Frugal in the Fruitlands

One of the greatest concerns in my financial life right now is my saving rate. While the average U.S. savings rate is below 1%, my personal rate is only around 7% (higher if you count pre-paying the mortgage). If you believe David Bach’s Automatic Millionaire books, one needs about a 10% savings rate to be well-off and about a 15% rate to be wealthy - so I am missing the mark there.

The reason I don’t save more is simply there’s no more room in my budget. Housing takes up a huge chunk of our budget, and everything left over must account for electricity, oil, maintenance and gas for two cars, phones, internet, TV, and a small slice for entertainment. I feel like we continue to cut where we can, but we’re living pretty narrowly as is.

Maybe I just need to be making more money.

Several months ago Millionaire Mommy Next Door (please note the new address) did a series of “abundant life” visualizations where she imagined how she would acquire that extra money and how she would spend it.

So I’m doing what MMND did: I’m inviting extra money into my life. Today, the amount I’m imagining is $10,000 a year extra, or a gross income for myself of $55,000.

The Power of Creative Visualization

Wikipedia defines “Creative Visualization” as “seeking to affect the outer world via changing one’s thoughts.” Lest this seems like nonsense to many of you, let me assure you I’m a hardcore empiricist myself. I have been personally involved in visualization experiments where there was a significant main effect of visualization on final performance.

But don’t take my word for it - one of the best-known studies of creative visualization involved Russian athletes (as mentioned in the Wikipedia article above). Over four conditions, those athletes who spent 25% of their training time doing creative visualization outperformed all other groups, including the 100% physical training group.

On a similar note, I’m reading T. Harv Eker’s Secrets of the Millionaire Mind. Eker makes the point that millionaires think differently than us lower class schlubs about money. This changes how we act around money, which affects how much of it comes into our life.

Why Only $10,000?

“If visualization is so great,” you might say, “why limit yourself to $10,000 extra? Why not visualize yourself as a millionaire?” After all, Mr. Eker says that the non-wealthy tend to think in terms of “thousands rather than millions.”

There’s a simple reason: it’s a big step to visualize yourself as a millionaire if you’re just managing to pay the bills and stash aside a little each month. Just ask those people who have become instant millionaires via the lottery: within a few years, most are back to their previous standard of living, no wealthier and no happier. (This Google Answers thread links to some relevant studies). If one doesn’t know what to do with a million dollars, there’s no use inviting it into your life.

$10,000 extra dollars… that, I know what to do with.

Brainstorm Ways to Bring More Money Into Your Life

Here’s my list:

• My company is being acquired by a larger company, which may mean higher pay and better benefits. Being more proactive rather than reactive at work may go far in this situation, though it’s hard to quantify how far.
• If all else fails on the J-O-B front, there’s always changing jobs to software/web development. That’s about the entry level pay for such a job, if not more.
• Hang my shingle out for the various “side hustles” (that’s a popular word in the blogosphere right now) I can perform. Some of these include:
  • Web design. I will need to finally put together my web portfolio to get this going!
  • Tutoring. I can tutor French and statistics. An ad on Craigslist and sign in my library would be cost-free ways to advertise.
  • Teaching. I can submit a proposal to teach non-credit courses in web design and/or blogging at my local community college.
  • Housesitting/petsitting. I think after housesitting for the head of the Objectivist Society and getting locked in his bathroom in the middle of the night in my pajamas, I can handle anything.
  • I can work harder to monetize this blog, or I can work on other topics I would feel more comfortable monetizing. I’ve considered, for example, starting a costuming blog, and using my expertise there to sell fabric through affiliate sites. Something like Kyle’s Learn Spanish On Your Own might be valuable as well, using French, the other language I speak.
  • I can sell stuff I don’t need or want anymore (Kung Fu DVDs, I’m looking at you)

Obviously I don’t want to do all these at once - the hunter that hunts two animals catches only one, to use a PETA-unfriendly metaphor. The idea is that the path to $10,000 is wide open.

Now, What Would You Do With This Money?

This visualization is not complete without a vision of how the extra money will be spent.

An income of $55,000/year would boil down to $2,115 every two weeks (I’m using my current pay schedule for simplicity’s sake). Adding this income won’t move me up a tax bracket, so I’ll be paying the same tax rate.

We’re in the 25% bracket, but according to my paycheck, I only withhold 22% in tax (Matt must make the rest up on his withholding). 22% of $2,115 is $465, so my “take home pay” will be $1,652 - approximately $307 more than my current take-home pay.

Now, if I add some of that extra money to my 401k I’ll be changing my taxable income, but let’s simplify this and assume all that extra money comes after tax.

• I’ll contribute $130 extra ($225 total) to my emergency fund until I have at least six months of mortgage expenses saved up.
• I’ll contribute $140 extra ($196 total) to my retirement fund
• I’ll contribute $37 to my “fun” fund, to be saved for things like my yearly vacation with my mom.

A Simple Visualization

In addition to the techniques above, I’m imagining myself counting out a pile of 10 $100 bills - $1,000. Then I’m imagining 10 piles just like that.

How about you: what amount of money are you comfortable inviting into your life? How would you get it? What would you do with it?

9 Comments »

The Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2008, S. 3252 was introduced before the Senate in July of 2008 as a way to control abusive and deceptive credit card lending practices. It is intended as a followup to HR 5244, which passed the House earlier this year. The Senate has still not voted on S. 3252, which means there’s still time for citizens to voice their approval or disapproval.

Why Should I Support This Bill?

As we review The Two-Income Trap we’ll talk about how deregulation of the lending industry is one piece of the middle class insolvency puzzle.

While some are eager to point fingers at irresponsible consumers, I think Warren and Tyagi have shown that American overconsumption is largely a myth. What people are spending money on today, it turns out, are the necessities of life - not plasma TVs and Prada bags, but housing and related costs.

It follows that if you’ve bled the rock dry, those expenses end up on credit cards - and credit card companies are eager to punish consumers for the privilege.

One of the major differences between 1970 and today is how deep a hole one can dig under oneself with credit. Previously, for example, the limit of credit card interest rates was set at a federal level. With deregulation, these limits were set at a state level, and were only enforced on lenders within the state, no matter where their customers were.

So what happened? Credit card companies just moved to states whose rates favored them (have you wondered why so many credit card companies are based out of Delaware? That’s why).

Here are just some of the ways credit cards currently cheat Americans:

• Universal default: even if you’re in good standing with that credit card, the company is permitted to raise rates related to behavior on other lines of credit - without notice. There is currently no limit on how high they can raise these penalty rates, either.
• Two-cycle billing: your finance charge is calculated based on balances you’ve already paid off.
• Sending bills out late and dinging customers for late fees as a result (even if the payment is postmarked by a certain date).
• Distributing payments first to lower-interest debt. This will prevent you from paying down high-interest rate balances until you’ve paid off low-interest ones first.
• Targeting young people who don’t have established credit

I would argue that as many as 90% of credit card companies engage in these practices. I know when I was in the market for a new credit card I struggled to find one that didn’t do two-cycle billing.

It may surprise many people (although it shouldn’t) to learn that credit card companies make more off you when you struggle to pay and rack up late fees then when you pay on time. Some would call this “business.” I call it exploitative.

All of this is made more challenging by the fact that a credit card contract is what’s called an adhesion contract - it’s a “take it or leave it” proposition. Since so many credit cards offer these terms, it’s not like a consumer can just go elsewhere. People who put this burden squarely on the shoulders of consumers forget this.

What Can I Do About This?

Consumer Reports’ publisher and advocacy group, Consumers Union, offers advice on protecting yourself and your credit.

If you’re in the market for a new credit card, I recommend using a site like Card Trak to find a card with the terms most favorable to you. Money magazine also does a regular feature on the lowest card interest rates. As a warning, some credit card rate searches are just there to shill for certain card companies - I was dismayed to find that bankrate.com, who I used to recommend, has started doing this. If you don’t find banks you’ve never heard of (like “First Tennessee” or “Pulaski”) in the first page of search results, then it’s probably not legit.

Most importantly, you need to urge your senators to pass this act. Consumers Union has established CreditCardReform.org to tell the story of this legislation. Here they explain a little bit more about the history of the legislation and invite you to take action by sending a letter to your senator to support S. 3252. I encourage you to individualize the message, especially if you have a personal story to share. Stories can be more powerful than facts.

Also, I apologize for the terrible picture on the CreditCardReform.org main page. It looks like that poor woman is about to be assaulted.

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Yesterday I talked about Money magazine’s retirement benchmarks, circa 2007. I explored the fact that I would need $72,000 at age 35 by these standards, or that I would need to be putting away $316 every paycheck for the next six years to reach that goal. I also hinted at why I’m not - because my husband and I are putting $500 a month towards our mortgage instead.

The Advantages of Prepaying a Mortgage

Recall that my house is financed in the “piggyback” route, with two mortgages. The second of those is the one we pre-pay. It is the smaller debt ($75,000), but it has the higher rate of 8.9%. We have currently paid off $15,000 of that debt in the first two years of ownership, for a current balance of ~$60,000.

Functionally, putting money into that is equivalent to investing in a product that pays 8.9% interest. Given the current financial state, this is a much higher rate than we would see anywhere else. We have been doing this since we bought the house, but it makes especially good sense right now.

There’s also the fact that the second mortgage balloons at 15 years (~13 years from now) - meaning that it will be need to paid in full at that time. This is another compelling reason to prepay. Admittedly, we could refinance at any point before then, but that’s just shuffling debt around. Paying $500 extra a month, we are on track to pay this off in less than 10 years.

Once the second mortgage is paid off, we will turn our attention to the first ($302,000). It has a fixed rate of 6.6%, but the payment amount increases at 10 years - at which point we will have paid off the second.

But the biggest advantage, to my mind, of prepaying the mortgage is decreasing the period of your life you spend paying for housing. If retirement is as difficult as it seems, then the freedom of owning one’s house outright is immense. With both mortgages paid off, that frees up ~$3,200/month for us - about half of our current income. Yes, there will be maintenance; and we would still have to pay for oil and electricity, but that is manageable on a more limited income. This would give us the freedom to be more mobile. I could, for example, spend three months of the year working at my mother’s tax business, pulling down about $20,000, and then go spend six weeks in Argentina learning intensive Spanish (one of my many dreams!).

This lifestyle would lend itself easily to mini-retirements, rather than the typically depicted Orlando-dwelling, shuffleboard-playing Retirement with a capital “R.” I could live with that!

I just need to stop telling myself this would be even more feasible if I had never bought a house to begin with… that train has sailed, to quote the immortal Austin Powers, and I’m not about to sell my house at a loss.

The Disadvantages of Prepaying a Mortgage

Well, really, there’s one big one: If we suddenly weren’t able to make our monthly payments, all the money we prepaid wouldn’t make much of a difference. The primary way this would happen would be a job loss.

This is why it’s so key to build oneself a safety net: an emergency fund and appropriate insurance coverage.

This is still something I’m working on. I’m building an emergency fund, but I worry I’m not building it fast enough. The figure to aim for is three to six months living expenses, which for us is $15,000-$30,000, on the generous side - but more like $8,000-$15,000 if we just want to cover the mortgage.

… I currently have $1,600 in there. I contribute about $150 a month, but it seems like every time it gets to a decent value, we have an emergency. Oh, only little disasters - car repairs, or vet bills - but it does continually deplete the fund.

As for insurance, I tend to hold the minimum coverage in just about everything. I have only liability insurance on the Tercel (admittedly, it’s almost 15 years old). I have what life insurance comes free at work (which won’t help a lot if I leave my job). Matt and I have the health policy that’s available to him at his job. We have whatever homeowner’s insurance is required by law. It may be time to reexamine this particular way of doing things, for maximum emergency preparedness.

In conclusion: we’re choosing to pay down our mortgage rather than contribute more to our retirement. I believe it’s the best choice for us right now, but I need to construct a better safety net for the “somedays” as well as the now.

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Trent at The Simple Dollar happened to link a much older article of his recently, A Closer Look at Money Magazine’s Retirement Benchmarks, from April 2007.

I’ll blockquote the benchmarks he blockquoted, just for the sake of discussion:

Assuming you want to retire at age 60 and plan to have no pension and no job in retirement, you need to have…
1.6 times your salary in savings at age 35
3.5 times your salary in savings at age 40
5.8 times your salary in savings at age 45
8.5 times your salary in savings at age 50
11.9 times your salary in savings at age 55
16.0 times your salary in savings at age 60

A lot of other stuff is figured in here: retirement at 60 with 80% of your current salary withdrawn each year, Social Security kicking in at age 62, an annual real rate of return of 4%, and 4% withdrawn every year.

Trent uses the example of Joe (the Plumber?) with a salary of $50,000. Joe needs to have $80,000 at age 35 to be on track with these benchmarks. Trent goes on to say that Joe needs to save $5,000 a year at 9% interest annually (This is how we can tell it was written in 2007!), or around $100 each week, if he starts saving at age 25, to reach this goal.

Okay, well, that’s great for Joe. I asked myself, what about me?

Right now I’m 28, my salary is $45,000 per year and I have about $10,000 in my 401(k) and IRA (I’m not counting my husband in any of this, just to simplify). I’m currently putting $56 per pay period x 26 paychecks per year = $1456/year into my 401(k). That means at 35 I’ll need a total of $72,000 to be on track.

I’m not going to assume a 9% annual return. But I’m not going to be a total pessimist, either. My money will need to grow at least 3% annually to keep up with inflation. I can earn 3.5 - 4.0% sticking it in a savings account (though that’s not tax-protected, of course). Since I’m investing every other week, I’m going to assume I have the power of dollar-cost averaging on my side. So let’s go with a more conservative 5%, and let’s take that number over to a compound interest calculator.

Here’s how it looks with the current amount I’m putting in per week (I’m assuming six years to grow because I only have about six months to my birthday):

Okay, $23,799 is a leeeeetle far off benchmark.

So how much extra WOULD I need to put away every pay period in order to meet this benchmark?

I would need to be saving $8,205 annually in order to meet my age 35 benchmark. That’s $6,729 MORE than I’m saving now in my retirement. That means I need to be putting away $316 per pay period, or $260 more than I currently am.

Can anyone be expected to save this much? That’s functionally a 16.9% savings rate. The average savings rate in the U.S. currently is less than 1% - not that I condone that, but let’s be realistic.

This is why I’m starting to think that Retirement, with a capital R, is not the answer. Maybe mini-retirements, a la Tim Ferriss, are, however.

And here’s the next part, for me: instead of putting $316 a month into my retirement, my husband and I are putting $500 extra/month towards our mortgage. Is this a smart choice? I’ll talk about that next time.

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In late August, I asked my readers, male and female, to provide insight into how much they spent on clothing, beauty and hygiene. My hypothesis is that as a professional woman it is difficult to spend frugally in the hygiene category, due to the demands a professional environment puts on looking put together.

Being a research analyst by trade, these results are not as clean as I would have liked, since many of the questions were open-ended, but there are still interesting findings to be gleaned.

Including myself, 21 readers took the survey - 6 men and 15 women. This uneven gender balance is pretty standard in survey research, I’ve found, as women are much more likely to respond to surveys than men.

The professions of the participants varied tremendously, but many were technical in nature (i.e. research associate, technical writer, systems analyst). There were also several graduate students who participated.

Responsibility level was hard to judge - I divided it into “low,” “medium,” and “high,” but this was basically a judgment call on my part. If you wrote down “manual labor” or “delivery driver” I judged your level of responsibility to be low; whereas if you wrote “working attorney” or “booking agent” I judged it to be high. For some I could not even make a guess - how would you judge “personal trainer?”

Clothing: I asked how much each participant had spent on clothes in the past six months. The overall mean was $286. For men, the mean was $240, with a range from $11-$600. Women spent more overall, ranging from $60-$1,000 with a mean of $305. (I did not test significance on this, or any, numbers, as the N was too low). The highest spending participant was a woman, and the lowest spending participant was a man.

Haircuts: I asked how often each participant had their hair cut, and how much it cost each time. On average participants cut their hair 4.7 times per year; the average cost was $31 (ranging from $0-$115). Several individuals cut their own hair or had a family member or partner cut it (one man and three women), for a net cost of $0. For men, the average number of haircuts per year was 5, and the average cost was $17 (ranging from $0-$30). For women, the average number of haircuts per year was 4.5 (longer hair does need to be cut less often), and the average cost was $36 (ranging from $0-$115).

Hair products: I asked how many hair products each person used on a regular basis, and how much each one cost. Keep in mind that measurements may be skewed here, as people buy products in different sizes, which thus determines how frequently they buy them. On average, participants used 2.3 hair products (ranged from 1-7), with a mean total cost of $17. Men on average spent $14 on 1.6 products (range of 1-3 products for a total of $3-45); women on average spent $19 on 2.5 products (range of 1 to 7 products for a total of $0-$50). The highest spending participant was female, as was the participant using the largest number of products.

Number of steps in routine: Reports varied tremendously here, depending on what people considered to be part of their routine. Many people did not include obvious steps, like “get dressed.” (I want to work in their office!) I discounted any steps that did not specifically have to do with hygiene, such as “check email” or “grab my iPod.” On average, participants’ routines included 5.3 steps (ranging from 3-10). For men, the range was narrower (3 to 5 steps) with an average number of steps of 4. Women’s routines ranged from 3 to 10 steps, with an average number of 5.8. The most detailed routines were those carried out by women.

Monthly hygiene expenditure: Not everybody knew how to answer this question, but I calculated responses from the nine people who did. The average monthly expenditure was $45, and ranged from $15-$100. For men, of whom there were only two, the average cost was $65 (range: $30-$100). For the seven remaining women, the mean was $40 (range: $15-$80).

Overall observations on level of responsibility: expenses did seem to differ as a function of the level of responsibility. The highest spending women, and some of the highest spending men, were in jobs with medium or high responsibility. Although I did not ask about office environment, this seemed to be predictive, with participants who worked in traditional environments, such as law firms or corporate offices, spending more on their appearance than others. Students - all of whom were female - were a low-spending group, unsurprisingly.

I urge caution in interpreting these findings, as always, because the N is so low - especially for the last items! But in most places this survey shows women spending considerably more time and money on personal appearance.

Women out there: what do you do - or what can you do? - to reduce the hold personal appearance has on your finances?

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Great news! Ten (Other) Ways to Make Your College Education Pay Dividends appeared in Festival of Frugality #160, hosted at FIRE Finance.

Two other posts I noted from this edition included:

• Don’t Go to a Private University at Blueprint for Financial Prosperity. I seem to really enjoy arguing on Jim’s Devil’s Advocate posts. In this one I point out that the effective cost of a private college education, after financial aid is accounted for, can quite often be less expensive than a public college education, especially for low income families.
• Benjamin of Trees Full of Money writes about My Inexpensive Do-It-Yourself Geothermal Cooling System. Even though this isn’t a system I can implement in my own house, this article impressed me. It’s a novel topic that I haven’t seen addressed in any Festival of Frugality, and the author gives concrete advice that you can put to work today. All around, a rare find.

I’ve also entered Gender and Finance: How Much Do Your Spend on Hygiene? in a carnival, but that won’t be out for a few more days. I am hoping to get more exposure for that article so I can reap a greater “sample size” before posting the results.

I am heading off on vacation tomorrow morning, so in the meantime I present my own responses to the questions I ask in that post:

What is your gender? Female
What is your occupation and level of responsibility? I’m a research analyst for a market research firm. I have no employees for whom I’m personally responsible, but I do answer directly to one of the senior VPs.
About how much have you spent on clothing for yourself in the past six months? I bought about $80 worth of bras from Macy’s, a $45 shirt from Land’s End, a $20 dress from Target, and a $17 sweater from Target. Total: $162.
How often do you get your hair cut? How much does it cost each time? Approximately once every three months (sometimes more frequently; sometimes less) at $46 each time.
What products do you use on your hair (shampoo, conditioner, sprays, gels, mousse, etc)? How much does each one cost? Matt and I share bottles of Suave Daily Clarifying shampoo, $3.49 on drugstore.com. I also use V05 Detangle and Shine spray; $3.99 a bottle from walgreens.com.
Describe your morning routine on a work day (or a day where you have to “dress up,” if you’re not currently employed). Wake up, take a shower (involves shampooing, shaving, and using a scrub on my face), spray conditioner in hair, put contacts in, (optionally) style/blow-dry hair (it seems to look the same no matter what I do), brush teeth, put on perfumes, deodorant, get dressed.
If you have a similar category to “clothing/beauty/hygiene” in your budget, tell me your monthly expenditure for just you. Over the past five months, approximately $69 per month of our spending has belonged to this category. At least half of that is mine, if not much more.

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Millionaire Mommy Next Door just featured an article on Why Women Need Money More Than Men. Her reasoning is that “having a child is now the single best indicator of financial collapse,” and that women, as the bearers of children, still bear an unfair portion of responsibility for child-rearing - and, if they don’t have a partner, all the related expenses. She suggests solutions such as delaying motherhood, sharing parenting and careers with a spouse, or becoming financially literate. (As we know, my husband and I are childfree, so I’d suggest avoiding children entirely, but I realize that’s not right for everyone).

One area MMND does not mention is how life expenses differ between men and women. In many areas, we pay the same the amount regardless of gender, i.e. housing, food, transportation. However, one category I suspect differs by gender is the one that in my budget is called “clothing, beauty, and hygiene.”

Why? The standard for professional women to look “put together” requires a greater expenditure of time and money than it does for men in similar positions.

Women’s fashions change more frequently than men’s. We have more options for kinds of clothes to wear. We wear makeup. We get manicures. Our haircuts cost much more. We have to shave more. We carry purses - often expensive designer handbags. We wear pantyhose (how I hate THAT one).

Some women like myself - acquiesce to these cultural standards grudgingly, seeing it as just part of getting ahead professionally; and some take a real joy in it. Rare is the woman who can escape from these standards completely; even a student who wears sweatshirts and jeans all the time may be expected to put on a dress and shave her legs for a wedding.

So, my readers, consider this a survey. (I am a market researcher, after all). If you could answer the next few questions, I’d be very appreciative.

- What is your gender?
- What is your occupation and level of responsibility? (manager, technician, etc)
- About how much have you spent on clothing for yourself in the past six months? If you don’t know, about how many shopping trips have you made? (or online purchases)
- How often do you get your hair cut? How much does it cost each time?
- What products do you use on your hair (shampoo, conditioner, sprays, gels, mousse, etc)? How much does each one cost? (if you don’t know, tell me the brand and I’ll calculate it)
- Describe your morning routine on a work day (or a day where you have to “dress up,” if you’re not currently employed).
- if you have a similar category to “clothing/beauty/hygiene” in your budget, tell me your monthly expenditure for just you.

I’m looking forward to hearing from you and gleaning some data on how financial expenditure for hygiene differs between the genders.

21 Comments »

Twenty-seven percent of the U.S. has a bachelor’s degree - and if you’re reading this, you’re probably one of those people. We all accept that the expense of our higher education buys us a better job or a graduate degree, but are there other benefits to being a college graduate?

As it turns out, the services your alma mater provides you as an alumni extend beyond free transcripts and overpriced reunion buffets. I examined the alumni benefits at the three schools I was most familiar with - Vassar College (Poughkeepsie, NY), Brandeis University (Waltham, MA), Fitchburg State College (Fitchburg, MA) - to see what they had to offer.

1. Access to libraries and athletic facilities. If you’re local to your alma mater, these can be invaluable. University libraries have subscriptions to far more journals and services than public libraries, and can allow you to delve deeply on any topic that might interest you. Your college’s gym can provide you, for free or a low cost, a top notch athletic facility. Some services are free with an alumni ID; some charge a fee. Your usage may also be limited.

2. Recreation. Alumni organizations often provide travel or entertainment opportunities to their members. Vassar, for example, is sponsoring a trip to London and Stratford-Upon-Avon to provide “backstage insight on theater,” with lectures from one of the College’s drama professors. Brandeis in the Berkshires is a similar type of program. Although these programs will cost you, being able to travel with like-minded people, with rare educational opportunities open to few, might make it worth it.

3. Contacts/networking. Most college websites feature an alumni directory of some sort. Some are simply databases of contact information, while others operate more like social networks (SUNY Canton’s MyCanton, for example, describes itself as being “like MySpace or Facebook”). Some, like Vassar, offer discussion groups where you can connect with alumni in similar fields, look for rideshares or housing, and buy and sell goods and services.

4. Career advice and assistance. Career development doesn’t stop with those transcript requests. Vassar, for example, offers a service called V-Net, a database of alumni who have offered to serve as career advisors to other alumni. More generally, some colleges have started using College Central to hook their alumni up with careers.

5. Accommodations. If you’re staying close to your alma mater, rather than dishing out for a hotel, maybe you can opt for a more personal experience? Vassar, for example, houses alumni in its scenic alumni house for $78-$168 a night. Many schools also will rent their dorm rooms out during the summer for a low cost.

6. Grants/fellowships. Even several years after graduation, you may be able to apply for grants or fellowships that your alma mater is offering. Vassar, for example, offers several fellowships to its alumni for pursuits such as studying language in a foreign country or taking “time out” when you reach your 40th birthday.

7. Lifelong learning. Many colleges provide lifelong learning opportunities to their alumni - and sometimes to local residents, as well. Brandeis in particular is known for BOLLI, the Osher Lifelong Learning Institute at Brandeis, which offers courses in history, government, literature, science, psychology, and other topics. This program is so popular that there’s now a lottery in place for membership! Alumni can also audit classes at many colleges; it’s all the fun of going back to school with none of the stress.

8. Credit cards. Now your alma mater can help you accumulate more debt! (Just kidding). Both Brandeis and Fitchburg State offer their graduates a college-branded credit card where every purchase supports the college’s fundraising efforts.

9. Insurance. In Massachusetts, several colleges - including Fitchburg State and Brandeis - have agreements with Liberty Mutual to provide reduced cost auto and home insurance to their graduates. Brandeis graduates also have some health and life insurance plans available to them.

10. Discounts. Fitchburg State, for example, offers a 10% discount on clothing and gift items from the college store. Through Brandeis you can receive a discount on rental cars through Avis, and a 30% discount on books from the University Press of New England.

How to plug in: Go to your alma mater’s website and look for its alumni subsite. Some sites will have a page called “alumni benefits” while some will note them in several different places. You may have to log in with your graduation info (ID code from the alumni publication, graduation year, etc) to take advantage of some services. Take some time to become familiar with what’s available to you now, so that when you need the information later, you’ll know where to find it.

(photo credit: joseph a)

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My friend Django brightened my day with this point about my weighty mortgage:

The other thing I was going to console you with is that, with the markets in the state they’re in, your financial position is actually perfect. [You're] heavily leveraged, i.e. a debt-to-net-worth ratio of close to 1.

The most likely result of a market crash is inflation as the fed pumps ever-more money into the economy… ditto tax relief, etc. In any inflationary situation, the ideal place to be is in debt up to your eyeballs, with the money from that invested in real assets (i.e. not credit card debt), since, as inflation pushes up prices and salaries, the amount of debt relative to income goes down. In the worst-case scenario (China dumps US currency, runs on the dollar, hyper-inflation) your debt becomes meaningless and you get a free house.

Conversely, in that worst-case scenario, the place you DONT want to be is holding bonds, pensions, or other fixed-income instruments (or just dollars) - because if a loaf of bread now costs $10,000, your pension isn’t worth very much.

This is what happened to Germany in the 30s (which they engineered deliberately, to get out of their debts to England and France) or Russia accidentally in the 90s, after they lost most of the countries money to a pyramid scheme.

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I’m sure it’s possible to vacation inexpensively.

I did not, however, do it.

After adding up all the receipts, I spent approximately $500 on my trip to New Mexico with my mom. That’s impressively low for a six day vacation, until you consider that my mother paid for the airfare, lodging, and membership in the dance camp we attended.

My responsibilities were food and gas - and given that food totaled o $187 for the weekend (our food was included at the dance camp), and gas only $55, there was definitely some, uh, discretionary spending in there.

So where did it go?

• $110 went to parking at Boston Logan airport’s economy lot for six days. Some economy that was! A better option would have been to have someone drop me off, but my flights were midday, making that inconvenient. Parking at the Woburn branch of the Logan Express and taking the shuttle also might have been cheaper (though likely not by much). Flying out of Manchester, NH might have been an option in other circumstances, but was not in this case (this trip was a replacement for a canceled trip to England, and our non-refundable airfare could only go towards a flight out of Boston).
• Around $122 went to souvenirs - not including some that my mother bought for me. I am pretty happy with my purchases, though. I tried to pick things that were consumable or which stimulated the local economy (which appeared to desperately need it). Hence I ended up with a sterling silver zipper pull made by a Native American artist in Santa Fe, a bottle of honey made in Escondida, some hand-crafted soaps from Taos, and a jar of pinon salve made in Datil. I probably spent the largest amount of money at once at the gift shop at Bosque del Apache wildlife refuge, where I spent one of my best days, but was consoled by the fact that it supported a non-profit, environmental organization.
• Interestingly, the places that were the most expensive to eat were also the most “institutional” and unspectacular - such as an Applebee’s near the airport, or the Shark Reef Cafe at the Albuquerque Biopark. Eating local food would have been the cheaper option in most places.
• Speaking of the Albuquerque Biopark, we paid $24 ($12 x 2 admissions) for a combo ticket that also admitted us to the zoo and let us ride the train between the Biopark and the zoo free of charge. Of course, we never got on the train, nor did we get to the zoo! We could have saved $10 if we’d only paid for admission to the Biopark. Ah, planning.

So after all the sopapillas and green chile cheeseburgers are out of the way, can we afford this? Tentatively, yes. It won’t send us spiraling into debt, but it is a bit of a hurdle. We may need to dip into the emergency fund, and, as you might know, green chile cheeseburgers are not an emergency.

The upshot is that I feel bloated, like after a heavy meal. I need to take it easy for a while; curl up with a book from the library and eat dinners out of my pantry.

All that said, what I really paid for is the chance to spend time with my mom. That’s priceless.

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