by WellHeeled on August 31, 2010
Minimalism seem to be all the rage right now – I see it as a collective reaction against the excesses of the past decade, coupled by the necessity of having to cut back amidst economic uncertainty. But could you cut back so much that you step over the line between minimalist and cross into moocher territory?
After I read this article, “The Cult of less” in the BBC, I think the answer is yes. The article features Chris Yurista, a D.C. travel agent and DJ who says that technology has replaced the need for most of his possessions and even a physical home.
Since boxing up his physical possessions and getting rid of his home, Mr Yurista has taken to the streets with a backpack full of designer clothing, a laptop, an external hard drive, a small piano keyboard and a bicycle – an armful of goods that totals over $3,000 (£1,890) in value.
The DJ has replaced his bed with friends’ couches, paper bills with online banking, and a record collection containing nearly 2,000 albums with an external hard drive with DJ software and nearly 13,000 MP3s.
That’s great and all – who doesn’t aspire to a life filled with meaning, not clutter? But I wonder what Mr. Yurista’s friends have to say about his lifestyle. To be fair, he could be chipping in for rent and utilities (or do other things to thank his friends for their hospitality) and the article just didn’t mention them. Or, perhaps Chris has access to cheap or discounted hotel rooms through his job, and he only leans on his friends for infrequent overnight visits.
If that were the case, then BC has done Mr. Yurista a disservice by portraying him so unsympathetically – the blogosphere is already pointing out the paradox: in order to live a minimalist, residence-free lifestyle, you have to find people who ARE willing to rent an apartment and pay for utilities.
If this wave of minimalism will help us reexamine our relationship with “stuff,” that’s great. If Chris Yurista were building his digital, rent-free lifestyle on the backs of his stuff-carrying, rent-paying compatriots, however, then he might be a minimalist, but he is also a moocher.
Where does minimalism end and mooching begins?
by WellHeeled on August 28, 2010
The economic recovery is sputtering and the talks of double dip recession is at an all-time high. In these tough times, it is common to have friends and family members who are undergoing hardships. Some of them may be coming to you for help. Should you consider lending money to your friends and family? On the flip side of the coin, if you are in trouble, should you reach out to loved ones for financial assistance?
If you are considering lending money:
1. Is it money you can afford to lose?
If this is money you need to start the small business you’ve been planning for years, or money for a down payment you will need in six month, or college tuition for your 17-year-old child – don’t lend it! Because the worse case scenario may happen and you won’t get this money back. Therefore, it’s a good idea to be emotionally and financially ready for nonpayment before you write that personal check.
2. Do you trust the borrower’s financial acumen, fiscal discipline, and integrity?
Notice how the question to ask isn’t “Is the borrower a good person?” or “Does he really need the money?” If you are considering lending money to a friend or relative, the answer to those questions is probably yes. But some very good and kind-hearted people are less-than-great stewards of money. If you want to have a realistic chance of getting your money back, you have to make sure the borrower is able and willing to repay you.
3. Can you make a gift of money instead?
Lending turns normal relationships into bank and borrower – an awkward situation even among the closest of loved ones. If you are uncomfortable with lending money but still want to help your friend or relative, why not give money instead? You will feel good about helping without the headaches of being a lender.
If you are considering borrowing money:
1. Do you have a realistic prospect of repaying this loan in a timely manner?
If not, then don’t borrow the money. Relationships damaged by lack of repayment are difficult to repair – I venture to say that if the amount is large enough, those relationships can never be repaired. For example, John might be on the verge of losing his car and need $5,000 to keep away the repo man. But if he have no prospect of repaying that $5,000, he need to think long and hard before he asks his best friend for the money. It is terrible to lose a car, especially if it’s your only mode of transportation. But it is far worse to lose a true friendship.
2. Can you make sacrifices and forgo much discretionary spending before you have repaid the loan in full?
We have all heard stories of the borrower who is unable to repay $300, but has just come back from a Bahamas vacation. It might not be fair, but it’s human nature: if you borrow money from friends or family, they will probably be aware of what you are spending your money on.
3. Is there some other way friend/family can help?
Asking for money is hard to do. If some other type of assistance is useful, try to ask for help in that regard instead. For example, if you are job-hunting and you have a friend who is an HR officer, ask her to review your resume and put you in touch with a few informational interviews.
Money and family is always a tricky subject. In general, the proverb “neither a borrower nor a lender be” strikes me as a fairly good standard to go by when it comes to mixing finance with family or friends. But, of course, personal finance is never just about money. If my family needed money, I would do what I can to help.
Have you ever lend to or borrowed from your family / friends? How did that experience work out?
by WellHeeled on August 25, 2010
“Those who say that money can’t buy happiness aren’t doing it right.” Have you heard that joke before? Well, it turns out that there is more than a kernel of truth in there. People are generally bad at buying happiness because:
1. We buy to keep up with the Joneses / stay on the hedonic treadmill.
Heard of the hedonic treadmill? That is the phenomenon where you upgrade and the new purchase keeps you happy for a while, but its allure eventually wears off and you are right back where you started: as happy (or as unhappy) as before, perhaps dreaming of the next upgrade or new purchase. The problem with constantly one-upping is that the cycle never ends. For example, maybe we love BMWs and want to drive a 335i. We worked hard, got a promotion, or maybe came into a small inheritance. That creamy 335i coupe is in hand. Even though we may be perfectly excited and happy driving the 3-series, let’s say a new neighbor moves in and has a sleek 5-series. Wouldn’t it be nice to drive a five, we might muse (and are obviously impressed by the clever rhyme of our inner thought). Hear those rumblings of discontent? That’s the hedonic treadmill powering up again.
2. We go into consumer debt from our purchases.
Money is a big source of stress for many Americans. Most consumer debt exacts a heavy financial price – credit card interest rates often top 20%. If you just pay the minimum on credit cards for your purchase, a $100 pair of sunglasses can turn out to cost you almost double that amount. Debt eats into our future earnings – when we are still paying, at 35, for a car we bought at 29, it’s not difficult to imagine why we might be less than pleased with our 20-something-self. Even the best, most suitable purchase will be marred by the pressure of unsustainable debt. If we buy a boat because we loves sailing, but then have no way of repaying our note, we will not be enjoying the ocean view for long (because the boat will be, ahem, underwater).
3. We buy things that we know we won’t or can’t use.
Have you ever found the perfect pair of perfect stacked pumps for 80% off, and by “perfect” you mean it is half size smaller than your normal shoe size, the heel is much too high, and the color is a shade off flattering? Oh, you haven’t? Must be just me then. Despite the characteristics noted above, I bought the shoes. I wore them twice (winching with every step and feeling very uncomfortable and unhappy). Then I gave them away. Not every purchase has to be useful, but I’ve found that utility and comfort goes a long way in making me happy with what I buy.
4. We over-buy in quality or quantity.
This happens when we buy something with the intention of doing something good, but the item is never used (because it is too complicated or simply unnecessary for our purpose). Then the item only makes us feel bad about ourselves. For example, buying a new camera to improve photography skills, or buying a dutch oven to make grandma’s braised ribs. If we don’t use those items, however, the camera and the cookware will sit there, gather dust, and remind us of all the things that we have NOT accomplished. Oh, and our bank accounts will be smaller for it.
5. We second-guess our selection and imagine the superiority of that which we did not choose.
Barry Schwarz called this the paradox of choice. Instead of feeling empowered by all the options available to us, we are overwhelmed. After we make a decision (even though the outcome is good), we imagine that the choices we did not select – the roads NOT taken – are the superior path. I realize that I suffer this discontent when it comes to ordering at nice restaurants. I may think, this osso bucco is tender and juicy, and the sauteed mushrooms is excellent. But, wait, a tiny voice in my head would pop up with annoying regularity, what about that grilled seabass? Maybe that dish is EVEN better. Or how about the lobster macroni and cheese? I should be 100% enjoying my osso bucco, but I am plagued by questions of what if. What if there is something even more delicious, and I’ve just missed my chance – and have spent my dining out budget for the month!? (I… take food seriously.)
6. We tend to buy things instead of experiences.
The standard line is that experience (vacation) trumps stuff (plasma TV). This is not a hard-and-fast rule because things facilitate our experience (watching a football game with the guys on a big-screen TV), while experiences can be remembered and cherished through things (a photo album of a Paris long weekend). Generally speaking, people tend to derive greater happiness from experiences because an experience only gets better with time. Our memories smudge out the horrid long lines at the airport, and deepen the excitement of a helicopter tour. With things, the depreciation is fast and furious, and there is always the next upgrade, just around the corner. So, the average consumer will likely be happier spending $10,000 on trip instead of $10,000 on a slightly larger home. Along the same vein, I am happier spending $20 on a tango class than $20 on a new skirt.
Do you fall prey to anything in this post? What tips do you have for buying happiness?
by WellHeeled on August 21, 2010
If you are brave, on a budget, and still looking for stylish hair, head to your nearest beauty school.
Beauty school haircuts are one of the easiest ways to save on haircuts and hair treatments. For example, my regular stylist charges $60 total, including tip, for a wash, cut, and blow-dry. The expenses add up quickly. At the beauty school I went to (thanks to Revanche for the introduction!), a cut is $12 by first-year students and $15 by second-year students.
A simple cut takes about an hour and a half, including a very relaxing wash, the actual cut and then the styling at the end. A teacher walks around the salon and supervises the students. The first time I went, my stylist was a chatty petite lady who apparently was a very good student – when she asked the instructor to examine my layers, the instructor measured my hair on both sides and made sure they were even, but she didn’t have to fix anything.
At the end, I gave my stylist a $3 tip, bringing the total cost of my haircut to $15, or a quarter of what it had cost at the salon I used to go to. I really love my cut, and to be honest, I couldn’t tell a difference in the result between what the student did and what my very talented stylist had done.
Still, beauty school haircuts aren’t for everyone. If you go, you should:
- Know thyself. You can get a bad haircut anywhere, but at beauty schools the chances are greater. Even though students may be well-trained, they are still less experienced than stylists working in salons. If the prospect of a less-than-perfect haircut makes you feel sick to your stomach, then beauty school haircuts aren’t worth the stress.
- Be clear about how you want your hair to look. If you don’t communicate what you want, the student may exercise his or her right to be creative. This may or may not be a good thing. Tread carefully.
- Have a flexible schedule. Most schools only cut during school hours (i.e. during the work day), although some schools have night-time classes. If night sessions are offered, they fill up quickly.
- Understand you can’t have a specific student. If you go to a school once and you love your stylist, that student can very well have graduated by the time you come back for another cut. This is what happened to me. I loved my first stylist, whom I really thought was a superstar. My second stylist was slower and less confident, but in the end she did an OK job.
- Have patience. My cut was straight-forward: simple round layers and two inches to trim off the ends. It still took almost 2 hours to finish (and I declined the blow dry at the end). Many times the student has to wait for instructor approval before he/she can move on to the next layer. If the beauty school had been busier, it may have taken even longer.
- Be realistic. If your hair is very curly, very damaged, or has a texture that even pros have had difficulty cutting well in the past, don’t risk beauty school haircuts. Go to a trusted stylist. I have fairly run-of-the-mill wavy hair, so I was fine with a student wielding scissors behind me.
- Relax (at least a little). In the end, hair is just hair. As long as the student don’t burn it off or give you a drastic bowl haircut, a bad cut can always be fixed. Enjoy the process of beauty school haircuts – and the savings!
A version of this article was first posted at BlogHer.
by WellHeeled on August 18, 2010
Because who doesn’t like a free $60? I am happy to announce a giveaway sponsored by CSN Stores, owners of over 200 sites that offer everything from dining room sets to the kitchen sink.
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(A) up to 3 entries = Follow @WellHeeledBlog and tweet this giveaway once a day with this message: Win $60 Gift Card @WellHeeledBlog http://www.wellheeledblog.com/?p=5047
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**If you’ve done any of the above, please leave a comment and let me know how you have entered so I can count your entries.
Deadline is September 1st at midnight PST. Good luck. 
Thank you for entering this contest and thanks to CSN Stores for making this possible!
by WellHeeled on August 16, 2010
Do you have a car? Do you pay under $100 a month to park your car? If so, chances are you are enjoying an effective subsidy. And by “you,” I am also talking about me. I have never thought much about the cost of parking (except when I had to valet my car in trendy parts of town). In fact, I have come to expect free parking as the norm, or heavily subsidized parking at public garages / meters for $1 or $2 per hour.
Why free parking exacts a heavy cost
New York Times’ Tyler Cowen argues that free parking exact a heavy environmental and financial cost: motorists are more likely to drive when they don’t have to shoulder the true cost of parking, cash-strapped cities and states cannot charge enough to increase their revenue, and perhaps most importantly, we do not feel the sense of urgency in developing adequate public transportation systems as we would if we had to pay the true cost of automobile usage.
According to this article,
Under a more sensible policy, a parking space that is currently free could cost at least $100 a month — and maybe much more — in many American cities and suburbs. At the bottom end of that estimate, if a commuter drives to work 20 days a month, current parking policy offers a subsidy of $5 a day — which is more than the gas and wear-and-tear costs of many round-trip commutes. In essence, the parking subsidy outweighs many of the other costs of driving, including the gasoline tax.
Gulp. This article hits home for me because ever since I started my job 30 miles away, I have been a heavy user of my car and of my office’s parking space. In fact, one of the reasons we chose our current apartment is that the complex offered two parking spots for our unit.
Somewhat selfishly, I am glad that I benefit from free and heavily subsidized parking I receive on the streets near my apartment, at work, and at restaurants and cafes. There is truly no good alternatives for a car where I live right now. Although I live close enough to a subway station that I thought taking the metro might be a possibility, the nearest drop off point from my work is more than 15 miles away.
What if free parking went away?
If I had to pay $100 a month to park my car at home and another $100 to park at work, I will have to cough up the cash and keep on driving. If CB had to pay $100 a month to park his car, though, he might be in a position to rethink having a car – it is possible to get from our home to his work on the subway for around $250 a month. That amount is currently more than what he is paying for his car in gas – add in the convenience of the car (especially on the weekends), it’s not worth it for him to pay an additional $250 a month to take the subway. If, however, he would have to pay, say, $200 extra a month to park at home and at work, then the incentives obviously shift more in favor of using public transportation for commute.
In many large cities such as New York, Boston, San Francisco, and even in Los Angeles, it is possible to go without a car if you live right in the center of town near public transportation and you don’t work in the suburbs. Unfortunately, that’s not the case for most of us.
Do you benefit from free parking? If you had to pay $100 per month for a parking spot, how would you change (or not change) your behavior?
by WellHeeled on August 13, 2010
“Can I afford it?” sounds like an easy question, but… is it?
Recently, I came across an article by Penny Saver guest-posting on Frugal Confessions. Penny, also the author of The Saved Quarter, is mom of two who has experienced some hard times during this economic downturn. She used to say “I can’t afford it,” but now she has decided to change her attitude towards money – and the way language she uses.
I also decided to stop saying, “I can’t afford it,” especially in front of my kids. It puts the position of power on the money or the thing rather than on me and my choices. There are things I genuinely can’t afford, like a mansion or airplane, but most of the things that I say I can’t afford are really things I could but choose not to spend my money on. I could choose to buy a cheap toy for momentary pleasure, or I could save that money for financial security. Which is closer in line with my value system? Which is better for my family?
I encourage you to read her post in its entirety and read the comments. Penny’s post led me to think… what is the definition of “afford”? I once passed up a $1,000 vacation, and yet I am planning on taking on six-figure debt for graduate school in the future. Obviously, I can argue that further education is an investment in my future while the vacation was a pure luxury good, but the stark difference in amount remains. Once you run the numbers, it may be quite clear that I CAN afford my vacation (if by afford I mean my assets less liabilities exceeds the $1,000 mark), whereas by the same definition I would NOT be able to afford the graduate degree. But of course that’s not quite the way I am thinking of it.
I’ve decided that I can’t afford to NOT pay myself first, so my retirement and emergency savings comes first. Whatever money is left over is for me to distribute as I see fit: this means that I can afford a not insignificant list of things – especially compared to the world at large – such as a Disney World vacation, gas for my car, rent for an apartment in an expensive part of the country (although not expensive by California’s standards). There are, however, things that are just plain out of my league. Take a ride into space, for example (unless I come into $20 million suddenly). In the vast distance between a multi-million dollar jaunt to the International Space Station and a $30 tank of gas, there are obviously a wide range of things that I can individually pay for and many fewer things that I can afford in a financially-prudent manner.
Here’s what I think about when I ask myself – can I afford it?
- Will this purchase take away from paying myself first?
- Does it require me to go into debt? If it does, is this debt sustainable, well-planned out, and for something that will help me in the long-run?
- Does it fit into my long-term financial goals?
- Is it worth all the hard work I’ve put into making this money?
- Will it make me happier and more well-rounded as a person? Really, really happy?
- Can I justify the purchase to Mom? (Not because I need her to OK every dollar I spend, of course, but because I value her opinion and confidence. And the scary thing is, my mother is almost always right).
So is affordability all just a choice of how we spend our money? What is this concept of what we can afford, and how do you answer the “Can I afford it?” question for yourself?
