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Posts Tagged ‘Money’

Are you saving enough?

In behavior, culture, domestic life, family, life, Money, parenting, US on March 10, 2014 at 2:21 am

By Caitlin Kelly

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A recent piece in The Wall Street Journal asserts that Americans spend way too much money:

You may overspend because you’re bored, you have no budget or you want to keep up with your neighbors.

Or you might be letting your emotions dictate your financial decisions.

Whatever the reason, you may be setting yourself up for a financial disaster.

But fear not: There are a few ways you can rein in your spending before it’s too late.

Tracking your cash flow and tapping into your feelings are two things financial advisers say you can do to curb your urge to spend.

“The spending choices you make now will greatly impact your quality of life later on,” says Patrick McDowell, a Miramar Beach, Fla., financial adviser.

Here’s an honest post by a new Broadside follower (welcome!), a college student, making minimum wage and struggling financially with college costs:

Although it can be annoying, I understand this is making me a better person.  It’s not just about the money all the time, it’s about a learning experience.

And here’s a dense and dry blog post, recently chosen for Freshly Pressed, about behavioral economics — written by a professor:

Certainly the evidence that people don’t typically behave rationally is quite compelling.  It’s easy to find examples of behavior which conflicts with economic theory.  The problem is that it’s not clear that these examples help us much. I’m pretty much obsessed by when, why, how and where we choose to spend our money. Or save it.

Given how little money most Americans save — here’s a blog post from The Economist about that — it’s a tough decision to postpone immediate pleasures (let alone the daily grind of needs), for groceries, housing and medical care in the future, possibly decades away. What if we never get there?

But what if we do live to be 80, 90 or beyond — and find ourselves broke and scared?

Here’s a frightening post from one of my favorite writers, Guardian journo Heidi Moore, about how older women — because we earn less and live longer — end up in poverty:

17.8 million women lived in poverty in 2012, 44% of whom lived in extreme poverty. Extreme poverty means “income at or below 50% of the federal poverty level”, which amounts to less than $5,500 a year…

What is surprising is that the slide into deep poverty is happening so soon, and in such massive numbers, among the elderly. It’s not clear what could have changed between 2011 and 2012 to cause it.

My mother went into a nursing home three years ago, paying — for a small room — $5,000 a month. Yes, really. That certainly made clear to me the very real cost of getting old, ill and needing costly care every single day. She saved, lifelong and ferociously, so she has the funds for it.

Most of us will not.

Our parents and grand-parents, and a few fortunate folk in specific industries, could look forward to a company pension; Jose will receive one from The New York Times, thank heaven. A few lucky people also get a company match to their 401(k) retirement savings from their employers.

But most of us are now expected and required to save and save and save and save, praying our investments retain and grow in value. I’ve been saving 15 percent of my income every year for a while; it’s finally adding up to a sum that makes me feel like the sacrifice is worth it.

It’s also simplistic to shame people who “spend too much” when millions have lost their jobs, often repeatedly, and have run through whatever savings they might once have had. Millions are also now earning far less than they once expected or hoped to.

Wages are stagnant or falling while the cost of living rises each year — and we’re still human beings who actually want to leave our homes and have some fun!

I splurge on four categories: 1) items or improvements for our home; 2) travel; 3) entertaining friends; 4) fresh flowers.

ALL IMAGES COPYRIGHT CAITLIN KELLY 2013.

How about you?

What do you splurge  on — and where do you keep your wallet closed?

How much money is enough?

In behavior, business, culture, life, men, Money, US, work on January 21, 2014 at 12:39 am

By Caitlin Kelly

Interesting, if scary, essay in The New York Times recently, by a former Wall Streeter — who once sneered at his $3.6 million bonus as insufficient:

After graduation, I got a job at Bank of America, by the grace of a managing director willing to take a chance on a kid who had called him every day for three weeks…At the end of my first year I was thrilled to receive a $40,000 bonus. For the first time in my life, I didn’t have to check my balance before I withdrew money. But a week later, a trader who was only four years my senior got hired away by C.S.F.B. for $900,000. After my initial envious shock — his haul was 22 times the size of my bonus — I grew excited at how much money was available.

Over the next few years I worked like a maniac and began to move up the Wall Street ladder. I became a bond and credit default swap trader, one of the more lucrative roles in the business. Just four years after I started at Bank of America, Citibank offered me a “1.75 by 2” which means $1.75 million per year for two years, and I used it to get a promotion. I started dating a pretty blonde and rented a loft apartment on Bond Street for $6,000 a month.

I felt so important…The satisfaction wasn’t just about the money. It was about the power…

Still, I was nagged by envy. On a trading desk everyone sits together, from interns to managing directors. When the guy next to you makes $10 million, $1 million or $2 million doesn’t look so sweet.

If you live — as we do — in an area filled with seriously wealthy people, some of whom attend the same church as we do, or sit beside us on the same commuter train, it’s disorienting to realize what “enough” looks like to those of us whose annual incomes are a puny fraction of theirs.

My first husband, a physician, earns in one month what I make in a not-great year writing.

A new film, The Wolf of Wall Street, is a true-life story of a former trader whose life defined greed. Cate Blanchett should get an Oscar nomination for her role in Blue Jasmine, Woody Allen’s latest film, about a New York woman who tumbles from tremendous wealth into poverty.

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And here’s a stunning bit of new data, from Oxfam -- 85 people own nearly half the world’s wealth.

Here’s a sobering list of how much money you’ll need for retirement — if you need or want $4,000 a month, your stash needs to be $666,000. Very few people can ever manage to save that much, especially when battered by multiple recessions and a weak economy.

People who live nowhere near NYC have no idea how insanely expensive it is or why we put up with it — for some of us, it’s where we need to be professionally; my husband spends more than $5,000 a year just to get to his office, between train, cab and subway. There’s no practical way to cut that fixed cost, a stupid number to many of you, I know.

But moving an hour or two further away from the city to save on housing costs also means an even longer commute, (which costs more), and sharply diminishes the time and energy to spend on its cultural, social and professional opportunities — fine for some, not for others.

Let alone the time one has to see one’s family, relax or have a life; one of my favorite books is the classic, Your Money or Your Life, which makes clear that’s the tradeoff many of us make, with only 24 hours in every day.

One writer I know profitably pounds the drum of endless productivity — a very American obsession — with books like 168 Hours.

What the point of making huge bank if you’re working all the time and/or too exhausted to enjoy your personal interests, (or even have any!), let alone nurture intimate relationships with anything beyond your computer screen or phone?

Credit Suisse recently made headlines by suggesting its junior bankers take Saturdays off.

I come from a family with money, some inherited, some earned, but will never enjoy a lavish life like theirs, which is sometimes a little depressing after watching them spend freely on jewels, furs, limousines, property, cars, travel and antiques. You develop a taste for the best, with extremely limited ability to buy it yourself.

So what’s really “enough”?

For us, at the moment, it’s having decent retirement savings and adding to them every year, no matter how much immediate fun it costs us.

It’s my husband’s job that he still enjoys and which, thank God, offers a pension.

Above all, it’s good health — without which billions in the bank means damn little.

How much money is enough for you these days?

Are books — and their readers — an endangered species?

In books, business, culture, journalism, Media, work on January 11, 2014 at 9:58 pm

20131219120434By Caitlin Kelly

This recent piece in The New York Times makes sadly clear why the notion of producing a book — a dream for many — is becoming more of a fool’s errand:

Overall book sales have been anemic in recent years, declining 6 percent in the first half of 2013 alone. But the profits of publishers have remained largely intact; in the same period only one of what were then still the “big six” trade houses reported a decline on its bottom line. This is partly because of the higher margins on e-books. But it has also been achieved by publishers cutting costs, especially for mid-list titles.

The “mid-list” in trade publishing parlance is a bit like the middle class in American politics: Anything below it is rarely mentioned in polite company. It comprises pretty much all new titles that are not potential blockbusters. But it’s the space where interesting things happen in the book world, where the obscure or the offbeat can spring to prominence, where new writers can make their mark.

Budgets have been trimmed in various ways: Author advances, except for the biggest names, have slumped sharply since the 2008 financial crash, declining by more than half, according to one recent survey. It’s hard to imagine that the quality of manuscripts from writers who have been forced either to eat less or write faster isn’t deteriorating. Meanwhile, spending on editing and promotion has also been pared away.

As the author of two well-reviewed non-fiction books, both of which required national reporting, and as someone who would like to write more, I care a lot about whether new books get published, how much authors like me — yes, midlisters — get paid and when, and who, if anyone, will actually read our books.

malled cover HIGH

Without a book-seller to recommend my books or a reviewer to rave (one hopes!) about them, how will you — oh, elusive readers — find or choose us?

I gave up reading my “reviews” at amazon.com years ago as some ad hominem attacks were so nasty they left me shaking. I shudder to think how many potential readers I’ve lost thanks to the face-punches comments left there by people who take an unholy pleasure in savaging others.

Yes, be critical! Every ambitious writer needs to hear where we’ve failed to connect or persuade.

But don’t be vicious.

Professional reviewers know the difference between slicing with a scalpel and bludgeoning with a pick-axe. I’ve reviewed others’ books. I know the incredible trepidation with which any writer reads their reviews; one even wrote to me personally after I reviewed his book in The New York Times to take issue with my comments.

How do you decide which (if any!) books to read?

How many of you, as I still do, spend time in a favorite bookstore simply browsing covers and titles, old and new?

Do you briefly scan what’s on the front tables at your Barnes & Noble?

And did you know that the books there — some of them a decade old — arrive there not because B & N thinks they’re awesome but because publishers pay a fee to the bookstore for that placement?

With falling advances, writing is evermore dominated by people who don’t need it to earn a living: Tenured academics and celebrities spring to mind. For these groups, burnishing a résumé or marketing a brand is often as important as satisfying the reader.

This is a serious challenge for all but a tiny fraction of the truly fortunate — people whose combination of “platform” (i.e. millions of people eager to buy anything they write) and story attract a huge advance — like Allie Brosh, whose fantastic blog Hyperbole and a Half produced a book, published in October 2013, that is now a best-seller.

The rest of us will get an offer, after a few books, of anything from $15,000 to, (at best) $125 or $150,000, even that very rare, divided into four payments over two or three years; $12,000 or $8,000 or $5,000 a year is helpful, but no writer I know can live only on that income.

So we squeeze the important and reputation-building work of writing a book in between teaching others to write or bar-tending or cranking out copy on every other topic but that of our book, creating a competition between the work we hope will allow us to find new readers, terrific reviews, maybe an award or fellowship — and the work that puts gas in the car and food in the fridge.

We eke out excellence.

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When — if ever — do we just stop shopping?

In behavior, business, culture, domestic life, family, life, Money, urban life, US on December 19, 2013 at 12:18 am

By Caitlin Kelly

Every day, my email in-box (guilty!) fills up with notifications of sales from flash-sites like Gilt and One King’s Lane and Ideeli or from retailers I’ve purchased from before.

I delete almost every single one.

Every weekend, (yes, we still read some of our newspapers in print), a thick, glossy pile of flyers tumbles in a nasty tree-wasting avalanche from within the folds of the Times, each imploring us to spendspendspendbuybuybuybuybuybuy!

Consumer Spending

Consumer Spending (Photo credit: 401(K) 2013)

Between the easy availabilty of on-line shopping — a boon to the home-bound or retail-underserved — and a consumer-driven culture urging us to buy everything we see, right now, it’s an ongoing challenge not to spend money. Not to buy even more stuff.

The U.S. economy, a statistic that always somewhat horrifies me in its implications of rampant consumption, is based 70 percent on consumer spending — gas, food, diapers, gum, Manolos, trucks, Ipads, whatever.

So if we actually stop shopping, or slow down our spending on consumer goods, the economy slows. If you live in the U.S., and have any disposable income (such a bizarre phrase!) it can feel like some civic or patriotic duty to go spend some more money.

When I worked retail for 2.5 years in an upscale suburban New York mall, I saw the insanity — truly — of holiday shopping firsthand. People staggered into our store already so loaded with bags they looked like pontoons. They pawed through the racks, threw our stock onto the floor and shouted with anger when we didn’t have exactly what we needed when they needed it.

Ugly!

And yet very few Americans, even those with decades of earned income, have saved enough money to ever stop working.

In October 2013, USA Today reported:

A new report paints a rather grim assessment of how prepared we are for retirement. “The Retirement Savings Crisis: Is it Worse Than We Think?” from the Washington, D.C.-based National Institute on Retirement Security, says the typical American family has only “a few thousand dollars” saved for retirement.

“We have millions of Americans who have nothing saved for retirement,” says Diane Oakley, executive director of the NIRS. “We have 38 million working-age households who do not have any retirement assets.”

For people 10 years away from retirement, the median savings is $12,000. “Of the people between 55 and 64, one third haven’t saved anything for retirement,” Oakley says.

I read those statistics and wonder what is going to become of them; not everyone has children able or willing to rescue them.

Fortunately, (partly because we never assumed the costs of raising children), we’re way ahead of that $12,000 figure. We drive a 13-year-old vehicle and live in a one-bedroom apartment and I set aside the maximum for my IRA, even when I’d really prefer to spend that money on a long and fantastic overseas vacation, or some gorgeous new clothes or to take in all the shows, plays and concerts that Manhattan offers us.

Having significant savings is, for me, a much deeper comfort than anything I could buy.

Here, from Harvard Business School, why buying an experience (if you must buy anything at all) wins:

Conventional wisdom says that money can’t buy happiness. Behavioral science begs to differ. In fact, research shows that money can make us happier—but only if we spend it in particular ways.

In their book Happy Money: The Science of Smarter Spending, authors Elizabeth Dunn and Michael Norton draw on years of quantitative and qualitative research to explain how we can turn cash into contentment.

The key lies in adhering to five key principles: Buy Experiences (research shows that material purchases are less satisfying than vacations or concerts); Make it a Treat (limiting access to our favorite things will make us keep appreciating them); Buy Time (focusing on time over money yields wiser purchases); Pay Now, Consume Later (delayed consumption leads to increased enjoyment); and Invest in Others (spending money on other people makes us happier than spending it on ourselves).

I try to adhere to all five of these principles:

Paris - Île St. Louis: Berthillon

Paris – Île St. Louis: Berthillon (Photo credit: wallyg)

– I can still taste the salted caramel ice cream we savored at Berthillon on the Ile St Louis in Paris five years ago.

English: Ile St-Louis - Paris Français : Ile S...

English: Ile St-Louis – Paris Français : Ile Saint-Louis – Paris IV (Photo credit: Wikipedia)

– I’ve chosen to work fewer hours, (which restricts my ability to shop, given that I save 15 percent of my pre-tax income every year as well), to better enjoy my free time and have experiences I value more than buying more things — to take a long walk mid-day or have coffee with a friend or read a book instead of flogging myself into another 10 or 15 hours’ paid work. I ended up in the hospital in 2007 for three days with pneumonia after chasing money too hard, too fast. Never again.

– I tend to hoard gift cards for as long as a year before finally using them, as I did recently with a Christmas 2012 gift card from my husband, (it bought two great pairs of shoes on sale.)

– I splurge on small surprises for Jose whenever I can, whether a book or a pair of colorful socks or a dinner out.

In a season where so many of us are rushing about madly shopshopshopping, it’s easy to forget that a more valuable gift can be as small and essential as a hug, a night or two of babysitting for a weary friend, making a meal for an elderly or ill neighbor.

It doesn’t have to come in a shiny Apple-designed, (cheap Chinese labor made), plastic shell or turquoise Tiffany box, no matter what their ads insist.

 Are you sick and tired of shopping?

Crash, burn, recover

In behavior, blogging, books, business, journalism, life, work on November 9, 2013 at 2:03 pm

By Caitlin Kelly

When was the last time you failed?

The sort of shit-storm tempting you back into bed for a week, whimpering?

Crash

Crash (Photo credit: Wikipedia)

Some recent challenges include:

– An editor killed my story — which cost me $2,200 in budgeted-for and relied-upon income.

One of the dirty secrets of journalism is that, no matter your skills level, some of your stories get “killed” — i.e. they are commissioned, a contract signed, a fee and deadline agreed upon and the editor can simply flap his or her hand and decide “it doesn’t work.” You don’t get to stiff the airline of its fee if the plane is dirty, crowded or late. You don’t get to pay your plumber, dentist or barber a fraction of their fee because…you feel like it. It’s almost always a surprise and it’s expensive and very few of us can just re-fill a four or five-figure income hole in a flash.

– My book proposal didn’t sell

My agent was upbeat and excited. They always are, at the start. But after the rejections piled up, it became clear to both of us this was a no-go. Editors who loved it, and there were a few, couldn’t sell it to the rest of their staff. I spent a year gathering the information and sources for it, and months writing and polishing it. Tant pis, mes chers, tant pis.

– Another editor decided to turn a 2,000-word story with five sources into…captions

That’s a really crappy first in my career. They’re going to pay the original fee, but there’s another piece to that story — having to explain to my patient and helpful sources I interviewed back in August that all the time they spent being interviewed by me is basically wasted. I was so gobsmacked I didn’t argue the point with the editor. Preserving that relationship has meant sucking up a lot of frustration.

– We got whacked with a surprise income tax bill, a big one

We married in September 2011 and my new husband changed the witholding of his income. To…not enough. Holy shit. Add that pile of debt to the kitchen over-run.

– Journalism’s fees remain stubbornly low, stagnant or falling

Everywhere in journalism today, writing has really become just one more commodity, like gas or orange juice. Cheapest wins. I have to fight harder with every single editor on every assignment for a decent contract and higher fees. I hate feeling embattled. It doesn’t build great client relationships, but feeling taken advantage of doesn’t work either. My costs are rising almost every month, but my income will only rise as much as I position myself and argue effectively for my value.

On the plus side of the ledger:

– My individual coaching and webinars have found favor

This is a new venture and one I’m enjoying. When I lost that $2,200 overnight, I vowed to make it up through my own efforts. The hell with snotty editors. I’ve almost done so, thanks to the enthusiasm of students in Chicago, Connecticut, Brooklyn, upstate New York, New Zealand, Australia, Virginia and San Francisco. Thank you! I’ve missed teaching and the pleasure of helping others. One student told me she was having “aha!” moments. I hope you’ll sign up, too!

-- I made a contact with a Very Big Magazine’s top editor, one I’ve wanted to write for for a decade

Some magazines feel like Everest, even to someone with a lot of great experience. They’re career-changers. They pay a lot of money. At a recent lunch with someone I met at a party, I discovered she’s related to a top editor there and I was bold enough to ask for an introduction and she made it.

– Reaching out to new clients in PR has shown me there’s some significant enthusiasm out there for my skills

Of the first three local agencies I contacted, two showed immediate interest.

– I’m trying out new ideas and new markets

Next week, I’m meeting with a younger writer who’s broken into corporate writing and making boatloads of cash from it. It’s an interesting lesson in networking with people much younger, as we’re all working in slightly different says, some more lucrative and less visible, some more prestigious but poorly-paid.

– My agent likes my new book idea

Book ideas are difficult. You have to be able to create a narrative arc with 80,000+ words and be able to persuade a publisher to pony up an advance you can actually live on. But from the embers of the still-cooling rejected proposal came this more focused, more positive iteration of one of the ideas in it. Now I have to go…sigh…write another proposal.

People love to think that writing is a cool, fun easy way to make money. You stay home in your PJs, crank out some copy, then head off to Bali for a few months.

I wish!

The reality is a constant hustle and scramble: for new clients, new markets, negotiating better pay and treatment, finding and wrangling sources for your stories…

Crashing is nasty, (and inevitable.)

But there’s no time to sit and snuffle.

Bills, baby, bills!

The new bridezilla — show me the dough or I’ll shame you on social media

In behavior, domestic life, family, life, love, Money, news, Style, urban life, women on October 20, 2013 at 2:50 am

By Caitlin Kelly

Wedding

Wedding (Photo credit: teresachin2007)

Here’s a seriously depressing story from The Globe & Mail about bridezillas’ latest depths of greed and entitlement:

Earlier this month, a bride whipped out her phone and texted one of her guests: The newlywed woman was still waiting on a money-stuffed card and congenially reminded her guest that she’d attended “for free.” The guest, a childhood friend saddled with student loans, fired back with a refreshing smackdown. “If you cannot afford a wedding, then do not have one,” she wrote in a letter. “Do not dare make your friends/family feel financially responsible for your decisions/parties/extravagances.” The guest taped a penny to the letter, then bid farewell to their friendship.

It’s the third nasty blowup of this kind since summer, all leaked by the guests and highly publicized. In July, another wedding guest revealed a Facebook message she’d received from a bride dissatisfied with the gift of $100 from the guest and her partner: “We were very much short on paying off the reception,” read the complaint. And before that in June, two guests from Hamilton got blasted for their admittedly unusual wedding gift, a wicker basket brimming with pasta and Marshmallow Fluff. The bride didn’t mince words in subsequent texts and Facebook messages to the pair: “I lost out on $200 covering you and your date’s plate,” she wrote, later adding, “Weddings are to make money for your future not to pay for people’s meals. Do more research.”

There are few occasions more id-revealing than weddings. God help us.

I used to be really good friends with  a woman I’ll call J. We were besties, I thought, for life. Hah!

I threw her a wedding shower, at a point in my life when spending even $100 to welcome 15 of her friends — only one of whom I knew — was a real financial strain. When she arrived the first words out of her mouth weren’t, “How lovely. Thank you!” but “What time will this be over? I need to let my fiance know what time to pick me up.”

Nice.

Then she held a destination wedding on a Caribbean island far from New York, where we live. Another $1,000+? Nope.

Another friend kept having showers and parties, like the dinner inviting a group of her friends, (many high-earning or married) to a midtown restaurant full of Wall Street guys eating $40 steaks. Women at the table ordered many bottles of wine and the bill arrived — my portion (!) was $100, an absolute fortune for me at the time. Every shower required another gift. By the time I attended her wedding I couldn’t afford another thing.

Enough!

I’ve been married twice; the first time my family gave us some money for the wedding. I married again in 2011, in Toronto, and it was all on us. We managed to make it charming, stylish and affordable.

We loved our gifts, but, apart from the actual ceremony, considered the day a large party. I don’t ask my friends over and present them with a bill for dinner…

People in a marquee enjoying a wedding feast.

People in a marquee enjoying a wedding feast. (Photo credit: Wikipedia)

What do you make of this notion that wedding guests need to cough up — or else?

Has it happened to you?

Have you done it?

The (price of the) unconventional life

In aging, behavior, business, domestic life, education, life, Money, US, women, work on July 28, 2013 at 12:20 pm

By Caitlin Kelly

Many of Broadside’s readers are in their teens and 20s, in college or university, or probably headed there. Some are thrilled at the prospect of acquiring more formal education, possibly all the way to a Phd or professional degree.

Diagram of the gown, hood and bonnet used in g...

Diagram of the gown, hood and bonnet used in graduation/presentation ceremonies of Ph.D’s. (Photo credit: Wikipedia)

Others, like me, are wary of school, chafing in classrooms, weary of authority. Wondering how else — is it possible? — to acquire the credentials and skills they’ll need to make a living.

This recent blog post, by a student at Brown, one of the U.S.’s  most prestigious and costly universities, asks some serious questions about what “success” looks like:

i have a goal. it’s farfetched, extremely open-ended, and it might be fleeting. my goal is to refocus. my goal is to revisit this idea of being human and reinterpret the meaning of success. success has looked only one way for as long as i’ve known the word: a big house, lots of
money, a nice car. success has been the american dream. as a child of babyboomers, i’ve seen the american dream take hold and manifest itself in a lifestyle that is hard to say no to. it’s a lifestyle of security and certainty. but what i’ve learned is that this lifestyle, as enabling as it may be, has forgotten a lot of things that i find extremely important. it has forgotten how to be simply human and has focused on how to be monetarily prosperous. i’m down with the good life, don’t get me wrong. i’m just thinking that i might have a different path in mind for myself. know i have something else that’s ticking inside of me, and it can’t just sit at in cubicle and work for 8 hours then to go home to frozen potstickers and minute-maid lemonade. it wants to run wild, rampant, and ridiculously free.

I appreciate her passion and her questioning of what constitutes the “good life.”

By the time a student has been admitted to Brown, or any other super-competitive school costing $30-50,000 a year, they’ve likely been groomed from infancy to focus solely or primarily on the achievement of visible, conventional goals.

Everyone they’ve known — in prep school, at summer camp, in their SAT prep classes, on their sports teams — is expected to head in the same direction.

Up.

How about….sideways?

Surculture, Subculture, Mainstream

Surculture, Subculture, Mainstream (Photo credit: cesarharada.com)

The problem is, if your parents/friends/family have all bought into the same dream — moremoremoremoremore — it’s lonely and weird to step off the track, let alone figure out a way to do so and not live in a box beneath a bridge.

I attend a church with some very wealthy parishioners, so I’ve seen some of their assumptions of what their children will do. One woman, whose husband and daughter were safely ensconced as corporate attorneys, had a son, 28, who had not even — facepalm! — finished college.

He was not an addict, in prison or chronically ill but unfocused, and had traveled the country doing a variety of odd jobs.

English: This is a diagram depicting the perce...

English: This is a diagram depicting the percentage in US who have no health insurance by age. (Photo credit: Wikipedia)

But her dismay at his wandering was intense, and, to my mind, bizarre. I finally met A., assuming he was a gormless wreck. He was funny, smart, observant, charming, curious about the world. I immediately saw he’d make a terrific journalist.

When I mentioned my idea to a church friend, she gasped in horror, sniffing: “You can’t make a living as a  writer!”

I was furious — and told her how much this reaction offended me.

This, while I was coughing up $1,200 a month for my apartment and an additional $500 every month for market-rate health insurance — a yearly sum of $20,400 before car insurance, gas, groceries, dentist’s, haircuts and the rest of life.

Yes, it’s far from the $150,000 to $300,000+ that a young banker or lawyer can earn. The sort of work that young ‘uns from wealthy precincts are de facto expected to choose.

But it is a living.

It is a life.

If you want to pursue creative, non-corporate work, you will pay the price. You will earn less, far less, than many people you know or meet. You may never own a home, of any shape or size. You may never own a vehicle, or a new one. You may find yourself shopping for most things in thrift or consignment shops or on sale.

To lower your living costs, you might share space with others, or live in a rural area or work several part-time jobs.

It’s fine. It’s a choice.

But it’s a way of life you will rarely, if ever, see fetishized on television or in popular media. It is not a life filled with designer luxury goods or vacations in places your wealthier friends have ever heard of. Your social circle might be much smaller, filled with people who truly share, understand and live the same values as you.

And you may also feel very out of step with your co-hort; many people my age now own multiple homes. They drive $90,000 vehicles and run major companies or organizations.

I recently contacted a young editor about freelancing — the daughter of one of my high school friends.

If I had stayed at that newspaper, my first staff reporting job, I might be her. I might well be her boss.

Yes, that felt extremely disorienting.

But I also relish my creative freedom, deeply grateful for a husband whose union-protected, full-time office job frees me from cubicle life. I’ve had well-paid staff jobs, in offices in Manhattan buildings, working for name-brand publications.

I didn’t especially enjoy them.

Working hard, with steady clients, I make a decent income, enough to save 10-20 percent every year and still enjoy some of the things I love: fresh flowers, pedicures, travel. It’s still far less than I made in 2000; my industry is a mess and pay rates are lower than they were then.

But one-third of Americans are me, now — working freelance, contract, temp. Millions of Americans, certainly my age, will never have a job with a paycheck again. Here’s a searing New York Times story today; make time to read some of the heartbreaking 125 comments and take them to heart.

We have no “benefits” from an employer, no paid sick or vacation days. We have no access to unemployment insurance if our work dries up.

The choices we make affect our lives, now and later. The decisions we make have consequences.

Make them, freely.

But know their costs.

Can you save more than $5.09/day? You’d better start!

In aging, behavior, domestic life, life, Money, seniors, US, women, work on June 17, 2013 at 12:05 am

By Caitlin Kelly

If you want to scare the shit out of almost any American — those who don’t have a defined-benefit pension guaranteed to them — which knocks out most workers, ask them how much money they have saved for their retirement.

retirement

retirement (Photo credit: 401(K) 2013)

The median figure, among those aged 55 to 64, (i.e. an age group, traditionally, potentially planning/hoping to retire within a decade or less), is a mere $63,100.

The median among all Americans is a staggeringly low $10,890, (minus the value of a home and/or vehicle.)

When New York Times writer Jeff Sommer recently wrote that $1 million wouldn’t do much, more than 600 readers weighed in with comments, prompting him to tackle the subject again the following week.

My math works like this — if, when (if) you graduate from college at 22 and start working immediately, you begin saving $5.09 every day, some $36.00 every week, or $144 every month, every year without a break — and with no accrued or compound interest from investing that money — you’d end up with the $63,100 median figure.

Surely we can do better?

For some people, right now, saving $5.09 every day, all seven days of every week, is impossible. Their living costs cannot be trimmed in any way, and/or their wages are too low.

Many fresh graduates, and older workers, are unable to find paid work in this economy. They are stalled, frustrated, broke, angry. Some carry enormous debt burdens of homes underwater or student loans they cannot discharge through bankruptcy. Some people are very ill, or have very ill family members for whom they must add the cost of care and the time it takes — i.e. unpaid labor — to do this as well.

But…for the rest of you, snap that wallet shut!

The culture that most Americans live in is one that continues to glorify and fetishize spending lots of cash, (or credit, mostly), acquiring tons of shit that’s new and shiny and cooler than everyone else’s — whether an Ipad or Ipod, phone, car, house, vacation, clothing, whatever. You can blow easily thousands of dollars on a freaking baby stroller, if that somehow seems essential to you.

Television and social media and the internet bring very rich peoples’ lives into our own. We can press our greasy little noses against the impenetrable glass wall of their luxuries and whine: “Why not me?”

You can go broke even trying to keep up.

saving and spending

saving and spending (Photo credit: 401(K) 2013)

I’ve been lucky. I grew up in Canada, a nation that still chooses — with much higher rates of taxation — to heavily subsidize college education. My annual tuition, from 1975 to 1979, (yes, really) was $660 a year. I was able to put myself through university and graduate debt-free.

I’ve also been able, since my second year of university, to sell my writing, photography, editing and translating skills to others — and had the developed skills, delivered on or before deadline every time, to make them want more of my work.

I’ve been fortunate, since the age of 22, to be able to share housing on four occasions, which helped cut my living costs in two expensive places — suburban New York and Toronto.

I’ve been grateful for good health, so I have never lost months or years to debilitating illness(es) and treatments that would have prevented me from working.

But that’s one side of the ledger — the getting side.

I’m also cheap as hell, when necessary, and it was necessary for years on end, especially when single paying $500 a month for health insurance, and facing three recessions in my industry.

I’ve chosen to stay in a one-bedroom apartment for 25 years. Would I prefer a second or third bedroom or bathroom? A backyard and fireplace and verandah? Hell, yes. But did I want to assume a much larger mortgage payment and longer repayment term? No. Nor the stress of fearing potential homelessness. Ever.

I’ve been saving 15 to 25 percent of my income every single year for years.

Our ironing board recently broke. I paid $4.30 at our local thrift shop for another one. Score!

When my income bottomed out to a terrifying degree in 2007 to 2009, I took a part-time retail job ($11/hour no commission) and bought my clothes and shoes from consignment shops.

Until my ex-husband moved in, I had no television. Until my second husband moved in — when I was in my early 40s — I did not have cable or a cellphone ($200/month saved right there.) I drove a used, paid-for car, as we still do.

A friend of mine runs her own company, an investment fund, literally managing millions of other people’s money. She drives a Mini Cooper, not a Mercedes or Lexus or Range Rover, the vehicle people expect.

“That’s how I got a million dollars,” she says, with a knowing smile.

We plan to be mortgage-free by 65. We have no children. We will have multiple income streams, one of which is our savings. Adding to them is a non-negotiable part of our life, as automatic, necessary (and boring!) as brushing our teeth.

Here’s an interesting, helpful and smart post from Dailyworth.com about how to face up to the reality that we all need to save (more!) money and invest it as wisely as possible.

Are you saving for retirement?

If not, why not?

If not, how do you plan to pay for your living costs in your 70s, 80s and beyond? (People insist they will keep working. Find me the employer willing to hire a 75-year-old.)

Rising costs, falling income, and waving at the Rockefeller helicopter

In aging, behavior, business, cities, culture, domestic life, journalism, life, Money, urban life, US, work on April 25, 2013 at 11:02 am
Money Queen

Money Queen (Photo credit: @Doug88888)

By Caitlin Kelly

Here’s an honest, powerful and deeply depressing blog post about what American life when your income is falling and costs going through the roof:

Hubby left and again, he had to stop off at the gas station to fill up his car.  He drives around 150 miles per day for his job.  And yes! he drives a fuel efficient car that gets between 35 and 40mpg.  But it’s not working out like we planned.  With the cost of gas at over $4.15 a gallon (and still rising) and the tightness of available money, it’s becoming a nightmare, with no end in sight.

While at the gas pump, the woman in the next booth came over to my husband and asked him if he had any money to give her.  “I need money to buy gas” she said “to get to work.  I don’t have any money to buy gas to get to work nor even come back from work and get home.  Do you have any money to give me, man?” DH then realized the reality of our own financial predicament. He told the woman that he had just been fighting with his own wife over the tightness of money and our own inability to buy food and gas and pay looming tax bills.

The only money I have that I can give you is this dollar bill,” he said and handed the woman the paper dollar bill I found in the parking lot yesterday.

I had breakfast the other morning, (total cost $11.00 for both, plus $1.00 for parking), with a friend who is single and freelancing and faces monthly living costs of $4,000; just her rent and health insurance is $2,000 every month. She has no savings anymore, having won and lost several jobs in our field over the past few years.

She has worked her whole life, like me, in journalism, and at 58 knows that the odds of finding a new full-time job that allows her to meet her living costs and save for retirement are slim-to-none.

Going back to college? For her, financially impossible. Taking some sort of quick, cheap credential? Maybe — but, really, given a choice of a 30, 40 or 58-year-old, who’s going to hire someone that age?

For millions of hard-working, educated, skilled and experienced Americans, a hand-to-mouth existence is the new normal. Especially those over the age of 50.

Here’s a powerful recent story from the Los Angeles Times about how work, even for the most highly educated, is changing for the worse:

Matt Ides has a doctorate in history and extensive teaching experience. Unable to find a full-time, tenure-track job, he took an adjunct teaching position at Eastern Michigan University, where he was paid $3,500 per class. He taught five classes one semester and four the next. One more class and the university would have had to consider him a full-time employee under university policy.

If not for his girlfriend’s salary, he said, “I would have had to live in a one-room apartment and eat soup every day.”

I moved to the U.S. in January 1988. As a brand-new driver, I was exquisitely attuned to the costs of owning, insuring and fueling a vehicle. Gas, then, cost 89 cents a gallon — today, it’s between $3.90 and $4.15 or more.

The price of groceries has shot through the roof. The cost of commuting to New York City, a daily necessity for my husband who works there, and for me to meet with clients and actually enjoy Manhattan occasionally, just rose, again, by 10 percent.

Jose and some others at his workplace are represented by a union, initially offered a 0 percent (yes) raise by his employer, The New York Times. They won a fat 2 percent a year — and the Times is considered, by some, a career pinnacle, a place you work long and hard to achieve.

I recently pulled out some old paperwork, and found an invoice from 1997 — 16 years ago — for $900. I just accepted an assignment last week from the Times for $900.

Nothing, anywhere — shoes, clothes, food, gas, insurance, dental bills, haircuts — costs what it did 16 years ago. Anyone attending university in the U.S. knows this firsthand, as tuition costs have skyrocketed, while incomes are stagnant and jobs hard to find.

Here’s the story of a graduate student at Duke, (named for the tobacco fortune family who founded it), who lived in a van in a parking lot so he could actually afford school. In a van.

Money - Black and White Money

Money – Black and White Money (Photo credit: @Doug88888)

Few of us are less educated, more stupid, more lazy or unwilling to work hard than we were 10 or 15 or 20 years ago.

Stagnant and falling wages for most of us are simply killing our desire, and ability, to get ahead of our monthly basic costs– to save for short or long-term needs, whether retirement, car repair, education, medical bills or (imagine), a vacation.

I’ve thought about moving far upstate, where we could probably buy an old house for cash and pay very little in property taxes. Socially? Death. Professionally, nothing would be there for my husband, who makes almost three times what I do. Making an even longer commute — with less time for himself and for us? Not a great option either.

So, moving isn’t really a smart choice. Neither Jose or I, (both award-winning veterans in our field), have advanced degrees, so no teaching jobs are open to us, even as a poorly-paid adjunct.

I had lunch recently with an editor who did exactly that, moved to the Catskills with her husband and baby. She lasted two miserable, lonely, broke years and now lives back in Manhattan.

We could, I suppose, go to a much smaller, rural place somewhere very far away in the Midwest — distant from our friends, colleagues, neighbors and social networks. But I tried rural life, for 18 months when I was 30. Sorry, for those who thrive on it, I hated it, never so lonely, broke and miserable in my life. Unless in that other place you have dear friends, loving family and/or steady work that will really help you thrive, I don’t see much appeal in moving anywhere else at this point.

And every day, right over my head, I hear the sound of income inequality — as a helicopter thud-thud-thuds across the sky very close to my balcony. It’s a Rockefeller, flying to work in Manhattan, 25 miles south; their huge, gated estate lies about a 10-minute drive north of our town.

How’s things with you these days financially?

Are you as worried as I am?

Related articles

It’s all about the Benjamins (or euros or pesos or pounds) — are you saving?

In behavior, life, Money, women on March 15, 2013 at 5:06 pm

That’s the American $100 bill.

Saving money is my single greatest challenge. (That, and earning a lot more — like trying to double my income this year in a dying industry. No pressure!)

Today’s New York Times paints a grim picture of how tough it is to save money now, especially for younger people:

A new study from the Urban Institute finds that Ms. Brady and her peers up to roughly age 40 have accrued less wealth than their parents did at the same age, even as the average wealth of Americans has doubled over the last quarter-century.

Because wealth compounds over long periods of time — a dollar saved 10 years ago is worth much more than a dollar saved today — young adults probably face less secure futures for decades down the road, and even shakier retirements.

“In this country, the expectation is that every generation does better than the previous generation,” said Caroline Ratcliffe, an author of the study. “This is no longer the case. This generation might have less.” The authors said the situation facing young Americans might be unprecedented.

A broad range of economic factors has conspired to suppress wealth-building for younger American workers; the trend predates the Great Recession. Younger Americans are facing stagnant pay — the median income, when adjusted for inflation, has declined since its 1999 peak — as well as a housing collapse and soaring student loan debt.

I grew up in a family with good taste and the money to indulge it — cashmere and trips to Mexico or France, a nice house, decent used cars, good food. My maternal grandmother inherited an insane amount of money and ran through it as fast as she possibly could, blowing it on jewels and furs and gorgeously-decorated apartments and a limousine service with a thin driver named Raymond.

It’s weird to grow up around a lot of money and develop tastes for luxury — and then choose a field, journalism, that has rarely paid me enough to satisfy them.

Saving money is so boooooooooring!

And so utterly necessary.

American Buffalo (coin)

American Buffalo (coin) (Photo credit: Wikipedia)

But I save 15-25 percent of my income every year, as does my husband. It means a lot of self-denial and self-discipline, certainly if your income is barely meeting your basic expenses, even pared to the bone.

I’d so much rather go to Paris and buy lots of pretty clothes and see Broadway shows and go away for romantic weekends. But to save the dough we need to retire — which we very much intend to do — demands it. Working freelance also means having no idea, most of the time, what my annual income will be. Not even next month’s.

So it means being aware at all times of what I’m earning, spending, saving and carrying in debt, (and at what rates of interest.) It’s only in the past three or four years — and I’m in my 50s — that saving diligently has finally felt worth it, as my retirement fund is now six figures.

It feels good! (Cue James Brown…)

James Brown (2001) during the NBA All Star Gam...

James Brown (2001) during the NBA All Star Game jam session (Photo credit: Wikipedia)

It’s terrifying to plan so far ahead, to hope we’ll live that long, and healthily, to wonder if all this daily self-denial is even worth it. I get why people don’t.

Saving a ton is certainly easier if you also earn the maximum you possibly can. That might mean working two or three jobs for a while.

Many women, though, remain deeply uncomfortable asking for more money, whether in a salary negotiation or freelance gig. No one is going to hand it to us!

One of my favorite books — every woman who works must read it – is “Women Don’t Ask”, which examines the many reasons women continue to receive lower pay than men for the same work. Mostly because we’re too damn scared to ask for more! (Men do, almost every single time.)

The more I make, the more I can save. (And occasionally splurge.) That motivates me every single time to ask for more work and the highest possible rates for it.

Here’s an honest and moving post about money — and being in your 20s and needing/wanting a lot more of it.

Here’s a really interesting interview with an expert in behavioral finance who thinks we should be forced into saving by the government, as they do in Israel and Australia.

saving and spending

saving and spending (Photo credit: 401(K) 2013)

Do you save money?

Do you find it difficult?

Any tips you can share?

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