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Archive for May, 2007

New look – you like?

Do I change the template too frequently?

Let me know what you think about this one, or if you prefer I go back to the old one. OR, if you just want me to stick to one look, any look, for at least several months!

Thanks guys. 🙂

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Mental accounting

I just received $120 from an old friend of Mom’s for my graduation. I don’t know the old gentleman (OG) very well, although my biggest impression of him is how independent he is, as a ninetysomething. Definitely inspirational.

Anyhow, the money will go into my big pool of money (well, or not so big, depending on how you look at it). I feel the need to put the entire amount into my Emergency Fund. Even though money is money – all interchangeable here – I still feel some sort of obligation to use gift money, especially from the elderly, wisely.

I came really close to buying a $50 sweatshirt today, but finally decided that because I can find equally nice and quality pieces for half the price, I really shouldn’t spend so much money (especially not OG’s gift money) on an over-priced sweatshirt.

It’s not the most rational of feelings (I doubt that OG will descend upon my front door with a disapproving frown if I used the $120 for a big sushi blowout), but I don’t think I’m the only one who feels this way.

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Crane stationery

I just spent $18 on stationery. But it’s not just any stationery, it’s Crane stationery. Sheets and notes with whimsical or elegant designs that demand you to write something meaningful, something witty, something worthy to be imprinted on such fine paper.

I’m fairly sure I won’t will exceed my $90 budget this week.

Anyhow, I got the paper so I can write to Grandma. We live very far away from each other, so I only have the chance to visit her once a year at most. I don’t write to her often – not because I don’t want to, but because she speaks a different language and it is difficult for me to write in that language.

But I’ve decided that enough is enough, as far as excuses go. Using online dictionaries and what little I remember, I’m going to piece together some short notes even if it takes an hour to write 10 lines. (Which it will, at the beginning). True, I didn’t HAVE to get the Crane stationery – plain lined paper would’ve been fine. But it’d be nice to give her something pretty to look at, and besides, the smaller cards will make my writing seem longer.

My non-financial related goal is to write her a short letter every 2 weeks.

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…but even better don’t shop and don’t buy anything you don’t need.

Hmmm… that doesn’t quite have the same tone to it, does it? 😉

In honor of Mother’s Day, here are some lessons she taught me.

1. Don’t buy something cheap if you don’t need it: I certainly know I’ve been guilty of this many, many times. I got a couple very inexpensive dresses that I’ve never worn. I’d be better off putting my money into classic, quality pieces than buying clothing that I will wear only once or twice (or not at all).

2. Know your wants from your needs: Mom always told me that the desire to acquire and to consume are strong desires indeed. It takes discipline to tell yourself, you don’t need that new purse or computer. You want it. It doesn’t mean that you shouldn’t buy things you want, but you have to realize that everything has a price and that you’ll pay for it (with the time and energy you spent earning the paycheck). Which brings me to the third lesson…

3. Time vs. money: There’s a negative correlation between the two – you can either have more free time, or you can spend your time to earn more money. Mom said she’d rather not work overtime and sleep in, then to work extra hours and pay for a massage. That’s a choice that must be made, because that old economics adage is true, there’s no free lunch!

4. Know what you’re comfortable with: Although we could have afforded a much larger, nicer house, Mom decided to purchase a smaller condo because she can easily make the payments on it. As she said, the extra one or two bedrooms are just not worth the stress of the additional $500 every month.

5. Never have credit card debt: The high cost of financing isn’t worth it.

6. Understand and accept the consequences of your choices: One of my cousins want to become an actress – she’s really quite good and with some lucky breaks, she might make it. Of course, the chances are against her. Mom said to me, it’s fine if my cousin wants to pursue that, but she must understand the consequences of her choices – namely, that she could very well be poor her whole life. Now, if you can honestly say that’s the sacrifice you’re willing to make, then go for it, but if not, then perhaps it’s time to get an accounting degree and do local theater on the weekends. What you cannot do, is expect a third party (your parents, your spouse) to support you.

7. Beware of the rich-on-paper syndome: During the big real estate boom, like the tech boom several years earlier, many people became richer – on paper. They went out and purchased new TVs and cars, remodeled, invested in risky ventures with their new found sense of wealth. But that money isn’t available until you sell the house or the stocks. Don’t be so caught up in your net worth or gains on paper that you toss budgeting out the window.

8. Save! Don’t count on the government, don’t count on a husband, and don’t count on your children. You are responsible for your retirement – the better off you are in your old age, the more you will enjoy it.

9. But don’t be stingy on the things that count: I guess this depends on each person’s priorities – Mom is a very frugal person. She’s never been one to care about clothes or makeup, or what kind of car she drives, but cutting back in those areas allowed her to invest in things that’s important: namely, my education. By the time my four years are up, my parents will have spent $100,000 on me. Mom did that because she wants me to have the best education possible, without a crushing debt. When my grandma got sick, Mom spent 6 weeks taking care of her. Her savings and accumulated vacation hours at work allowed her to spent the time without worrying about whether the mortgage or my tuition would be paid. And ultimately, the purpose of financial security is to have choices. To never have to decide between caring for a sick mother or paying your bills.

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College reflection$

I’ll be graduating soon. I can’t believe that four years have gone by, just like that. Mom can believe it, though. Especially because she can finally stop writing the $3,000 tuition checks every month.

A couple years ago my college’s tuition+room/board+expected miscellaneous expenses broke the $40,000 mark. Add in book money and plane tickets home, a student (not on financial aid) can easily pay over $45,000. In ONE year. I was fortunate to get some financial aid and took out student loans, but even so. At $160,000+ for four years of school, my parents probably paid around $110,000.

That’s the best (and most expensive) gift they’ve given me. There’s a lot of debate on if parents should pay for their children’s college education, and obviously it’s an issue that depends on the family’s situation and values. So, there are no one-size-fits-all solutions.

Well, knowing what Mom did for me, I want to do the same for my future kid. At the very least, I’d want to have three years of private school education expenses saved up. But that’s going to be a tall task.

According to Sallie Mae’s College Cost Calculator, the current $40,000/year tuition (or $160,000 for 4 years) will balloon to an astounding $1,031,373 in 26 years, assuming 7% annual cost increase. The cost of attending four years of private school will exceed $1 million dollars. I know that $1 million in 26 years won’t be worth as much as now, but it’s still a whole lot of money!

Good thing I won’t have to worry about paying for someone else’s college expenses for a LONG time.

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…But only if you live in Chicago.

Artists’ Frame Service is offering FREE college diploma framing (a $125 value) from May 14 to July 31.

Just take your diploma to one of their three locations (Lincoln, Highland Park, or Clybourn Shopping Corridor) and select your framing. This offer is good for one diploma per graduate, any year, any school.

So even if you have an old diploma from a long time ago, you can still get it framed.

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Delayed gratification is good for financial planning, but be careful not to take it too far. That doesn’t mean just break out the credit cards and spend like there’s no tomorrow, but if you really want to do something, make room for it (in your budget and in your schedule).

One of my friends once told me, make sure that some goals are just for you. Not for your parents, not for your friends, not for work and not for your partner. Don’t put if off for too long. I have smart friends, huh? 🙂

This applies to other (non-financial) aspects of life too. For as long as I can remember, life has been punctuated by the Next Big Thing (NBT). College admissions, job interviews, etc. etc. There’s always the next goal, bigger and better. It never ends.

Now that I’ve got a job, the goal is to amass a respectable nest egg, give back to the college, and try to keep my patched-up relationship semi-together, all while working 16-hour days and weekends. Ambitious? Perhaps. Idealistic? Definitely. Crazy? Don’t answer.

I do know that life’s too short to keep jumping from Point A to Point B without enjoying the scenery in between.

Do I sound like a Hallmark commercial. Or one of those “carpe diem” postcards. Eek. It must be close to college graduation time.

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