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Archive for August, 2006

Got my library card and books

August 31st, 2006 at 05:53 pm

I actually went yesterday, but the hours posted on their website was wrong. Grrrr.

Anyway, I got my library card, and took out four books.

- The Money Book for the Young, Fabulous, & Broke, by Suze Orman
- Personal Finance for Dummies (my father recommended this one)
- Smart Women Finish Rich, by David Bach
- The Millionaire Next Door, by Thomas J. Stanley and William D. Danko

I'm particularly intrigued by that last one, actually.

Since we're being hit by a tropical storm tomorrow, going to B&N on Friday might not be such a good idea, so I'll probably skip my trip tomorrow (especially since I don't, um, own an umbrella). But I get to finish Suze Orman's book anyway, so yay.

Marrying 'rich' isn't all it's cracked up to be

August 31st, 2006 at 12:00 am

My entire life, my mother has entreated me to ensnare a rich man so that I will never have to worry about money again.

I used to think that this reasoning was shallow and silly (and in large part because I want to be financially independent and not have money play a role in the power dynamics of my relationship). But now, I also think it's just plain wrong.

Let me explain.

To start off, the first critical flaw in this plan is that there just aren't many rich people in this country. According to the wealth distribution in the US (data from 1998), the vast majority of nation's wealth is in the hands of a tiny fraction of the population.

For those who don't feel like viewing the reference link, here is the take-home message. The top 1% of the population own 38.1% of the nation's wealth. The next 9% own 32.8%. The next 20% own 24.4%.

What does that leave the rest (60%) of us? Only 4.7% of the nation's wealth.

I use this grossly uneven wealth distribution to simply conclude that statistics will not be on your side when it comes to meeting an eligible rich bachelor (or bachelorette). Unless you're an insider on Wall Street (or the White House??), I highly doubt you can just go out there and seduce a multi-millionaire. What a bummer, eh?

Another flaw in the nab-a-sugar-daddy approach to financial security is actually an observation I made while in high school and college. I went to a pretty elite high school and college, so there was a large population of wealthy kids there. Perfectly eligible young sugar daddies, right?

Wrong. I realized that the "rich kids" in my high school and college weren't rich *themselves*. It was their *parents* who were rich. After all, these kids weren't even out of school yet, much less earning money! Most of them don't even work, because they don't qualify for financial aid and the associated work-study jobs.

Furthermore, I noticed that kids born with a silver spoon in their mouths were not responsible with money. Most of them took money for granted, and didn't know how to manage it. At best, they spend freely and irresponsibly; at worst, they are spoiled rotten.

Would it truly do me any good to marry one of these rich kids? I would say no. Because even assuming he gets a large inheritance from his parents in the near future--which is not likely considering life expectancy and estate taxes, a kid with unproved earning power and weak money management skills will probably not remain rich for long. Chances are, the inheritance will be blown, and you'll be right back where you started, or worse--in debt, because this kid may not know how to replace the money that he's spent.

Okay, but what if your guy is actually earning a sizable income, and not just mooching off his parents. Well, that's good, since at least there will be fresh income coming in. But what would a large paycheck accomplish if it is spent every time? Maybe he won't spend himself into debt, but this doesn't exactly build wealth either. It merely maintains a constant state of treadmilling and survival.

Now what if your guy is responsible with money? Maybe he earns less than the others, or doesn't have a rich family, but with proper asset management, future financial security seems much more likely. And what's best is that monetary responsibility is a personality trait rather than an act of circumstance, so you don't need to find this guy in the top 1% of the population.

This is the train of thought that brought me to one of my seminal conclusions about choosing a spouse. It's not about finding a guy who is rich, or earns a high income. It's about finding a guy who can manage the money that he does earn.

And in case anyone thinks I've just killed romance, I'll be the first to admit that love is important, too. But love won't feed you or pay the bills, and I'm nothing if not practical. And this is a finance-related blog, so I'm not going to talk about mush on account of it being off-topic.

So there you have it. Another late-night insomnia-inspired ramble from Mimi. Maybe I *should* get a real life (or some sleep!).

Sent Vanguard my Roth IRA check!

August 29th, 2006 at 04:13 pm

It's done! It's winging its way to Vanguard via certified mail right now! I had to walk through the pouring rain to go to the post office, but THAT'S OKAY! At least I got to leave work on time!

After this, it's $333.33 a month, with a little extra tacked on at the end to max it out. Hopefully, I'll make it.

I need to electronically transfer the next rollover next March. I have a two week window to do this.

Tomorrow: Go to the library after work, get a library card, and get to know their personal finance section very, very well. *squee!*

In case you need more proof that I am, indeed, insane

August 28th, 2006 at 11:11 pm

I'm tired. I'm bored. I'm gonna blog. Smile

Just for fun, I'll list some of my odder habits that relate to frugality.

- I haven't bothered to buy a trash bin for my room. I'm using an empty bulk Cheerios box. The top flaps hold the plastic bag in place rather nicely!

On a slightly related note, one old pasta sauce jar holds my change, and another holds my sugar. An empty teriyaki sauce bottle has been requisitioned to hold my olive oil (which I bought as a gallon). A hummus container holds an aliquot of salt. At least I'm refilling my bulk soy sauce in an actual soy sauce bottle.

- I only have one pair of socks that do not have holes in them. And I don't mean little holes. I mean GIGANTIC HOLES WHERE MY FOOT ACTUALLY FALLS OUT. I really do need new socks, eh?

- (This one shocks the hell out of my co-workers.) I never buy lunch, even if I don't brown bag it with leftovers. I just fast all day until I can get home and cook. And I'm perfectly fine and functional. I even get hyper and work faster, which I kind of like.

- I fast before free meals so that I can eat more. Especially buffets. I love free buffets.

- When I was a college student, I tightly budgeted my meal points because I saw people running out of points all around me and was worried that I'd do the same and starve. I ended up feeding not only myself, but also my bf, for an entire semester, and we bought whatever we wanted. I probably could have fed even more people if I'd tried.

- I feel a compulsion to budget my expenses as if I were making minimum wage (although I'm counting CT minimum wage, not the federal one--federal minimum wage is too little, even for me). Just so I can tell myself that I will make it even in the worst case scenario. Because I am that paranoid.

- I get free haircuts every two years by donating my hair to Locks of Love. I *do* do this out of caring (and I know my hair is really nice), but the free haircut is definitely a bonus. Does that make me a horrible person?

- Now this one might actually bother people, but when I'm on my own (or with the (ex-?)bf or someone else who does not mind), I don't flush the toilet every single time after I pee. I just don't see the need to flush an ENTIRE TANK of PERFECTLY GOOD DRINKING WATER just to get rid of a little pee. I'll flush every third time or something.

Okay, now that I've thoroughly grossed everyone out, I'll retire for the night. Smile

On cooking, self-reliance, and being bought

August 28th, 2006 at 10:16 pm

So in my last entry, I established that I like to cook. A lot. Every day, in fact.

I thought it might be interesting to ruminate over how I got to where I am now. Because looking back at my history, I assure you that I wasn't always like this.

In the wee years of my youth (um, 10-ish years ago?), my mother told me that I needed to learn how to cook, because it's something that I'll have to do for my future husband.

Being a budding feminist who abhorred traditional gender roles (and, um, a rebellious teen to boot?), I was extremely indignant and offended, and vowed that if I even got married in the first place, *my* husband would be the one that cooked for *me*, thank-you-very-much. And I refused to cook out of sheer spite (or engage in any activity that could remotely be construed as "domestic", for that matter).

And this continued on... until college. Where everything changed.

Suddenly, I didn't have parents who cooked for me anymore. For the first time, I was responsible for feeding myself. And although there was a mandatory meal plan, the food served in the dining halls... left... much to be desired, let's just say, both culinarily as well as nutritionally.

Obviously, I wasn't alone in having to deal with this. I saw my college friends react by dropping frighteningly large amounts of money on eating out meal after meal, and I thought, "There is no way that such expense is sustainable!"

The turning point for me came when one of my friends invited me and a bunch of our friends to hang out with her at her mother's house. Her mother had prepared a meal for us, but she had no idea that in this particular group of people, vegetarians outnumbered carnivores, and one of our members was fully vegan.

The vegetarians ended up doing all right, all things considered, but the poor vegan had absolutely nothng he could eat. Even the salad had mayo in it.

My friend's mother was very apologetic, but it was my vegan friend's response that surprised me.

He said, "It's okay, please don't worry about it, this happens all the time. If you don't mind me looking through your fridge and cupboards, I can make myself something to eat."

And that was exactly what he did.

That was when it clicked. Being able to cook was a powerful skill, because you are no longer limited to someone else's menu. And this is especially relevant when you have dietary restrictions. I realized that as long as I needed to eat, I should be able to cook. Otherwise, I'll just be continuously reliant on others to provide one of my most basic physiological needs. And in most circumstances, I'll have to pay through the nose to get it.

I immediately stopped resisting learning how to cook to rebel against gender roles. Cooking is not relevant to gender. It is relevant to survival. It is a useful and indispensable LIFE SKILL. Being able to feed oneself is not only an act of responsibility, but an act of self-love.

I started to teach myself how to cook the summer after freshman year. It was rough at first, but I kept trying, and I gradually improved. And I've never looked back. When you get right down to it, cooking is edible biology and organic chemistry, and I am nothing if not a science geek, who is curious about how food is made, and likes to eat well. Smile

Recently, my new roommate, who cannot/does not cook at all, has gotten me thinking about all of this again. I've been whipping out meals every single night, and he apparently likes what he sees. He's always coming out of his room to survey what I'm making when I'm busy in the kitchen, and he'll constantly ask to try my food. I have given up on ever expecting to have leftovers (and the tragically small and low-quality cookware in the apartment does not help matters).

If I were in his situation, I would say, "Hey, can you teach me how to do that?"

Him? "I'll pay for all of your food if you'll make what you make for me, too."

Consumerist till the end. Trying to buy my services.

I'm not sure if I'm flattered or insulted. But maybe I'm just overly sensitive due to my history. (I just feel uncomfortable cooking for males who don't cook themselves. I am not their goddamn mother. Or wife, for that matter.) I *could* put the money I save (all of $60/mo, heh) towards an iPod, but... I still feel... used. I don't want cooking to turn into a chore or an obligation.

I told him I'll think about it. And that if he wanted this, he would seriously need to get bigger pots and pans, because the ones he's got can barely fit enough food to feed just me.

Wow. I don't really know what to say. I probably should have seen this one coming.

So what the heck am I eating on only $60 a month?

August 27th, 2006 at 01:28 am

My monthly food/grocery bill comes to about $2/day, or $60/mo.

Apparently, this is highly unusual, even among frugalistas.

What's more is that I don't even particularly try very hard. I mean, I "try" to get my grocery bill to $50/mo, but even in the past, before I started watching my finances, I've never gone above $75.

(The only exception was when I was stocking up my kitchen/pantry from zilch when I first moved out on my own. I hit the neighborhood of $150 that first month due to my decision to buy all of my nonperishables in bulk. That cost me up-front, but won't in the long run.)

So how *do* I pull this off?

To answer this question, I'm going to carefully analyze my food buying and eating habits, and present my findings below.

All right, here goes.

I buy nonperishables in bulk.

I know this is pretty standard practice for frugalistas, but I'll describe it anyway.

After I first moved, my colleague (and now roommate) took me shopping at Costco. I used this opportunity to stock up on bulk nonperishables at wholesale prices.

I bought standard staples such as butter, sugar, oatmeal, canned tomato products (crushed and diced), cereal, pasta, rice, olive oil, soy sauce, ketchup, and others. I knew it'll be a hard initial hit on the wallet, but the favorable unit price is ultimately worth it, as I won't run out for months and months.

I mostly buy fresh, seasonal produce.

After that one-time stock-up of nonperishables, my regular shopping took over. I shop weekly, and I mostly buy fresh produce (fruits and vegetables). I buy small amounts of each produce so that it won't spoil before I eat it, and I shop often to ensure a constant influx of fresh produce.

I also make an effort to be aware of what produce is in season. I do this for two reasons. The first is that the quality of the produce is highest during its peak season. The second is that sales are very common when a produce is in season.

So, for instance, you will never catch me paying more than $1/lb for tomatoes during the summer, because I *know* that tomatoes are in season, and that each week, at least one grocery store *will* have them on sale.

I usually end up spending a little over $10 a week on produce, or about $40 to $50. The rest of my expenditure consists of items like dried/canned beans, eggs, sauces, and the like.

I do not buy junk food.

Going from what I do buy to what I don't buy, we come to junk food. This one is actually a tough one that requires discipline on my part, because I actually really like junk food.

I consider any food that is high in fat and/or sugar without being rich in nutrients to be junk food. So candies, chocolates, Doritos, cookies, and ice cream are all junk food, but sugary cereals are okay because they are vitamin fortified.

I avoid them because they are unhealthy and generally more expensive per unit price than the raw ingredient they are made out of (see the end of this post for a sample analysis of potato chips).

Occasionally, however, I do break down and get something. Usually ice cream, because I do have a weakness for it. I tell myself that at least it has calcium.

I do not buy processed foods.

I think this one is implied by what I've written above, but I'll say it explicitly. I stick with the rawest form an ingredient can get, and avoid processing whenever possible.

So, I get potatoes instead of frozen french fries or tater tots, strawberries instead of strawberry jam (I'll buy peanut butter, though; don't know how to make peanut butter), flour/sugar/butter/etc. instead of premade cake mix, and I've never bought those pre-made dinner package thingies before. Honestly, I've never even had them, because my family never shopped at American supermarkets, and I never ate pre-made food from a package.

Which brings me to...

I cook from scratch every single day.

And I don't give myself a choice in this matter, because I simply do not keep ready-to-eat foods around, with the exception of fruit.

For me, food is *made*, not unpacked and heated. Or maybe I'm just a snob. Smile But I stew all of my own soups, I mash my own mashed potatoes, and I bake my own my cakes, cookies, and muffins. Yes, it takes a lot of work, but I actually really enjoy cooking, and it doesn't have to take more than an hour.

I am a vegetarian.

I haven't mentioned meat or fish at all for a reason. I've been vegetarian for the past four years. It's probably another reason why I don't buy pre-made foods--most of them are meat-based, and I can't eat them. I don't think stores sell much in the way of pre-prepared vegetables.

I get my protein by eating a wide variety of grains, beans, and vegetables--and supplement with tofu for complete protein. I don't know really what meat costs, but tofu, at $1/lb, is probably much cheaper than most meats. Actually, picking up a circular, the only meat I see that's around $1/lb is raw chicken.

I base my meals around carbohydrates, and supplement with vegetables and tofu.

When I look back at my menus, the main course, so to speak, is almost always a starchy, carbohydrate-rich food, such as pasta, rice, or potatoes. Occasionally, I'll base a meal around beans. The remainder of the meal consists of vegetables and tofu.

Some examples of meals are pasta with tomato sauce, topped with sauteed garlic, onion and bell pepper. Or fried rice with broccoli, celery, squash, and tofu in soy sauce. Or vegetarian chili with home-baked cornbread. Or avocado and cucumber sushi rolls with miso soup. Or mashed potatoes with mushroom gravy with steamed sweetcorn on the cob with butter.

This generalized meal structure ensures that I get the bulk of my daily caloric intake from very cheap sources (both pasta and rice have around 1700 calories per lb, and 1 lb of either rice or pasta can definitely be bought for under a dollar), while my nutrient intake is covered by my fruits and vegetables. And I've done nutritional analyses on my diet--I'm covered very well, with the possible exception of Vitamin B12.

I never eat out.

I stopped being able to justify it once I realized how cheaply I could eat on simple, raw ingredients. It's also hard to ensure that your food is vegetarian when you eat out. So I only eat out when I'm taken out.

So that's about all. I'm not familiar with how most Americans approach food, so I dont really know how I compare/differ.

Maybe you can enlighten?

August grocery tally and books I want

August 26th, 2006 at 04:20 pm

Went grocery shopping today. M&M Farms.

- corn (3 ears): $1.00
- ...
- (Huh. I seem to have misplaced my receipt. Argh. Will fill this in when/if I find it.)
- ...
- total: $9.97

This will probably be it for August. Total grocery (food) bill for this month: $62.11.

If I omitted the junk food run for the (ex-?)bf, that drops the total down to $51.40. I am pleased with myself. Big Grin

I've also realized that the paperback edition of A Feast for Crows by George R. R. Martin is coming out in a month. Scifi/fantasy fans have been waiting for YEARS for this release. So this will be my "splurge" purchase for September. I get a 10% employee discount at the Yale bookstore, too!

Yes, collecting scifi/fantasy books is my personal expensive habit. So shoot me. I haven't indulged in a long while. Stick Out Tongue

I also realized that I've wanted to read Nickel and Dimed ever since I heard about it. I'll put that on my reading list for B&N Fridays.

Suze Orman's The Money Book for the Young, Fabulous, and Broke

August 26th, 2006 at 12:16 am

Following in the tradition of last Friday, I spent another two hours reading personal finance books today.

I was able to locate many of the suggested titles, and skimmed through a few of them.

The book that I settled on to read this week was Suze Orman's The Money Book for the Young, Fabulous, and Broke. I chose that one this week because it covered the topics that are currently the most relevant to me.

I am handling student loans, building my credit for the first time, looking to milk my (ephemeral) youth for maximum returns in retirement, and starting to save for large future purchases such as a car and house, and accumulating assets for generalized investing.

A few things that I learned:

- I need to get my three free credit reports at annualcreditreport.com before the end of the year to have an idea of where I stand in terms of my FICO score.

- My (what I feel is an) obscenely high credit card limit ($10,000) is actually a good thing, because it lowers my debt-to-credit ratio, since I never carry a balance? I thought I heard somewhere that high credit limits counted against you because it could be seen as 'potential' debt, so I'm still a little confused on this point.

- I've been considering getting a new credit card with more/better rewards, and if I do, I shouldn't cancel my current one to preserve my credit history.

- I shouldn't be in a hurry to pay off my student loans. I've actually been leaning more towards this position myself as I realized that money going into 45 years of compounding interest at >10% returns is much better than reducing 10 years of 4% to 5% student loan interest. Yes, it requires deferring the emotional gratification of shooting down that debt, but I think the numbers justify it.

- "Saving is for a short-term goal that you hope to reach within five years or so. Investing is for the long term." Short term savings can be placed in high interest CDs, money market deposit accounts, and money market mutual funds.

- A Roth IRA is better than a 403(b). I was planning on maxing out my Roths anyway.

I stopped before I got the the investing and car/house buying chapters of the book. I'll finish them off next week.

I also hope to start on some books specifically on investing. I just discovered that there was an entire investing section!

Progress on Vanguard Roth IRAs

August 23rd, 2006 at 10:02 pm

I finally went to the bank and asked about how to withdraw my matured Roth IRA and move it into Vanguard. I won't break any account minimums, apparently, so yay!

I also called Vanguard, and opened a Roth IRA account there. Right now, the money is earmarked for the Target Retirement 2050 Fund, but I might change it.

Tomorrow, I'm getting the check for the Roth IRA from the bank, and I will have to go to the post office to mail it to Vanguard.

If the post office loses this check, there will be hell to pay. Angry Smiley 005

I also did some minor grocery shopping today, at the HK grocery.

- 2 boxes of tofu: $1.15/each
- 1 dozen eggs: $0.99
- mushrooms (at $1.89??): $1.27
- total: $4.56

All in all, not a bad day. I still have so much more to do, though. I'll feel much better once everything gets set up and settled down.

What books on personal finance should I read??

August 23rd, 2006 at 05:18 am

I really enjoyed last Friday's excursion to Barnes & Noble to read up on personal finance.

I think I want to make a habit of this. I'm going to go every Friday.

I want to learn more about:

- basic economic theory
- investment options and how to evaluate them
- how current events interplay with the world economy
- real estate
- inspirational tales of success
- anything else that might be interesting and/or useful

So, recommend your favorite book to me! In fact, recommend ten! Tell me what the book is about, why you like it, and, if applicable, how it has helped you.