Double Journey

I was reading an article about people who failed to adjust their life after losing a job.  The article focuses on those who thought they could maintain their lifestyle because they got a severance check from their former employer and failed to realize that they might be unemployed longer than they expected.

It was hard for me to read the article because it is irksome to me to read about people who do not understand the reality of their situation.  It is especially bothersome to me to hear that people act this way in this country where most people have little or no money saved to deal with emergency situations.  Getting severance is a gift.  Few people have the “right” to a severance package.  Most employers provide them as a way to make all the parties involved feel a little better but they rarely if ever have to dispense generous severance packages.

I guess I just do not have a lot of sympathy for people in these situations.  I might if these people immediately cut their spending to the bare minimum to make their savings last as long as possible but none of these people did that.  They all decided to ignore the situation and continue to live as if nothing serious had happened.  I compare this to my own situation of life without a job.

I quit my Microsoft Job in September.  I was officially on payroll until the end of October but I stopped working at the end of September.  I simply used my vacation for that last month.  Despite the fact that I chose to leave, I had enough savings to last several years at my then rate of consumption, I still had a paycheck coming in, and my wife had a job that could cover all the bills, I started to immediately watch my money the day I gave notice.  Why?  I had no idea how long I would be out of a job.

My original idea was to take at least six months off.  That didn’t happen because I have a problem not working and the uncertainty drove me nuts.  But despite my very safe position it was just prudent to not spend money the same way as I had before.  I was more careful about anything I bought.  We ate out a lot less.  We canceled plans that would cost us too much money.  I then look at my wife’s position when we first moved to Washington.  She did not have a job lined up when we moved.  I made more than enough money to support the both of us but despite this she decided to get a retail job just to bring in some cash.  It wasn’t great work but it paid and she wanted to make sure she brought a little something home just to get used to the idea and not feel too “safe”.

Perhaps all of this was “easier” for me to do because I made a conscience choice to leave my job so I got to do it on my terms.  The psychology of it does not make much sense to me since I would think that having the situation forced on you would make the problem more immediate and urgent.  But I suppose there are those who would rather avoid the situation than tackle it head on.

Diverging from my Italy trip for a while because, well I’m back and I’m tired of writing about it.  I may pick it up again.  I may not.  I do have a crazy Rome Airport story.  Seriously, something out of a comedy movie.  But that may be left undocumented.

So only a quick post tonight.  I’m just getting back into the swing of the markets.  I had not made any trades in quite some time because of the wedding and the honeymoon.  I also just don’t think it is a good time to enter the market one way or the other.  I knew the market would probably trade sideways for a while and it has for the most part.  I was in no hurry to either go long or to go short the market.

So my question for all those out there today is, do you ever notice that your spending happens in bunches?  My credit card bill for the last two months is, as you might imagine, quite high.  But it is not just the wedding and honeymoon that is causing it.  I had to get new tires for my car.  The bill for my internet hosting came due.  I had two separate membership fees come due.  My wife had to register for classes this month.  And there were more things than that.

Now, lucky for me, I’m a good little saver and these random and volatile spurts of spending can easily be managed but I have noticed this happening to me in the past.  I wonder if this is really a phenomenon or you just happen to notice those medium size purchases a little bit more when you have had other large expenses to pay for?  How about it, do you ever notice that you spending fluctuates greatly and that you will just have one or two months a year where it seems everything comes due at the same time?

I have officially crossed the line.  I fought it off for years but I think my time has officially become more important than my money.

I love a good deal.  In fact, I can not buy most things without getting a good deal on it.  I’m the type of person who will spend hours making sure I not only get the absolute best product to fit my needs but that I also get the absolute best deal I can find.  Well I have been in the market for a new video card for quite a while.  Like usual, I scoured the internet to figure out what the best card was and find the best deal on it that I could.  The problem was that I could not find a card that met all my needs so I kept searching.

Now usually, I have a lot of patience on this type of thing.  I waited almost 5 years before I finally bought my TV.  But I hate not having the use of my computer so it really bothered me to not have my computer working.  I kept looking for a good deal, looked every day.  I went to the brick and mortar stores to look but was not crazy about the prices there.  Then last week, I finally found what I was looking for at Frys (I had been there several times before with no luck).  It wasn’t perfect, but it was pretty close.  The only problem was that I was going to have to pay full retail price. 

I am Chinese.  If there is one thing I hate doing is paying full retail price for any sort of electronic device when a deal is almost always to be found on the internet.  But I was more tired of waiting to fix my computer and I was even more tired of looking every day to try and find a deal on a card.  So rather than keep looking, and maybe save $20 or $30, I decided to just buy it.  When I think back on it now, the hours I spent looking for the card was nowhere near worth $30.  If someone offered me $30 to just nothing but search for a great price for a product for several hours, I am certain I would turn it down.  Why is it that I find it necessary to do when the cost is not as explicit?  What about you?  Do you do equally illogical things?

This past weekend was my birthday. I turned 31. Being who I am, we did not do too much. I prefer to stay at home which makes it pretty easy to not spend too much money.  We got up in the morning and had homemade waffles.  Shortly after that I got to open up my birthday gift.  My fiancee got me a new tripod, the Manfrotto 190XDB, to go along with my camera.

We decided to go to the local arboretum to spend the day.  It was a beautiful California day.  It was actually to the point where I was sweating part way through.  It must have been in the 80’s.  I got several good shots with my camera (no shots with the tripod unfortunately) and was ready to call it a day by 2:00 p.m.  I was dead tired, the sun will do that to you, so i was ready to go home and just plop on the couch.  I watched the NCAA tournament and waited to go to dinner at some mysterious location.

Well the location ended up being the Arroyo Chop House.  It is a high-end steak house, similar to Ruth Chris but probably better.  We had been there once before several years ago but I honestly did not remember too much about it.  This time what stood out was the excellent service they provided.  They knew ahead of time that it was my birthday. So they reserved a spot right next to the fireplace.  They even left a card on the table wishing me a happy birthday.  I thought that was a very nice touch.

I ordered what else, a steak.  She ordered a lobster tail.  The food was excellent, better than you can get at other places like Ruth Chris.  All told, the meal, with two glasses of wine, cost us $150.   Was it worth it?  It is hard to say.  Is it ever OK to spend $150 on one meal?  It is not something we do very often but it is sometimes nice to splurge.  We can afford it easily, so it is not like we have to stretch to make this work.   We probably only eat out like this two or three times a year, my birthday, her birthday, and on our anniversary.

So should we do this? I tend to think it can actually be important to splurge every once in awhile.  You cannot be frugal all the time and it is important to once in awhile enjoy the fruits of your labor.

What do you think? Are extravagances like this justified?

I got my company bonus in the last week.  It was not the full value of what my bonus should have been, but it was very generous when you consider the economic climate and the struggles my company went through in the last year.  Truth is, I was expecting to get nothing.  So were most of the people under me.  Most were very appreciative of getting anything, however small it may have been.

So how did I spend this windfall?  I am not doing anything I would not have done otherwise.   I have never ever decided to do a little more spending just because I got a bonus.  Ironically, there is no real need for me to do this because I honestly have quite a bit of savings.  It is true, I will have lots of expenses this year.  There will be the wedding and I want to buy a house sometime soon if housing prices continue their precipitous decline. I have my eye on a new Home Theater receiver, but if I buy it, it would have been something I would have done regardless of my bonus situation.

Now my advice now is the same as my advice would be regardless of the economy; you should not do any extra spending just because you get a bonus.  If you want to celebrate, do it in a small way.  But under no circumstances should you buy something just because you happen to get more money.  This is how people become poor.  Their pockets are like sieves.  As soon as money comes in, it goes out the other end.  Most people do not have money problems because they do not earn enough, they have problems because they spend too much.  It is easy to spot these people.  These are the same people who get upset that there might not be a bonus.  They are upset because they have already spent the money!

So do yourself a favor and ignore the fact that you got a bonus.  Believe me, saving it will bring you much more happiness than anything you can possible buy.

One thing I have learned over the years is to not try to spend money on my cat.  When I first got my cat, I used to go to the pet store and try and find things he would like.  I spent lots of money on toys, and bedding in an attempt to make him happy.  The thing I quickly learned was that my cat often did not like anything that I spent money on but would instead prefer the scraps off other things.

I first learned this lesson the first Christmas I spent with my cat.  I got him a few catnip toys and a few fake mice.  His favorite gift?  The ribbon and paper that everything was wrapped in.   Just to make sure that I learned my lesson my cat decided that he would make as his new bed the cardboard crate that the new dartboard I bought came in.  I am not sure why he likes it, it is not particularly soft and is kind of noisy with the plastic wrap, but he sleeps in it pretty much every chance that he gets.  So save your money and instead just give your cat the refuse off of the things that you buy.  I promise you, your pets’ tastes are probably pretty different from yours.

Lately, I’ve had some conversations with people about how I split my finances with my fiancée.  Here and I have talked a lot about money and our expectations about how we spend/save it since we started living together more than three years ago.  We have had further talks to see how we will handle things we we get married.  Lots of couples avoid having this talk and think things will just figure themselves out.  That is a complete mistake.  Most marriages fail because of money issues.  It is better to get this topic out front and talk about it than let it stay in the background.

So what do we do?  Our formula is pretty simple.   Lots of people would just split their finances 50/50 but I did not think that was very fair.  So early in the relationship I suggested something different.  If you add up our combined salaries, I make 72% of the income.  I therefore pay 72% of our shared expenses.  Shared expenses are things like rent, groceries, eating out, and household items.  We do not split things like clothing, electronics, student loans, or our individual car payments.  Those our paid from our individual accounts.

So lets take an example.  Let us imagine we take home $10,000 a month combined.  For the sake of simple math, let’s say I earn 75% of the income and she makes 25% of the income.

Now lets say our combined household expenses are $3000 a month.   I would pay $2250 a month and she would pay $750.  We used to add up the money to be exact, but it ended up being close to the same amount every month so instead we switched to a model where I pay all the household bills, and she cuts me a check for the same amount every month.  Our expenses have probably changed since we came up with the system, but we figured it is close enough and there is no need to quibble over a few bucks here and there.

When we want to buy things that one person wants, we do not argue about it.  The person just buys it because they have their own money.  So when I decided to buy my new Plasma TV, there really was not any discussion about it.  I just did it.  In fact, she probably pushed me to buy it.  After all, she would get to enjoy it while I was paying for it

I find that this arrangement works great.  There literally has NEVER been an argument about how we spend money because we have figured out a system that works for us.  There have been times when one person wanted something and the other person did not and we discussed if it should come from the common fund or not.  But in the end, if one person really does not want it, it would just be up to the other person to buy it from their own funds.

Is this going to change much when we get married?  Not really.  We will probably get a shared account which we do not have now and put our money into that joint account.  We do have a shared credit card where we do put our shared expenses on, but not a joint bank account.  Some of the separate expenses will be combined.  So we will combine our car insurance payments and our medical expenses.  The only real difference we have discussed is how we are going to handle our savings.  We will probably have a predetermined amount we decide to save. This will just be added as a shared “expense” and then put aside.  For example, say we decide to save 40% of our income.  So if we use the numbers in my previous example, we would simply treat the $4000 as a common expense.  I would put in another $3000 a month, she another $1000.  That means I would put in my own account $2250 and she would put $750.  While it may seem like I certainly get to save more money, in reality it does not really work out that way.  Neither of us really spend money, so in the end it does not really matter who ends up with more money as neither of us will spend it.

So what do you think?  How do you split up your finances?  Do you think what I do is fair?

I’ve had this blog a little bit over a year.  In that year, I will admit I haven’t done a heck of a lot to try and grow this site.  I would like to make the excuse that my new job has been much more demanding then I would have realized.  I could argue that I have done really well in my financial goals by putting my focus there rather than to focus on this site.  But in the end, it would just be excuses.  It would all be true and valid but I for one do not like it when people make excuses, so I will not be making them here today.

However, despite this lack of focus in building this site, I am somewhat impressed I have blogged as much as I have.  I have a little over 200 post for the year.  That’s no small feat and means I’m averaging about a post every week day.  I hope to do even better next year.  More on that to come.  I decided I would look back at what I wanted to accomplish with this website and see how far off I veered.

1. Double my $20,000 - I gave up on this one just a few month into the year.  I just didn’t have the time to do it and in reality, I’m sure I would have failed at it given how poorly the market performed.  I would have done better then the market, I probably would have even made money in the money I was trading, but I would not have gotten anywhere close to doubling the money, that is for sure.
2. Develop another source of Income - I did not get to this one either.  Sad really.  It was something I really really wanted to do.  I make a nominal amount through this site, but just barely enough to cover my yearly cost so nothing much to speak of here.
3. Watch my basket more carefully - This one I have actually done thanks in no small part to this website and the discipline it has made me have.  Still, I lost track of a stock or two and held on to a few I probably should not have.  But everyone had losers this year and I’m chalking this one up to the bad market.
4. Spend more money - This one was the crazy one.  Easy for some, hard for me.  I did loosen up the purse strings ever so slightly.  I bought myself a 50″ Plasma TV , a new Digital SLR camera, and a host of things for the apartment (including upgrading the apartment itself).  I even bought an engagement ring.    Admittedly the last one should not count as I would have done it regardless of my decision to spend more money or not but the first few are definitely a departure from me and my frugal ways.  All said, it was a lot of money for me.  Does it prevent my fiance from calling me frugal?  Nope.  She is probably right.  I still skimp and save probably more than I should given our income level.  But in the end, it always comes down to the fact that I rather save now and retire early later.  Then again, with the way our economy is going and the reaction of our government, they may make that impossible.

So all in all, not a very successful year from the blog perspective. It was a very successful year for so many other reasons.  I got the job under control now, where before I was miserable at times.  I got back to California and could not be happier with that move.  And of course, I got engaged!  I honestly could not ask for much more of a successful year.  Well, that is until we turn the calendar to 2009 …

To add to my post about my engagement, I learned one interesting thing about engagement rings.  It pays to go to a small specialist.

Like a lot of people, I tend to feel  more comfortable shopping at big chain stores.  That is why I tend to do my shopping at places like Best Buy, Target, and Amazon.  They tend to have the widest selection and the best prices because they have huge stores and usually do not offer high level of customer service.  I actually prefer this since it not only keeps prices low, but I do not like to be bothered by sales people when I am shopping.

However, with the ring, I went a different route.  I should say, my fiancee went a different route.  Someone like me would be tempted to go to one of the big engagement ring stores like Robin’s Brothers, Jared’s or Tiffany’s.   Especially the latter one because the name is so well known.  I would shy away from a small mom-and-pop type setup because I would not feel as safe going to a place like this given how expensive this purchase is (it is now probably the most expensive thing we own).  But my fiancee had a particular style in mind, so she decided to do some shopping.

She picked a style and decided to ask several of the local jewelers for quotes.  To her surprise she found one that quoted her a very reasonable price just for the band.  She also asked about the solitaire diamond and they gave her several options, each of which were actually cheaper than anything we could find elsewhere.  This was very surprising to me because their prices were actually better than the online retailer Blue Nile. Blue Nile is known to have very good prices on its single diamonds and when we tried to find one of the same quality as the one our jeweler offered, it came out to be more money online.

This was a very good diamond, it scored very well in the 4 C’s (Cut, Clarity, Color, Carat).  In fact, we found that many of the chain type stores could not match the grade of diamond that we were getting.  While most people worry about the big C, Carat, we found that it was probably the least important factor.  Her diamond is brilliant, it really sparkles in the light because it scores so high in all the other factors.  So my strong recommendation out there to anyone looking to get a diamond ring, focus on the OTHER C’s.  It is much more important than you think.

My only other concern was how I could be sure I was getting what I paid for.  That was easily taken care of by going to a third party jewelery appraiser which I had to do anyway to get the ring appraised to buy insurance on.   Of course, the appraisal went fine and my fiancee could not be happier.  So we found not only better service but better price and quality by going with the small guy.  It may make me rethink what I thought I knew.

Despite the fact that I absolutely hate crowds, and I hate fighting to get a parking spot, the last few years I have gone out on Black Friday.  I never buy anything, but I like to get a sense of the crowds and to see what people are buying.  I have never actually bought anything because of one simple fact.  While there are great deals to be had on Black Friday, they are usually for things I don’t need.  Now there is the part of me that loves a good deal.  I see something at 50% off, and it instantly piques my interest.  However, I find the whole thing rather sad as people line up more than twenty-four hours in advance to take advantage of doorbuster deals.

I only went to a few places.  I went to a Best Buy, a Borders, and a Macy.  I also just glanced in a few others.  While some pundits have predicted this to be a horrible shopping season, there were some pretty significant crowds at the Best Buy. The parking lot was quite full, with several cars continuously circling for a parking space.  I ended up parking pretty far away but I at least did not have to wait for my spot. I walked in and it was pretty crowded.  There was however no line at the registers.  It was kind of odd.  It was the first time I have not seen significant lines at a Best Buy on a Black Friday.  It might mean that Best Buy is getting really good at getting people through the line.   This is entirely possible because all the registers were opened and they had several makeshift registers throughout the store.  It might be also that there are lots of people like me, looking just not buying.

The same thing at Macy’s and Borders.  It just was not all that crowded.  It seemed even lower on Saturday and Sunday.  This is in contrast to what is being reported in the news as most news outlets are reporting higher foot traffic this year than in years past.   It will be interesting to see how this news will be digested by investors.  It will really show how much bad news is actually baked in into the equity markets.