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!

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.

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.

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!

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....

photo by Linus Gelber

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.