Poorer Than You

Money: It's Not Just For Rich People

Net Worth Update: September 2007

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We all know that I’m a giant geek, and that all month I look forward to these net worth updates. What you might not realize is that I geek out about it even more during months that are ambiguous. Will my net worth go up or down? I don’t know, but I’m excited to find out! I have to restrain myself from calculating it out beforehand, so that I can have the big surprise on the first of the month!

I think I need more hobbies. Anyway, here’s the big reveal… *drumroll*

Change: $141 or +0.51%

Ooo! It went UP! Which is hugely surprising, to say the least. I took out $1,370 in student loans this month to go back to school, so it would have been perfectly expected for my net worth to go down. However, I had a few personal loans forgiven as birthday presents, and I opened an ING savings account to start an emergency fund, and have received some nice bonuses and referral credits from that.

Next month, barring disaster (knock on wood!), we should see another climb. I’ve started my on-campus job and will start seeing paychecks from that next month, and now that I have my emergency fund, I’ll be moving back to aggressively tackling my credit card debt.

Student loans will continue to go up every three months or so for the next year and a half. Most of them are interest free while I’m in school, and I’m going to make an effort to pay off the interest on the other one as it accrues. If I can keep on top of it, the interest won’t capitalize – that is, be rolled into my principal.

Some hefty goals, I know – but look at that upward sloping line! Up $2,000 in less than a year, while in school and accruing student loans! Please excuse my bragging, but I feel like I’ve got a lot to be proud of here.

For a breakdown of my assets and liabilities, check out my NetworthIQ for September. There’s also an explanation of my NetworthIQ categories.

Does My Frugal Life Make Me Miserable?

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This is a response to Trent’s post The Backlash Against Frugality, which itself is a response to Anya Kamenetz Yahoo Finance article Staying Frugal in the Age of the iPhone. The long and short of it is that Anya wrote an article about frugality, and the comments left on it are very, very divided. Although there was a lot of positive, the negative comments unfortunately stick right out.

What really stuck out for me were all the comments calling Anya’s life “miserable.” Most of the negative comments took offense to the idea of Anya buying second hand clothes, and not having a TV. (Since when, I wonder, is the television the only bringer of happiness?)

My own situation is not all that different from Anya’s. In fact, in some respects, I’m more extreme. I’ve been Compacting since January – that is, not buying anything new except for food and toiletries. So I started thinking about it – am I more or less happy now, as compared to before I started compacting?

Before I get into anything, I would like to say that this is entirely non-scientific. There are a lot of other things that have changed in this time period (my job, my major, this blog, the house I live in…), so it’s nearly impossible to tell. Still, it’s worth musing on.

The Television
I’ve spoken before about my ability to live without a television, and I stand by it. I now often forget that I can flip on the television and watch live broadcasts – I’m no longer used to the idea and it almost never pops into my head as an idea for entertainment, or even as a procrastination tool!

Not watching TV has given me so much more time, and flexibility in my time. The television I do watch, I watch on DVD or on syndicated internet – I choose when I watch it. I believe I am much happier having control over my TV instead of being bound to its time slots.

Yes, you could argue that a Tivo would offer me the same benefit, but think about it. I already HAVE that benefit – why would I need to buy a Tivo and pay a monthly subscription for a benefit that I already have?

Second Hand Clothes
Easily the second biggest beef negative commenters had with Anya’s article. I have to admit, I haven’t actually bought any second hand clothes… ever. Not even since I’ve started Compacting. I have a dresser and a closet full of clothes, so the need for new ones simply hasn’t come up.

I have no problem with the idea of buying and wearing used clothing. I’m not sure why it bothers other people, but I can’t see it affecting your level of happiness. I don’t think it matters at all where clothes come from – what matters is how they look and make you feel. If a sweater falls really well on you, does it matter that it came from Goodwill?

Not Buying… Things
I have a “things” problem. Even now, after having moved house and scoured my possessions, trying to only bring with me things that really mattered… I still have too much stuff. Most of my stuff is still sitting in boxes, waiting for me to get around to organizing my new bedroom.

Even having not purchased any “things” in the last 9 months, I still have an entirely messy room with too much stuff in it. Getting more stuff is simply going to compound the problem.

Buying Experiences Instead
I’ve been to more concerts and amusement parks. I’ve gone out with my friends on hikes and seen places in my neighborhood that I had no idea existed. I hang around on my campus and enjoy the free or cheap entertainment ($1 for two comedians this Saturday – I’m so in!). I hang out with my friends and play wacky card games.

Spending less money on things means having more money to spend on life. A few months ago, I tried to think about the thing that matters to me most. It’s not my computer (although sometimes it may seem that way), and it isn’t my collection of all seven seasons of Buffy the Vampire Slayer. It’s my friends and my family.

I love my computer because it’s an easy tool for contacting people. I love my car because it takes me to the places where people are. I love talking about Buffy with people even more than I love watching it. The things I value most in my life are those that help me reach people. I’m happiest just spending time with people. Just last night I had the time of my life… grocery shopping with my friends.

Happiness is not confined to objects for me anymore. I know, it all sounds very cliche. But not spending money hasn’t turned me into an awful miser. I feel much happier having a handle on my money, and I really don’t believe anymore than owning “things” is the road to happiness.

Financial Aid Refund – What Do I Do With It?

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It’s Student Loan Refund Open Season, and the line at Student Financial Services is about to get pretty long. For college freshman and anyone else who might not know what I’m talking about, Student Loan Refunds occur when you get more money from your financial aid than your school needs for your tuition and other billable expenses. And then they cut you a check for the difference.

So what’s to be done with this sudden, extra, seemingly-free money? “BUY BOOZE!” you say. And that’s a valid use of it (also not the best use of it), but I’m not necessarily talking about what you should spend it on. I’m talking about where you should put it.

You’re probably already making out the deposit slip to drop in your usual checking account at your brick-and-mortar bank. But is that really the best place for your money?

In a checking account, your money is basically just going to sit in the account until you’ve depleted it. Even in a regular savings account, it’s probably not going to earn more than .2% interest (a fifth of a percent). And sure, interest is good, but how much money is .2%, really?

What’s the average you get back on a refund check? I don’t know, but I’ve never gotten more than $350. Some people actually get enough from their checks to pay for their off-campus room and board for the semester, so it might be a lot higher, like $2,000. So let’s just use $500 for the example, because it’s nice and round.

So $500 in your savings account earning .2%. Now that $500 isn’t going to stay there for a solid year, but let’s pretend it did. After a year, you would have earned… *drum roll please…*

$1.00

Wow, that hardly seems worth it. In fact, considering you’ll deplete that $500, and won’t even earn a whole dollar, it doesn’t seem worth it at all to put it in the savings account instead of the checking.

But hold up – I’ve got an idea. In fact, it’s what I’ve done with this term’s refund already. Are you interested? I’ll be getting a 3.5% (not 3/10ths of a percent, a whole 3.5 percent) return on my refunds. And I got a $25 bonus.

So how much of a difference can 3.5% and a $25 bonus make? Well, to start with, there’s that $25 bonus. So we’re up to $525 in our example already. And $525 at 3.5% for the year would be… *drum roll again…*

$18.37 – putting the total up to $543.37. Without breaking a sweat.

Alright, alright, so you’re sold on the 3.5% with a $25 bonus idea – where can you get it? ING Direct’s Electric Orange Checking account. It works just like a regular checking account, with a few differences:

  1. You get a 4% APY on money sitting in the checking account. You can also open a Orange Savings account with them, and link the accounts together. Money in the savings account earns 4.3%.
  2. The account comes with a debit card, but no check book. If you need to send a check, they have an electric check system – or you can move the money to your brick-and-mortar checking account (so don’t cancel your old account!)
  3. You get an Overdraft Line of Credit instead of “courtesy overdraft protections” – that thing where when your account drops below $0.00, instead of declining your purchase, your bank graciously lets the charge go through and then slaps you with a $35 fee? Yeah, instead of charging a flat, outrageous fee, ING charges a normal interest rate on the amount your account went below $0.00. If you manage to make a deposit in the next few days to bring the account back into the positive, you’d only be charged pennies – instead of $35.
  4. You get a $25 bonus if you open the account with a referral link and your opening deposit is $250 or more.

So that refund check sitting in your checking account? The one that’s probably for $250 or more? Go open an account with it. Remember how I said you could move money from ING to your brick-and-mortar checking account? That link works both ways – you can move $250 from your regular checking to ING for the opening deposit.

So whether you’re saving this refund for next term’s textbooks, or you’re slowly draining it for expenses – it doesn’t really matter. Either way, you should be making some money off of it while it sits in your account. 

My Very Insane Credit Card Spreadsheet

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I did something that probably falls under the category of “insane.” I pulled up all of my credit card statements for the past two years (thank goodness for online statements!), and I opened a new Excel spreadsheet. And I started entering all of the purchases I’d made on my credit card since the last time I had a $0 balance (March 4th, 2006).

The point of this exercise was not just to look at what exactly the purchases were that got me into credit card debt, although that was certainly something that I was able to do. But my real goal was to see which of these purchases were the ones still sitting on the credit card. What was is it that I’m paying off exactly, when I make a payment to the credit card?

So after putting in all of the purchases, I put all of the finances charges I’ve accrued. I’ve decided that in my mental account of what’s on my credit card, the interest goes last. I don’t even begin paying off the interest until I’ve paid off all the purchases. This makes figuring out what I’m paying off a lot easier.

After listing all of the purchases and finance charges, I started subtracting all of the payments I’ve made to the credit card since I started carrying a balance. After a purchase was “paid off,” I would put a strike through it. As I began doing this, I decided to estimate where I would end up. What am I paying off right now?

My guess was that if I were to make another payment to my credit card today, it would go toward something I bought in my big spender month of July, 2006. And when I finished moving down the list and subtracting payments and crossing off the paid off purchases… I ended up at a purchase from July 23rd, 2006.

Some pretty good estimation skills I’ve got there, huh?

So it turns out that when I make my next payment to my credit card, it will work to pay off my digital camera. The one I’ve had for over a year. The one I bought impulsively to make myself feel better when I dropped and broke my camcorder.

I also found that I have racked up $362.77 in interest so far. Ew.

I can’t wait until the day I cross off the last purchase on this list. Actually, the day I cross off the last finance charge on the list and can say “There. I’ve got a zero balance again!” It will be so nice to not have the purchases of last July still hanging over my head.

In the mean time, I’m going to try and find some credit cards with 0% balance transfer offers. Because these finance charges? Just not cool.

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