The Expert Budgeting Advice I Don’t Follow

The 50-20-30 budget is a cornerstone rule-of-thumb according to personal finance budgeting experts. In it, you spend 50% on needs, 20% on savings and debt reduction and 30% on “wants.”  This may be sacrilege but this seems like a terrible plan for your budget.

Frittering money away on a budget

Consider the following hypothetical 10-year spending of a 23-year old who makes approximately $30,000/year post-tax and who follows this budget.
Age Posttax $ Annual wants Monthly Wants
23 30,000 9,000 750
24 31,200 9,360 780
25 32,448 9,734 811
26 33,746 10,124 844
27 35,096 10,529 877
28 36,500 10,950 912
29 37,960 11,388 949
30 39,478 11,843 987
31 41,057 12,317 1,026
32 42,699 12,810 1,067
 Total $108,055

Starting with a modest entry-level salary and modest raises, this person has spent $108,055 over just 10 years on indeterminate “wants.” Over a 40 year career, this number could be half a million or more.

What do you get if you spend 30% on wants?

What do you think these wants are? Well, if you look at the number as $100k, and think of spending a lump sum like that, it seems like you could have bought some really awesome stuff that would be valuable now. You could have a designer wardrobe, a nice car, some nice vintage furniture or maybe you can point to key moments in your life- lavish vacations, a big wedding.

But if you subdivide it into $750-$1000 month, it’s very easy for that money to disappear rapidly. You find that you can piddle your money away on Kardashian-endorsed clothing, a Hyundai, and overpriced West Elm furniture (I don’t have anything against the Kardashians or Hyundais but I’ve heard West Elm isn’t very good). Instead of memorable meals, you’ve spent way too many weeknights at the not-so-good pub or the meh takeout place.

Why 30% “wants” can be a bad idea

Budgets are often thought of as ways to restrain our spending but, if used incorrectly, they can be the impetus to increase spending. Say this person is 23 and never made any real money before and now has license to use $750 with no real purpose every month. How is this person going to spend that $750? Probably not in a malicious way but likely in an easy way. Someone suggests a trip somewhere and you go.

Then, you have a rough day at work so you go out to a fancy dinner to treat yourself. Upgrade your electronics and your cars. Upgrade your furniture. You have kids and buy your kids stuff. At the end of 10 years, you have the latest versions of things you used to have when you were 23, your closets are filled with stuff, you have a fair number of frequent flyer miles and you wonder, why am I still in debt? Why don’t I have the career I want?  Why don’t I have the relationships I want? Why isn’t my life fulfilling?

 All this regret and you’ve been sticking to a budget. You did everything the financial gurus told you to do, but you might not be getting ahead of your finances.

A Possible Solution

The regrets people have in their 20s were not traveling more, not building close relationships, not exercising, not trying new things. Instead of putting an indiscriminate “wants” category, perhaps you could subdivide your “wants” budget to address these possible regrets.

Chinese billionaire Li Ka-shing offered some interesting budget advice. Some background on Li, after his dad passed away, he was forced to start working 16-hour days at age 15. He did not come from wealth but is worth an estimated $31 billion today.

Anyway, Li’s advice is to divide one’s budget according to the following categories:

50% live. 20% save. 15% grow. 10% build. 5% play.

Here’s How It Would Work

Here’s an example of what this looks like on the same $30k posttax salary:


Live (the basics)

$800 rent/utilities
$150 food
$200 other necessary spending (insurance, phone etc.)
$100 transportation

Total = $1250=50%

Grow (learn and experience)

$50 building your network/dating (building new relationships)
$50 books/classes (structured learning)
$200 travel/trying new things/starting a new business (independent learning)
$75 charity

Total =$375 =15%

Build (acquire the things you will need in your life)

$100 furnishing your home/home needs
$100 furnishing your wardrobe/personal needs
$50 exercise (classes, building your own at-home gym)
Total = $250 = 10%

Save

$500 savings/debt repayment
Total = $500 = 20%

Play (whatever you want)

$125 entertainment/eating out
Total = $125 = 5%

$2500 total

You get $50 to spend on networking this month. Who do you want to meet and treat to coffee? A cute dating prospect? Your coworkers? People with your potential dream job?

You get $200 to travel this month. Where do you want to go? What do you want to see? Paris? Polynesia? Pittsburgh?

You have $100 to spend on classes. What do you want to learn? Java? Italian? How to bake a cake? How to play the piano?

Even you can’t make these percentages, that’s fine. It’s something to work towards. The point of a budget is structure, not perfection. The beauty of this budget is that if you follow it perfectly, you will grow and you won’t squander too much of your money away on activities and products that you won’t remember.

I’ve heard some people say that the 20s don’t matter. Those people probably think life doesn’t matter. In your 20s you may (finally!) be out of school, and you can make your 20s can be all about growth. Even if all you learn is how to tread water, that’s a great skill

Some people enter their 30s in hundreds of thousands of dollars in debt. Why can’t you use these 10 years to build a foundation for your career growth?

What do you think of this alternative budget?

Expert budgeting financial advice I don't follow

Photo by Fabian Blank on Unsplash

In Praise of Deceiving Your Audience

Giving advice is tricky. First, you might not know what advice to give. Then, even if you know the absolutely right solution, the asker might not follow your advice. This has led some people to give advice based on what they believe the asker might follow instead of what may be more useful. I guess for me, that rings false because lawyers don’t get to give illegal advice just because we believe our clients are crooks.

Others believe that people may follow their advice but will be disappointed if they get different results. These people are very wary of giving advice of the “I did this, you can too!” varietal. They say insinuating similar or even positive results could be misleading. I’d like to think that people have seen the Etsy Fail blog  and/or understand the term “your mileage may vary.”  You train as hard but you don’t run as fast in the race. You study as hard but get different grades. You can diet and exercise and still not be as skinny as someone who eats whatever they want and lays on the couch. This is something we all learn about pretty early in life – life is not a simple cause and effect machine.

My thoughts on this: if the advice is solid, I don’t think we should concern ourselves with the results. First of all, none of us can guarantee or predict results. (The only people who try to do so are selling something.) If you write solid advice to a group of people, you can’t take on too much responsibility for what happens. We can’t predict the future for ourselves, let alone anyone else. The only thing we can control is our choices.

Second, the process is more important than the results.  I believe in teaching good habits, even if the results will inevitably vary.  If we focus too much on the end result, if we get too caught up in “well she has these advantages” or “he has these deficiencies,” no one will ever start anything. And that may be the worst kind of advice. If we focus on the journey and the good habits, I think it would be exceedingly rare for anyone to get to the end and think, I wish I hadn’t even started. 

I think about the call for transparency in personal finance blogs and I wonder if that’s beneficial. Let’s say someone reads the Frugalwoods, who have gotten some heat for pretending to be middle class while earning a $300k salary, and the reader is inspired to live a simpler, less expensive lifestyle and save more. Is there a bad outcome in this scenario? To me, the ends justify the means.

Some might say, bloggers can be inspiring while being honest. But I’ve disclosed that I have a high salary, and I’ve already heard a few comments that imply that  I’m unrelatable. I think people get most inspired by those who seem similar to themselves. If you broadcast you have a high salary, fewer people will think they can follow you, even if the advice and the steps are the same. If you broadcast your high salary, other people will focus on the results, see it as unobtainable and they might not even start. That’s a bad outcome. So if some bloggers want to create a facade of being low-income and that facade helps more people, who am I to judge? They are helping people. I am unrelatable.

Some might also say that bloggers could more transparently advertise the difficulties in their paths, but I wonder if this is also counterproductive. When I think about everything I’ve ever accomplished in my life, I’ve never thought about the obstacles or my deficiencies. For instance, my friends wanted to run a marathon, and I figured I would join them.  I had never run more than 10 miles before but I followed Hal Higdon’s program and I was fine.  I think if someone had told me that I wouldn’t make it, I probably would have backed out.  Some people like to prove people wrong – I am not one of those people. Lots of people are easily discouraged.

This is the beautiful thing about tiger moms. They assume their kids are capable and make their kids keep trying. Usually the kids soar because the kids have no idea that they can’t do it. I think it’s also true for adults – if you have high expectations, people will reach them more often than you would expect. Part of it is that you have no idea what the other person can accomplish and the other part is that people stretch to achieve what they believe they can achieve.

I think there are enough naysayers in the world that I don’t need to be one of them. And I think the basic tenets of personal finance are something that nearly everyone can do.

In fact, succeeding in personal finance is not that surprising, even if you start from the bottom. When I think of all the amazing things that people have accomplished when they really shouldn’t have, personal finance seems easy. Like Spud Webb never should have made it to the NBA. There are guys who are 6’8″ who don’t make it to the NBA. So someone who is 5’7″ generally has no chance. And no way would he ever have the chance to compete or win a dunk contest. I’m sure everyone told this to Spud Webb. I’m sure the number of people who believed in him making it to the NBA was very small. I’m sure there were a number of people who told him to do something easier. If he focused on the results, he wouldn’t be Spud Webb. He just focused on being an awesome basketball player. (See also Muggsy Bogues)

I think of the pianist with only one hand. There are people with two hands who aren’t pianists. Hey buddy, let’s steer you to painting instead (I mean, you don’t need both hands for painting and there’s a quadriplegic painter, so one hand doesn’t seem so bad). There are tons of things that someone with only one hand can do easily – playing the piano is one of the hardest. But that guy said no, I want to play the piano. And he did.

I remember I heard an interview with a man without limbs who became a wrestler and when I tried looking him up,  I couldn’t figure out which search result was him because there were multiple successful limbless wrestlers.  

I’m following the budding career of Shaquem Griffin, the first one handed-NFL player in the modern era. Now, if I had a son with one hand who wanted to be in sports, I would direct him towards running or soccer. And those would have been the safe choices. But it’s also less inspiring.

Shaquem Griffin was selected in the fifth round – he wasn’t a sought-after prospect. He knew the odds were against him in the draft. But from what I read from his interviews before he got drafted, the results of the draft, which he couldn’t control, were not the most important thing. He had already created a life for himself where he didn’t say, this is my disability, what can I still do? He started with, this is what I want to do and I won’t let my disability hold me back. And that’s the kind of mindset that is going to get him far and inspire others. That’s the kind of mindset I want to cultivate in myself and others.

It would have been very good advice to tell any of these people why they couldn’t do what they were trying to do. Why waste your time? Try something easier. That’s focusing on the results, not the process. All of these people succeeded because they focused on the process and weren’t too afraid to start.

So when people say, people can’t save money, I’m surprised. There are countless dyslexic authors, but telling someone they can save money is setting people’s hopes up. Because saving money, that’s impossible.

I’m not saying the message should be, you will get a million dollars by age 35. The message should be, if you develop these habits, you will have a great chance at succeeding no matter where you start from. Yes there will be obstacles and challenges and setbacks. I have no idea what those will be like for you. But I believe in starting and I believe in the process. And I believe anyone can. I also believe in the great Rumi quote:

Live life as if everything is rigged in your favor.

Jordan B. Peterson describes a very optimistic view of life whereby a person thinks that all one’s problems are caused by oneself. That way, each person is totally in control of his/her own destiny. I mean, it’s not true. We are not the masters of our own fate. But what if we acted as if we were? Those who think they are the protagonists in their dramas have a lot more say in their outcomes than those who see themselves as victims.

People say you can encourage people but the ethical thing to do is to stifle their expectations lest they be disappointed. I say, why? If more people believe they can, more people will.

Photo by Josh Calabrese on Unsplash

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How Being “Nice” Hurts Your Finances

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Everyone should be kind. But that’s quite different than being “nice.”

According to Wikipedia:

The term”nice guy syndrome” can be used to describe a man who views himself as a prototypical “nice guy,” but whose “nice deeds” are deemed to be solely motivated by a desire to court women.

A nice guy does certain things that appear, on their face, to be nice, but he doesn’t do these actions just to be nice – no, he has an agenda. In his mind he’s thinking, if I do X nice things for a girl, then she should date me. But the girl never agreed to any of this. The way you recognize a “nice guy” is that when he doesn’t get the results he expected, he gets really upset and the nice actions stop. He views these women as leading him on.

This isn’t a phenomenon solely for men though. I’ve seen women also make these mental contracts. I’ve known women who act believing that if she does certain things, the guy she’s dating will want her to be his girlfriend, or will propose or will be a better husband.  And then when the guy doesn’t call, doesn’t propose, doesn’t pick up the extra chores, she’s upset. She views these men as players.

In both these “nice people’s” minds is the idea that the other person should have known that the nice guy/girl wouldn’t have done these things without some quid pro quo arrangement. The nice guy/girl held up his/her end of the deal so where was their reward?

So what’s a nice guy/girl to do?

Well, I’m a lawyer so I’m going to say “Make a contract.” But you probably won’t.

The problem with “nice guys” or “nice girls” is that you can only control your own actions. If you expect people to read your mind, you’ll generally be disappointed. Even if they could read your mind, it doesn’t mean that they’ll do what you want them to do. If you need someone else to do something in order to make your actions worth it, either state your intentions and get an agreement or don’t do it.

What does this have to do with finances?

Just like in relationships, you can only control your own actions when it comes to your finances; you don’t have control over results and you don’t have control over anyone else. The important thing here is acknowledging the contracts you are making in your own head. For instance:

You’re killing yourself at work, but no one agreed to promote you.

You write blog posts based on what you perceive other people want to read, but no one agreed to read it.

If you’re acting like a “nice guy/girl” these are reasonable things to do but these actions will only lead to resentment. Instead, you need to ask yourself why you’re doing the things you do. If you find your work intrinsically rewarding, then keep on doing it. If you would only do certain activities if you get a certain return, then you have to ask for it and do what it takes to get the other person to agree. If what you’re asking them to do sounds hideous to ask (if I am nice to you, then you will work for free), then don’t expect a great response.Even if the other person agrees to your terms, you should always act as if the return is uncertain. That means, if it’s something you really don’t want to do, you really shouldn’t do it.

I know everyone says doing what you love is terrible advice. It’s true that it’s a dicey proposition to do what you love and expect to make a living from it. But the worst part of doing what you love is that you might not get paid; you still spent your time doing what you love. If you aren’t doing what you love, you better make sure you are getting something worthwhile in return.

Cheapness – Can Stop Please Stop

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A friend was telling me how he could get any drink he wanted for free at a certain Starbucks because of a deal with his company. He was telling me about how he chose his drink (yes, this was an incredibly long and boring conversation) and I interjected, you don’t drink coffee so why does any of this matter?

I know, he said, but it was free.

He would make an excellent personal finance blogger. =D

When I was younger, I tried to figure out everything I could get for free. But as you get older, you become a little warier about free stuff. Sometimes the furniture is free because it has bed bugs embedded in it. Sometimes the food is free because you’re getting a sales pitch. And sometimes it is a good product without strings attached but it is still too much of a hassle to pick it up or upkeep, or sometimes you just don’t want it.

Free only means it doesn’t cost money; it doesn’t mean it comes without any costs at all.

As I’ve aged, I’ve learned to appreciate the other costs in life. Costs in time, mental energy, space in my apartment, convenience. It makes sense that the more money I have, the less I use money as my only lens with which to view the costs of things, particularly as those other costs have become more precious.

If you have no money, then it may make sense to base your decisions on money. But I’m exceedingly wary of people who have money who base all their decisions solely on money. There are personal finance bloggers who make much more money than I do and who put up all these constraints on how they can spend their money. No vacations. The cheapest food.

I understand dipping one’s toes into austerity. I think it makes sense for everyone to go through no-spend months and to live like they were college students again. It’s important not to forget that feeling. But living your life based on what saves the most money – that’s cheap.

People think lifestyle inflation is the only thing you need to look out for but cheapness is also a pervasive and somewhat easy trap to fall into. What’s the problem, you may say. You’re saving money.

I mean the problem is you’re a jerk. How do you know you’re a jerk? Because you don’t have a code. Everyone needs to have a code. What do I mean by a code?

Imagine your parents assembled the perfect toolbox. They read up on Consumer Reports and spent their time figuring out what was needed for the best toolbox, and then got to work assembling the best hammers, screwdrivers, pliers, you name it. Then one day you ask for advice on a project and you learn that they have never used any of these tools. They don’t even know how to use them.

You ask to borrow a tool. They won’t give it to you. You ask, what are the tools for. Emergencies. The future. It makes them feel safer knowing they’re there. Even though they don’t use them. And then they leave you behind and amass more tools.

Money is a tool.  If you have no projects, then why are you accumulating so many tools?

I’ve had former friends who invited people over for food and then told us how much the food they were providing would cost us (it was something like $10/person and they were serving us cabbage soup. I felt like I was getting fleeced. Also I don’t know when I had to agree to eat and pay for cabbage soup).

There are things that will cost money and you will have to decide what is more important to you. Your reputation. Your children. Your parents. Fun. Charity.

You have to set out the tenets you want to live by. Because if you don’t value anything at all, then why do you and how can you value money?

Frugality – Don’t Stop Can’t Stop

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I have two friends who own successful small businesses. One spent $25,000 on two watches recently but the first time I met him, he was giddily boasting about his $6 t-shirt. The other sold his share in his company for $1.2M and the first time I met him, he was looking for street parking to avoid paying for a lot.

One would think, both of these men being cocky alpha males, that they would have tried to impress me from the get-go with their wealth. But they were flaunting their cheapness when just meeting me and I only learned about their wealth over time. I think they both tried to flaunt their wealth to me later (I did learn about the watches and the selling price of the company after all), but what I initially saw was that these were people who were still interested in saving a few bucks here and there even when it didn’t matter to them.

For a different perspective, I remember a grad student telling a friend and me that when she got her first real job she would get a wardrobe full of designer clothing. My other friend in this conversation is a very successful vice president of a major company and I remember her balking at the cost of designer clothing. $600 for boots? No thank you.

So why am I telling you these anecdotes? Well, I’ve seen posts where people wonder if they’ll have to be “frugal forever.” It seems like people are wondering if they’ll always be miserable clipping coupons or comparing prices. What I learned from these anecdotes is that there is no end to frugality. I’m not saying it’s an endless treadmill of counting pennies, but if you get into certain money-saving habits that work for you, that you develop over years, you don’t turn them off even when you gain wealth. You may not be able to turn them off either. Think of it like a train – you spent all this time getting it going that it’s hard to stop it. You’ve built these habits for life.

For instance, I still look at coupon inserts because I used to clip coupons with my mother. This is a habit I’ve had since I was a little kid. I look for promo codes when I purchase items online. I still cook most of my meals at home. I don’t need to save the dollars here and there anymore, but 1) I’ve gotten quite efficient with how I save money because I know what works and where to look; 2) there’s very little incentive to spend more when I know the cheaper option works; 3) I’ve learned to enjoy the cheaper options; 4)  the high of saving money doesn’t go away; and 5) I just don’t know another way to be.

So if you’re frugal, you are mindful with your money. You have forced yourself to make decisions that resulted in spending more  on things that are meaningful to you and less on stuff that isn’t. If you live that perspective, you probably start to believe that mindset and that’s a hard mindset to break out of. In fact, you probably don’t want to break out of that mindset. You are that mindset now.

So if you’re wondering if you will get to a point in your life when you can finally get rid of your frugal habits, the answer is probably not. Once you develop the habit, you’ve changed something about yourself and your goals. The positives are that it only gets easier to save money because you will find it second nature and you will want to do it. It’s like flexing a muscle. It becomes less awkward and then it just becomes second nature. The negatives (possibly) are that you have fundamentally changed what you value and how you live your life. You may never get that designer wardrobe because you have realized different goals in life.

The other option you have is to get the designer wardrobe, the fancy vacations, the upscale apartment. The truth is that all the choices you make at the beginning of your career and all the ones you are making on a daily basis are creating the habits you will get used to. As I’ve heard Whitney Cummings say about snowboarding, you go in the direction that your feet are pointed. If you’re used to saving, the more you’ll save.   The more you spend, the more you’ll get used to spending. The more you do something, the more you’ll value it, the more it’ll become part of you. It’s the habits, the things you do everyday, that will make you into the person you will eventually become. And it’s only much later that you realize what you decided you valued, because that’s the person you became.

What kind of person are you becoming?
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Photo by Mado El Khouly on Unsplash

Quick Thoughts on 15 Books I’ve Read this Year

The more I read, the more excited I am to read. It’s like learning more about what I don’t know. And it’s exciting and also a little bit embarrassing because I start to get paranoid and think, wait, did everyone else already know about this? Given the rates of reading in the world, maybe not.

I’m sure someone will ask how I read so much. Well, it’s easy to read a book a week if you are a type-A neurotic who takes public transportation and also doesn’t have a very exciting social life. I read whenever I’m in a queue to calm the internal rage that comes over me from waiting in line and whenever else I have a spare moment. I only watch one or two TV shows a quarter and they’re all shows that can’t be binge watched – i.e. I don’t have Netflix.  Even so, I’m a little short on a book a week, particularly as one of these “books” is a movie, but I’ve been working like mad recently. I hope to get better!

*These aren’t affiliate links.

1. Dollars and Sense: How we Misthink Money and How to Spend Smarter by Dan Ariely

This book focuses on the irrational ways we handle and think about money. The biggest one that I noticed for myself is faulty comparisons. In the book it’s how car salesmen get you to add on extras to your car, because you mistakenly compare the cost of the extras to the car, which make the extras seem insignificant. For me, I’ll nitpick about the cheapest Uber but forget that I used to spend so much money owning a car. Or I remember this one time when my boyfriend and I had just come back from a pricey European vacation and we balked at paying 10 cents to print out a Groupon for a “free” meal on our way back. We were adding the 10 cents to the vacation and were trying to take a stance of “not a penny more!” but that’s a really illogical way to look at money. And vacations. I should have been comparing the 10 cents to the cost of a comparable meal out, not adding it to the tab of the vacations. (Also no one was keeping track of my budget for vacations for me so it didn’t matter to anyone anyway).

In the same way, I’ve always thought budgets were a little odd. Like if your budget is $100 on clothes and you’re already at $100 in April, what does it matter if you buy the dress you like on April 30 v. May 1?

2. Win Bigly by Scott Adams

If you still can’t wrap your mind around how Candidate Trump became President Trump, this one cuts through all the BS.

3. Great at Work by Morten Hansen

Most employees focus on a million different tasks and projects and do middling jobs at them. The best employees focus on fewer things but obsess to be the best at them.

4. In Pursuit of Silence [documentary]

Ok it’s not a book so I’m cheating here. It showcases the negative effects of noise in our lives.

5. Thanks for the Feedback by Douglas Stone

Understand whether you want coaching, compliments or information regarding your position as feedback and interpret any of the feedback you receive as such. This helps you understand others’ feedback for you and communicate your needs for feedback from others.

6. The Last Black Unicorn by Tiffany Haddish

What I took from this book is that Ms. Haddish is a powerhouse of positivity. I also remember that she wrote that if you’re not having fun on stage, no one’s having fun.

This is the book that finally helped me understand that affirmations were not crap.

The way humans are socialized, we hold a somewhat irrational attachment to our tribes. It’s not that we should break our allegiances but we have to understand others’ allegiances if we are to understand their motivations.

9. The Year of Less by Cait Flanders

Like a coming of age story when it comes to money and someone in their 20s.

10. Barking to the Choir by Greg Boyle

I’m so impressed with Father Boyle’s compassion for former gang members. It really makes it hard to judge anyone after reading this book.

A lot of good emotional work here.

12. The Gentle Art of Swedish Death Cleaning by Margareta Magnusson

I love this idea of cleaning out your house early so your family won’t have as much to do. And it’s such a hilarious gem of a book too.

Forget the 1%, the upper middle class are keeping income inequality alive.

14. Nonviolent communication by Marshall Rosenberg

This is a way of communicating to de-escalate potentially explosive situations (not necessarily violent in a gang way, but could just be violent in your personal relationships).

15. Getting the Love you Want by Harville Hendrix

I buy into the idea that I’m attracted to people who represent the negative characteristics of my primary caregiver in an effort to subconsciously repair that rift. That’s why I always date men who oddly remind me of my mother.

What are you reading?

The Write Everyday in May Challenge

pexels-photo-316465.jpegToday I will tell you how a tiny bit of success ruined my life (or just derailed my blog). If you check out the archives, you’ll see that this blog was started in 2016. I didn’t start writing regularly, however, until October. Starting in the middle of October of 2017, I tried to write everyday. I didn’t quite make it, but I created enough of a habit that I posted more in November than any month before or after. It felt good building the habit.

Then in late November, I got featured in Rockstar Finance. I can tell you honestly that was not the goal because I didn’t know regular sites got featured on Rockstar Finance. But with that feature, my middling viewership skyrocketed, even if only for a few days. But the surge had a profound effect on me. I changed from thinking, I’m just writing for myself, to, I COULD BE POPULAR. And for a hot second, I chased popularity. I read up on SEO and (ugh) Pinterest. I tried social media, which was great because 1) I finally could claim some Millennial cred and 2) I met some cool people and 3) had very cool experiences like attending CampFi on a last minute ticket. I’ve even set up some interviews with people I met on Facebook that will soon become posts. All in all, I don’t regret social media the way most people do.

But I found that the social media and other activities were distracting me from what I really wanted – which was writing. Yes, the number of people visiting my blog went up a lot, but I only made 6 posts in April, the lowest number I’ve done in 6 months. I’ve heard that successful bloggers focus more on marketing than writing and I’m sure that’s true but that’s not my vision of success.

I think some people may be misled to think that I’m trying to make my blog popular and then monetize like every other personal finance blogger. I mean, I wouldn’t hate it (the monetization anyway, though I’m terrified of popularity) but the overarching reason I write is because writing benefits me.

I have a lot of stories I want to tell. I have 165 drafts in my inbox that represent posts that I’m trying to write. When I started writing my blog, I had 150 drafts. Rather than diminishing, the number of drafts has increased because I haven’t finished them and I keep adding more. My blog wasn’t accomplishing its mission of inbox zero.

I have to remember (sorry readers) that this blog is for me. I mean, I hope it’s helpful to you too, if only in that I encourage you to write more. For instance, here are some ways that writing has helped me:

  1. It helps me store memories and experiences away like Dumbledore.  It’s just a relief that I don’t have to remember everything in this tiny little mind I have. Without my journal and my blog, my life would just pass me by and I wouldn’t spend the time to reflect on my experiences or learn from them.
  2. It helps me synthesize thoughts and ideas and organize my thoughts.
  3. It has helped me to connect with others. It’s been lovely reading comments.
  4. Writing helps me remember the things I read in the tons of books I read per year. Otherwise it’s all in one ear out the other.
  5. It helps me chart my progress. It’s amazing when people take pictures of themselves every day for years – you can see the changes as they happen.
     Writing down your thoughts is like seeing your mind change. It doesn’t always seem like we are changing but we are, often subtly. If we don’t make a record of who we were before, we might fail to see the progress and think we aren’t getting anywhere. It’s very difficult to take a picture of your mind though – but writing can help take a snapshot of who you were at this period of time.
  6. It helps exercise the creativity and self-expression muscles.
So I’m going back to my original purpose. I pledge to write every day in May. Why don’t you join me? My challenge to you – whether you’re a blogger or not – is to spend some time writing every day this month. It doesn’t all have to be perfect or even intelligible. I will try to make my posts as intelligible as possible, readers, but mostly I just want to make a dent in my pile of ideas and take some weight off my brain. I hope you do the same.

Will you join me in my writing spree? Why do you write?

Why My Next Car Will Be a Luxury Car

pexels-photo-724495.jpegDespite being happily car free for two years, I already know what car I will get in the future –  a 2015 white Acura ILX with approximately 50,000 miles.

I think the frugalest among us would gripe – DON’T GET A LUXURY CAR!!! YOU’RE FALLING INTO CON-SOOOOOOOM-ERRRRR-ISM-ism-ism (imagine that with a ghost voice echoing).

I’m not choosing this car because it’s a luxury car or even a car I particularly like. I’m choosing it because it’s my mom’s car, she doesn’t like it, and it has a poor trade-in value. She wants to get a new car, and I don’t have a car, so when she decides on a new car, I’ll purchase her old one.

I guess some people would think, well that’s your mom’s mistake and you shouldn’t have to pay for it. I mean, I don’t really understand that way of thinking but let me explain what our way of thinking is.

So our family is Chinese and my parents left China because they’re not big fans of communism. The basic problem with communism is you can’t trust others to keep working if they can get everything for free. Ironically, our family operates like a quasi-Communist unit. If someone needs money, money flows to that person freely. The plus side is that there’s a lot of trust and we also know everyone’s finances. We are lucky in that everyone is a self-sustaining ship.

The benefits include a sense of unity. We are very Asian in that we never split the cost of anything if we are out together. We pay for each others’ groceries if we’re shopping together. We never ask to be repaid for anything. If anyone were to ask for money from everyone else, it would be considered a gift – there is never mention of paying someone back. To us, that’s how one would treat strangers, not family. It also just makes life easier, making it seem like we have extra emergency funds (though we keep our own personal emergency funds as well).

It also helps our peace of mind to have others that you can depend on to help you out. Or even that demand to help you out. My parents get pretty annoyed if I buy something that they could give to me for free. I’m afraid to buy new dishes or towels because my family will see them and wonder why I thought their 10 year old towels weren’t good enough anymore. In fact, I never throw anything out without first considering if someone else in my family would want it. Waste not.

I’m pretty sure this is normal among the immigrant community. My friend drove a really fancy Mercedes that wasn’t his style for years. He said his brother needed to sell it to get a minivan for his growing family. It didn’t matter that he could have and may have wanted a cheaper or different car. Money is more than thinking about oneself – it always involves thinking about the family unit.

I remember rolling up to CampFi in a black dress, black cashmere sweater, designer shoes and driving a Lexus. I thought, I hope no one sees me. I had just come from work and, because I didn’t have a car, I borrowed my dad’s car, while he was on vacation. My whole outfit cost $100 and I had worn it for years. This was the cheapest car I could get. It didn’t look like I was frugal. And I guess it’s good that I didn’t care how I looked.

It’s funny because so much about “being frugal” seems to be “looking frugal.” People brag about their rusty cars and the holes in their pants. But just as everyone knows that having expensive stuff doesn’t mean you’re rich, having  expensive stuff also doesn’t mean you’re spending too much or that you’re not wealthy. In the future, I may drive around in a fancy car but it’s not because I view the car as a sign of monetary wealth. The car would be a sign of the wealth that I have accrued based on the strength of my family.

At the Crossroads of Student Financial Health and Mental Health

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I learned that there was a suicide at my very competitive high school earlier this month. He was a freshman. When I learned this from a friend, I told her I was surprised it hasn’t happened more often.

When I was home on break my fourth year at college, I received a very strange phone call. It was the father of an acquaintance,  a current senior, already accepted to attend my college. The father asked about my senior slump, i.e. the expected drop in grades a high school senior has after being accepted into college. Oblivious, I stated honestly that my senior grades improved my last semester, likely due to teachers caring even less than the students. I treated it as a bit of a joke, but he didn’t take it that way.

Apparently, my acquaintance had suffered the usual senior slump and his father had taken it upon himself to punish him based on whether I had done the same. (I was currently attending the college, so clearly I was not a good example for the father to call).

I later learned that the father hit his son after our call.

I think people hear this story and are surprised that I’m surprised. That family and my family are both Asian so I should have known what the call was about, right?

Over the years, I’ve learned that my parents are not normal. For instance, once when I was in a group of Asian people, someone said “people don’t understand that all Asian people get beat by their parents.” I piped up:”my parents don’t hit me.” One of my friends burst out laughing. Then she stopped and asked if it was a joke.

Asians think this is bar none the strangest thing about my family – no one gets hit, no one hits anyone else.  I know, as children, my parents got beat, but that was in Asia and a long time ago. I figured it was a bygone barbaric time. My grandparents did not know any better.

I’m not saying you should or shouldn’t beat your kids. I don’t understand it myself but I’m not judging. Still, it’s not the hitting that bothers me so much as the reason for hitting. My acquaintance was going to a very good school. Why would you hit a good kid like that?

And the answer is, because slumping grades are not good enough in the Asian American community. I am cognizant of the pressures to be perfect, but mostly from a distance. Most of my pressure growing up was internal; I tiger mom-ed myself. I signed myself up for piano lessons. I applied to gifted and talented programs. I applied to law school on my own urging.

It wasn’t until I was in college that I saw the external pressure my friends were under. This pressure to be perfect, top of class, high-earning. And I didn’t even grow up in a  super-pressure-cooker area like New York or California, or (heaven-forbid) Asia.

Asian immigrant parents often came to this country with nothing and they wanted a better life for their children. This has led to an arms race in education and money. And Asian parents will literally do anything to get their kids to succeed. There’s an incredible amount of sacrifice involved. Some Asian parents will sacrifice their own financial well-being for their children. With that, there comes a lot of pressure (psychological, emotional and physical, to name a few) to do well and give back. It’s not just about earning one’s keep; it feels a little bit like the guilt that Private Ryan has after so many people sacrificed for him. But if he had known about the guilt he would suffer, Private Ryan probably would have told those soldiers to call off the search. It’s just too much of a burden to bear. Nothing will ever seem enough to cover the sacrifice.

When I thought of student financial health, I thought about student health, and I thought about this. I was thinking, the best way to work on your financial health as a student is to give yourself a break. It’s too much of a burden to achieve super-perfect grades to get into that super-perfect college so that you can get that super-perfect job and earn super-perfect money. It’s ok to make ok money.

It’s ok to struggle at school or finances or relationships or anything. It’s also ok to fail sometimes. Failint doesn’t make you a failure and people will not see you as such.  Not being perfect only means you are human. And if that’s not ok for some people, well it’s their own problem. It’s not your problem.

In a way, it was good that I wasn’t such a stellar student because it meant that I didn’t have to live in fear of knowing what might happen if I failed. I met the failure and found it was ok.

Your parents probably love you even without all the bells and whistles. I mean, I can’t say for sure because I’m an Internet stranger. But it’s probably true. I eventually found out my own parents cared about me apart from my (paltry) accomplishments.

I always noticed that when pushy Asian moms would brag about their kids, my mom would bring up whatever marginally impressive thing her kids had done to use as a weapon to fight back. And then she’d bemoan the other moms later. From this, I did eventually get the feeling that my family was all on the same team. She didn’t tell me to get better for the sake of other moms; she just hung around other moms less. (Not because she was ashamed of us but because it’s just exhausting and no one’s ever going to top Danny who went to Yale on a full scholarship).

I wish you all the same luck with your families. And, y’know a scholarship to Yale (while we’re wishing). #finhealthmatters

 

 

Yes, Frugality is Only for the Rich

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Let’s imagine two families that each spend $46,000 a year. If that family makes $46k/year, they are a cautionary tale. But if that family makes, say $250k/year, they are paraded around as frugal experts.

This is basically how I read the uproar about the Frugalwoods, i.e. the latter couple. There was an article critiquing them because their situation is unrealistic to most people. Then there were critiques of that critique, stating that frugality was for everyone.

These latter articles made it seem like the lower and middle class should aspire to the “extreme frugal” habits of the Frugalwoods.  One article even says the Frugalwoods should be applauded because “they’ve exhibited a level of self-restraint and stick-to-itiveness that the rest of us can only dream of.” I mean, I guess the rich can only dream of it. The lower income and middle class live this reality every single day.

Consider that 50% of U.S. households earn $50k or less, representing 70% of the population. Captain Obvious says, that’s the vast majority of people in this country. Some of these households are going into debt, sure, but if we assume 50% of this group is living below or at their means, that’s 44 million households (34% of all U.S. households) living on less than what the Frugalwoods spend per year (assuming $50k after taxes is around $40k. Some commenters have stated the Frugalwoods are living on a bit less than $46k but it’s still around this figure).

If frugality were actually about living on less, then these 44 million households should be as equally vaunted as those making more. But living off <$46k when you’re making <$46k is stressful. No one wants to follow advice on how to be struggling, even if the actual budget would be the same. What’s better is living a bucolic Instagrammable lifestyle where one can talk about minimalism and having “more time for the things that matter” on $46k. The only people who can live that life are the rich.  


I love love love this comment by Dr. McFrugal:
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On Reddit, this sentiment is echoed:
Being frugal really starts to apply when you make enough money that you could afford luxuries, but you turn them down to save money. That’s frugality. The college kid who is eating Ramen every day because he doesn’t have a choice – that’s not frugality, that’s survival mode.

Frugality is only for the rich because the poor and middle class are just surviving.

I have nothing against the Frugalwoods. It’s not their fault that they’re celebrated for something that millions of other people are forced to do. It’s like a couple that’s celebrated by living on $12/day traveling to another part of the world, even though the general populace lives on $2/day. It’s like an able-bodied person using a wheelchair for a day, and being average at it, and everyone saying, hey people in wheelchairs, look and learn from this guy.

It’s not the couple’s fault that they’re feted. The problem lies in the lack of understanding of what is normal for the majority. There are millions of families with even lower than “extreme frugality” budgets, but it’s the rich people with higher budgets who are getting celebrated. That means it’s not the budget that is celebrated but the income and the percentage. Lower and middle incomes may win on absolute spending but if you define frugality as percentage saved, the rich will always win. 

This is not to say that the lower or middle class should give up hope and spend willy-nilly.  Saving money is obviously good and should be encouraged even if you don’t get a book deal. What I’m really critiquing is the critiques of the critique.  If “extremely frugal” people like the Frugalwoods are spending more in absolute terms than lower and middle income people, then the lower and middle income people are just as frugal. At some point,  you hit the threshold for how little money one can spend. If well-educated, book-selling, rich “extreme frugal” people are spending more than you, even with all the advantages that the rich have for saving money (like better rates because they can pay for their house in cash) than maybe the 44 million households making it work on less have hit the absolute limit. Let’s not chastise them regarding “learning frugal habits” just because their savings percentages are low. The savings are low because of lack of income, not lack of frugality.

We also need to question why we inexplicably praise rich people for doing the same thing as the middle class as if that’s a huge hardship for them. We have impossible, standards for the lower and middle class and very low standards for the rich. This is unfair. There are a few takeaways I get from this situation.

1. Let’s stop pretending rich people have all the answers.
I know someone might say, well saving a lot of money on a high income is more difficult than living paycheck to paycheck on that same income. I don’t even know if I need to explain this but here are 4 reasons why being rich is easier than being poor:
  • There’s a lot of comfort from the idea that you can just solve problems with money if you want to/have to. You can’t do that if you are lower income.
  • There’s comfort in knowing that saving money can produce tangible results soon. If you’re rich, you can live like a pauper and possibly retire in a few years. If you’re poor, living like a pauper means you can retire in 45 years. It’s the difference between sprinting for 500m and sprinting a marathon.
  • Being rich makes saving money easier. I got a coupon in the mail for a free meal at a new fast casual place that opened up. That would never happen if I didn’t live in a fancy area where people can be expected to come back for paying meals in the future. Living in a rich area means you’re treated better and have better perks. And don’t tell me “avoiding lifestyle inflation is hard.” No, figuring out if you can afford rent next month is hard. Not buying new things when your old things are getting faded is easy.
  • Being rich means you can screw the poor. My friend told me that when he was a kid, his mom paid way too much for a beater because she had bad credit. If I wanted that beater (this never would have happened because I was 10 at the time, but let’s say this happened today), the dealer would have offered it to me for less because I have excellent credit and could pay cash. Not only would I have gotten a better deal on that car, but if I had gotten that car, which was just one option for me, she would have been screwed. That was the only car available for her. Being rich means you have all the options that the poor have and also the options of the middle and upper classes. Being poor means you hope the rich don’t take your options in their quest for frugality.

So yes, being rich makes everything easier. Don’t let anyone tell you differently. It’s more impressive to live on a lower income if you’re lower income. It’s easy being rich.

2. Everyone should first seek to understand.

I’m weirded out by bloggers who talk about “nonfrugal” people as if they are some single entity that is obsessed with conspicuous consumption. Some people are like that, for sure. But others are making all the right choices and are constrained by their circumstances. Others are making most of the right choices. Others are recovering from some of the wrong choices. Some people just make different choices.

And most people suffer from the simple malady of not being rich.

The middle and lower class have tips and tricks that the rich can’t even comprehend and it’s a bit sad that they’re underrepresented in personal finance blogs.  Poorerthanyou started a group highlighting articles geared for lower or middle income folks but it shouldn’t just be people with lower incomes that read it. Everyone should read this. Personal finance shouldn’t be about lower income people needing to learn from higher income people –  everyone should be learning from everyone else.