Entries from May 2008 ↓

My hubby writes very long blog posts that he works on for days. Today he finally published a new one in which he colorfully described how I play a “diplomatic metagame” to make him lose at every board game we play with other people. It was quite a hilarious read for me because it reminded me of the glee I felt when people followed my advice to crush him. The only reason people listen to me is because I do point out some great strategies for them and I know my hubby is brilliant enough to handle himself. He didn’t make mention of an awesome strategy I employed when we played Boom Blox this weekend so I feel like I should write about it here. Basically, we were playing a game with a friend where each player had four blocks that acted like air hockey pucks. The goal of the game was to throw a virtual baseball and hit the blocks of your color into scoring zones. If you hit your opponents blocks on purpose they will gain 15 points and if your blocks slide out of bounds it disappears in a poof. So somehow I convinced our friend to team up with me to knock the hubby’s block out of bounds. We managed to knock 3 out of his 4 blocks out with our blocks. Finally, he had one block left that seemed to be out of the line of fire of all of our blocks. So I said, “hey I’m going to knock it out, get ready”. Then my hubby said, “yeah right I’d like to see you try!” So I aimed my Wiimote straight at his block and threw my virtual ball. His block went flying out of bounds and he gained 15 points, but he had no more turns left and lost. Our friend said, “wow, I didn’t expect that, but that was a smart move!” My hubby was quite annoyed of course as I rolled on the couch laughing.

Anyway, there are a few games where I can eviscerate him one on one, but he never plays those with me. So what does all of this have to do with money? Well, I think personal finance and managing your money is a very complex game. There are rules, goals, and strategies and everyone plays a variation of it. This is how I visualize it.

1. This game is cooperative - Another thing the hubby didn’t mention is that I could be a pretty good team player in cooperative games because my “vicious” energy to crush my opponents is now directed at the larger and more powerful system of the game. I think personal finance is the same thing. Everyday our own financial health is pit up against larger money systems which we cannot control on our own. For example, inflation and the stock market are things people want to “beat”, and we do it by creating and buying into mutual funds, or sharing information as to how to stretch our dollars. These are cooperative mechanics that are quite valuable. So when it comes to our money, I think the hubby and I are on the same side.

2. The game should be fun - I have written before that if the goal of earning money is to just get more money then life is no longer fun. There need to be breaks from extreme savings and money management to enjoy the money you earn. Otherwise, the game would become a total grind and having millions of dollars would still seem meaningless.

3. Strategy guides do help - When you get stuck in a game you can look up a solution online or see how others played it. The same is true in personal finance. You can read about how financial products work and how others used them.

4. A little bit of sacrifice could go a long way - As I mentioned in the beginning of this article. I knocked my hubby’s block out scoring him 15 points, but he was out of the game. That’s similar to knocking out debt. You may have to sacrifice a bit of luxury to completely pay off a lender, but after it’s done that adversary is completely out of your game.

5. There is luck involved - Every good game involves a bit of luck. I don’t think everyone starts off on equal footing so some people do have to work harder than others, but it’s never hopeless. A good player of any game could overcome bad luck.

6. The end game - I think the end game is to get to a point where you don’t worry about money anymore. For some people this could be death, but I think you don’t have to necessarily be dead to get to a point where you have no more financial burdens. It is possible to generate enough passive income through investments and other ventures.

Ultimately, games are created to simulate many aspects of real life, and the topic of financial management is many times more complex than a single board game.  I think the one thing that makes real life so hard is that the rules and missions aren’t so clearly stated and there is a constant metagame of figuring out what to do.  Once you settle on a single mission, there is always a chance of finishing it.   So, what do you think your end game is?

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I haved lived in the San Francisco Bay Area for almost 11 years now, and the number one reason I hear from people as to why they love this place is “the weather”. The Bay Area does have a pretty unique weather profile that mirrors the mediterranean and it is usually fairly comfortable all year. However, I wonder if the weather is really what keeps people here, and if it’s really the foremost reason why they are willing to pay such a premium to live here. I think for me, weather is not the most important thing in the place I live, and here is why.

When I lived in China as a child I lived in Yangzhou. This was a city with very clearly marked seasons. Summers were scorching hot, and snow fell in the winters. I have pictures of a younger me in a thick winter coat and a stinky coon hat crouching proudly next to a snowman. In the summers I went out and captured tadpoles and butterflies for fun. I loved that place, and it didn’t matter that it was possible to get heat strokes in the summer and icicles as big as myself hung from the roofs in the winter.

Then I moved to Hawaii, and I got my first sunburn from the penetrating tropical rays. My hair was bleached by the sun to almost a light brown and most of the time it was 85 to 90 degrees. Sometimes there were monsoon like rains that triggered flash flood warnings and painted the sky with multiple rainbows in their aftermaths. I really enjoyed living there despite the fierce sun.

Finally I ended up in the San Francisco Bay Area during the first year of high school. At first I actually hated the weather here because it felt cold compared to Hawaii. I can only describe the weather here as muted as compared to the places I have been and that is probably why it is so attractive to many people. However, I think I still prefer Hawaii’s weather more.

Since I lived in these three distinct biomes, I can safely say that weather is really not the most important factor in how much I love living in a place. I think the main reason people move to the San Francisco Bay Area is simply money. This is a high paying area with many jobs, and the reason why we relocated here from Hawaii was just that. My parents were able to find employment here and build a financially stable life in the past decade. For me, the one thread that made me love and enjoy every place I lived is family. A stable family and support system could make any place bearable regardless of the weather. Ultimately, when you plug yourself into a community, it is harder to uproot yourself and move to another place. So even though I gripe about the expenses and traffic involved with living in the Bay Area, I know I have people who love me here, and that’s probably worth more than anything and could prevent me from leaving.

If beautiful weather is really the only thing that’s keeping you in a place you can’t afford, then perhaps it is not worth it. I really think that humans are highly adaptable and social creatures that could grow to love a place as long as they are not alone. Though I guess in casual conversation it is much easier and neutral to say, “I love this place because the weather is great”. So what do you think?  Is the weather the number one reason why you live where you live?

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I don’t write very detailed numbers concerning my personal finances on this blog even though it is a personal finance blog. I always write some estimates and approximations and also things that have happened in the past. That seems a bit weird since I sort of advocated revealing salary information and being transparent about personal finance. I am actually really open with my close friends about my personal finances, but I do feel weird about revealing exact numerical details to the world. I also don’t keep a networth graph here like many other PF bloggers because I feel that is akin to keeping score with money. The hubby also doesn’t like to give out too much information. Anyway, today I decided to satisfy some personal finance voyeurs by posting our savings and expenses in terms of their percentages of our gross income. I took most of the numbers from our current paychecks, and some numbers are averages of bigger expenses.

Taxes

Payroll taxes: 20.16% - This includes Federal and California State Income taxes, Social Security and Medicare Taxes, and the CA SDI Tax. The total may seem a bit low because the income taxes are only taxed off our income after our fairly significant 401k deduction. The income taxes are also tiered, so only a portion of our money is taxed at the highest brackets. Though I am pretty sure we may owe some more taxes this year because I exercised some incentive stock options at the beginning of the year and we may trigger the AMT.

Living Expenses:

Rent: 12.26% - We have been living here for less than a year, and when our lease is up in July the rent might go up, but we don’t think it would be too egregious because our landlord is not some huge corporation and we’re taking care of his apartment. We really do enjoy living here.

Car Insurance :1.71% - The hubby just recently got a rate reduction for being a good driver. It took about three phone calls to the insurance company but those phone calls saved us $400 per 6 months term so I am pretty happy about that.

Car maintenance : 1.08% - This is an monthly average of the amount of money we spent on maintaining our cars in the past 9 months or so. We actually spend big chunks of money at once. For example, my last car maintenance was a bit over $1000, but this happens rarely so I averaged it out.

Utilities: 1.1% - The main utilities we pay include cable internet, the hubby’s cellphone, and electricity.

Food: 4.69% - I feel that we spend quite a bit on food every month, but actually sometimes eating out is cheaper than cooking. For example, making a couple sandwiches at home actually costs a lot because deli meats and bread are getting expensive. A lot of the times the hubby and I just buy one dish and split it because restaurants give too much food anyway. There is a really good Thai place nearby so one time we just bought one curry dish for $10 and then cooked rice at home and stuffed ourselves.

Gas: 2.52% - We have been doing good at saving gas lately by driving slower.

Entertainment: 1.1% - As it was laid out in The Baglady Budget, we have a 2% ceiling on entertainment, but actually we never spend that much. On average we have spent about 1.1% per month, and that’s why the hubby is running a surplus that he wants to use on a computer in a few months.

Donations: around 6.5 to 8% - We upped our donations a bit this year and we’re donating more than before. The percentage seems a bit small when it is based off our gross income. In light of the recent disasters in Burma and China we also added a few special donations this and last month.

Other: 0.7% - This category includes things like gifts. It seems that there is always a birthday or wedding around the corner. The hubby has a gift account for such expenses.

Total expenses inventory: ~31.61% of gross income

Savings:

401k: 17% - We both contribute 17% of our paychecks into our company 401k plans. The hubby was pleasantly surprised when he bumped his contributions this year from 10% and 17% and barely noticed a dip in his take home pay. The reason is that his taxes were reduced accordingly.

529 plan: 0.72% - I have a 529 plan open with Fidelity for our future child(ren). Right now we are putting very little into it every month.

The rest: 31.21% - The rest of the savings currently is going into money market funds in our Vanguard joint account. I also funded our Roth IRAs for last year with our savings. I’m not sure if we’ll qualify for Roth IRA again this year since the hubby may be getting a raise soon, but we’ll see. This money is also our emergency fund and house down payment savings. It is growing quite a bit and I may buy some more mutual funds with it once it gets past 25% of our entire portfolio.

Total savings: ~48.2% of gross income

I hope we can still save this much when we have kids, but I think we can afford to spend 15% of our income on a kid and still manage to save a good amount for the future. It is also good that we are able to essentially live on one income because this means we don’t have to worry if one of us loses employment. Anyway, it was fun to lay this out so I could see the flow of my money clearly, and I hope someone’s curiosity has been satisfied.

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A few weeks ago I stumbled upon a site named Angry Renter through a Google ad. I rarely click on Adsense ads, but this one intrigued me. The site presents a petition for renters to sign in hopes of stopping a housing bailout. I perused the site a little bit and figured that online petitions never really work, but I left a comment anyway and moved on.

Interestingly enough, this weekend I read an “expose” by the Wall Street Journal about Angry Renter. The gist of the article is that Angry Renter is a fake grass roots campaign run by a non-profit organization called FreedomWorks.org ran by a bunch of fat cats including Steve Forbes. They also listed the expensive properties the leaders of the organization owns. They also quoted the president of FreedomWorks.org saying “I’m an angry homeowner who pays his mortgage”.

I found it funny that the Wall Street Journal needed to write this article because it shows that maybe Angry Renter is really pissing someone off. So what if Angry Renter is run by homeowners? Homeowners pay income taxes also, and I don’t think any sensible person wants their money to be used to prop up bubblicious housing prices so that their children cannot afford a reasonable home. I also don’t think anyone wants to contribute their hard earned money to banks that scoop in billions of dollars a year by being legal loan sharks. Though the site is biased, some of the statements on Angry Renter are true. For example, renters do not get tax rebates for renting, and for all intents and purposes, renting serves the same basic need as buying a home. Why is there such a clear discrimination? Renters do wield less political power because they own less money as a whole compared to the banks and homeowners. So what is the problem with one little non-profit group with rich donors wanting to give renters a voice?  Additionally, it is also true that most homeowners are responsible and didn’t buy into the housing bubble so that they don’t need a bailout.  So why should all of us suffer for the folly of a few?

I am just surprised that all of this is happening in America, a place that prides itself on freedom, democracy, and free market.  Why should people have the freedom to be stupid and irresponsible, but not be encouraged to manage their money wisely?  A general housing bailout seems to send the message that saving money for a downpayment and renting is stupid because as long as you bought a house the government will protect you.  Why don’t they apply bailouts to obsessive gamblers that were “tricked” by the casinos, or stock speculators that lost their shirts during the dot com bubble?  Why is the housing bubble so special?  The answer is simply that the banks want their money back from people who can’t pay, and they are disguising their greed and grapple for survival as a humanitarian mission to “save the troubled homeowners”.  Give me a break because I don’t want to pay for mortgages that I did not sign for.

So the bottom line is, I don’t think you need to be a renter right now to be angry about the impending giant housing bailout. Currently, the House has passed a $300 billion bill for housing aid which President Bush and the White House is threatening to veto. Unfortunately, old George only has a few months left in office and as long as the Democrats stay in power this housing bailout will probably go on regardless of how many signatures people collect.  Anyway, I hope more bailout bills never go through, but that is probably just wishful thinking.  Meanwhile, I will be a patient and maybe slightly angry renter.

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Well, it’s another milestone at The Baglady!  This is the 200th post, and all of you kind readers have made over 1100 comments!  In my 2008 goals post I briefly mentioned that I would like over 1000 visitors to this blog daily by the end of the year, and now I am up to 300 to 400 per day so it seems highly likely I could reach my goal.  Since then,   I also  joined a great community blog named Wise Bread and started a new blog about San Mateo Home Sellers in Trouble.  Between the three blogs now my writing gets over 2000 views per day.  That’s a huge improvement from just 100 to 200 visitors daily 5 months ago!

In terms of blog income, I have gone from  $161 in January to nearly $600 this month.  All of the money I collect from blogging is currently donated to various charities.  It makes me happy when I see my articles earning money every day now, even when I am not writing.

With the growth of my blogs, I finally wrote  a Press page to showcase all the mentions my writing have gotten on top blogs and other press.  Check it out for some of the most amusing and useful articles I’ve written.

I want to say thank you all for reading my writing.  It really makes my day when I hear that my random thoughts have helped you or made you laugh.  I know that I piss people off, too, but getting any kind of reaction means that I made someone read and think a little bit and that is also rewarding.

The more I write the more I think that my writing could be the best legacy I could leave.  I would love for my future descendants to read my stories and my parents’ stories to get a glimpse of how we lived.  I know I love to hear my mom’s stories about  my grandmother’s family. So hopefully I will can preserve this blog for those that come after me.  I also think it is amazing that the internet allows this rapid sharing of ideas and lives.

With that, I leave you with some great Blog Carnivals in the recent weeks:

Carnival of Debt Reduction at Debt Free Revolution

Carnival of Personal Finance  at Alpha Consumer - I didn’t really submit to this carnival but they included my article under Four Pillar’s name.  Sorry Mike, I don’t know what happened there.

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