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Are You an Abstainer or a Moderator?

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moderator vs abstainer Are You an Abstainer or a Moderator?

When it comes to goals, there are two types of people out there: Abstainers and Moderators

Many personal finance bloggers try out “no-spend” or “no-shop” challenges where they abstain from certain purchases for a set period of time. I’ve never had much success with these types of challenges (in fact, I rarely go 2 months without buying something, even if it’s just something small like a belt or clutch). Originally, I thought I just lacked the sheer willpower (and, ahem, awesomeness) of other bloggers, but apparently the reason is that I’m a Moderator, not an Abstainer.

According to The Happiness Project:

You’re a moderator if you…
– find that occasional indulgence heightens your pleasure – and strengthens your resolve
– get panicky at the thought of “never” getting or doing something

You’re an abstainer if you…
– have trouble stopping something once you’ve started
– aren’t tempted by things that you’ve decided are off-limits

Abstainers and Moderators need different types of financial goals

Figuring out if you are an abstainer or a moderator will help you set financial goals in a way that encourages your success (instead of secretly undermining you).

An abstainer would find “No” goals – NO Starbucks, NO shopping, NO going out to lunch at work, etc. - a way to motivate herself into saving more money. A moderator, however, would chafe at such absolutes, and would find MORE/LESS goals easier to stick to. A moderator should instead aim to drink LESS Starbucks, buy FEWER clothes, bring lunch MORE often.

I am definitely a Moderator. The thought of “never” getting to do something – buy something, eat something, try something, etc., makes me break out in a cold sweat. It’s akin to a giant case of FOMO – Fear Of Missing Out. For example, I’ve dramatically cut back on clothing/accessories purchases and Starbucks consumption compared to years past. But if you tell me I can’t buy anything or drink a latte for a year (or more), the FIRST thing I’d do is rush to the mall and clean out the entire Sales section of Banana Republic while chugging a Venti vanilla soy latte.

Hat tip to Blonde on a Budget

Are you an abstainer or a moderator? How does that affect your financial goal-setting?

By the Numbers: One Example of a Chinese Middle Class Wedding

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One of my cousins got married a few weekends ago. Unfortunately, I didn’t have enough vacation days to attend her wedding in Southern China, but I was able to glean some details from my mom to share with you all. So behold, this is one example of a wedding in China.

Photography

Wedding photography in China is a fascinating topic. Instead of hiring a photographer to capture the events of the wedding day (indeed, the much vaunted “photojournalistic style” has swept the wedding world here in the U.S.), in China, bride and grooms take their wedding pictures several weeks or even months ahead of time. The wedding session takes an entire day with several change of locale, numerous changes of outfits, makeup artists on site, wind-machines, and even a computer guy to airbrush on-the-spot. My cousin and her groom lounged as 18th century prince and princess in a Rococo foyer, posed with a bicycle against the backdrop of a rolling meadow, and posed in outfits a la fashionable folks in 1920s Shanghai Bund. And that’s just the few pictures she sent me!

Photography typically costs $500-$3,000, depending on how many poses you want, how many prints you order, and how elaborate your sets are. There is also a professional photographer at the venue on the day of the wedding, but that expense is a small one compared to the actual “wedding photography package.”

Reception / Dining

Dancing is typically not a part of a Chinese wedding reception, instead, guests are treated to the bride & groom (and sometimes the bridal party) participating in games as entertainment. My cousin entered the room in a carriage decorated with flowers and branches, and then there were pouring of the champagne and first sips as husband and wife. There were 29 tables with 10-15 people per table. According to tradition, the groom’s family invites one more table than the bride’s family. Each table was around RMB 3,500 or $600, so the entire reception comes out to around $17,400.

In the U.S., tradition says that the bride’s family should pay for the majority of wedding expenses. In China, the situation is reversed. The groom’s family is responsible for the costs. Indeed, the groom’s family is also traditionally responsible for buying a house for the newlyweds. A young man’s eligibility may well depend on the ability of his parents to purchase and furnish a home, or at least to put down the bulk of the purchase price (financing / loans in China is becoming more common, but many familys still pay cash for their homes).

Wedding Gown(s)

The bride had three changes of outfits during the wedding/reception. One: a classic, strapless white ballgown, two: a red Chinese-style outfit with an embroidered top and skirt, and three: a red qipao or cheongsam, a very fasionable, very unforgiving gown. It’s quite inexpensive to get clothes made in China, especially if you avoid designer names, so I’d venture to guess that these three outfits cost her around $500 total.

The groom had a few changes of outfits as well (although my mom and I naturally did not delve into the particulars of his dress as much as we did my cousin). He wore a white suit when my cousin wore her ballgown, and when she changed into her traditional Chinese gowns I assume he wore a coordinated dress as well. Again, clothing is cheap in China, so his outfits were probably less than $500.

Wedding Gifts

There is no tradition of gift registry in China. Instead, guests give cold card cash in a red envelope (like the kind they give at Chinese New Year). Typically, the bride and groom would “make back” in gift money what they (or their parents) spend on hosting the wedding. Another cousin got married last year, and I think he got something like $10,000 or $15,000 in gifts. This might sound like fun and games… until they are invited to the guests’ wedding! Then the act of reciprocation must occur. In fact, some people have gone so far to refer to wedding invitations as “red bombs” because of the money-giving obligation that acceptance demands.

Weird Saving Tricks I Use

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Do you use weird saving tricks? We’ve heard of all the normal ones: automatic deduction from your paychecks, setting aside 10% of your income for retirement, putting your tax refund into your savings account, blah blah blah. I’m not talking about those. I’m talking about the idiosyncratic and really strange little mental tricks you play on yourself so you can squeeze out a few extra dollars of savings here and there. In fact, I have a specially named sub-account for savings from these weird tricks - I call it my Funny Money account.

funny money Weird Saving Tricks I Use

Here are some of my weird saving tricks:

  1. When I make brunch at home, I put away $15-20 (what it would have cost us to go out to eat). Last weekend, we somehow managed to cook at home not once but twice, so $40 went from my bank account to the Funny Money Fund on Monday. We eat out at brunch way too often, and the funny thing is that brunch is my favorite meal to make, at a time -weekends- when I have time to make it.
  2. When I make a return (a dress that I just couldn’t make work, or shoes that don’t fit right), I take the money I get back and I put it in a savings account. Impulse buys, thou shalt not get the best of me!
  3. When I get a gift card as a present or as a bonus from credit cards, I try to put 1/2 of the face value into my savings account.
  4. When I stay at a hotel for free because of points redemption, I save $10-$40 depending on how expensive the hotel was.
  5. When I window-shop and I make the (frankly very difficult) decision to NOT buy that perfect pair of stacked suede heels or mirrored jewelry box with velvet lined interior, I put the money I would have spent into the Funny Money Account.

I use these little tricks because saving is just as much mental and emotional as it is mathematical. I know I am a spender trapped in a saver’s body – it’d be way too easy for me to overspend if I don’t put a few safeguards in place. So I have the big ones such as 401K deductions, but I also try to make it a fun game for myself and make sure that when I DO overcome those impulse buys or get lucky with gift cards or free stays, I put away a little something too. If the money is just swimming around in the checking account, I know I’m going to spend it.

Do you have any weird saving mind tricks you use?

Should You (Do You) Tip For Bad Service?

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On the one hand, tipping has become such an ingrained social norm, a part of “the cost of doing business,” if you will, that it would take something egregious to not tip. On the other hand, I don’t believe that tipping should be taken for granted. If good service was not provided, then a tip was not earned. So in what situations would it be appropriate to withhold a tip or to decrease the amount of tip?

Consider these four scenarios:

  • You call a taxi to take you from the airport to your hotel. The taxi arrives 10 minutes later than the quoted time, and the driver is abrupt and short with you when you get in.
  • You call a taxi to take you to the airport at 530am. The taxi arrives a few minutes before 6am (despite several frantic calls you’ve made to the dispatcher). When you get in the van, the driver is polite and cordial, but asks you about a gratuity when you hand over your credit card. Incidentally, it’s the same taxi company.
  • You go to a restaurant. After the host seats you, you are left there waiting for 15 minutes before anyone notices.
  • You go to a restaurant. Your water glass goes unfilled for 20 minutes even as you repeatedly try to flag down the server. The restuarant is not inordinarily busy. (And would it make a difference if it were?)

In those cases, would you tip? Would you decrease the tips?

In the first case, I still tipped $2 on a $10 fare because I felt put on the spot. In the second case, I told the driver “no gratuity” because I was so peeved that he was 20-plus minutes late and that he had the nerve to ask me about a tip right when I got into the car. In the third case, CB and I just left the restaurant and went to a different place because there’s nothing that sours a restaurant experience faster for me than being ignored. In the fourth case, I think we still tipped 20% even though we both talked about how unresponsive the service was. I chalk it up to social conditioning.

With tips so ubiquotous these days (and many folks dependent on tips as part of their overall compensation), I’m wondering in what situation can you justify not tipping? Fabulously Frugal wrote a post on her feelings about tipping, and I agree on several points. I don’t mind tipping, but if tipping has gotten to the point where it is expected for even mediocre or marginal service, then why not just mark up the cost of the item and call it a day?

Should you (and do you) tip for bad service? At what point would you eliminate the tip completely?

Tipping Your Hotel Housekeeper / Maid

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I love staying in hotels. I like the plush bedding, the spotless, well-appointed rooms, the fact that I never have to make my bed. But rarely did I think about the hotel maids who make the nice stays possible. According to travel experts, guests are supposed to tip hotel housekeepers/maids, but most folks don’t. I’ve only heard that guideline a while back, and have only started tipping a few months back.

One thing that struck me was that hotel maids are so invisible that it’s easy to forget them. Unlike a waiter or waitress who’s right in front of you bringing you drinks and food, I’m not in the room when a housekeeper cleans the toilet, changes the sheets, or dusts the TV.

Once I started learning more about hotel maids, I felt guilty about all those years of not tipping. But I also don’t want to start adding $10 in tips to every 3-day trip. Now, to make sure I’m a conscientious guest, I do a couple of things. I hang a “Do Not Disturb” sign on my door – I am rarely in a hotel room longer than 2 days, and I just don’t need the room cleaned and the bed remade every single day. When I check out I leave $3 or $4 underneath the pillow (somewhere where the housekeeping is sure to find it).

CNN Money published a good article on hotel tipping:

So when and how much? (Lizzie) Post offered these guidelines:

• Tip every day to ensure your tip gets to the person who actually cleaned your room.
• Leave a note in your room with the money indicating it is for housekeeping.
• Tip $1 or $2 per person, per night in most hotels. In higher end hotels, $3 to $5 per person per night is typical.
• In a motel, tips are generally not necessary for a one-night stay. The $1 or $2 standard is appropriate for multiday stays.

Tipping housekeepers is “a really lovely thing,” said Reneta McCarthy, a Cornell lecturer who started out in the industry as a housekeeping manager with Marriott.

“But generally speaking I would say the majority of people don’t do it. And when you look at it, you know, I hate to say it, but this is not considered a tips position. The housekeepers, unlike the bellmen, are not filling out tip reporting forms,” she said.

The national average hourly wage for bellhops was $11.40 in May 2010, according to Bureau of Labor Statistics wage estimates. The average for housekeepers was $10.17, according to survey data. Survey forms issued by the bureau ask for information on tips, but it’s unclear how reporting varies between housekeepers and bellhops.

Even now, I don’t always remember to tip. Sometimes I will run out of cash. Sometimes I will be running out to catch my flight and simply forget. But most of the time I try to tuck in a few dollars here and there.  I guess I figured if restaurant servers are tipped, hotel maids – with an arguably more difficult (and much less visible) job – should be too.

Do you tip your hotel maid? How much do you tip?

Would You Sell Family Gold Jewelry for Cash?

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The price of gold has grown by leaps and bounds over the past couple of years. In fact, this precious metal is sitting pretty at $1,800 per ounce right now, compared to $1,000 per ounce two years ago and $1,400 per ounce six months ago.

Many folks with old gold jewelry have already cashed out their cache of necklaces, bracelets, and rings. The ever-higher prices are sure to tempt those who haven’t.

My grandmother gave me some pieces before she fell ill – a gold bangle, a few old coins, a chain. She grew up in a wealthy family and these jewels were part of a much larger dowry. During a civil war in her home country, she dumped loads of precious gems into the rivers so that her family wouldn’t be lynched by the mobs. Sometimes, I imagine what treasures must lie at the bottoms of these rivers, covered with decades of mud and silt. These few gold and silver items were all that my ancestors managed to save, all at enormous personal risk.

I am not normally sentimental about jewelry, and her jewelry certainly aren’t really my taste (nor do I have use for such nice pieces). The rational thing to do would be to take advantage of the historic run-up in gold prices, send in the bangle and chain for cash, and then maybe use the money for graduate school. Somehow the rational thing feels like the wrong thing to do. I don’t need the money desperately, and I like the fact that I have something that is a piece of my family’s history. It makes me sad to think of the jewelry, so carefully protected and hidden, melted down. So, for now, I am holding on to everything.

Would you sell, or have you sold, gold jewelry for cash?

Goodbye ING Direct?

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ing direct 300x78 Goodbye ING Direct?Just heard that ING Direct will be bought by Capital One. I’ve been a member of ING Direct since 2006 and have always been very happy with their customer service. I love the sub-accounts feature, and as of right now I have 6 accounts with ING. I hope Capital One will respect the culture and customer base that ING Direct has created, but only time will tell. For now I plan to stay put and see what type of changes the acquisition will bring before I make a decision to stay or go.

Most folks on Consumerist are quite upset about the change – I have to admit I am a little, too!

Do you have ING Direct? Are you planning to switch banks because of this acquisition?

Hat tip to Debt Ninja.

Image credit via INGdirect.com

“Investment Clothing”: Investments That Aren’t

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When is an “investment” not an investment?

When it comes to “investment clothing” or “investment pieces.”

According to dictionary.com, the first definition of “investment” is:

the investing of money or capital in order to gain profitable returns, as interest, income, or appreciation in value.

Despite what fashion magazines say, clothing is not an investment

The fashion world love touting the idea of “investment” clothes or an “investment” wardrobe. Every season, editors rave about new “investment pieces” or “statement looks.” Want some Louboutins? They are an investment in your shoe collection! How about an Armani suit? An investment in looking professional! An Hermes purse? An investment accessory!

Don’t get me wrong, I agree that we should have classic, high-quality pieces that will last us through at least three or five years – cheap rayon shirts and skirts do not a wardrobe make. I agree that we should buy what we love, instead of what’s on sale. I agree that having well-fitted and appropriate clothing is absolutely essential to many careers. There is nothing wrong with buying beautiful clothes (I love clothes and would probably spend far more money on them if I could!), but it’s wrong to call shopping an investment.

Most of the time the idea of an “investment piece” is used to convince us to buy really, really, expensive items that have no prospect of appreciating in value. A Bottega Veneta handbag is absolutely stunning, but I think it’s going a wee bit far to call it an investment. There are a few luxury brands that hold their value well (Chanel, Hermes come to mind), but they are the exception rather than the rule.

Like most ladies I know, I admire well-constructed jackets, supple leather purses, stylish little black dress. I may even buy an expensive piece that goes perfectly with everything else in my wardrobe. I may even buy an expensive dress that I plan to keep for the next ten years. All that is great, but that doesn’t mean I’ve made an investment.

I feel like a curmudgeon, because who doesn’t like beautiful clothes that fit and flatter? But as personal finance expert Manisha Thakor says, clothing is not an investment!

Hit Unsubscribe Button On Store Emails

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As recently as a month ago, I was subscribed to the following store emails:

  • Gilt
  • Hautelook
  • RueLaLa
  • Gap
  • Banana Republic
  • J. Crew
  • Ideeli
  • Jetsetter
  • Voyage Prive
  • Talbots
  • Urban Outfitters
  • Vacationist
  • LivingSocial
  • LivingSocial Escapes
  • Groupon
  • Zozi
  • CozyCot
  • Sephora
  • Ann Taylor
  • Ann Taylor Loft

[Takes a BIG breath]. One night, in a frenzy of inspiration after I stumbled back to the Early Retirement Extreme blog, I decided to hit the unsubscribe button on all these store emails. Clear my inbox and clear out the temptations!

I have what I need, and if I wanted to, I can always go to the store or visit their websites and get something I like. It is a relief, though, to no longer have 10 emails offering temptations every single day. My urge to shop has decreased significantly – and if there is a must-have deal, I trust the petite style blogging community to keep me informed!

If you need help unsubscribing from store emails, read this list of how to talk yourself out of shopping, then go visit the ERE blog. I don’t agree with everything that Jacob says (he really is too extreme for me), but I always find that blog as a good dose of inspiration and motivation when I am feeling a little complacent with personal finance.

The Bag Lady Syndrome: Do You Have It?

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The Bag Lady Syndrome is the fear, usually held by women, that they will end up alone, destitute, and homeless. Talk about a trifecta of bad news. I read somewhere that a majority of women – even very successful and wealthy women – harbor this fear.

Are you afraid of becoming a Bag Lady?

I am.

I wrote about this fear in a BlogHer article, and I focused on three ways I can minimize the risk of becoming a Bag Lady: (1) saving, (2) investing in my career, and (3) buying a home and paying off the mortgage as soon as possible.

In fact, the entire genesis of this blog may be a result of the Bag Lady Syndrome. In my About Me page, I wrote that I “do not want to be old and poor.” The unspoken corollary there is that I do not want to be old and poor and homeless.

Mom has instilled many great characteristics in me, but she also put into my head (rightly or wrongly, and I am inclined to say rightly) that being old and poor is one of the most tragic fate that can befall a person. It’s probably what she can see in her work as a medical professional.

Avoiding The Bag Lady Fate

I don’t want to live a life based in fear, but I admit that fear of becoming a Bag Lady drives my decisions today and will likely drive them tomorrow. For example, I try to save as much as I can for retirement right now, I educate myself on investments and asset allocation, I plan to invest in and always maintain a career.

Most importantly, I plan to buy a single family home and pay off the mortgage so that I will own it free and clear by the time I turn 50. (I plan on having several houses in my lifetime, one to live in, and others to serve as rental properties. But one home will always be paid off.) In my opinion, the biggest safeguard against homelessness is to have a home that you own, and that no one else can take from you.

I read Funny About Money’s account of how she survived on $22,000 last year – most of it from unemployment insurance. She said she felt like she was in penury. What struck me the most about Funny About Money’s post, however, was the fact that she wasn’t out on the streets – she had a home, that she paid off years ago, and so she would not be homeless:

No matter what anyone says about the alleged tax advantages of carrying a mortgage, when you’re unemployed a paid-off roof over your head is your second-greatest asset.

I agree 100%. The truth is, if someone didn’t have housing costs, he/she can probably scramble by for a year or more even in the face of unemployment. There are other options: food stamps, local health clinics, buses, ways to take on odd jobs or freelance assignments and make a few hundred dollars a month. Take out the biggest source of expense – rent or a mortgage – and you can get by if you are in adequate health.

Are you afraid of becoming a Bag Lady? What are you doing to prevent that fate?

The Traps of Mental Accounting: Why We Treat Money From Different Sources Differently

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Do you practice mental accounting?

Most people do. Do you treat $1,000 that you receive as part of your regular salary differently than the same amount from a bonus or a winning lottery ticket? Research says yes, we do treat money differently, even though we shouldn’t.

We are more apt to splurge (on expensive purchases or vacations) with a gift or bonus of $1,000, but we are often more conservative with the same $1,000 that is deposited as part of our regular payment. But why should that be? $1,000 is $1,000 regardless of where they come from.

What is mental accounting?

According to Investopedia:

Mental accounting refers to the tendency for people to separate their money into separate accounts based on a variety of subjective criteria, like the source of the money and intent for each account. According to the theory, individuals assign different functions to each asset group, which has an often irrational and detrimental effect on their consumption decisions and other behaviors.

Different Source, Different Purpose

Another aspect of mental accounting is that people also treat money differently depending on its source. For example, people tend to spend a lot more “found” money, such as tax returns and work bonuses and gifts, compared to a similar amount of money that is normally expected, such as from their paychecks. This represents another instance of how mental accounting can cause illogical use of money.

Logically speaking, money should be interchangeable, regardless of its origin. Treating money differently because it comes from a different source violates that logical premise. Where the money came from should not be a factor in how much of it you spend – regardless of the money’s source, spending it will represent a drop in your overall wealth.

Me vs. mental accounting

I understand this concept intellectually, and yet I STILL fall prey to the traps of mental accounting. Exhibit A: for the past year or so I have ramped up my freelance efforts because I enjoy it, and it never hurts to have extra cash.

I also have noticed, however, that I am much more lenient with my freelance earnings and bonuses than I am with my salary. The salary is for 401K contributions, it’s for rent, it’s for gas and car repairs. In fact, I am quite a tightwad with my regular paychecks.

Yet something in my brain tells me that I should treat my freelance earnings and bonuses differently – that those dollars are for splurging on new clothes, or nice dinners, or massages. I spend much more frivolously when I think I am spending my “extra” money. But the truth is there is no such thing as “extra” money. ALL the money I have, including any gift money I’ve been lucky enough to receive, is interchangeable, they are all part of my net worth. A dollar that I have received as a part of a bonus is still a dollar, it’s not any different than a dollar I have earned as part of my regular paycheck.

Fighting against mental accounting

I am working hard to change my mental accounting tendencies. Part of that effort is the setting up of the SEP IRA – putting money away means that I won’t be tempted to spend it all on frivolous pursuits.

In addition, I’ve started to put a significant portion of my freelance dollars toward the Galapagos Fund. The money will still be spent, but it will be for a big once-in-a-lifetime trip that I will remember and cherish forever, instead of for small purchases that I will forget a week later.

Also, with every freelance paycheck I get I contribute to my estimated tax fund. This minimizes the free cash that’s lying in my checking account (less spending!) and will help me avoid an unpleasant surprise when April 2012 comes around.

Mental accounting might have gotten the best of me for a while, but I am fighting back!

Do you do mental accounting? How do you stop yourself?

photo via pksoni.com

Focus Groups: Make Extra Cash by Sharing Your Opinions

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Focus groups: the basics

Focus groups (or paid market research studies) are qualitative marketing studies in which participants are asked about their perceptions or attitudes. These market studies are interested in certain demographics for different studies. To evaluate if you qualify for a particular study, you usually need to answer questions on your age range, gender, employment, zip codes, etc. Most of the time, more details are required. Studies have preliminary surveys that you must fill out to be considered — these surveys are not paid — their purpose is to determine your appropriateness for the study.

Why participate in focus groups?

Because focus groups are an easy and fun way to make extra cash, especially if you are someone who has a flexible schedule during the week day (for example: college students, retired people, freelancers, job seekers, etc.).

Marketers look for specific characteristics in their participants. For example, if a pharmaceutical company is running a study on children’s aspirin, market researchers may ask for mothers who are between the ages of 24 to 40 with a child who is under the age of 12.  A lobbying firm conducting research on political affiliation and voter behavior may ask for registered Democrats or Republicans who are in their 30s to 40s. Once you are in a study, you will interact with the market researcher and with other group members. You will give your opinion on the product or promotion the researchers wish to evaluate. Focus groups are usually in person, but a minority might be conducted via Internet or over the phone.

Where to find these paid opportunities?

My favorite source for focus groups is Craigslist, which provides a treasure trove of focus group information. Start by searching for any combination of these terms “focus groups,” “paid study,” “paid market research,” “paid marketing study”, etc. You can also sign up for research firms that conduct opinion panels, such as Focus Foward or Focus Pointe Global. I joined Focus Pointe Global’s mailing list and frequently receive preliminary e-mails where, if I qualify, I will be invited to a paid focus group (haven’t been too successful — my demographic must not be in that high of a demand!).

Other sources for focus groups are community newspapers and nonprofit organizations. The easiest $80 I made in high school was when I was selected to join a couple of teenager focus groups run by a nonprofit organization. One group was conducted via phone, so I sat in my pajamas and discussed teen political activism for two hours — I came away from stimulating conversation with an increased desire to be involved and, a few days later, an $80 check. In the words of my 16-year-old self, “That was sweet!”

A few months ago, I participated in a study on cell phones for which I spoke with a market researcher about my cell phone purchasing habits and preferences, such as which type of plan I use, who is my carrier, which features I like (QWERTY keypad, touch pad, sliding screen, etc.). The study took only 30 minutes but netted me $45.

Who should join focus groups

If you have a relatively flexible schedule, enjoy sharing your opinion about a particular product or policy, and you like to earn $30-$60 an hour with minimal work, then you will love participating in focus groups.  And, oh, I just found a study for video game players that pays $100 for a couple hours of talking about video games (which CB will do free of charge!) – forwarded that to him.  But where are my focus groups on personal finance?! icon wink Focus Groups: Make Extra Cash by Sharing Your Opinions

An earlier version of this article was posted on BlogHer.

Free Starbucks WiFi: The Budget Buster

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Starbucks is a genius at busting my budget

Starbucks wifi is a budget buster. Or, rather, Starbucks wifi is MY budget buster. Ever since Starbucks begin its free wireless internet in the middle of July, I have been spending, and spending mightily, at their stores at least 2-3 times a week. Free WiFi has made me step into a coffeehouse at least once a week.

Excuses, excuses

I have an excuse, I tell myself – I live 30 miles away from home.  In heavy  – or even normal – traffic that makes what would normally be a 30-45 minute commute stretch to an agonizingly slow hour or hour and 15-minutes. Going 20 miles an hour is nobody’s idea of fun.  So, instead of trying to fight with all the other unfortunate drivers, I decamp to the Starbucks half a mile from work, flip over my netbook, and spend 2-3 hours surfing the net and writing (like now!).

How much am I spending at Starbucks because of free WiFi?

I am paying for this privilege: every drink cost around $3; $4 if I am feeling like a fancy frappacino. Sometimes I also order a sandwich because I was too busy to eat during the day and so I enter Starbucks famished. A conservative estimate of $5 per visit x 2 visits a week = $10 per week, or $40 to $50 a month.

If I keep that up for a year, I would be drinking 500 big green bucks down the (delicious green-tea-macchiato) drain. Sorry David Bach, I guess my Latte Factor really is costing me a pretty sum. And before all you savvy folks say – the public library! – I checked. There are no libraries that are close by or on the way home, and I’m not sure if they have WiFi even if there were. For the moment, at least, Starbucks seem to be my best option for waiting it out after work.

The New Abnormal: Pinching Pennies To Justify Splurges

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A recent Business Week article caught my eye, with the title “Americans Buy IPads While Broke in New Abnormal Economy“, it’s hard not to.

There are many interesting points in this article – the gist of it is that consumers are just sick and tired of making so many adjustments since the start of the recession. Now while we are willing to pinch pennies on the small items, we paradoxically are willing to spend big bucks on true luxury items. Indeed, the fact that we are saving $2 by buying store-brand paper towel instead of a national-brand may help us justify that it’s okay to purchase a new $2,000 computer.

The new abnormal has given rise to a nation of schizophrenic consumers. They splurge on high-end discretionary items and cut back on brand-name toothpaste and shampoo.

Ran Kivetz, a professor of marketing at Columbia Business School, has done research on consumer psychology. He says that consumers’ brains lack a line that separates spending from saving. We practice a certain amount of thrift so that we can justify blowing a large sum frivolously, he says.

Have you fallen into the pinching pennies to justify splurges mindset that Professor Kitvetz talks about?

I know I have. I have proudly patted myself on the back when I took advantage of a 2 for 1 deal and snagged an extra tube of toothpaste for the same price, then the next day, perhaps subconsciously emboldened by my earlier thrift, purchased a Groupon package for a local spa. In order to make my savings goals, I really shouldn’t have made that Groupon purchase. The fact that I saved $3 on toothpaste is nice, sure, ($3 is an In-n-Out burger!), but I would have to have gone through quite a few toothpaste for the $3 saving to add up to a $100 spa visit.

Now I consciously remind myself that my true savings is my income less my expenses (which includes taxes, rent, loans, groceries, and all the other incidentals that comes with living).  If I did not spend $10 because I skipped takeout one night but then went and spent $600 on an IPad, I have not saved at all. Instead, I spent $600 whereas I could have spent $610. That’s not to say I shouldn’t get an IPad or that it’s bad to spend – it’s not bad to spend (and in fact it is quite enjoyable, especially if you spend on things that make you happy, which in my case includes food, travel, books, and let’s admit it, clothes).

It IS, however, very important that we don’t subconsciously sabotage our own saving efforts by thinking that we are justified in making certain purchases if we really are not able to afford them.

Saving for Retirement: Love It? Hate It?

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Growing up, I never had personal finance as part of the curriculum. But everything I’ve learned about motivation to save for retirement, I’ve learned in high school.

Recently, TeacHer Finance wrote a post sharing her perspective – she hates saving for retirement.  I understand her reasons.. maybe that’s why I don’t really think about them – because I am afraid of mentally discouraging myself from saving!  It is difficult to balance retirement with shorter-term goals, that is for sure.  And although there are good, logical reasons to save for retirement, the motivation factor, like I mentioned at the beginning of this post, was completely from high school.

From High School to Retirement Saving

This might be a nerdy way to explain it, but here is it. When I was in high school, I’d often slack off a little at the beginning of the semester – I wouldn’t study as hard as I should have, or prepare for the occasional pop quizzes that I KNOW will come up in class.  It’ll be okay, I told myself, I will work harder for the next test, the next presentation, the next project.

Towards the second half or 2/3 of the semester, I’d look at my class progress reports, feel disappointed, and then I’d hunker down and put my nose to the grindstone. But the simple mathematical truth was that for every 80% I got in the first half of the class, I’d have to get a 100% to achieve the 90% ending score I wanted. Let’s just say that it was a rare day that I got those 100%s.

And every time before the final, when it’s 4 AM in the morning and I am still pouring over my notes on European history or statistics or macroeconomics, stressed out of my mind, I think, why didn’t I start preparing earlier? If I had JUST prepared a little more at the beginning of the term, I wouldn’t have to work so hard towards the end, I would give myself more wiggle room, and I would probably have gotten a better grade.

The lesson I learned? Put the work in early, get better results for less effort.

That’s the thought process I bring to retirement saving. I am saving as much as I can right now so that I wouldn’t have to panic and start saving 30% of my income when I’m in my 30s or 40s, when I will surely have more financial obligations.  Now, when I think of not saving for retirement, I think of high school.

Do you love saving for retirement (is love too strong a word?) Do you hate it? How do you motivate yourself to save for something that is so abstract, and so far away?

Movie Theaters, Ethics, and Snacks: Should You Bring Food To Movies?

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The question is inspired by comments to my guest post at Free From Broke: 4 Ways to Enjoy The Movie Experience, in which I talk about the methods I use to keep my movie expenses down so that I can continue to enjoy movies on a budget.

Going to movie theaters is expensive. Ticket prices have gone up to the double digits. I have several ways to minimize movie expenses – one of the ways is to avoid concession stands, whose prices are usually marked up several hundred-fold. I frequently don’t eat anything during movies, but sometimes I’ll bring bottled waters and food (snacks such as oranges, pears, dried fruit) in the theaters for extra long movies.

But one commenter on the 4 Ways to Enjoy The Movie Experience got me thinking on the ethics of bringing food into theaters. Is it unethical to bring in my own snacks when the movie theaters usually say “no outside food or drinks”? I have no problem bringing in water – in fact, any place that won’t let me bring my own water (unless the prohibition is for safety purposes), is not a business I want to support.

Bringing food into movie theaters, however, is a stickier proposition. When I bring my own snacks into movie theaters, it’s for both health and budget reasons (did you know that one bucket of medium popcorn has anywhere from 600 to 1,200 calories?!), and I don’t bring any food that movie theaters sell. So while I might sneak in a small bag of orange slices, I won’t be bringing in my own popcorn, Coca-cola, or salted pretzels.

But maybe I’m just rationalizing my behavior. What do you think?

Do you bring food inside movie theaters? Is it ethical? Do you think it’s wrong but still do it?

image source: calorielab.com

No More Free Checking?

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Growing up in the 2000s, I, like most of my peers, have come to take free checking accounts for granted. In fact, when a big brick & mortar bank started instituting monthly fees on my checking account a few months ago, I closed that account and turned all of my checking business to a bank that didn’t have any monthly fees for their accounts.

But free checking can become “endangered animals,” says a New York Times article:

The biggest impact on checking accounts, however, is likely to come from new regulations governing overdraft protection. Starting in July, banks will need explicit permission from customers before allowing them to use their debit cards to spend more than they have in their bank accounts on a one-time purchase. Similar restrictions will apply to A.T.M. withdrawals.

Banks earn billions in overdraft fees, money that helps pay for free checking.

20 years ago, most checking accounts had fees or very high minimum balance requirements for a free account. Washington Mutual brought free checking to the masses in 1990s and subsidized the free checking by selling more profitable loans and services. Other banks followed suit.

The article goes on to say, however, that debit cards (and the revenue from fees retailer pay to accept the debit cards) might be enough to pick up the slack from the overdraft fees, so banks can still maintain free checking for most of their customers. Personally, I am becoming more and more interested in debit cards, especially if I can’t have a free checking account without using debit cards.

As a consumer, I definitely hope free checking is here to stay.

My two questions:

1. If you had to choose between free checking with deep overdraft charges, or low monthly fee (less than $10) but with overdraft protection, which would you choose?

2. What can banks do to keep your business even if they don’t have free checking? (i.e. identify monitoring services? better customer service? other perks?)

Save Money by Embracing Your Natural Hair

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Did you grow up loving your natural hair? I didn’t. During my middle school years, the gold standard for hairstyle among girls were pin-straight locks that fell like a curtain down the back (think Gwyneth Paltrow’s hair below):

My hair, however, was thick and wavy and unruly. Despite spending $30 on a straight iron and anti-frizz serums (a considerable sum when you’re 12 and have no income) at the local drugstore, my hair remained stubbornly wavy. 10 years later, I got a straight (magic) perm at a Korean salon. After sitting in the stylist’ chair for 3 hours, not touching, washing, or pinning my hair for 3 days, and paying $250 for the privilege, my waves were finally coaxed into submission.

The perm did its job. My hair stayed stick-straight for a year. When my hair finally grew out, however, I decided against spending another $250-$350 for a magic perm. That’s a fair deal of money, and besides, I’m no longer in middle school. The cool girls won’t pick on me because my hair doesn’t conform to their ideal. icon wink Save Money by Embracing Your Natural Hair Another reason is I’m afraid of the damage consistent chemical treatments will do to my hair. I decided to save money by embracing my natural, wavy, locks.

So, I went to my stylist and I asked her to give me a cut that will play up my waves. She did, and it looks great. Best of all, I don’t have to do anything – I let my hair air dry, scrunch in a bit of a curling creme at the most, and I’m ready to go. The fact that I save money every time by NOT doing the straight perm is another bonus.

The best way for me to keep both my hair healthy and my wallet happy is to get a cut that works with my hair length and texture (and when in doubt, go for longer cuts). This minimizes the time and energy I have to spend on my daily haircare routine, so I have more time and money to do other things. Though I can’t say I’ll never head back to the salon for treatments (this Brazilian Blowout sounds intriguing), I am happily embracing my natural hairstyle for now.

Do you like your natural hair? Does the desire to save money influence your hairstyle decisions?

image source: askmen.com