Financial Happiness

MSN had a good article:  5 Financial Habits That Will Make You Happy.

The article opens with a statistic that I heard no long ago:

"happiness rises as household income does up to about $75,000 ..but beyond that more money won't make you happier"


I still don't know how I feel about that one.  Anyway.  None of the five habits ticked me off - in fact I actually find them all to be true.  My favorite is #1:

"Get Pretty Organized."


Personally, I can't manage to get really organized.  I am too lazy to make a budget and too spoiled to stick to it. Example:

One trick my sister-in-law, Becky, uses is to grocery shop only every two weeks.  To do that, she has to plan meals for two weeks together.  I saw the list and was totally bewildered:

"But what if you don't want that for dinner tonight?"

"Too bad," was her answer.  I have nothing like that kind of discipline.

I can, however, manage to stick receipts in a file folder.  Archive e-mails.  My taxes are always in order.  I can tell you that I spent $1,500 on gasoline in 2010.  American Express says so.  I feel better now.

Saving for Retirement

I read a lot of articles about retirement. A lot. Occupational hazard. But MSN Money had one that made me think. 6 Smart Ways to Save for Retirement was the title. The first one was:

Don’t inflate your standard of living.

As you get raises and promotions throughout your career, it's common to want a bigger house and nicer stuff. But part of each pay increase should go toward your retirement savings.

Instead of buying something with a bonus or trading up to a nicer car when you get a raise, some of that extra money needs to be tucked away for retirement.

Now, the bit about allocating part of our raises to retirement is something I already preach, thank you very much. But this made me think: you know why else we shouldn’t inflate our standards of living? Because it will be a lot easier to live within our means after retirement if we don’t.

What I am hearing lately is that the experts don’t even know how to answer the question, “How much will I need?” because our needs are all so different. The standard used to be 80%. We will need an income of 80% of our current salaries to live on after retirement. That number doesn’t work. Some of us will spend a lot less on clothes and commuting, etc. But some of us will want to spend a bunch on travel and other things we haven’t had time to do. So if we can manage to consume less now, we will have less trouble adjusting to consuming less later.

I suck at this. I love the Internet and I love to shop. Better get a handle on it.

I am a Convert

I may have told you that I do most of my banking online.  I was actually a pretty early adopter, because I fell all in love with the way you could schedule when payments are going to be received.  And the bank sends the funds in time to meet the deadline.  In however many years I have used this service, I have only had two problems.  The one that was Chase's fault, they told me about immediately and offered to pay any fees that I may have incurred due to the delay.  The second problem was on the receiving end - and Bank of America was just wrong.

However.  I have held out on using the ATM to deposit funds.  For some bizarre reason, I have felt like I need an actual person to deposit my money.  Because people, you know, never make mistakes.

Well, Chase did some good marketing with those commercials, so I went over to Dominick's to give it a try.  I figured that at the Dominick's ATM, if something bad happened, like my check was shredded instead of scanned, there would be people right there.  People.

I endorsed the check with a "for deposit only".  Then I started the transaction.  The ATM offers to print a scan of the receipt, with the scanned check on it.

It was beautiful.  It took less time than a teller, who has to type in your account information.  I just logged in to check my account, and there it is.

I may never set foot in my bank again.

Fine. I'll Write Something Nice.

But it starts with:

I am so old that I have started reading "The Glenview Report".  The newsletter from my village board.  Because I care.  Or something.  There were two pieces of news:

Most of the newsletter was taken up with an explanation of the new contract with the garbage collection company.  Three things happened:

1. We lost the option of having twice weekly service.  That was fine with me since we dropped to once weekly service over a year ago and have been perfectly happy with it.
2. We are all required to use the garbage collection company's special garbage cans that are designed so that a contraption on the truck can lift and empty them.  The Village is going to pay for us to get them.  That is doubly fine with me since we already have said special garbage cans and will no longer have to pay the fee to rent them. 
3. After these changes the monthly cost of the service is...wait for it...going down.

So we get the same service and pay less for it.  Go Glenview.

Also, in a small corner of the newsletter was a piece about Lockheed Martin renting space in our big, fancy police station for training and stuff.  Inasmuch as I think the big, fancy police station is a monstrosity (that I resent even further since the library has had to fight tooth and nail for every dollar) I have to say I am pleased to see that some revenue is being generated through it.  $75,000 was the number reported, I believe.

So thank you, Village Board.  You seem to have done some good work here.

About the Credit Cards

When I read about the new credit card rules, my first thought was, "Huh.  I'd better use my safety card once or twice."

Because the credit card companies now have the right to charge fees on cards that haven't been used.  I still have my college Mastercard from Citibank.  It was good to me, but the rewards weren't there.  So I stopped using it actively and kept in in the house for emergencies.  I hadn't gotten to using it yet, and now I won't have the chance.  I received a letter from Citibank today saying they had cancelled the card due to its non-use.

Hm.  I guess that's their prerogative.  But if they had asked nicely, or even just charged the fee before closing the account, they would have kept my business.  Perhaps even increased it.  Because I had a stupid sentimental attachment to that card.  Still have the number memorized.

I understand the credit card companies need to shift the paradigm on the business model or whatever, so I don't have a problem waiting it out while the feds and the banks arm wrestle over the questions of profit and stability and fairness and service.  I realize that is a luxury.  I realize that I have been milking the rewards program. And Eric Zorn at the Chicago Tribune says in this article that I have been rewarded at the expense of the poor, so I felt bad for about five minutes.  Because what am I supposed to do, not work the programs?

My primary need for credit cards is convenience.  The rewards are nice, but secondary.  I don't want anyone to go bankrupt over them, though.

So goodbye, Citibank.  No hard feelings.  Thank you for giving me my very first credit card.  I hope you find what you are looking for in the next girl.

(But somehow I doubt it.)

What Women Pay

I read this article on MSN Money when I was out of town - Seattle, I think – so I didn’t write about it. But MP Dunleavy (with the help of Consumer Reports) dug up a whole bunch of scenarios where women are charged more than men for essentially the same service. Of course, this is not exactly news. And while I have noticed such things before, I think I had rationalized them to “women have more hair, so a haircut costs more” or “there are extra fragrances added that lotion” or “men push harder in negotiations/bargaining”.


Then there was mention of a lawsuit. Two ladies sued Saks for charging them for alterations on their evening gowns when alterations on men’s tuxedos are done for free. It sounds like wealthy women with too much time on their hands, but I guess the battles must be fought by those who have the means. It becomes scarier as Dunleavy notes the differences in mortgage and insurance rates and then the bottom line:

“When you look at each product or service individually, the affront doesn't appear so egregious. But it all adds up: a few bucks for alterations, a percentage point or two in mortgage interest, higher health care co-pays. Then consider that, on average, a woman still earns about 78 cents to a man's dollar (or $78,000 compared with $100,000 paid to a male colleague with the same level of experience).”


The moral of the story is that while there are larger battles to be fought here, the average women can make her statement by being a more educated consumer. Vote with your wallet!

The Best Financial Advice I Have Ever Heard

Liz Pulliam Weston at MSN has updated her article on $500 in the bank.  It is the reason that I read MSN Money.  So many people that are trying to build an emergency fund are intimidated by the traditional advice - to save six months of expenses for emergencies.  The idea of putting away so much is daunting, so we don't bother to try.  The better idea is to start by squirreling away $500.  $500 will cover most of the unexpected expenses that derail our savings plans.  Car repairs,  A/C breaks down, the sweet potato that killed the garbage disposal...

Seriously, if you have been having trouble building your savings, please read this.

Trying Something New

You know how people talk about a "Starbucks Factor"? The silly little thing you keep doing with your money that adds up to real money over the long term. The first one I identified for myself was magazines. I would buy one every single time I was at the grocery store. Sometimes more. So I bought a subscription to Vanity Fair, the one that I liked best, and put a moratorium on the grocery store magazines. I have done no math on how much money that has saved, but I expect it is a lot.  In the interest of full disclosure, my mother will tell you there is an enormous pile of unread Vanity Fair magazines in my house.

I discovered, rather recently, that particularly in the wintertime, my Starbucks Factor is actually Starbucks. I have been buying hot chocolate at the coffee cart in my building every day that I am at work. I just decided that I should stop. Bring something from home, since I can't manage to do so for lunch. But instant hot chocolate doesn't taste right to me. So I bought a shiny new coffee mug to keep at the office and a few boxes of French Vanilla Cafe.

I am not entirely sure this experiment is going to work. The hot chocolate is primarily milk, which has a lot of protein. Chocolate milk is the perfect breakfast food. This fake coffee really doesn't substitute in that area.  But it is hot and it tastes fine and three dollars goes a lot farther.

We'll see how it goes.

Awesome!

I have been known to complain about how the banks have all of these great promotions for new accounts, but not much for the people that have had accounts since...(here is where my mother is rolling her eyes)...the day they built that branch in 1977!  Seriously - $100 gift cards right and left for opening accounts, but no love for the ones that have stuck with them through four mergers.  My checks still say Bank One.

Chase won some points back today when I logged on, checked my bank account and found a credit for a hundred bucks and change with the entry, "Chase Pays Your Bills Winner".  

I seem to remember a commercial for that promotion, but I thought it was just for debit payments.  I don't do debit payments, since I use credit cards for everything, but it looks like it works for online bill pay, too. 

I am most pleased.

The Difference

Now this is interesting. MSN Money has an article (well, it is really a blog post) trying to determine why some people earn $30,000 and some earn $100,000:

“Many commenters noted that, from their experience, high-income earners generally exhibit several of the following traits:

They maintain a strong work ethic.
They don't watch the clock.
They seek to improve their skills.
They do quality work.
They're flexible and adaptable.
They maintain a good social network.
They possess self-confidence.”

No surprise, but the comments were at least as interesting as the original post. “Luck” was absolutely named as a factor. In my experience, being at the right place at the right time is a big deal. Knowing someone that knows someone. But while I can’t cite it, I could swear there was statistical evidence that established tall people earn more than short people, and thin people earn more than heavy people. And that is before we even get to race, gender and ethnicity. And education. And choosing the “right” field.

I love reading this stuff – for the sake of argument. But the real question is: what is that salary worth to you? Are you spending your time the way that you want to spend it? Do you have a lifestyle that you can afford?

Assuming that your basic needs are met..What makes you happy?

This is Exactly What I Mean

USA Today ran an article about how there are growing numbers of unpaid property tax bills due to the recession. No kidding.

I have long complained about my property taxes. I do not begrudge taxes in general - I realize they are necessary. But property taxes tick me off for several reasons:

1. I still do not understand how they are calculated.
2. The assessments are outdated - at least in my county. So while my bank says that my home is worth one number, Cook County thinks it is worth much more. And is charging accordingly.
3. The value of one's property is not necessarily consistent with one's ability to pay property taxes.
4. School budgets are directly tied to property taxes.
5. My nice neighbors just moved away because they couldn't stand the property taxes anymore.

Now let's talk about those unpaid bills:

Tax collectors from South Florida to Wisconsin and Cleveland have noted the increase. In Cuyahoga County, Ohio, which includes Cleveland, nearly 8% of taxpayers didn't pay tax bills due this month, double the rate of four years ago, says Deputy County Treasurer Robin Darden Thomas. Now the county is struggling to collect about $400 million it's owed in back taxes, she says.

$400 million that the county had budgeted as income. I realize that when income goes down, income taxes go down. So swapping income taxes for property taxes isn't going to solve the problem. But as long as there is tax withholding from our paychecks, it must be more consistent than worrying about people that aren't - for whatever reason - paying their property taxes. The idea that someone who has owned her home for decades, paid off her mortgage and retired would have to sell said home and move to some lame condo because she can't take the property taxes makes me insane.

So increase my income taxes, if you must. I rather think we should be changing the capital gains rules, now that we are talking about it. But someone please, do something about these property taxes.

Letting Them Eat Cake

MSN Money pointed me to an interesting editorial in Forbes magazine. The author is pointing out the plusses to the recession. For people that have money. It is all things we have heard before – the deals are out there, the service is better, etc. My opinion is that she is half correct, and half unbelievably insensitive.

I have said for months that as long as I have my job I will be just fine and I am grateful to have it. I still very much believe that even the people that have done a decent job of saving aren’t much more than one catastrophe away from financial ruin. I have said that I am spending money, probably more money than I would have a year ago, because my house needs work, because I can and because there are businesses that I want to support. And seriously, my house needs work.

For me, the interesting thing about the article was not the points that it makes, but the debate in the comments – both on the Forbes site and the MSN site. Some are trashing her, some just saying “you’ll get yours” and some…are agreeing with her. For a few, it is pointing fingers at people that weren’t (willing or) able to save well. For others, it was just the pleasure of reading a positive perspective. I guess we aren’t so much in this together anymore.

American Express - Reviewing the Rewards

I have completed my first year using the American Express Blue Card. You may recall that I applied for this card after I dumped Bank of America for being a pain in the butt. Because I pay my cards in full each month (except when I have a 12-month no interest at Best Buy or something), I did some homework on rewards programs before settling on this one.

The cash back formula is:

1% on gas, groceries and drugstores and one half of one % on everything else on the first $6,500 spent each year. After that, 5% on gas, groceries and drugstores and 1.5% on everything else.

I used this card for everything, everywhere that takes Amex, including two dollar purchases at McDonald’s and most travel expenses for work. I used my Mileage Plus Visa as a backup. I was pleasantly surprised to find that Amex is accepted most places. Notable exceptions were:

1. School tuition. Part-time students can pay by credit card, but BU doesn’t take Amex.
2. Doctor’s offices. Veterinarian’s offices.
3. Hair salons and spas are iffy.

Hidden perk – Costco only takes American Express. So I was able to start buying my gas there. I don’t do it all the time, but it is a nice option to have.

The bottom line? $703.65 was my cash back for the year’s purchases.

The web site analysis told me that the average card user manages the 5% return on 15% of her purchases. My 5% return was on 25% of my purchases. I attribute that to two things:

1. I pay for groceries on my credit card. That makes some people squeamish.
2. My prescription drug program has me making the initial purchase and then being reimbursed by BCBS. So I am getting 5% back on all of those allergy drugs.

There is some fine print to note regarding the rewards program. For one thing, if you pay your bills late, you may forfeit the cash back altogether. That would suck. Also, there is a limit to the single-visit cash back for that 5% return ($500?). Neither of these things is an issue for me.

At the close of the year, American Express says that it will pay the reward after 30 days. Mine posted to my account over the weekend, so I was pleased.

Where I am not-so-pleased:

The web site shows earnings of 1.25% rather than 1.5% for the next time around. I am disappointed, but the talking heads warned us that these benefits were in jeopardy as banks tried to stabilize. So I am not crying about it.

Especially since that $736 that I spent in New Orleans was pretty well covered by that cash back. So my “free” vacation just became free again. Almost.

My Free Vacation

I had a whole mess of United miles to burn. I used some for the plane ticket to New Orleans. Then I discovered that because I have a Mileage Plus Visa, I could use more for the hotel. I may have written that it only works for miles earned with the card and that I paid for the hotel with my card and was reimbursed by using the miles. Long story short, I didn't pay anything for my flight or my half of the hotel bill.

So I was checking my Amex card online today. Wow, did I spend a lot of money.

Between eating out, books and gifts, the cab fare (to and from the hotel and from O'Hare to my house) and miscellaneous cash out of pocket, I spent $736.

In my brain, it costs about $1,000 for a person to go on vacation. Did I spend more than that on my last road trip - when gas was $4.00 a gallon? Not by much. This time I spent $736 after airfare and hotels. How the hell does a family of four go to Disney World every other year?!

I daresay I have done my part for the economy.

The Dentist

USA Today ran another of those “what are we spending our money on during the recession?” articles. No surprises, really, but here was a good point:

Still, when the economy grinds to a halt, people clench their teeth. That could mean spending money at the dentist.

There's no statistical evidence, but dentists such as Dr. Matthew Messina in Cleveland, Ohio., are seeing more people with tooth-grinding injuries.

"The body responds the same way to a real threat, 'There's a burglar in the house,' as it does to a perceived stress like 'I'm worried I'm going to lose the house,"' Messina said.

Going to the dentist is something people skimp on when money is tight. While there is no statistical proof that tooth-grinding injuries are on the rise, I am pretty sure there is statistical evidence somewhere that skipping dental cleanings will cost more in treatment later on. And treatment is unpleasant.

My parents were always having dental issues when I was a kid. On top of that, I had two bad experiences in my youth – where the dentist did not listen to me and pain and fear ensued. I went six or seven years without going to the dentist. Finally, I knew I had to go back. And I was terrified.

My father gave me an awesome piece of advice:

“You are an adult and you are the client. No one gets to touch you without your consent. If the dentist isn’t listening, you get up out of the chair and walk out the door.”

I’ve never had to do that, and for all practical purposes, it isn’t quite…practical. But the thought was empowering nonetheless. I found a dentist in my neighborhood that is about my age – which was to minimize the feeling of “must obey this authority figure” anxiety. His assistant is fabulous.

I am a convert.

If you don’t have a regular dentist, please find one. And if you have one, please don’t skip cleanings. And remember to floss!

The State of Consumption

I don’t imagine this is news to many people, but it seems we haven’t learned anything. MSN Money reported on a study by the National Foundation for Credit Counseling that says :

“Nearly a third of Americans are without savings of any kind outside retirement plans.
A full one-third had not saved anything in the past year for retirement either.
One in four had paid at least one bill late in the past year.
28% of those with a mortgage said they were unaware of the terms.
Of those spending less, about 45% said they saw their newfound thrift as temporary and planned to recapture their old lifestyles once the economy improved.”

So 45% of us aren’t even pretending to think that maybe we got ourselves into this mess and should change our behavior.

We thought this would be a wake up call. But really, I think we just made bargain-hunting the national past time. A new Home Goods store opened near me and I couldn’t even get a parking spot on a Tuesday afternoon. At the Whole Foods two stores away.

I did it myself a couple of weeks ago. I walked into a TJ Maxx needing a last-minute Easter gift for my niece. I was in that shopping center and knew they had a toy section. I walked out with a lovely toy and a Michael Kors tote bag.

It was 55% off! And I needed a new bag for summer!

I guess for me, because I have 30+ years until retirement, the Dow Jones average means less to my spending habits than the fact that I have a job. Maybe that is how everyone else sees it, too.

What is in My Wallet

MSN Money has an article entitled, “What Your Wallet Says About You”. It basically says that if your wallet is a mess, your finances are probably a mess, too. It particularly notes the terrible, tragic problem of having change lying around on the floor of your car.

Under the heading “Chaotic Cash”:

“The bills in your wallet are crumpled and in no particular order. There's change in the bottom of your pocketbook or even the floor of your car.

Someone who treats money cavalierly often does not respect money or may not even care about finances, Thakor says. If you leave money around, you're basically saying it's not important enough to put it in a safe and protected place.”

Or. We treat cash cavalierly because we don’t use it so much as the credit cards that record each transaction down to the penny, sorted by date or category and posted in a secure account online.

Under the heading “Unruly Receipts”:

“Your wallet is stuffed with receipts, but there's no sense of order to them, and you never really do anything with them. This is a person who is trying, says Thakor.”


Or. My wallet is stuffed with receipts because people give them to me and I haven’t thrown them out yet. I clean out my bag when the messiness starts to make me mad. Maybe twice a month. I actually decline receipts at nearly every opportunity. I don’t take them at the gas station – which shocked my grandfather.

The idea that “a disorganized desk is the sign of a disorganized mind” is not true. And I can absolutely confirm that the state of my wallet, and my bag and the change on the floor of my car are absolutely no reflection of the state of my finances.

Frugal Fliers

MSN Travel had a good article, Two Words for a Frugal Flier: Patience. Wednesday. I am not a particularly frugal flier in that I am spoiled by my home town airport and think that a layover is about the worst thing one could endure while travelling. I am also rather loyal to United Airlines. And I don’t like the risk of waiting for fares to drop. So I suck at this particular game. But I found two good tips that will work even for me:

“The best time to shop is late Monday or early Tuesday, some fare experts say. Airlines often start fare sales on Sunday night or Monday morning, said Rick Seaney of FareCompare.com. Those sales alone are fine if they include the flight you want. But other carriers generally match the fare sale by Monday evening or Tuesday morning, giving you more choices.”

OK. I can be flexible about when I shop for a flight!

“Wednesdays are generally the cheapest day to fly. Tuesdays and Saturdays are also good days to fly because demand is low and the airlines are trying to fill seats.”

I think I knew that already, but it is good to keep in mind.

I think the point here is that we as consumers should gauge the value of our own convenience. Ugh. I just realized my mother must be credited with teaching me that.

The 24 Hour Rule

My boss is a huge proponent of the 24 Hour Rule. He has drilled into my head that there are not all that many decisions that have to be made instantly. While he was talking about workplace decisions, Lou Carlozo at the Chicago Tribune wrote about the 24 Hour Rule as it relates to spending money:

"Here’s how it works: When mulling any purchase over a certain amount, say $50, put it off for at least a day. Then ask yourself: Do I need this? Or do I want this? Can I possibly live without it for a while? Can I drop it? Can I search for a thriftier alternative?"

I love this. But I wonder. Does $50 mean $50 on one thing? With sales the way they are, I could go to Carson's and find a $20 shirt...and then another...and then another...

Right. As if I ever found three shirts that I liked in the same day.

Anyway - good advice here.

Salary Administration

MSN Careers had a great article called, "Everything You Should Know About Your Salary". Here is my favorite part:

"Wages and salaries are set according to a unique blend of external market competitiveness and internal equity considerations at each employer, Brennan says. Every organization has its own way of paying people, and many variables -- such as organization revenue size, number of employees, profitability, pay history, corporate culture, geographic location, competitive labor analysis, benefits and perks, and ease of commute -- are factors."

In my experience, people tend to think, "I work harder" or "I do a better job than the guy next to me, so I should get more money". First of all, that is your perception. It may not be your supervisor's. Second, the truth is that the market determines our salaries. Sure, there are other factors, like seniority, that are involved. But mostly it is the market. Third, I have a pretty good idea of what the market averages and medians are. Because my employer spends an awful lot of money paying experts to survey our industry, our geographical area and our positions. So don't quote salary.com to me.

Hm. I didn't mean that to be a rant.