"Goals are dreams with deadlines" -- Diana Scharf

Tuesday, June 25, 2013

Financial Peer Pressure: Keeping up with the Collegiate Joneses

I like to think that Mr. W and I do our best to resist consumerist trends and behaviors.  For instance, we don’t own an iPad or an e-reader.  I only have a smartphone because it is provided by my employer.  My car is 11 years old and I bought it used.  Mr. W’s car has an unsightly dent that he hasn’t fixed because the damage is purely cosmetic.  We live in a part of town that most of our friends probably consider “unhip.”  It’s perfectly safe, but it’s just not where most young professionals would want to live (one of our acquaintances smirked, raised her overly waxed eyebrows, and said, “ooooh… really?” after learning where we lived.  Whatever).    

That’s not to say, of course, that I haven’t followed consumerist trends from time to time: I definitely have.  And, I’m ashamed to say that it was usually motivated by perceived peer pressure and my own desire to keep up with the so-called Joneses.  My behavior was most egregious during college.  When I attended college, I left my hometown in California to attend a university outside of Philadelphia.  I found myself in an entirely new environment and part of an entirely new social circle.  None of my new college friends were especially materialistic and they didn’t flaunt expensive purchases.  However, trends on the East Coast were pretty different from the trends on the West Coast.  I found myself wanting to follow along with the trends so that I would fit in with my new friends.  I didn’t really care if I could fit in with the public at large, but I did care about the opinions of my friends.  It was as if I thought that buying the same stuff everyone else had would help me to forge meaningful relationships (wow…was I in middle school again?). 


I present to you, in ascending price order, a list of stuff I bought simply to keep up with the collegiate Joneses.

Soffe Shorts ($8/each):

Do you know what Soffe shorts are?  I didn’t, until I started college.  They’re just tight-fitting cotton shorts with an elastic waistband.  Trust me when I say that there is nothing special about these shorts.  They don’t even make your tail end look good, a la Lululemon attire.  But all my friends wore them while lounging around the dorms, so I figured I ought to have them, as well.  At $8 per pair, they didn’t exactly break the bank…until I decided to buy them in seven colors.  And of course, I had to buy the pair with the name of my alma mater stamped across the rear (cue dramatic eyeroll, shall we?). 


Nalgene Water Bottles ($17/each):

Nalgene water bottles were hugely popular on my college campus.  The ones sold at our student bookstore were approximately the size of a Big Gulp, and virtually indestructible.  Most students would take them to the dining halls and fill them up with soda/water/iced tea to chug throughout the day.  The bottles came in bright colors, prominently displaying the name of our alma mater.  They were $17 a pop, which seemed like a steep price for a plastic water bottle.  But I figured that I would reuse a Nalgene bottle for years, so the cost per use would be minimal.  With that reasoning, I bought myself a Nalgene.  Within a matter of weeks, I accidentally left it in a classroom.  Then I bought myself a replacement Nalgene.  I lost this second Nalgene by placing it on the roof of my car and driving away.  I hope that someone picked up those water bottles and is making use of the $34 I wasted.   


Sigg Water Bottles ($19/each)

By the time I was a senior in college, Nalgenes had been trumped by Sigg water bottles.   Sigg was the new “IT” bottle.  I’m not even sure why Sigg became so popular.  It’s essentially an aluminum canteen that is 1) not insulated at all, 2) difficult to use while exercising, and 3) nearly impossible to clean.  But they just looked so cool.  And there was a scarcity factor, which made them seem that much cooler.  Whereas Nalgenes could be bought en masse at the campus bookstore, Sigg bottles were much harder to come by.  Theoretically, you could purchase them online – except that the Sigg website was always sold out.  I checked Whole Foods frequently to scope out their Sigg inventory.  I eventually bought myself two aluminum bottles at a whopping $19 each.  I haven’t lost them yet, but I also haven’t used them in about a year.   



Vera Bradley Totes ($42/each)
I had been familiar with Vera Bradley totes prior to starting college.  My grandmother and her friends were fond of the floral quilted handbags, and purchased them in many patterns and styles.  However, I had never seen someone my age carrying a Vera Bradley bag.  In my experience, it was a brand that was marketed towards a more mature customer.  Once I started college, it seemed like every female student owned at least one – if not several – of these floral quilted totes.  Some of the floral patterns were fun, but some reminded me of a tapestry.  At the end of my freshmen year, I purchased myself a preppy pink and green VB tote for $42.  It ended up being a worthy purchase since the tote was the perfect size to carry a day’s worth of books and notebooks while trekking from class to class. 

North Face TriClimate Jacket ($228)
When I started college, I didn’t own a “real” winter jacket.  I simply hadn’t needed one in California.  Sure, I had some sort of peacoat that I had purchased on sale for $30.  But it was barely substantial enough to keep me warm during the mild Southern California winters.  As Thanksgiving approached and the temperature dropped, I realized that my peacoat was just not going to cut it.  I noticed that all my college classmates wore these nifty North Face “TriClimate” jackets.  They were three-in-one contraptions consisting of a soft inner jacket and a lightweight waterproof/wind resistant shell.  The two jackets could be worn separately or zipped together to maximize warmth.  Voila – convertible outerwear!   How ingenious is that?!  (yes, I realize that convertible outerwear is passé to anyone who has grown up in cold weather.  But it was a game changer to me).   I decided I had to have one, especially since they were available in un-hideous colors.  While I was home for winter break, I used my Christmas money and splurged on a North Face jacket.  It was $228, which was at least four times more than I had ever paid for a single item of clothing.  On top of that, I paid 8.5% California sales tax on the jacket.  Pennsylvania doesn’t assess sales tax on clothing, so I could have saved myself nearly $20 by buying the jacket closer to school.   I did wear the jacket frequently while in college, but ended up selling it on eBay for $50.  I realized that parkas weren’t really my style, and saved my money towards better a better quality peacoat, instead.    

Thankfully, I never indulged in the most expensive campus trends, such as Tory Burch flats or Chanel sunglasses.  All in all, I don’t think I was too frivolous with money during my college years, although I definitely had some weak moments.  Admittedly, the financial impact of buying an $8 pair of shorts was relatively minimal.  However, the tendency to succumb to financial peer pressure -- real or imagined -- can be dangerous regardless of the dollar amount.  Thinking back to the college years has helped me to identify ways that I have been susceptible to financial peer pressure in the past, so that I can avoid similar behavior in the future, when the stakes are likely to be much higher.

Wednesday, June 19, 2013

Seven Ways I Plan To Save Money This Summer

It’s been quiet these past few weeks here at The Umbrella Treasury.  I’ve been fighting off a nasty summer cold and wrapping up some important work projects.  My organization has a June 30th fiscal year which means…wow! BUSY!  But I miss blogging and I’m hoping to get back to a more routine posting and commenting schedule. 

With the official start of summer right around the corner, I’ve been thinking about my summer spending habits.  If left to my own devices – without a budget or a written plan to keep myself on track – I’m sure my summer spending would show a sharp spike in comparison to my day-to-day spending during the rest of the year.

Image credit: piovesempre / 123RF Stock Photo

Here’s an anecdote to demonstrate what I mean: In January of last year (2012), I resolved to keep my discretionary spending as low as possible.  Mr. W. and I were planning our wedding and I thought it seemed wise to trim unnecessary expenses, at least until after the wedding.  For six entire months, I adhered strictly to this plan.  The only clothing items I purchased during this period were a few new pairs of nylons (because, really, it’s never okay to wear ripped hosiery to the office).  I exercised similar restraint with regard to other discretionary spending.  I was so proud of myself for sticking to my plan. 

It turns out that I was patting myself on the back too soon.  Once summer kicked in, I relaxed the tight rein on my finances.  Over the thirteen weeks of summer, I bought myself six (yes, six!) new dresses.  In my defense, four of those dresses were purchased for specific wedding-related events.  But even so, I could have found something suitable in my closet.  And I really had no excuse for buying those other two dresses, besides the fact that they were awfully cute.  But I suppose that cuteness isn’t a good excuse for blowing one’s budget, is it? 

What is it about warm, sunny weather that entices me to spend more money?  What makes me throw caution to the wind?  I think there are a few factors at play.  In part, I simply enjoy spring and summer fashions more than I do cold-weather styles.  I’ve always been drawn towards bright colors and splashy patterns.  After a long, drab winter, I feel tempted to refresh my wardrobe by buying a bunch of pretty sundresses.  And it’s not just my clothes shopping that increases during the summer.  I know that I have a tendency to spend more in other budget categories, as well.  I’m more relaxed and carefree during the summer, and I’m more likely to eschew my budget in favor of fun.   

This year, I decided that I would make a concerted effort to spend less money during the summer months.  Here are a few ways I’m going to put this plan into action; I don't offer these as advice, but simply as examples of what I'll be doing. 


1.       Don’t buy clothing that I won’t wear:

For as long as I can remember, I have bought a new swimsuit every summer.  Sometimes, I go overboard and buy several.  There are three problems with this practice. 
Problem One: After buying a new swimsuit(s) every summer, I have amassed quite a collection of bikinis, tankinis, and every other type of “kini” you can imagine.  This might be acceptable if I were considering a career as a pro surfer (dress for the job you want, right?)  Alas, I’ve tried surfing and it’s not where my talents lie.  There is simply no way that I will wear swimsuits enough to justify owning so many -- or buying any more. 

Problem Two: Swimsuits are expensive.  Why do some bikinis cost upwards of $200, considering that so little fabric is used?  I’ve never paid that much for a swimsuit and I always buy them on sale.  Nonetheless, the markup even on sale bikinis is outrageous.  Out of principle alone, I should refuse to buy more swimsuits than I absolutely need.

Problem Three: I don’t ever wear swimsuits.  Period.  My skin is so pale that I make Casper the Ghost look like a cast member from The Jersey Shore.  Being this pale has led me to feel way too self-conscious to wear a swimsuit in public.  If I ever go to the beach, I simply wear a tank top and shorts.  Buying yet another swimsuit would be a colossal waste of money.  (Yes, I know I could “do something” about my pale skin.  But I’m not generally fond of fake tanning methods.  In my experience, self-tanning lotions are more of a hassle than they’re worth.  And I don’t like the idea of using a tanning bed because of the potential health ramifications).

Clearly I should not buy a swimsuit this summer.  Just remind me of this resolution whenever I start browsing the J. Crew swimwear collection. 

2.       Brew less coffee:

My morning routine involves brewing a pot of coffee for Mr. W. and I to share.  I usually make enough for each of us to drink 1-2 mugs of coffee.  But during the warm summer months, I rarely feel like finishing my first cup of coffee, let alone a second.   It pains me that I literally pour money down the drain whenever we have leftover coffee.  This summer, I’ll try to brew only as much coffee as we are likely to drink.  And, if we have any left over, refrigerate it so we can make iced coffee later.   

3.       Don’t carry cash:

This may sound counterintuitive, but carrying cash can wreak havoc on my finances.  When I have cash, I am more likely to make small impulse purchases.  During the work week, I often find myself strolling to the vending machine to grab a Diet Coke.  This is especially tempting during the summer, when a cold, refreshing bottle of soda seems like it would satisfy my caffeine craving.  Sure, it’s only $1.00-$1.50 each time.  But over the course of a month, that could add up quickly.  If I don’t carry cash with me, it’s substantially harder for me to make these unplanned discretionary purchases (especially since our vending machines don’t accept credit cards). 

4.       Drive the speed limit:

I know it’s a good practice to drive the speed limit all the time, even if you’re not trying to pinch your pennies.  It’s just common sense.  In truth, I always drive the speed limit in residential areas and while on smaller roads.  There’s too much foot traffic and congestion to do otherwise.  However, I admit to driving 15-20 mph over the speed limit when I’m on the New Jersey Turnpike or the Garden State Parkway.  Yes, I’m driving the same speed all the other cars drive, but it’s still illegal.  To date, I’ve never been pulled over for speeding and I’d like to keep it that way.  Pleading “Officer, everyone else was speeding, too” won’t go far to get me out of a speeding ticket.  
On top of safety reasons, there’s a very good financial incentive to drive the speed limit: in addition to the price of the speeding ticket itself, I could get points on my license, which would mean increased car insurance premiums.  No, thank you.  Plus, I understand that gas mileage is best at 55-65 mph.  Given that I commute a long distance, it makes sense to optimize my gas mileage as much as possible.


5.       Keep the windows and curtains closed:

I love sunlight and fresh air.  Even though our apartment is on the smaller side, it has eight windows plus a skylight.  The natural light is lovely, but the apartment becomes a hothouse in warm weather.  Last summer, I used my air conditioning sparingly: in an effort to save money (and the polar bears!) I only turned on the A/C once the indoor temperature approached 90 degrees.  If the outdoor temperature started to drop in the evenings, below the indoor temp, I would turn off the A/C and open the windows.  But I think this was actually a mistake:  soon enough, the apartment would be hot and humid again.  We’re still planning to use the A/C sparingly, but we have a new approach: once we turn off the A/C, we’ll leave the windows closed to retain the “bought air” for as long as possible. 

In addition, we’ll keep our curtains closed during the hottest part of the day.  Last year, I didn’t have curtains (they were a wedding registry gift).  I’ve already noticed that keeping them closed goes a long way towards warding off that summer heat and decreasing our A/C usage.   


6.       Cut back on laundry costs, where possible:

The dress code at my workplace becomes slightly less formal during the summer.  As a result, I can get away with wearing cotton blazers, cardigans, and other things that are machine washable.  This should help to decrease our dry cleaning expenses. 
Also, we’re going to air dry a few loads of laundry every week.  Although the coin-op laundry at our apartment complex is very reasonably-priced, the monthly cost still adds up to $40-$50.  Given how warm our apartment will be, we might as well try to air dry a few clothing items.  Most likely, we’ll still use the dryer for things that become more wrinkled after air drying.  I think we can save about $10/month by air drying certain clothing items. 


7.       Take advantage of free entertainment options:

During the summer months, our community holds a number of free or low-priced outdoor entertainment events: jazz on Main Street, concerts in the park, parades, film festivals, etc.  It’s not NYC’s “Shakespeare in the Park,” but it’s still highly enjoyable.   Often, Mr. W. and I forget about these events until it’s too late.  Last summer, we forgot about the weekly jazz festival in it's entirety: for eight straight weeks, we did not attend a single jazz night.  That’s pitiful.  Not this year!  We want to take advantage of everything our community has to offer – especially if it’s free or practically free.   

Do you spend more in the summer?  If so, are you looking for ways to cut back?

Tuesday, June 4, 2013

Finding a Bargain Apartment in a High-Rent Area

Image credit: ghenadie / 123RF Stock Photo
When I finished graduate school in summer of 2009, I didn’t have a clear sense of what would come next.  My original plan when I enrolled in a Master’s program was to pursue a Ph.D. and eventually teach at the university level.  For various reasons, I decided against this plan.  Fortunately, I did not have any student loans from graduate school.  I had received a graduate assistantship which provided tuition remission and a modest living stipend.  I also worked a few part-time jobs to earn a little spending money.  The decision not to pursue a doctorate was a good one, but I needed to find a way to earn a living.  I needed to develop a Plan B, fast.  

Although my family lived, and still lives, in California, I knew I wanted to stay on the East Coast in order to be close to Mr. W.  The lease on my college apartment was set to expire on June 30.  However, I hadn’t found a full-time job by the time classes ended.  Without a reliable source of income, I didn’t feel comfortable signing a new lease.  I still had my part-time jobs, but they wouldn’t pay enough to make ends meet. 

Mr. W’s parents graciously offered to let me stay in their guest bedroom for as long as I needed.  I’ve always been so appreciative of their welcoming hospitality.  In a time filled with uncertainty and pressure, they helped to alleviate the financial pressure I would have felt if I needed to rent my own apartment.

On June 29th, I moved in with Mr. W’s family.  On June 30th, I had a job interview with an organization located in central New Jersey.  A few weeks later, I started working at the same organization where I had interviewed, and where I currently work (about 40 miles south of Mr. W’s family).  I stayed with Mr. W’s parents for the first three months, making the 80-mile round trip commute.  After my 90-day probationary period at work had passed, it seemed like a good time to find my own apartment.  Although I loved living with Mr. W’s parents (really, I did!), I didn’t want to become an imposition or take advantage of their generosity.

Deciding to Deal With a Long Commute:
When I started apartment hunting, I considered moving closer to work.  I had been spending about 2.5 hours a day and $300/month commuting to work.  It was obvious that I could save a lot of time and money if I moved closer to the office.  Ultimately, I decided to stay in the same area and find an apartment near Mr. W.  This might seem foolish, but it was the right decision for me.  His area had the small-town feel that I liked.  Even if I moved closer to the office, I would want to see Mr. W as much as possible.  I would still be driving between central and northern New Jersey several times a week.  If I was going to make the long drive anyway, why not just live closer to him in the first place?   Once I had settled on location, it was time to start the process of finding an apartment. 

A High Cost-of Living:
Based on my salary and the cost of commuting, I decided that I should spend no more than $1,000/month, including utilities, on housing.   With this number in mind, I started perusing Realtor.com.  The results were discouraging: small one-bedroom apartments in Mr. W’s town rented for $1,500/month.  A two-bedroom place (which I didn’t need) could easily be $1,800-$2,000.  In comparison to major urban areas, these rents weren’t high.   However, they seemed high for the suburbs.  More importantly, I was committed to living within my budget.   

Found: Basement Apartment for $700/month (October 2009-August 2011)
After scouring Realtor.com for a few more weeks, I still wasn’t having much luck.  I decided to try a different approach and started checking Craigslist and the “For Rent” section of the local newspaper.  I stumbled across a promising advertisement: a clean, newly-renovated basement apartment in a private family residence.  Partially furnished.  Kitchenette, laundry facilities, and parking space.  $750/month, including utilities. 

I met with the owners/landlords to view the apartment.   The owners were very nice and were anxious to rent their unit.  They liked me and offered to drop the price to $700/month since they thought I was the “right” tenant (I also think they were hoping I would eventually date their son.  This was awkward, especially since I was already in a relationship, and so was he.).   

·         Great price
·         Location (safe neighborhood, near Mr. W’s house)
·         Clean and newly renovated
·         All utilities included in price
·         Dedicated parking spot
·         Laundry facilities on site
·         Partially furnished
·         Willing to accept month-to-month lease
·         No realtor fee

·         400 square feet
·         No closets
·         Minimal natural light
·         Musty basement smell
·         No separate entrance (my “front door” was in landlord’s garage)
·         Kitchenette had a sink, compact fridge and a range top, but no oven
·         Partially furnished
·         Matchmaking landlords

The biggest drawbacks to this apartment were the small size and the lack of natural light.  I love sunlight and this apartment had just a few tiny windows.  But given that I would be working long hours, I didn’t think this was a deal-breaker.  It was partially furnished, which was both good and bad.  While in grad school, I had slowly purchased “not-the-absolute-cheapest” furniture from Ikea, and I was proud of my modest furnishings.  If I rented this apartment, I would need to get rid of some things or put them in storage.  I would also need to create some sort of storage solution for my clothing. 

Another prospective tenant was interested in the apartment, so I had to decide quickly.  I concluded that the pros outweighed the cons.  The price was hard to refuse.  In addition, the landlords offered a month-to-month lease for no extra charge.  If the arrangement didn’t work out, I could simply move at any time. 
I moved into the basement apartment in October 2009.  It was a cozy and comfortable unit, though a bit small.  At times, I really longed for a light, airy home with big windows.  I moved out in August 2011, when my apartment flooded during Hurricane Irene.  The basement had a sump pump that should have prevented flooding.  However, our entire town lost power for 5-10 days (depending on which power grid served your property), so there was no electricity to operate the sump pump.  To this day, I still feel incredibly fortunate that this was the only damage I experienced resulting from Hurricane Irene.  So many others experienced devastating damage. 

Found: Two-Bedroom Apartment for $1,250 (September 2011-present)
After my apartment flooded, I needed to move quickly.  There was no power, so my dark apartment became even darker.  My belongings were sitting in several inches of water, and I was afraid that mold spores would begin to grow.  I stayed with Mr. W and his parents for several days.  They didn’t have power ,either, but at least there was sunlight and dry ground.  Using my smartphone, I searched Realtor.com for available apartments.  I had to do this quickly, since there would be no way to recharge my phone battery. 

By this time, I had received a promotion and a raise at work.  I thought that it would be reasonable to spend $1,200-$1,300/month on housing, including all utilities.  I still couldn’t find any listings in Mr. W’s town in my price range.  I decided to see what was available in surrounding towns, since those could be slightly less expensive.  I came across a listing for a two-bedroom apartment with hardwood floors, a built-in china cabinet, and ceiling fans.  From the pictures, it looked adorable.  The apartment was located just a mile from Mr. W, but it was in a different town.  It was still a perfectly safe, pleasant area.  However, the school district was not well-ranked, which considerably decreased housing and rental prices.  Since I didn’t have kids, school districts weren’t important to me.  The price was $1,250/month, with heat, hot water and waste removal included.  I would only be responsible for electricity, cold water, and gas.  For that price, I had expected a small one-bedroom.  This place was 600 square feet and two(!) bedrooms.  It was still a compact apartment, but it felt enormous compared to my basement apartment.   

·         Great price
·         Location (safe neighborhood, walkable area, near Mr. W’s house,)
·         Lots of character
·         Second-floor unit (ie, flooding would be unlikely!)
·         Two bedrooms
·         Tons of natural light in bedrooms and living room

·         Heating is included in price, but landlord controls heat (ie, it can be quite chilly)
·         On a busy street corner
·         Small closets
·         Dark kitchen
·         Laundry facilities are in adjacent building

 As soon as I toured the apartment, I knew that it would be the perfect place.  I could see myself living there for several years.  It was also large enough that Mr. W and I could live there together once we were married.  As with my first apartment-hunting experience, time was of the essence: another prospective tenant was seeing the apartment and the realtor didn’t think it would be on the market for long.  Plus, I needed to get my belongings out of the wet basement asap. 

The financial logistics were also more complicated than when I moved into my basement apartment.  I needed to pay $3,750 in a matter of 24 hours (1 month’s security deposit, 1 month’s rent, 1 month’s realtor fee).  I had enough money in savings, so the cost was not a problem.  However, I kept the majority of my savings in an online high-yield savings account.  It would take 3-5 business days to transfer into checking.  The landlord wanted to receive payment in the next 24 hours, or he would release the apartment to the next interested party.  On top of that, my personal checks were unusable because I had kept them in my bottom desk drawer, which was now under several inches of water.  Luckily, it all worked out.  I had just received my paycheck on 8/31, so my checking account balance was higher than I would usually have kept it.  Mr. W lent me the balance I needed until I could transfer money from my high-yield savings account.  And instead of writing checks, I got money orders from the bank.  I signed a lease in early September and moved in immediately. 

Mr. W and I still live in the same two-bedroom apartment.  Along the way, we’ve discovered other pros and cons.  Parking can be a real pain because of traffic for the businesses located downstairs.  However, the business owners are some of the friendliest folks we’ve ever met.  Another gripe: someone swipes our weekend-edition NY Times if we don’t pick it up early enough in the morning (seriously? I look forward to the Sunday paper all week!).  On the other hand, one of my neighbors always brings in packages that are left outside the building entrance, to ensure that they aren’t stolen by passers-by. 

I’m pleased that we have been able to keep our housing costs on budget, despite being in an area with a relatively high cost-of-living.  Sometimes our 600-square-foot home starts to feel cramped and I fantasize about moving to a larger apartment.  Then, I remind myself that staying on budget now will help us to achieve our long-term goals in the future.  Being able to buy a house in three or four years is much more important than having ample room now! 

I would love to hear how other people have kept their rent/housing costs low.  Are there sacrifices you’re making now in order to reach a certain financial goal down the road?