Well Heeled Blog > 2009 > June

June Gloom, Financial Style

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June gloom is not only confined to coastal climate. Right now, I’m feeling under the weather when it comes to my personal finances.

May and June were pretty bad in terms of spending. In addition to my own spending on fun things, unexpected expenses just seem to crop up (hello $60 parking ticket and $90 medical bill), not to mention double rent for a month will kill your budget.
 
Normally, I’m really good at letting the sunk costs be sunken. I don’t ruminate over it. I see the charge, groan inwardly, then I pay the fine or the fee and I move on.
 
I don’t know why this month things have been weighing on me more heavily. I just feel discouraged.
 
Well, July is a brand-new month. Which means I’m going try to get back on track by:

  • Putting in $3,000 into 401K
  • Limiting restaurant meals to 3x a week. That’s it!
  • Giving up expensive ($25+ per person) meals. (I had a $80 dinner at a Michelin-star-rated restaurant in June. But it was worth it. Oops.).
  • Eliminating spending on clothes or shoes.

I, however, will keep have some personal pampering and fun by:

  • Taking dance classes for $60.
  • Getting a massage for $110.

Has anyone ever felt the “June gloom” of personal finance?

Cash goes fast when it comes to standardized tests

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Or, all the money that went to College Board / ETS and GMAC over the years.

As a veteran standardized-test-taker who have recently (and happily) said goodbye to standardized tests, I’ve decided to take reader S’s suggestion and tally up all the money that went into this little 1-person enterprise of standardized test-taking.

The numbers will be an approximation (to the best of my memory + googling) for the tests I took in high school.

  • 10th grade: PSAT:
    Cost to take: $10-$14 (?)
  • 10th-12th grade: Advanced Placement Tests (5 total)
    Cost to take: $135 each = $675 total
  • 11th grade: SAT I (taken twice – I might be showing my age, but when I took it the full score was 1600, not 2400)
    Cost to take: $25 each = $50 total
    Cost to send top score to colleges (12 colleges) = $8 each = $96 total
    Test-Prep: $0 – my high-school counselor somehow got me into a class that a prep organization was doing as a pro-bono project.
  • 11th grade: SAT II (3 tests, each taken twice)
    Cost to take: $25 each = $150 total
    Cost to send 3 top scores to schools: $8 each = $18 total
    Test Prep: $500-$1,000? I was sent to tutoring every day after school for a couple of months.
  • Post-college: GMAT (taken twice)
    Cost to take: $250 each = $500 total
    Test Prep: ~$1,800 – this includes a formal 9 week prep class and a couple of additional workshops.

Adding up all the numbers… comes to out to around $4,000. Just on testing and test-prep alone.

There are some people who are innately good at standardized tests. They study for two weeks and get a 99.999th percentile on the first try. They are the ones who get 780s on GMATs and 176s on LSATs. (Yes, I know people like them. I try not to hate too much. icon wink Cash goes fast when it comes to standardized tests ).

Then there are people who really struggle with standardized testing in general – they may be very smart individuals who are just not good at these types of tests.

I think I fall somewhere in the middle – I usually score better than median on the diagnostic just as a benefit of the education I have received to date (and as an avid reader my verbal skills tends to rank fairly high off the bat), but I definitely need to study over a consistent period of time to get a good score.

That’s where test preparation (and the financial resources it required) has helped me a great deal.

Saying Goodbye to Standardized Tests

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Parting is such sweet sorrow – except in this case.

Finally took the GMAT today.

Before the test and during breaks, I kept repeating to myself – just do what you know how to do. I knew that if I just did the questions that I know how to do – if I just performed at my ability, I’ll get a score I’m happy with.

And I did. 95th percentile! Not the 98th or 99th percentile that I know people gun for, and frankly I could’ve gotten a few percentiles higher in the Verbal section (although I did much better in Quant than I thought I would) – but you know what, it’s okay. I’m truly happy with what I got.

Hey, I won’t be lowering the average of any school. icon smile Saying Goodbye to Standardized Tests This brings me a HUGE sigh of relief. The score is good for five years, so I won’t have to worry about it again.

Speaking of standardized testing, it’s been a long road paved with study guides, prep books, and three-ring-binders full of notes and practice problems…

Here are all the standardized tests I’ve taken throughout the years (not including state-mandated testing):

  • 10th grade: PSAT, AP European History
  • 11th grade: SAT (twice), SAT II Math Level I (twice), SAT II Writing (twice), SAT II US History (twice), AP US History, AP Statistics, AP English Language
  • 12th grade: AP English Literature, AP Calculus AB
  • College: Blissful, standardized-test-free four years
  • Post-college: GMAT (twice)

Now I’m DONE. Standardized tests, we’ve had our time together, but it’s time to part ways. Truly.

A Lot Like Love

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Tonight, I watched A Lot Like Love starring Ashton Kutcher and Amanda Peet.

(spoiler coming up)

Towards the end of the movie, Ashton’s character was talking to his brother about his sad status in life: he’s almost 30, unemployed, and living with his parents. His life looks nothing like how he envisioned it would be seven years ago. He has fallen in love with Amanda’s character, but he has promised himself that he wouldn’t pursue a relationship until “all his ducks are lined up”.

Then his brother said (or signed – he’s deaf) something very wise:

“This is your life. Right now. It doesn’t wait for you to get back on your feet.”

How many of us given up on being happy or fulfilled because something that we expect haven’t happened yet, or because our relationship or career or financial status isn’t where we wanted to be? I’ve been guilty of this – I’ve said, I’ll be happy when XYZ happens. But life doesn’t stop until you get all your ducks in a row. And even after you get your ducks in a row, you’re probably eager to get more ducks to add to your row until you achieve (the illusive state of) total duck domination.

…Anyhow, that line in the movie just made me think about what we put off, what we work for, and how we try to find happiness through achievement or acqusition. Like most PF bloggers, I think I take good care of my finances, but it’s equally important to take care of my personal well-being. Because life doesn’t stop while you’re trying to figure out your relationship or career, or pay down debt, or get into school, or save for a house.

On another note, I don’t know why I’ve been seeing so much wisdom in so pop-culture lately. In the past few posts, I’ve written on Britney Spears, Twilight, and now A Lot Like Love.

Now you can all judge me for my choice of music, book, and movies. But I’d appreciate it if you didn’t. icon smile A Lot Like Love Besides, it’s just not as fun tying The Scarlet Letter or Mrs. Dalloway to Some Bigger Picture. It’d seem too much like school.

What's your favorite berry?

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Blueberry?

Blackberry?

Strawberry?

Raspberry?

Cherry?

As I speak I am munching on a bowl of blueberries ($2-something per box at Trader Joe’s). Balance out the cookies I’ve had earlier, I say. icon smile What's your favorite berry?

Last Twilight post

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Okay – this will be my last Twilight detour, I promise!

(might have spoilers below)

So today I borrowed Twilight and Breaking Dawn from a girlfriend. I thought that Breaking Dawn seemed so convoluted that I didn’t really bother to read all of it, just enough to get the happily-ever-after, vampire-style. As a fast reader and a ruthless skimmer, I pretty quickly went through Twilight‘s 400+ pages.

Stephanie Meyers really hit on a captivating storyline – I was very intrigued by the whole premise of the Edward-Bella (vampire-human) love story. But all the way I keep thinking, I really wish there was more character development (at the risk of sounding like an English teacher), especially in Bella.

I can’t really understand the love story between Bella and Edward – why does she love him so much? How can we tell it’s different from teenage infatuation? She is intoxicated by his physical beauty, and is grateful that he protects her… but what else? The love story seems a little more believable from Edward’s standpoint, only because he’s had 90 years as a vampire to understand himself (and really, who knows about vampires? Meyers’ characterization can be just as right as anybody else’s) – but Bella? I get the chemistry, I get the attraction, I just see Bella’s feelings for Edward as more passionate infatuation than deep, abiding love.

To be fair, although Meyers didn’t go into much of what happens after Bella becomes a vampire, it’s conceivable how her passion for Edward could develop into long-lasting love – whether bound by their experiences as vampires, or that they now have a baby, or that they will grow old stay young and unnaturally beautiful together.

But then again, Romeo and Juliet didn’t have time to develop a great, lasting, deep and abiding love either. Obviously, in fiction, lasting love is not necessary for the makings of a Great Love.

The best love story I’ve seen in a long time, portrayed by Hollywood, actually comes from Up. The first part of the movie is the best – bring tissues. Because you will tear up. (I spent the first 15 minutes of the movie trying to hold back tears because I will not cry in an animated movie!)

Hair aware and market pricing

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I finally got a hair cut this past weekend. It came out to be around $55 with tip, is very reasonable. My stylist, “Holly”, gave me some nice long layers and a saucy flip (though unfortunately only achievable through a professional blow-dry).

She was really chatty and friendly, and somehow the conversation turned to finances and the recession. I asked her about the business model of hair salons – apparently, some stylists work on commissions and receive clients through the salon, others are solely renters who pay the salon a weekly rent and recruit their own clients.

Holly said that she used to work as an assistant stylist in a very upscale salon in a very upscale part of town – where a week’s rent for a salon space is $800! Of course, the cut and treatments at that salon can range from $300 and upwards. On the good days, Holly said, her boss (the main stylist) would net $1,200. A DAY.

Of course, when the recession hit, bookings fell. They noticed that the clients are spacing out their appointments more and more. Instead of coming back for a trim or a new ‘do every 2 months, clients might be waiting until the 4th or 5th month mark. I also imagine that many people would bypass the more expensive treatments like hair color and perms and settle for a simple cut and blow-dry. All of this cut into their profits.

That’s why Holly decided to move to her current salon, which operates on a lower price point (think $50 per cut instead of $400+) and is located in a less swanky area. Her per-cut take is much lower, but the increased sales volume makes up for it.

Another real-life example of market pricing. Love it!

Twilight, Twentysomethings, and the Paradox of Choice

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I’ve never actually read the Twilight series. I skimmed a couple of the books at Barnes & Noble, but never quite dove in. Last night, however, I stayed up until 3AM watching Twilight the movie.

People enjoy Twilight for different reasons. For most, it’s the love story. After all, Bella and Edward make Romeo and Juliet look pedestrian – what’s some familial fighting compared to insatiable bloodlust? Romeo never wanted to desanguinate Juliet!

I think I’ve just discovered why Twilight speaks to me.

Not because of the vampire-human love story. But because of Bella’s certainty. She was certain that she wanted to be with Edward forever and she was certain she would become a vampire to be with him (I didn’t spoil anything, did I?). The best part of the fact that your boyfriend is a vampire? It’s only one decision. You will have to make one monumental decision (to become a vampire!) but afterward you’re done. You’ve decided your life. There is no room for second-guessing. Now all you have to do is to sit back, relax, and enjoy eternity with your undead beloved (and occasionally dabble in internecine vampire fighting).

Twentysomethings today, especially women, have been told from an young age that they can do anything. But the opportunity to do anything is, on the flip side, the pressure to do everything. There are no certainties about one’s path. No matter what decision you make, there will always be more. Like other young adults, I appreciate the freedom I have – I do. But sometimes the plethora of choices can prove exhausting.

This is the situation Barry Schwartz described in the Paradox of Choice (great video of Schwartz’s talk at the 2007 TED conference): choice is supposed to be the underpinning of individual automony and happiness, but having too many choices can cause 1. analysis paralysis and 2. dissatisfaction with the chioce you’ve made (it’s easy to imagine that you could’ve made a different choice that would be better).

Life is a matter of choice on all fronts – consumer choices, career, family, relationships. This is what 20s are like. You’re trying to get ahead, to be prepared, to make the best choices to set yourself up for happiness and success at home and at work. There are so many decisions, and by extension, so much room for second-guessing.

Sometimes I feel energized by the possibilities that are laid out before me. Other times, I find myself wishing for a little bit more certainty. It’s a feeling I expect I’ll have to work through – for the rest of my twenties and beyond. After all, no vampire is coming for this girl.

So Excited I Can't Sleep

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*sung to tone of Britney Spears’ “(You Drive Me) Crazy”*

401(K), I’m so into you
You got that tax deferral, what can I do
401(K), for you I waited a year
Now I know that my tax vehicle is here

You drive me to savings
I just can’t sleep
I’m so excited, I’m in too deep

Ohh…crazy, but it feels alright
Asset allocation keeps me up all night

Tell me, you’re so into me
That my account is safe from Uncle Sam’s reach
Tell me stock appreciation is true
That I’m not wasting my money on you

401(K) you mean so much more
More than any tax deferral I’ve had before!

T-14 days until 401(K) kicks in!

My perfect lady apartment

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(Thanks to my friend “Jane”, I’ve decided to christen my new place The Perfect Lady Apartment).

This is the first time I’ve ever lived on my own, and, I love it! I had thought that I’d get lonely, and I’ve had my moments of wouldn’t-it-be-nice-if-my-friends-were-around, but mostly I appreciate the increased privacy and the additional space that come with living alone.

I’ve also come to realize how much I enjoy living in an atypical, smaller, apartment complex. I love that my landlord and his family live right next to me, and we actually interact! My landlord even spent an entire Saturday morning helping me move (again, Nicest Landlord Alive).

It also helps that all utilities and wireless internet are included in the rent. I am paying $950 a month (which includes parking – worked out a deal where I pay an extra $50 a month for designated, off-street parking). So all in all, I am paying around $150 more for this charming gem of a studio than for my share of a two-bedroom apartment.

That is a price I’m more than happy to pay. icon smile My perfect lady apartment

When the Thrill of Blogging is Gone

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The title of this post doesn’t refer to me (the thrill of personal finance? Gone? Nonsense!), but to the recently-published New York Times article on the fate of “orphan” blogs left by their owners.

I actually have “orphaned” several blogs. Some of them I don’t even remember the addresses – I had one at angelfire.com and another one at geocities.com and another one at scribble.nu (which doesn’t exist anymore). I also have a brief, public blog at livejournal.com. But eventually, after a couple of months, I left every one of those blogs orphans of the blogosphere!

When I first started Well-Heeled, it was conceived as a blog devoted to lifestyle, fashion, decor issues. My first post (long edited away) had pictures of an Anthropologie dress, that, at $400+, I had no business owning. Then I started reading now-defunct blogs such as FreeTheCow, NYCMoney, and Laws of Finance (anyone remember them?), and I thought it was really cool that people are taking charge of their financial lives, and writing for the world to see. It was as if I’ve suddenly developed a taste for something that I not only find interesting, but is also GOOD for me (loving personal finance is like loving brussel sprouts?).

What has helped me continue blogging at Well-Heeled is 1. a genuine interest in my topic (and the fact that I can still write about decor and shopping and everything else, after all, the trademark of a personal finance blogger is that one can write about money and, well, anything!) and 2. all the reader feedback I get. If I haven’t gotten any comments, I probably wouldn’t have continued blogging for as long as I have. I expect that at some point I’ll stop blogging, but for now, I can’t imagine when!

Monday musings on employment, unemployment, and the such

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Recently, it seems as if a new word has entered the recession-inspired lexicon. First we had “staycation,” then came “frugalistas” and “recessionistas.” Now, there’s “funemployment”. Los Angeles Times and SF Weekly both published features on the trend (and I have several friends who are taking time off to do their own thing).

So while all the dismal jobs news makes me feel anxious about my career future, these reports help me feel like, well, the world wouldn’t end if one does not have a job for a little while.

Out of college, everyone (or so it seemed) wanted to “take over the world.” But this deep retrenchment may have given people – especially young, well-educated professionals in their 20s and 30s, a chance to reexamine their ambitions, priorities, and assumptions.

I wonder – if this dismal market has given people the chance to do something differently, chase their dreams instead of the next promotion. Having experienced or witnessed the massive disruptions to our identities as producers and consumers, how will we respond once the recession ends?

One 20something blogger I read is Molly of These Little Moments (who shares my penchant for shoes). She has been unemployed for 6 months after being laid off from her job in public relations. Today, she wrote a very honest post about her experience with unemployment, and how this stint outside the workforce has changed her view towards work and altered her career ambitions.

This recession has affected my thinking too – maybe not as drastically as it has Molly, but it definitely has on several fronts.

The recession has reminded many people – myself included – that family and friends are the most important things in life. My thinking has always been that true love and friendship are hard to find. So once you do you better hold on to them for dear life! I think for me, a rich and fulfilling life can be lived out in both the personal and professional spheres. This recession has reaffirmed in me the importance of financial independence, and my desire to have a career, not a job.

One alumna sticks out in my mind – she worked at several large companies domestically and internationally, graduated from a top business school, and now is in charge of marketing an entire brand in Europe. She’s maybe 35. She’s going to be a CMO or an EVP one day (maybe even a CEO), I can almost bet on it.

I’m impatient, and sometimes, on a bad day, it feels like I’m already falling behind. But I know I can get there.

Hotwire: Book Hotels For Less

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After researching several hotels (all 4-5-star properties, all at least $175-$200+ per night) for my parents, I decided to give Hotwire.com a try.

For those unfamiliar with Hotwire.com, it’s a travel site that operates on an “opague” or “blind” model. Hotwire.com’s reservation system tells you the general location of a property and its rating, but not its name or address. So instead of Fancy Hotel at 123 Ocean Street, you’d get the information such as 4.5-star hotel in Waterfront District, amenties include Spa, Tennis, Restaurant, etc. prior to booking.

This time, I got lucky. I managed to book the Omni Hotel for a Saturday night for $90(!). Add on another 15% in taxes and fees, and the total bill still comes to below $110. A quick look on the hotel’s website shows that the best available rate is $219/night.

My parents is getting a night at a luxurious hotel. I am paying a price that’s 50% off the published rate. This is what I call a win-win situation. icon smile Hotwire: Book Hotels For Less

Hotwire.com is not for everyone. It’s certainly NOT flexible and NOT for someone who has an exact hotel in mind (the change/cancel policy is simple – there is none! It’s impossible to change your reservation once you’ve clicked “Confirm”).

If you are willing to be a bit more flexible with hotel selection and are sure about your trip, give it atry. I’ve booked rooms through Hotwire twice now, and both times have been satisfied with the hotels I’ve been received.

If you want to book Hotwire.com, you should:

1. Make sure that the name on the reservation is someone that will be at the hotel
2. Be certain of your dates of stay
3. Be flexible on the specific hotel you will get
4. Understand that you might not get the room arrangement you want (i.e. a bedroom that sleeps 2 can have 1 King bed or 1 Queen bed – there are no guarantees on Hotwire.com)
5. Understand that your booking is nonrefundable and nontransferable.

Do you use Hotwire.com? What has been your experience?

The good, the bad, and the ugly

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My finances have fallen by the wayside.

The Good: *cricket chirps* I am not living above my means (just, er, very close to it). I also finally set up automatic payments to my student loan.

The Bad: Between all the costs for the apartment and the copious amounts of shopping and dining I’ve been doing, my emergency cash fund has been growing… rather slowly. For most of April and all of May I haven’t been able to save much at all.

The Ugly: Too ugly for words. Only numbers can tell the story.

Double rent for June: ~$1,700 (later I expect ~$300 back, but still!)
GMAT registration: $250
Hotel reservation for parents: $200+
Memorial weekend massage & shopping: $350
Dining out: I don’t want to look!

Conclusion: I’ve been a rather bad PF blogger, haven’t I?

The exciting news is that I will have access to a 401(k) come July. I am debating if I should aim to contribute the full $15,500 the 401(k) for 2009 – that’d be $2,583 a month, a very significant chunk of my paycheck. I probably won’t be able to save for anything else for the rest of the year.

However, given that I expect to return to school in the next few years, it behooves me to save as much as I can in an employer-sponsored retirement vehicle while I can. One year of maxed out 401(k) is $15,000+ in contributions… that can make a ton of difference later on in my life.

Maxing out the 401(k) in 6 months = a lot of money! But maybe this enforced savings is just what I’ll need to whip my finances back into shape.

Psychology of Presents to Parents

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How’s that for alliteration?! icon wink Psychology of Presents to Parents

For June (combination Father’s Day and Dad’s birthday), I’m sending my parents to a weekend getaway.

Even though Mom and Dad explicitly told me that they “don’t need to stay in a nice hotel,” I feel weird sending them to anywhere that’s less than 4 stars.

It’s not that I’m a hotel snob, I’d stay quite happily at budget hotels or a hostel. But this is supposed to be a gift. To my parents. It’s suppose to be luxurious.

I don’t think they’d mind staying at a nice, 3 star place. Yet, a night at the local inn just doesn’t say “present” to me.

So because of a self-imposed threshhold on quality, location, and service, I’m looking at hotels in the $200/night range.

Thank goodness it’s for only one night!

Winner of the $25 TJ Maxx gift card is…

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Rin!

Congratulations to Rin and thank you to everyone who participated!

Rin – check your email. I hope this gift card will help you get some nice new bedding for a low low price! icon smile Winner of the $25 TJ Maxx gift card is...