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Posts Tagged ‘spending’

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

images-3

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?

Needs Versus Wants — When Is Enough Enough?

In antiques, art, beauty, domestic life, life, Money on October 25, 2011 at 12:09 am
One of the entrances to the Retiro Subway Stat...

A subway station in Buenos Aires...a place I very much want to visit someday! Image via Wikipedia

Great piece in The New York Times by a certified financial planner in Park City, Utah:

One of the most challenging personal finance issues we all face is the ever-expanding definition of “need.” Things we once considered clear luxuries have somehow becomes necessities, often without any consideration of how the change in status happened.

Cars that seemed just fine now seem old fashioned. Then there are children and their cellphones. Only a few years ago it would’ve seemed outlandish for 14-year-olds to need one at all, let alone the latest iPhone.

Achieving clarity about the difference between our needs and wants remains one of the biggest challenges in personal finance and a tremendous source of potential conflict within families. While simple in theory, the calculation is much more complex in practice.

One of the most discouraging parts of modern life seems to be this never-ending sense that we should want more.

And a front-page piece in The Wall Street Journal, examines how much less Americans are buying.

I’ve lived in a one-bedroom apartment, with limited closet space, (which I share and in which I work), since 1989. There just isn’t a lot of room for a lot of stuff. I admit it, we do have several storage lockers…

But I’m not typically crazed about buying more stuff. I hate malls, don’t really find shopping very interesting and have been living, since losing my staff job in 2006, on less than a third of what I then earned — while all our costs have risen considerably, whether bridge tolls, gas or food.

My greatest indulgence is objects for our home, whether the folk art black horse I bought last month in Ontario or the transferware plates I collected in the 1990s before they became trendy and expensive. I look at all those plates and think – really? Then we had a party last week with 34 guests and I had plenty of tableware and serving pieces and was happy not to resort to Chinet or paper.

We only upgraded last year to a flat-screen television — which Jose bought while I was away, knowing I’d say (truthfully) we did not need a new TV and our huge black 1988-Sony Trinitron was just fine. Which it was.

So it’s an interesting battle for any of us with disposable income (and deeply grateful for it!) — what do we really need and what do we (only) want?

And when is it OK to give in to the latter?

I’m at a point in my life I want, more than anything, things or experiences that are damn expensive. Because we’re lucky enough to own (and maintain) the basics, whether a good laptop or decent cookware.

But I seriously crave annual (or more) overseas travel, although I can’t say I need it.

In a weird way, I sort of like not having a ton of money — precisely because obsessing about buying more and more stuff is really not workable. We drive a paid-off vehicle and live well in a small-but-lovely home we own, (albeit with a mortgage.) I’m still able to save 15 to 20 percent of my diminished income every year. (We also have no kids, which saves us $10,000 per child annually.)

I’m also at a point in my life, mid-50s, where the things I most want are not things one can actually buy.

– I’d really like to find a way to double, if not triple my income in order to truly beef up our retirement savings.

– I’d like my half-brother, after years of refusing to acknowledge my existence, to get a grip and deal.

– I’d like my mother to realize the three women currently showering her with attention, (she is addled, starved for attention, isolated, old and rich), may not be quite as benignly devoted as she is persuaded they are…

And so on.

What you want more than anything right now?

What do you need?

Or is it also something you can’t obtain with money?

“Malled: My Unintentional Career In Retail” — On Sale Today!

In behavior, blogging, books, business, entertainment, journalism, life, Media, Money, women, work on April 14, 2011 at 11:06 am

Finally!

My new memoir, which tells the story of retail work in America, is out today from Portfolio. It’s been getting terrific reviews — Entertainment Weekly calls it “an excellent memoir” and Herb Schaffner, a columnist for Bnet compares it to the best-seller “Nickeled and Dimed”, calling Malled “reality journalism at its best.”

I’m thrilled by the reception it’s gotten, with interviews and reviews, so far, from USA Today, The Financial Times, The Washington Post, the Associated Press and Marie-Claire. I’ll be a guest on NPR’s Diane Rehm show, with two million listeners, on April 19; on Marketplace and on WNYC’s Brian Lehrer Show on April 20.

I’ve also been invited to write a guest post for the Harvard Business Review blog.

My goal in writing this book is to make retail work — and the 15 million employees who make their living doing it — better understood. We all shop! The American economy, even in a recession, relies heavily on consumer spending, but we rarely talk frankly about what that demands of those workers, many of them part-time, with no benefits, earning low wages with little chance for raises or promotions.

I worked as an associate in a suburban New York mall, with some very wealthy customers, from September 2007 to December 2009, so this is also a portrait of the deepening recession and other workers who are taking low-wage work to make ends meet. I interviewed many others, from Costco CFO Richard Galanti to consultant Paco Underhill to best-selling author and owner of five elegant clothing stores, Jack Mitchell.

Like me, like this blog, “Malled” pulls no punches. It’s sometimes funny, sometimes dark, always honest.

And, yes, there’s plenty of outrage!

Wal-Mart has so far spent $2 million fighting an OSHA order and $7,000 fine to make their stores safer during sales  — after an associate in their Long Island store was killed when shoppers stampeded over his body.

Is this really what we want for our low-wage workers?

The sad thing is that such treatment is considered normal. In 1892, F.W. Woolworth disdained the notion of paying his workers a living wage — his business model, discount goods, simply didn’t allow for it.

I hope you’ll check it out at malledthebook.com, where you can read the introduction and Chapter One free.

You’ll also find there a listing of my many upcoming readings and events, most in and around New York City and some in Toronto; I’m talking at 10:00 a.m. on May 28 on the downtown campus of my alma mater, The University of Toronto.

The book also has a Facebook fan page; I hope you’ll “like” it and spread the word! If you enjoy “Malled”, I’d love it if you’d write a review at amazon.com

And here’s a funny/spot-on flow chart on what it takes to get a book published…

Ditch Your Stuff!

In behavior, business, Money on August 8, 2010 at 3:32 pm
my own picture, to be added to cookware and ba...
Image via Wikipedia

We recently spent three eight-hour days doing the job we had put off for a decade — clearing out our rented storage locker. (Confession: some of it went into a smaller space, the rest of it into the garage. And, yes, there are four small lockers with other stuff — out of season sports gear and clothing, suitcases, etc.)

In so doing, we immediately saved $150 a month in rental fees, plus the $350 we netted for selling 24 boxes of books.

Here’s a thoughtful New York Times piece about what museums, so politely call, de-accessioning:

A two-bedroom apartment. Two cars. Enough wedding china to serve two dozen people.

Yet Tammy Strobel wasn’t happy. Working as a project manager with an investment management firm in Davis, Calif., and making about $40,000 a year, she was, as she put it, caught in the “work-spend treadmill.”

So one day she stepped off.

Inspired by books and blog entries about living simply, Ms. Strobel and her husband, Logan Smith, both 31, began donating some of their belongings to charity. As the months passed, out went stacks of sweaters, shoes, books, pots and pans, even the television after a trial separation during which it was relegated to a closet. Eventually, they got rid of their cars, too. Emboldened by a Web site that challenges consumers to live with just 100 personal items, Ms. Strobel winnowed down her wardrobe and toiletries to precisely that number.

Now the couple, debt-free, lives on $24,000 a year.

It’s not a new idea, living on less, although it’s rapidly gaining currency. In a 1992 book, “Your Money Or Your Life”, Joe Dominguez and Vicky Robin pointed out you’re spending time or you’re spending money. Save one, and you save the other.

I’ve chosen, deliberately, to stay in a one bedroom apartment for 20 years. In flush years, I could have traded up to something bigger, maybe even a house. I didn’t want to. I didn’t want: to buy a lot of stuff to fill it with; maintain and clean all that stuff; clean gutters and shovel sidewalks or mow a lawn; the daily anxiety that, if I lost that job or income or client(s), I’d lose it all. Even in the leanest times, and they have gotten lean, I could manage to stay in my home, building equity.

I loathe debt.

We drive a nine-year-old car, paid for.  We are trying hard to find new and better ways to earn and save in order to pay down the mortgage as soon as possible. In line with popular sentiment, we’re now much more focused on experiences over stuff. We threw a party and invited friends to celebrate the completion of my book. The money we spent for food and drink that night might have bought two of three pairs of shoes or 10 new or 20 used books or CDs or…more stuff.

These days, I want more life and less stuff in my life.

And yet, and yet…how does one turn a blind eye to all those delicious temptations?

Have you downsized? Plan to? How has this changed your life?

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The Scariest Couples Talk Of All – M-m-m-m-m-money

In Money on October 24, 2009 at 11:27 pm
A Chinese shopper looks at the US dollar bills...

Image by AFP/Getty Images via Daylife

Do you know what your partner, husband or wife earns, spends, saves and invests? Do you know their FICO score? (And vice versa)?

Really?

Today’s New York Times has a terrific column on the four issues every couple needs to grapple with before marriage or serious commitment: ancestry, credit, control and affluence. We all bring patterns of spending influenced by our families of origin. Credit is how many of us get through life, whether a car loan, college loan or mortgage, but you can’t get far with a lousy FICO score. Control is the toughest. I don’t want to tell my partner he can’t play a round of golf, but when a day’s outing at a decent public course where we live costs $100, I wince every time he reaches for the clubs. Not fair, not fun. Somehow, we have to figure it out so I, too, can have my amusements without asking permission for every one of them.

Affluence is another challenge to unpack, certainly in a recession where the lifestyle you thought you married can suddenly fly out the window with job loss, prolonged job searches and perhaps a new job at half the old salary. Living “for richer, for poorer” tests any marriage, but especially one where no one’s hopes or expectations have ever been explicitly acknowledged or discussed.
Talking frankly about money and what you want to do with it — whether blowing it on a pair (or five) of Jimmy Choos or a new set of clubs or saving up a six-month emergency fund — is rarely easy. People set up housekeeping every day with no idea what their partner really values most or knowing how to even initiate the conversation. So many of us avoid it. Bad idea. I was so deliberately, lazily ignorant while married to an M.D. I did not know who held our mortgage nor the amount nor the due date. He walked out, for good, the day it was due. Ooops.

This week has been a real financial come-to-Jesus moment at our house for two reasons; my sweetie’s newspaper employer suddenly announced the need to cut 100 jobs before Christmas, including buyouts. No pressure. And we’re hoping to refinance our mortgage, reducing the interest rate from a usurious 8 percent to 5 or thereabouts. That means — ugh — writing out all our assets and liabilities so the bank can shine a light into every imaginable orifice. Before the bank sees it, we’ve seen it. Shriek.

Have that talk. Today!

Cheap-o's Rejoice. It's Genetic!

In Money on October 2, 2009 at 5:31 pm
day in the life: lunch money

Image by emdot via Flickr

Maybe being cheap is genetic?

So suggests writer Adam Sternbergh in the current issue of New York magazine. It’s a theory, since some people spend money so fast and so insanely — and with so little remorse — it makes the rest of us feel a little ill. I’ve been accused many times of being tight/frugal/cheap, but sometimes it’s in the eye of the beholder. To my mom, who lives on a fixed income and who saves money like no one I know, I’m like a crazy person. A trip to Paris?  Travel is indeed one place I will blow my scrimped-up bucks. Yet she has a cleaning lady once a week and I can’t imaging paying someone else to do what I can do so quickly and easily for free. She found it obscene I spent $100 for a pair of consignment shop suede loafers — except they’re Ferragamos, which, new, would have cost five times that price. And I’ll be wearing them for years to come.

So if I’ve inherited my mom’s cheap gene, maybe it’s recessive?

I’m usually the saver and my sweetie is the spender; typical of most couples, we’re different in this respect which makes for interesting moments. We wear cashmere and drink decent wine, yet sit on a 20+ year-old loveseat, (slipcovered when I had a salary to pay for it) and I’m typing this on a “table” we built of fiberboard covered with a piece of mattress ticking found, yes, at the Paris flea market.

Where do you cheap out? When and where do you (still?) splurge? Who taught you to pinch — or blow — your pennies?

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