shattered credit score. For the first two years I slowly increased my monthly contributions until I was able to contribute the $4,000 maximum. All of my retirement savings are wrapped up in a Roth IRA because I've never worked in a place that offered 401Ks and matching contributions and paid vacations. Ah, the good life. I am soooo jealous of your matching contributions! I would guess that most bartenders and wait staffers have no clue that such a thing exists. Not only do employers pay you, they help you save money too. Weird.

I think that by the end of the year I'll hit thirty grand, woo hoo! A note about my calculations. I'm admittedly lazy and so there's some stock that isn't listed, which is why it's stuck at $3,000. Also, it is standard to put the value of your home's equity into a net worth equation. I left it out because it would dramatically skew my net worth and give me a false sense of savings. Also, while M and I save together, I only included my own retirement savings, stocks, and land. Oh yeah. The land. That was a very, um, irrational late night purchase on eBay years back. It's a piece of desert in Arizona. According to google earth it looks pretty. Not that I've ever been there... And you all thought I was financially astute!

Wednesday, October 31, 2007

Critique of Debt

Nicholas Von Hoffman has an online post for The Nation, Give Us This Day Our Daily Debt, which breaks down the plight of the little guy. The big companies need the little guys (and gals) to buy their products, which is why Henry Ford shocked and awed the world with the first ever raise without request. Somebody needed to buy those cars.

Quoting the Wall St. Journal, the wealthiest 1% rake in 21.2% of all income (2005). One lousy filthy rich percent. That leaves a 12.8% reap for the bottom half of earners. Whoa. Fifty percent of all workers in the entire US equals 12.8% of the earned income pie. That's paltry and putrid. So what happened?

Well, if you've felt your pockets lately you know what happened. You've got more plastic than paper, and the global market party keeps on keeping on. Why pay you more when they can just pay you less and let you borrow more? So not only are we broke, we are disempowered.

    Since so few people have so much of the money locked up and do not plan to share, either the masses cut back on their spending, which is the road to universal disaster, or they must borrow and borrow and borrow without end. Not only the grownups.

    From the point of view of the big rich, getting young people in debt not only keeps the money coming in but also makes youth timid and obedient. Debt ensures that they won't turn up on the streets to demonstrate for some unwholesome cause. You could almost call it a rule that all people--black people, Hispanic people, white people, trailer trash people, college graduate people--when put in debt pretty much do what they are told.

Tuesday, October 30, 2007

Working for Free

Okay, so two things have happened. The good news is that I found out I might be hired as a researcher for this project I am really excited about. It's for a non-profit organization interested in alleviating financial illiteracy among at-risk groups, for example college students. I can't wait to get started, and when I was working on my proposal for them I sincerely had fun doing it!

In the meantime, as you know, I got a gig at a restaurant. Which is where the work for free part comes in. So yesterday night was slow. It was a Monday, after all. But still. Towards the end of the evening the GM pulls me aside and tells me, because I asked earlier if they needed my Social Security number, that I should know they only pay cash. I just shrugged. In reality, the vast majority of restaurants in the city are cash only employers. Frankly, I would prefer to be on the books for a myriad of reasons, from the moral to the practical, but I'm not exactly a voting shareholder here. So then the GM tells me this I-am-one-of-you speech, concluding that after much badgering and goodwill he convinced the owner to guarantee a minimum of sixty dollars. What?!

Well, he doesn't pay an hourly wage. Okay, servers get a dollar below minimum, yes this part is legal, and yes this is why it's important to tip. That said, you make good money in the city waiting tables. If you give good service, which isn't a walk in the park but not exactly brain surgery, then you get an average 18-20% tip. Most restaurants still give you the dollar below minimum hourly wage, even if it is off the books. It is not normal to get nothing. And sixty bucks a night sucks a$#. Which, after I tipped out the entire staff (another irritating thing restaurants like to do- make the wait staff pay for the restaurant staff because the owners don't want to) I walked with sixty.

Suffice it to say I will not be staying at that restaurant. Which is sad, because I can't beat the commute- it's only a block away! It's only a couple shifts a week and a very easy and laid back place. Until I hear back from the other position as a researcher and learn what the pay will be, this will give me some pocket change.

Monday, October 29, 2007

Setting Goals

So I officially have a job. Of course, the first thing I'm doing is trying to figure out how to save all my money!

I tinkered around with my net worth graphic. Though our apartment is worth a chunk of change, I opted to leave it out of the equation. I also only included my own retirement savings, not M's as well. Frankly, gathering the info on my accounts alone was more than enough reminder that my desk looks very Salvation Army. At least the disorganized ones. I really need to get it together...

I'm trying to decide if I should put up my retirement goal, which would only depress the heck out of me, or more likeable goals, like a travel fund and emergency fund. I'm also trying to figure out a new set of goals, so if anyone knows how to set those financial goal progress bars, feel free to hit me up with an email!

Thursday, October 25, 2007

Juggling Student Loan(s)

Juggling student loan debt is about as fun as juggling chainsaws on high speed. Not that I've ever tried the latter, but I'm all too familiar with the first.

I graduated in 1993 (now I just aged myself!) with $18,000 in debt. I went to one of, if not the, most expensive school in the country. After graduating I got a lease for a two bedroom on East 12th Street between A and B for $800 a month. It was a king's ransom for both myself and my friend, but we had our own apartment in the East Village with all the other recent college grads. Think Williamsburgh but with crack houses and affordable rents, and not a whole lot of bars and restaurants. I've held nine-to-five career-ish type jobs for the grand total of about two years of my life. My first job out of college was as an editorial assistant at a publishing house in the city. I share the opinion of this young man just out of school- paying off huge loans limits who we become. After a year of living off of coffee trucks for breakfast ($1 dollar special coffee and a donut) and ramen with bacon, I was done. I had worked in restaurants in the city during college, and I went back. I worked the swing shift at The Coffee Shop in Union Square, made boatloads of money, and in between dancing the morning away at Sound Factory I began my first novel.

And my student loan debt? Well, lucky reader that you are, that's another story.

According to a study recently reported in The Chronicle for Higher Education,

    ...borrowers who graduated in 1992 or 1993 with $15,000 or more in debt were three times as likely to default on their loans over 10 years as were borrowers with less than $5,000 in debt. Students with the lowest salaries in 1994 were more than four times as likely to default on their loans over that period as were students with the highest salaries after graduation.

So yes, I defaulted. Then there was that time I moved to LA to follow a girlfriend that I broke up with the day we left, well that miserable "year abroad" was another banner of a default year. I came back to NYC and jumped into my second, and last, real nine-to-five gig, Associate Director for an art gallery in the city. Again, not a whole lot of money and I didn't write for a year. Finally, I left to go back to bartending. The liberal deferrements were ending and my loans had ballooned. The interest was low, but still, they weren't coming down and remained out of reach. So I bit the bullet and tried to begin repayment. Problem was, I had moved around so damn much, and didn't go out of my way to let them know where I was, that they would only accept full payment. I was royally pissed off at myself and determined to change. So I read the fine print of every piece of paper I was given. I wrote certified letters, cc'd to the CEO of Sallie Mae, that were armed to the hilt with their own legalese as examples why I had the right to make payments. Six months later, I had consolodated my loans and was well on my way to paying them off.

Graduating with student loans is like having irresponsible debt without the irresponsibility. It's debt for something that has come and gone, and it's more often than not a pretty hefty sum. It's not like a mortgage and you get a house. No, it's an intellectual vacation of a lifetime that lasted four or so years and just ended. Best of all, you just won yourself an entry level position, or better yet, grad school. And suddenly, your financial literacy as a just-unleashed adult is to constantly "fix" all the things you keep fu*#ing up: a hacked up credit score, late fees, defaults, your parents have to co-sign your lease, overdrafts, the feared phone calls for eternal forebearance, the list is endless.

Count me as long ass lesson learned. As you can tell by the length of this post, I'm feeling generous. So if you want some friendly unsolicited advice...

Do whatever you can to pay off your loan and keep in contact when you can't. I preferred the head-in-the-sand approach, and if I had only talked to them I would be better off. And the damn loan would be paid by now.

Educate yourself, because the student loan industry will take you for a ride if you don't.

Know the statistics on defaults and avoid the traps. Again, if you have over $15K in loans you're almost 3Xs likely to default than a person with $5K. Paying off a big ticket item can become unreal, just like saving for a big ticket item (like retirement) can be unreal. Like saving for retirement, statistics make it real. Another stat, African-American graduates had a default rate more than 5Xs that of White graduates, and Hispanic graduates' default rate was more than 2Xs that of White graduates. Yet again, I fail to fullfill the Asian-American stereotype (but at least this time I'm not giving it the middle finger), since Asian-American graduates have the lowest default rates.

Play with your calculator. Fiddle with the figures and just know your big picture. Knowing what it takes to pay it off in ten years and what it takes to pay it off in twenty is a good kick in the pants.

Defer. If you have other debt, and you can defer your student loan(s), pay off your other debt first. This is the tricky part. If you have high credit card debt, for example, but you are well on your way from financial mess up to financial clean up, then free up some money. Credit card interest is high, and like all debt (except for, arguably, mortgages) you should pay off the highest interest rate first. Just be careful not to default.

Watch your deadlines. Mark one of those free calendars of cute endangered animals that you get in the mail every year. In big marker. Mark when your loan is due, when your forebearance ends, when the deadline is to call to change your automatic draft so you don't overdraw your checking account and miss a payment. Mark down the date, time, and reason for every call or correspondence with them. And of course, keep every piece of paper and email they send to you.

Look into consolidating your loans. The Boston Globe did a great piece on loan consolidation. Make sure the offers are legit, read the fine print, and research as much as you can. Student loan consolidation has great benefits, but it's a maze and a minefield.

And last but not least, talk to as many people as you can about their own experience. Whether you do it on a blog or over dinner with some friends, know the horror stories and the I-can't-believe-she-was-so-nice stories. Know that most of the time you call up they won't even be able to find you in their computer. Know that half of what they say to you will sail right over your head and you'll have to write it all down and get back to them. Know that no college degree equips you with the ability to decipher your loan packet, but you have to try your damn best. And know that if I can mess up and flip it around, anyone can. And this spring hopefully I'll be dancing around Prospect Park screaming, free at last!

Astroland is Back!

Freaks and frights are back! After mourning the loss of Coney Island's Astroland, for those of us who hoist this old school amusement park up to Disney-on-drugs iconoclast, well we finally get our wish. Astroland is back for one more year. For a fraction of the price of Great Adventure, and a greasy ton of fun better, it's another Brooklyn beach summer. You still shouldn't go in the water, but I won't share that story....

Wednesday, October 24, 2007

Big Words and Bags of Rice

I'm addicted to a vocabulary game. Well, not really a game per se, but it's a test with rewards. At Free Rice you test your vocabulary with multiple choice answers, and for every word you guess correctly, 10 grains of rice are donated to the United Nations World Food Program. There's a bunch of corporate sponsors with banners on the bottom of the site, and they're the guys paying for all the rice.

The fun part, if there is such a person out there shares my stunted view of fun, is that for every word you get right the next word is harder. Until eventually you wish you a PhD in latin and biological taxonomy. There are 50 levels, and apprarently it's rare to hit 48. I got to 43 and I'm determined to get to 48. Without cheating, of course, because that would be not fun. By the way, when you get an answer wrong, you lose a level, but your donated rice grains stay the same.

So if you're looking for a time suck (generously known as procrastination), check out the test here and learn more about the program here, with a possible moral caveat here.

99 Cents

Top 10 things you can buy with 99 cents.

10. Three fourths of one item at any 99cent store in the city, since for some reason nothing is really 99 cents.

9. A 6 month CD at ING earning 5.00%. And then you can be like Look, two extra pennies!

8. A lovely oil painting on eBay, kind of like felt art but without the felt...

7. Homemade lollipops on Craigslist.

6. A bag of glass globs to make, um, stained glass globs windows.

5. Several attempts at trying to use a public payphone because you forgot your cell at home. Of couse, the pay phone eats your quarters without making the call, and you probably have a staph infection despite your best efforts to levitate the earpiece.

4. Food-in-quotations at various fast food joints off their 99cent menu.

3. Something you probably don't need but simply can't pass up at a stoop sale that, yes, is still going on in October because Al Gore warned us there'd be days like this.

2. A US dollar with 99 cents Canadian.

And last but not least, numero uno, you can download Alicia Keys' latest song, No One on iTunes and become near deaf. Like me. Because I've been playing it on repeat for the past hour while trying to figure out if it was possible to write about Alicia Keys on a personal finance blog...