The managing of money

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Broadway tickets always a splurge — worth it?

By Caitlin Kelly

Few things are as frightening to some people as managing money.

For many, it’s a question of sheer survival — when the American federal minimum wage, shamefully, hasn’t risen from $7.25/hour in 10 years — while the cost of living now dictates a minimum of $14.84 an hour in Cleveland and $24.30/hour in San Francisco.

For others, it’s the best barometer, literally, of their worth and value to the world, to their family, to their industry — and to themselves.

One freelance writer bragged this week about making $10,000 in a month and how she’s about to hit her $50,000/year income goal.

Which inspired many others but also annoyed me and some other writers I admire. I really tire of money being held up as the sole metric of success.

Income is not one-size-fits-all.

Expenses, as well.

I recently had an interesting conversation on Twitter with a stranger, a mechanic earning $40/hour, about my use of the words “working class” — wondering if that meant him. I suggested “blue collar.”

I’m endlessly fascinated by what we earn, how we earn it, what we spend it on and how much (if any) we save and for what purpose. As subscribers to the Financial Times, we also get its glossy oversize magazine called — no kidding — How to Spend It, which often features $10,000 dresses and $100,000 watches, pocket change to the bankers and other HNW (that’s high net worth) readers it’s aimed at.

I’m fascinated by money partly because my maternal grandmother inherited a lot of money from her father, a Chicago stockbroker and real estate developer — and spent it so fast and so freely you would think it burned her fingers. She lived a life of opulence: homes designed by the city’s top decorators, limousines everywhere, custom-made silk muumuus and matching turbans and enormous jewels. It was quite something!

She also never bothered to pay any taxes to anyone — so when she died there was little left after paying off the Ontario, Canadian and American governments.

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Our weekly indulgence, fresh flowers

So I’ve seen the effects of both privilege and profligacy.

 

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Don’t end up in trouble!

Living in the United States for decades — without doubt the meanest and most punitive developed nation when you are poor, ill, vulnerable and struggling — has also really opened my eyes and taught me to be extra cautious about what I earn and how much to save. It’s not a place you ever want to be in trouble with no lifelines or savings, reliant on charity or the shards of government help potentially available to you.

We were offered a huge break this year, a tax credit that has saved us $1,000/month (!) on our health insurance. But we’re also now required to account for every penny of our income and expenses to bureaucrats who have no understanding that — as full-time freelancers — we do not have an employer, yet keep hounding us for more and more paperwork.

That’s when I get libertarian in a hurry and would rather just pay for things myself.

I’ve stayed put in the same one-bedroom apartment for decades; our housing cost is $2,000 month, (half of it the maintenance fee we owe to the co-op,) fairly cheap for New York (suburbs.)

But we don’t have children or pets or dependent relatives, when so many others bear the costs of all of these. So we’re usually able to save money and that gives us some breathing room — helpful when we lost $27,000 worth of anticipated income overnight thanks to the pandemic.

We were also lucky to each graduate college with no debt, (Jose had full scholarships and I attended university in Canada), another enormous burden for so many Americans, even into their 30s or far beyond.

So much of the money we have access to, and how we manage it, is circumstance and luck: where we were born and raised, what resources were made available to us and when. The job market.

Good health — or its lack.

This year has, oddly, been a busy one for us. We have both had steady work and found new and appreciative repeat clients.

But we both really know how fragile it all is.

My husband grew up in a wholly different way, his father a small-city Baptist minister living in church housing. So Jose tends to be very risk-averse and I tend to be bolder when it comes to spending and investing. It makes for some challenging moments!

We work really hard, splurge when we can, and pray for ongoing good health.

Does handling your finances cause you stress?

Do you enjoy it?

Did anyone teach you money management skills?

Money: getting/spending/saving it

By Caitlin Kelly

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One of my pleasures is enjoying culture — and yes, it costs money!

A friend recently saw an ATM receipt that left her gobsmacked — $139,000 — in the hands of a young woman, maybe in her 20s.

My friend is a single mother who works in a creative field, frustrated that she has yet to hit the level of income she craves, deeply envious of the stranger with so much more than she.

I get it — when I found out that a friend of ours, someone our age, earns $500,000 a year, I was stunned.

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The level of poverty in the U.S. is deeply shocking — given the astonishing wealth here

My husband and I are both working full-time freelance, with a mortgage that won’t be finished for another five years unless, somehow, we make a lot more money and can pay it off sooner.

What’s currently killing our ability to save — or enjoy much beyond basics — is $1,800 month in health insurance costs; his, heavily subsidized by his former employer as a retiree while they soak me the full price.

Yes, there is cheaper insurance, but it all comes with huge deductibles and co-pays.

The getting and spending, (and saving and investing, ideally), of money is often a lifelong challenge for all but the very wealthy.

But it comes down to basic economics: if you’re always broke, you’re under-earning or living beyond your means.

If you’re mired in poverty — with little education and/or weak job skills, multiple dependents and/or health issues — it can feel, and be, almost impossible to climb out.

And I know far too many women, of any age, who remain somehow terrified of money — especially when asking for it or more of it, (i.e. negotiating an initial salary, asking for raises/bonuses/commissions/better freelance rates), and handling their finances confidently and intelligently.

As if, for some reason, we don’t deserve it.

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It does mean taking charge.

It does (gulp) carry consequences, no matter how much action (or inaction) you choose.

I once attended an information session at the U.S. firm where I keep my retirement money.

It was laughable.

As in laughably bad, full of jargon and weird, arcane advice possibly of value to people with millions to manage — or waste.

Not me!

Selfishly, as a journalist, I get paid to learn, and, in writing about personal finance for the Times and Reuters and others, have learned (and taught readers!) a lot about handling money.

I also read the financial pages of two newspapers daily and read several business magazines to keep abreast of what’s happening in the domestic and global economy.

If you don’t know the word fiduciary, learn it and make sure anyone going near your money professionally is one.

One of my favorite people, and bloggers, is writing candidly about getting smarter about money. I admire her for being forthright and questioning her decisions publicly.

People rarely do.

I urge anyone thinking about how to better handle their finances to read this fantastic book, (which I reviewed in The New York Times, and am now friends with its author), Pound Foolish. It’s not a how-to, but a smart and insightful overview of the personal finance world.

She also writes a smart and helpful advice column for Slate.

My other favorite money columnist is Michelle Singletary, with the Washington Post.

ALL IMAGES COPYRIGHT CAITLIN KELLY 2013.
Still there, since 1927, the Monte Vista Hotel in Flagstaff, Arizona — travel has always been a priority for me

Jose and I were were lucky to both have attended and graduated from college debt-free; he on full-ride scholarships, I attending Canada’s best university for $660 a year. (No, there’s no missing zero.) Neither of us attended (or needed) graduate or professional school.

Nor did we have children, saving us an estimated $200,000+ per child to raise.

Nor do we have dependent relatives.

My priorities have been travel and retirement.

But I admit it — it really did feel useless and annoying to keep putting money away year after year after year for what I hoped would one day help fund a retirement, denying myself so many purchases, (newer car, nicer clothes) and pleasures in order to do so — until that sum finally grew to six figures and I thought, with relief and pride: I did that!

And, yes, for many reasons, saving money is difficult for some people, and impossible for those who don’t earn enough to get past subsistence.

But it’s also urgent (and tedious!) to distinguish between wants and needs, between what everyone around you may boastfully own, often on credit, (new phone, new car, huge and lavish wedding, bigger house, etc.), and what fits your financial priorities.

Peer pressure to keep up — i.e. spending! — will kill you and your financial future.

It’s one reason I constantly urge women, especially, who earn less and live longer, to always, always ask for more — and to read this book that tells them how to do it.

Do you find handling money frightening or intimidating?

Any great tips to share?

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

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.

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

Do you save money?

Do you find it difficult?

Any tips you can share?

How to manage your money

There are so many people eager to tell us how to do it.

But how many of them are right?

I recently recently reviewed a terrific new book, by a fellow New York writer, Helaine Olen, called “Pound Foolish: The Dark Side of the Personal Finance Industry” for The New York Times; here’s my full review.

She’s largely scathing of the Big Names who make a shitload of money telling us what to do with our own — (my finger slipped and typed “yelling.” That, too!)

English: CNBC’s “Mad Money with Jim Cramer” ca...
English: CNBC’s “Mad Money with Jim Cramer” came to Tulane University’s Freeman School of Business Oct. 19, 2010 to broadcast in front of a live audience as part of the show’s “Back to School Tour.” (Photo credit: Wikipedia)

People like Jim Cramer, Suze Orman and Robert Kiyosaki.

In 2012, I wrote a personal finance column for five months, every week, aimed at Canadian readers. I learned that every personal finance author seems to have a different opinion:

Love ETFs! Hate ETFs! Bank six months’ savings! No, three! Mutual funds are great! No, never!

Personal finance is deeply personal, affected by family, culture, education, understanding, (two very different things!), greed, fear, hope, comfort, wishful thinking. And the larger economy. In the 1980s, I earned 18 percent on my Canada Savings Bonds. Not today!

At 19, I was handling my money alone. Like every other, it’s a skill best acquired through practice. I was living alone, earning income as a freelance writer and photographer, putting myself through university and living on a stipend of $350/month in Toronto, where my rent, for a tiny studio apartment in a lousy neighborhood, was $160 a month. That left me $190/month — or $2,280 for the year for everything else: dentist, haircuts, clothing/shoes, laundry, food, phone, answering service.

Oh, and tuition and books; University of Toronto then (mid-1970s) cost $660 a year.

My parents never helped me out financially — beyond the cost of my small, cheap first wedding. And no chance to go home and live free or cheaply for a while after the age of 19.

Mutual Funds for Dummies ... U.S. Funds at War...
Mutual Funds for Dummies … U.S. Funds at War — Too simple? (Monday, June 4, 2012) …item 3.. Music to Help Study and Work – 26:39 minutes … (Photo credit: marsmet545)

Here are some of the many factors affecting our ability to earn, save and invest, in bold:

One reason we’ve been able to save a decent sum for retirement is having no children, an estimated annual cost, per child, of $10,000.

I chose a profession, journalism and publishing, that often pays crap. I did expect to have a steady income, and a staff job making $60-80-100,000 a year throughout my 30s, 40s and beyond. But my first New York magazine job, in 1990, paid $40,000 — $5,000 less than I’d earned at a  Montreal newspaper in 1988.

(Thank God for my pre-nuptial agreement, and alimony, both of which gave me time to get back on my feet and find a well-paid staff job.)

Yet three recessions since 1989 — with 24,000 journalists fired in 2008 — and ongoing upheaval in my industry have put paid to any notion of a steady, high income.

Once you’re earning beyond your basic needs, (and learn to keep your overhead low,) save like crazy and invest thoughtfully to keep your nest egg growing, no matter how slowly or how small.

Luckily, Jose’s staff newspaper job is steady, union-protected and a kind of work that does not damage his health or strength. Unlike many Americans, we’re extremely lucky he has a company pension to look forward to. He has also been responsible enough to make a will and designate me the beneficiary of all savings to protect me financially if he dies before I do. (I did this for him as well.) If you have assets, and dependents, protect them!

Do you play the CPW game? Cost per wearing? Better quality clothes and shoes, even pre-owned and repaired, typically last longer than cheap crap you have to keep replacing. (And earning more money to pay for!)

I bought an apartment in June 1989, a one-bedroom. I’m still here. I certainly didn’t plan that, and fear I’ll never live in a house. I’d kill for a fireplace and backyard! But that real estate decision, (a long term mortgage with a decent rate, and low maintenance costs) allowed me to do good work I enjoy, even freelance, living alone, and allowed me to save 15-20 percent of my income every year, even when it was laughably low.

Read this life-changing book, and decide what is truly worth most to you — owning even more/bigger/newer stuff or enjoying free time. You can’t ever buy more time!

We drive a used, paid-off car, with no plans to replace it any time soon. (See: low overhead.)

Managing your money intelligently and attentively is a wearying life-long game of Whack-a-Mole. Just when you think things are going smoothly, boom! The car or house needs a costly repair or your kid needs braces or you lose your job — or all three happen at once.

Here are a few tradeoffs that work for me:

I don’t write a lot of checks to charity — but donate my time and skills to several volunteer boards and organizations instead.

I chose not to continue my formal education beyond a B.A. — but I attended Canada’s top university and, ongoing, read widely, attend conferences and network assiduously to stay current in my industry. Until or unless I know the ROI on an advanced degree, I won’t assume any educational debt.

We drive a battered old car — but it takes us safely, affordably and comfortably 10 hours north to Canada to visit family and friends.

We live in a smaller space than I’d prefer, with no second bedroom for my office or a bed for guests — but it allows us the extra cash to travel, save and entertain.

Managing your money means making choices, every single day. It means determining what matters most to you, and examining — truthfully — why that choice matters right now more than anything. (Designer labels, a trip to Paris, a new pair of skis, a second bedroom, a fourth child, grad school….)

Do you manage your money well?

Where did you learn those skills?

Personal Finance
Personal Finance (Photo credit: 401(K) 2013)

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Another way to make your first date a living hell

Credit Score Compare
Credit Score Compare (Photo credit: Casey Serin)

Yes, really.

Now it’s considered normal to ask if your dinner partner has a decent credit score:

It’s so widely used that it has also become a bigger factor in dating decisions, sometimes eclipsing more traditional priorities like a good job, shared interests and physical chemistry. That’s according to interviews with more than 50 daters across the country, all under the age of 40.

Credit scores are like the dating equivalent of a sexually transmitted disease test,” said Manisha Thakor, the founder and chief executive of MoneyZen Wealth Management, a financial advisory firm. “It’s a shorthand way to get a sense of someone’s financial past the same way an S.T.D. test gives some information about a person’s sexual past.”

It’s difficult to quantify how many daters factor credit scores into their romantic calculations, but financial planners, marriage counselors and dating site executives all said that they were hearing far more concerns about credit than in the past. “I’m getting twice as many questions about credit scores as I did prerecession,” Ms. Thakor said.

I like Manisha a lot, having interviewed her for my own work. But this is…weird.

No?

I loathe debt. Hate it. Hate it! I grew up in a freelance family, where debt is just dumb if you don’t have a steady, known income. I also grew up in Canada, where there is no tax deduction for mortgage interest, as there is in the U.S., where even interest on credit card debt (!) was, for a while, tax deductible as well.

So I get why you don’t want to marry a deadbeat and sacrifice your own excellent credit score — often called a FICO score in the U.S. — to someone else’s crummy fiscal habits. I have heard far too many horror stories of people — too often women — who had no idea what insanity their husband or boyfriend was perpetrating financially until it bit them on the ass.

What do you think of this new trend?

Would you bail on someone new if they refused to share their score, or had a lousy one?

Ten warning signs you’re an adult

My Mortgage Docs to be Reviewed by an Expert
My Mortgage Docs to be Reviewed by an Expert (Photo credit: Casey Serin)

We all know the standard metrics: graduate college, grad school, marry, have kids, acquire property and a vehicle.

I never had kids, so that typical dividing line into Maturity escaped me.

But for many of us, different moments mark a definite end to innocence.

Here are ten that resonate for me:

Taxes!

I grew up in a family of freelancers whose approach to paying income tax — which is never deducted at source, for those of you who’ve never done it — was, hmmm, variable. One day my Dad said, “I have two pieces of advice for you about taxes.”

“Running and hiding?”

Suffice to say I now have a very good accountant and genuflect to him deeply.

A mortgage

In New York, getting a mortgage is like some bizarro obstacle course littered with lawyers with out-stretched hands. Check, check, check, check!

Knowing — and caring about — your FICO score

For those of you outside the U.S., this is your credit score whose quality determines whether life is pleasant (low interest rates on mortgages, car loans, credit cards) or a hell of slammed doors refusing you access to any sort of credit. Surprisingly few consumers realize what sort of leverage you have with a good score — a lot!

Giving informed consent for my mother’s brain surgery

That was very weird, given how deeply private she always was. I looked, literally, into her head, staring at the four-inch tumor on X-ray that soon, successfully, came out.

Putting my mother into a nursing home

Pretty much the hell you’d expect: having to sell 95 percent of her things and make consequential decisions quickly. Being an only child makes it both easier and harder.

Getting a colonoscopy

For those of you under 50, something to look forward to! (And those putting it off out of fear, it’s no big deal. You have one wearying day beforehand to cleanse you colon, go to sleep during the procedure. Done.)

Knowing your neighbors

When you’re young, single and often behaving badly, you may not want to know your neighbors. Who was that guy/girl skulking out of your apartment? What were those weird noises at 3 a.m.? Once you’re a bit older, maybe traveling for work, maybe with a place you own and/or value more than a dive shared with six roomies, having kind and watchful neighbors is a wonderful thing.

Regular mammograms/Pap smears/prostate exams

I’m always a little stunned when I hear of someone, (who has health insurance, which in the U.S. means these are no-brainers), who skips these essential tests. No one wants to hear bad news. My mother has survived breast cancer, so mammo day is always a little shaky for me. But seriously? Just do it!

Joining a faith community

No disrespect to atheists and agnostics. But for many of us, finding a congenial place to nurture your spiritual growth is a major step. It’s easy to focus solely on family/work/friends/fun — until the shit hits the fan.

Making a will/living will/power of attorney/health care proxy

So cheery! But if you have been fortunate enough to have accumulated anything of value, it’s worth deciding who to leave it to. And facing any sort of major surgery — even childbirth, my mom-pals tell me — means facing the scariest of fears about mortality or severe injury.

How about you?

What milestones have marked your path to adulthood?

Ditch Your Stuff!

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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Five (Fun) Ways To Save Money

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We recently cleared out our storage locker — and cashed in $350 for 16 boxes of books we’d been paying a fortune to store. Score!

As someone whose income fell by 50 percent after losing my newspaper job four years ago — and still working in a struggling industry — I’ve gotten better at shaving costs to the bone. Turns out I’m not alone.

Today’s New York Post reports that nearly half of young women, 18 to 39, are saving and investing more than they did a year ago. More than 60 percent are also planning to reduce their debt within six months. The study interviewed 2,002 women.

Compared to guys, women, regardless of age group, are more conservative about future spending. Women — 72 percent — are more likely than men — 65 percent — to say if they come into extra dough, they would save it or put it toward bills, the survey found….

But young women feel they have to be more self-reliant in these dire economic times, said financial planner Eleanore Szymanski.

“They used to be planning for immediate things and retirement is far away for them, but this recent downturn has been a good wakeup call. They are scared they are not going to be taken care of,” said Szymanski of EKS Associates in Princeton, NJ.

Szymanski said she’s seen a 50 percent increase in young women attending her financial planning classes.

“I have seen more college people in this class than ever before. It’s a general feeling, ‘It’s up to me, I am going to take care of myself in this recession,’ ” she told The Post.

1) Barter. Not everyone will go for it, but you never know until you ask. Maybe you’re a great cook and can teach a new grad in return for tech skills or — as I have — trade writing/editing skills with my massage therapist.

2) Ask for price breaks when possible. Don’t be a nasty jerk about it — “So, what can you do for me?” —  as many are now demanding at major retail outlets. But there are times and places there is some wiggle room. I finally bit the bullet and asked my local YMCA if they had reduced fee for their services. I had to show my tax return, which made me cringe, but it allowed me to stay healthy and not break the bank. When I needed major dental work, I paid my dentist every month (on time), without interest.

3) Review every credit card’s APR and ask for a lower rate. Ideally, you should have only one, maybe two, and, ideally, pay off the balance every month in full. American Express has been my card of choice for decades but last year jacked my rate from 9.9% fixed to 15% variable. I recently got that rate down by 1 percent — because I asked. (An excellent FICO score is your leverage.)

4) Consignment shops. It gets really boring never buying anything fun or stylish. Seriously. It doesn’t have to be brand-new, just new to you; if a fab pair of shoes or a jacket is $20 or $40 — not two or three times that — a splurge is manageable. I have several secret sources where I’ve scored triple-ply Neiman-Marcus cashmere and never-worn Prada and Sigerson-Morrison sandals for $60. My wardrobe contains Clergerie and Ferragamo shoes, but I didn’t cough up the $400+ per pair at retail. Decide you don’t love it? Sell it to another consignment shop.

5) Eat (and entertain) at home. Zzzzzzz. Not if you know how to cook and have a basic batterie de cuisine: a few sharp knives (and sharpener), colander, saute pan. You can borrow cookbooks from the library or download recipes off the Internet. We eat so well at home, thanks to our culinary skills, it takes a lot to woo us away from our own kitchen and dining table. We use linen or cotton napkins (cheaper and prettier than nasty paper and they last for many years), and light candles and play music and enjoy conversation. I collect pretty tableware on sale and at flea markets and antique shows, so setting a lovely table is easy and fun.

Any tips you can share?

Be Thrifty – Or Else

An assortment of United States coins, includin...
We'll need a lot more than that...Image via Wikipedia

Being cheap is the new black, writes Daniel Akst in the Wilson Quarterly (you have to pay for on-line access), quoted in The New York Times:

To be thrifty, after all, is to save, and to save is not only to keep but to rescue. Thrift is thus a way to redeem yourself not just from the unsexy bondage of indebtedness but also from subjugation to people and efforts that are meaningless to you, or worse. Debt means staying in a pointless job, failing to support needy people or worthwhile causes, accepting the strings that come with dependence, and gritting your teeth when your boss asks you to do something unethical (instead of saying “drop dead”). Ultimately, thrift delivers not just freedom but salvation — which makes it a bargain even Jack Benny could love.

Margaret Wente, writing in The Globe and Mail, wonders how anyone — save the fortunate few with defined-benefit pensions — will actually survive retirement without a pile ‘o cash:

Because of imprudence, misfortune, a vast shift in cultural habits, or the sheer financial drain of supporting their kids until age 28, they are facing their old age with no savings, no pension and few assets. I have no idea what they’re going to do. All I know is that there are plenty of them. For the first time since we introduced old age pensions, millions of people who’ve led comfortable, middle-class lives are facing a big drop in their standard of living when they stop working. No more salmon teriyaki for them.

“A large chunk of the baby-boom generation is on the verge of retirement with only the state to depend on for a retirement period that will be, on average, the longest in Canadian history,” writes consultant Robin Sears in the magazine Policy Options. “We were pension pioneers. But we’ve lost our way.”

Whose fault is it that we don’t save like Grandma did? Is it ours, for crashing our savings rate below zero, and not being disciplined enough to resist the siren call of easy debt that’s been relentlessly marketed to us for a generation? Whose fault is it that we’re living longer than anybody has before, and screwing up the actuarial tables? Whose fault is it that the vast majority of us fail to save at least 10 per cent of our earnings starting at the age of 30, the way we’re supposed to? What about the single mom who’s put her kid through university, or the highly creative guy who is stupidly hopeless with his money, or the manager who got laid off at 57 and has to dip into his savings, or the millions of conscientious people who pay shocking fees to the investment industry to mismanage their RRSPs? Should we blame them, too?

You can see the problem here. Saving up for your old age is an individual responsibility. But helping you do it is a social one.

It would be nice if we could be more like the Chinese, who save 40 per cent of their money. That’s because they know they might starve or die from lack of health care if they don’t. The danger is that we’ll wind up like the Japanese, who suffered a huge economic hit in the ’70s and ’80s. Millions of retired folks were forced back into employment to support themselves. Former doctors took jobs as parking-lot attendants.

As someone self-employed, it’s not an issue I take lightly.

It’s a big pile of ifs: If my partner and I stay together, married or not, I’ll be OK, if his pension is still there; if Social Security pays out to us both what our statements tells us it will; if we keep saving 15% -plus percent of our incomes every single year; if our carefully chosen and diversified investments don’t tank; if , when we finally tap our accumulated capital, interest rates aren’t where they are now — a smack-in-the-face 1-2 percent on safe, secure holdings like CDs.

Now there’s a fair recompense for all that thrift!

If we bust up, it’s Friskies and a cardboard box for me! If I still own my home, and the mortgage is paid off, and if I can afford the monthly co-op maintenance fee, my only possible salvation from penury will be a reverse mortgage. Because my writing income isn’t nearly where I want it to be, and I can’t see suddenly doubling or tripling it for the next decade consistently, (believe me, I’m trying), my projected SS income wouldn’t get me through a month right now. There’s a comfy thought.

The old three-legged stool: SS, pension and savings is missing a leg — the pension — for most of us now. The second leg, savings, is a perpetual challenge when gas is $3/gallon and wages are stagnant or, in my industry falling to 1970s rates. Hey, change careers! Assume $10,000 to $75,000+ in student loan debt and cross your fingers that shiny new job market is all perky and welcoming when you graduate, competing with people willing and able to work at half the wages because they’ve still got five decades to save.

If they do save.

I recently interviewed, for my book, a single 51-year-old with a Master’s degree and $40,000 of student debt. Canned from her non-profit job a few years ago, she makes — wait for it — $7.25 an hour working retail. She couldn’t possibly save a dime and lives thanks to hand-outs from her 82-year-old mother. Her life is not quite what she planned.

One friend, 16 years my junior, is scrambling harder and harder and harder, like a hamster on a speeding wheel, to earn what she needs. Like us, she and her partner don’t even have kids. They are stylish and fun, but live very frugally.

Our “old age” is now.

Only Losers Save Money — Look At Current Interest Rates!

An art installation of a bed entitled 'To Meet...
Might as well put your money under the mattress..Image by AFP via Daylife

A thoughtful column on this by Floyd Norris in today’s New York Times:

Aren’t low short-term interest rates wonderful?

If you are a bank, the answer is yes, particularly because the low rates are accompanied by somewhat higher longer-term rates.

If you are a saver, however, your view might be very different.

This month some interest rate spreads have reached record levels. The difference between what the Treasury pays on a one-year bill — less than half a percentage point — and what it pays on 10-year bonds — a little below 4 percent — expanded to the largest on record this month. In banking jargon, that is a very steep yield curve.

For banks, that is a license to make money with very little risk, particularly since they can get people to open savings accounts that pay close to nothing.

This week I checked the Web sites of the four largest banks in the country — Bank of America, JPMorgan Chase, Citigroup and Wells Fargo — to see what they were offering on an ordinary savings account, say, one with $5,000 in it.

Chase, the retail operation of JPMorgan Chase, and Wells Fargo were offering 0.05 percent. That $5,000 would produce monthly interest of almost 21 cents. If you left such an account untouched for 20 years, and rates stayed where they are, the glories of compound interest would lead to a profit of $50. Before taxes, of course.

Yesterday I finally wrote a check to sock away the absolute maximum allowed to me as a self-employed person, 15 percent, for my 2009 IRA. I do it every year.

I earn a lot less than I did in my last staff job, sorry to say. I’ve never been in a staff job long enough (where they had one) to qualify for their 401 (k) so, like millions of Americans, whatever I save is all up to me, as is figuring out how to safely invest it. As Norris points out in today’s column, anyone who is diligent and self-disciplined enough — yes, I am being judgmental — to save a significant portion of their income, whatever that income, now feels like a Big Fat Sucker.

Why exactly should I give anyone, anywhere, access to my hard-earned cash to re-sell at usurious rates while giving me nothing? Oh, right, that’s banking.

I was only spared the bloodbath of the last Wall Street meltdown because the bulk of my investments, (due to my fiscal fears of loss, which are typically female), were in cash. But I want to retire and I don’t want to eat cat food because I’m so broke I won’t have a choice. This forces a lot of unamusing choices, and we don’t even have the added and significant costs of raising children.

If you want money in the future you have to save it now and make sure it grows. The first decision is driven by the implicit agreement that there is a point to this! Without growth of your hard-earned and carefully saved capital, the point is…? I see what suckers the banks are making of us all, all of us except for the wealthy.

That’s still most of us.

My mother is now spending her savings, like many others, simply to survive. Luckily — and because she has been both strategic and frugal as hell — her home and car are paid for. She lives in Canada, so neither of us fears a medical bankruptcy. But her main medication is $162 a month, a significant hit to her monthly income, which was derived from interest on her lifelong savings. She has no work-related pension; like me, she was self-employed as a journalist or worked for companies that did not offer a pension scheme. Nor does she have a husband whose pension, savings or Social Security income would help.

Why should the frugal and cautious have to take the hit for the careless and greedy? It’s too bad banks made liar loans to people who had no ability to re-pay them. As we drive our nine-year-old vehicle, as I am stalled in my career mid-recession, as we try to figure out how to help my mother while saving 15 percent or more of our own incomes for our own future, it all seems a little pointless. Saving money.

How does this make you feel? Are you still saving? Are you able to?