Candy Tax and other Childhood Grudges

Tax day has come and gone. Congrats to those of you with hefty returns you’re already excited to spend, or better yet, save. My shove into the world of taxation didn’t come during my sophomore year of college when I worked my first legit job. The first memory I have of taxation (pretty sure it was without representation) occurred Halloween night 1993.

Dressed in my finest green felt with an orange feather stuck in my cap, I made the rounds of Heritage Woods as the cutest Peter Pan you ever did see. My one year old sister held court in her stroller dressed as Tinker Bell. Between her huge blue eyes and my endearing wit, we were really bringing home a substantial candy haul.

DSC02402
(Seriously, could you resist those baby blues? And no, this isn’t her Tinker Bell costume.)

When we got home I ran to the living room and dumped the contents of my cloth pumpkin bag onto the floor. Oh the candy. So much yummy candy. Unfortunately, our two big dogs came running and I had to defend my stash. My Dad called off the hounds and I eased up my defensive stance realizing, a moment too late, a bigger threat had entered my candy territory.

Higs and Murph

Summer sitting on murph(Attempts to steal my goods aside, they were my best friends. Besides my sister of course.)

Leaning down to pluck a fun size bag of Skittles from my pile, my Dad said the two worst words I had ever heard, “candy tax.” My mouth dropped open and I yelled, “put it back!” Those Skittles were my hard earned income. I shoved my body into a green-felt Peter Pan costume for those Skittles. I told jokes to the cranky lady down the street for those Skittles. THOSE WERE MY SKITTLES! My Dad looked at me and said, “We took you trick-or-treating, so we get some of your candy.”

Halloween (This was two years before the candy tax law of ’93. I really should have anticipated that one.)

Granted, I was four and much too young to truly understand taxation, but in my mind it stood for someone coming in and unjustly taking something I had worked hard to earn. Almost 20 years later when I received my first “real job” pay check and saw Federal, State and New York City taxes taken out I’m pretty sure I opened up to my mouth to yell, “put it back!”

holding my loot(I became increasing suspicious of everyone and guarded my loot carefully after Lollipop-Gate.)

Apart from my financial origin story, I learned about net profit by selling Krispy Kreme donuts at a yard sale*, candy tax is my earliest memory about finance and perhaps my biggest childhood grudge. My other grudges include the dogs getting to eat a whole cake on their birthday when I couldn’t. My sister finding the golden egg at Easter five years running. My eyebrows inexplicably turning from blond to black. And ruining my awesome Pocahontas sneakers because I dragged my feet trying to slow my bike down during a family outing.

Childhood grudges aside, I’m blessed to have two parents who were committed to making sure I had an understanding of finances early on in life. An understanding and respect of money is empowering and, in my opinion, one of the greatest gifts parents can give their child.

Even when we were little, my sister and I weren’t handed much. Sure, birthdays and Christmas were elaborate affairs filled with glorious toys, but in between we learned how to earn what we wanted or helped pay for it ourselves.

If I pointed out a toy at the store and asked for it, my Mom or Dad would ask if I was willing to pay for half. If I met them at 50 percent, then I could have the stuffed animal (it was always a stuffed animal). Nine times out of ten I wasn’t interested in paying the $4.50 it usually cost for a cuddly creature. However, this tactic taught me to evaluate purchases and prevent impulse buys at an incredibly early age. It’s a tough skill to learn later in life, especially when you have bills to pay.

Now, that I have reached “later in life” I’m pleased to be a millennial with a basic grasp on finances. According to mainstream media, the millennial generation is in big financial trouble. We can’t land jobs, with or without college degrees. We’re collectively drowning in student loans. As of October 2012, the average student is graduating with $26,600 of debt. And to top it all off we’re apparently all self-indulgent whiners who want to rely on parental welfare, well, forever.

Stereotypes aside, I have come across a fair amount of my fellow millennials who have a crippling fear of money, largely because they don’t understand how finance works. Those friends of mine were my motivation for creating #BrokeMillennial. Hopefully, this blog not only continues to develop my own financial literacy, but helps other fledgling adults learn some basics about budgets, saving and investing.  Plus, I think some real-life grownups find my stories pretty entertaining too.

P.S. If you ever think you see me out shopping, yes, I am the woman wandering aimlessly around the store clutching a stuffed animal cute blazer, trying to decided whether or not it’s worth my money. Unless it’s 50 percent off, then it seems like an obvious yes.

P.P.S. Don’t let the tough love with finances or candy stealing fool you. My Dad is an amazing father.

IMG_2959*For my financial origin story please read Donuts and Dollars.

Please join me and my fellow personal finance bloggers as we celebrate Financial Literacy Awareness Month. Hosted by Shannon Ryan from The Heavy Purse, you can read why financial literacy matters to all of us. Just visit The Heavy Purse and click on the participating bloggers’ links.

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Follow the journey on Twitter @BrokeMillennial or subscribe for emails about new posts. Email feedback or topic requests to brokemillennials@gmail.com.

My Dirty, Little, Money-Saving Secret(s)

A few months ago I decided to treat myself to a shopping trip. Well, treat is the wrong word. I don’t really like shopping, but I had recently evaluated my wardrobe and found it quite lacking in professional clothing. A good friend of mine, lets call her H, with the same fondness for blazers agreed to come along. We armed ourselves with a list of sales, our student IDs (because J.Crew gives a student discounts) and some well-constructed walking shoes.

H had a job interview coming up and needed to find a professional outfit and a new pair of dress pants. We pulled a few options and she went to try them on. “Oh, I really like these,” I heard her say behind the well-worn dressing room curtain. She strutted out wearing a pair of black slacks and did a few twirls in front of the full-length mirror. Nodding her approval, stepped back behind the curtain, changed back into her boring jeans headed to the cashier, ego-boosting-pants in hand.

“Wait, I need to check the tags,” she said as we got ready to pay up.

“Why?” I inquired.

“Because, if they’re dry clean only I don’t want them,” she informed me.

H had a valid point. Even if she felt like a superstar in those pants, they would ultimately cost her more than she was willing to pay for a pair of pants. Luckily, they were machine washable, but the cute silky top she found got the axe. Dry cleaning a shirt in NYC costs about $4.50. If she dry cleaned it once a month it would cost her $54 a year, more than the original price of the shirt.

IMG_1716(I only wear the finest materials available.)

My friend’s reluctance to invest in a piece of dry clean only clothing got me thinking what other little actions we can take in our daily lives to cut costs. Shopping is an easy one for me. I’m blessed with a natural disdain for the whole process and frequently wear hand-me-downs.Not retro-chic thrift store clothes that make me a New York Fashionista, hand-me-downs.

My first year in New York I got lucky and my roommate’s co-worker frequently purged her closet full of exclusively high-end label clothes. Not only did I get free clothing, the leftovers could get taken to a variety of second-hand shops that buy clothing.

IMG_2074(Why yes, that whole outfit is a hand-me-down.  What a sharp eye you have! The blazer is indeed Banana Republic. No, I don’t care that it’s last season.)

Besides my pillaging of people’s discarded clothing, here are some of my top penny-pinching ideas:

  • Brown bag lunch
  • Buy food in bulk and cook large meals for the week
 (get a slow cooker)
  • Cut cable (invest in a Roku or another streaming media player)
  • Evaluate transportation costs – take public transit if it’s an option or carpool if it isn’t
  • Contain cost of utilities - Our electric bill just came in the mail today, we owe $32.87 TOTAL. #humblebrag
  • Get a roommate or consider living at home – see how much you could save staying at home with the “Get Rich Living with Your Parents” calculator.
  • Buy off brand (for certain products ie: cleaning products).
  • Shop the sales
  • 
Cut the gym – Unless you’re a hardcore gym rat stop getting suckered by those rates. Instead, run outside or do an exercise video on your TV via your streaming media player. Girl Meets Debt offers a great post about the horrors of gym memberships.
  • Don’t buy a coffee or tea.

I understand, some days you just want to go get a $5 grande caramel macchiato. But figure this, you can save $2 on an iced latte if you order an espresso shot on ice in a grande cup and then add your own milk.


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IMG_1254

(I get it. My name is really tough.)

If you frequent Starbucks and the idea of spending between $10 – $20 a week on overpriced beverages isn’t enough to deter you then please sign up for a rewards card! They used to do free soy or flavor shots. Apparently they need the extra 50 cents these days. At least they’ll send you the occasional free drink coupon. Find out more details here.

IMG_0142 (RE: above comment – I’m allowed to mock. I worked there too.)

Hand-me-downs and adding your own milk aside, there are some great deals out there. Sign up for Groupon, Living Social or deals in your area (ie: New York Deals). Finally, in true millennial fashion, I advise you download Scoutmob or any other region specific deals app.

IMG_1717(A free app that saves you money! Can’t beat it.)

Follow the journey on Twitter @BrokeMillennial or subscribe for emails about new posts. Email feedback or topic requests to brokemillennials@gmail.com.

The One Where Someone Else’s Dad Teaches Me About Money*

This post was included in the Carnival of Personal Finance #404. Check out all the other great articles included here!

Per special request a series of posts will deal with practical budgeting. I’m not claiming my way is the right way, or the best way, for you to deal with your money. I’m simply offering the #BrokeMillennial budgeting/saving system.

On Monday I sat in the airport waiting for my flight back to New York when my phone buzzed with a text message from my Dad reading, “I will put $20 in your account when we get home. Take a cab home or save it.”

Since my departure from the nest my Dad will spring these delightful financial presents upon me in an effort to get me to treat myself. After much deliberation, and even calling my boyfriend for his advice on the situation, I saved the $20 bucks and used my monthly metrocard I’d already paid for to take the bus home. Besides, I need a haircut this week so thanks Dad!

Treat Yo Self meme(This is me…well…never. Just kidding, I am still planning on the aforementioned haircut.)

Financial planners, fellow personal finance bloggers and possibly your parents all push the importance of saving money. Many of us have heard that we need to save at least 10 percent of every paycheck and have three months worth of living expenses stashed in an emergency fund. It’s a financial philosophy so deeply rooted in our society it has pervaded into mainstream media. The first time I heard about saving ten percent was from none other than Jack Geller, Monica’s dad on the show “Friends.”

Monica: Um, yeah, so uh, uhh, listen, I’m sorry I didn’t tell you this before but umm, I,     I’m no longer at my job, I, I had to leave it.

    Mrs. Geller: Why?

    Monica: Because they made me.

    Mrs. Geller: You were fired? What’re you gonna do?
    
    Mr. Geller: Judy, Judy, relax, this is our little harmonica we’re talking about. We taught     her well. Ten percent of your paycheck, where does it go?

    MONICA and Ross: In the bank.

    Mr. Geller: There you go. So she dips into her savings, that’s what it’s there for. She’s     gonna be fine..Aren’t you sweetie?

jack geller collage(Because one picture of Jack Geller just wasn’t enough.)

Needless to say, Monica hadn’t saved ten percent of her paycheck and had a rough time financially, for a few episodes. Life’s hard when living in a rent-controlled apartment in a trendy neighborhood with a bedroom bigger than most Manhattan apartments. Okay, rant over.

Monica's bedroom(There is a nightstand on each side of her bed! Who in Manhattan has enough space for a king bed that isn’t touching all four walls of the bedroom?!)

While it’s great to wax-poetic about the need to save, it’s hard for many millennials to grasp the idea of squirreling away funds when most of us are already scrimping. Unfortunately, I’m not going to empathize, I’m in camp Jack Geller. The time to save is when you’re making money, any money.

The notion of putting ten percent aside may seem daunting when you’re barely making enough to pay for rent and food. So don’t focus on saving ten percent, instead focus on saving ten dollars from each paycheck (unless $10 is 10% of your paycheck…then perhaps save less).

Sure, if you save ten dollars each paycheck you won’t amass that ideal emergency savings fund, but you will be in the habit of saving. It’s the habit that is most important. Reason being, when you get a higher paying job putting money aside will be an instinct and you can start to actually put aside ten percent of each paycheck. There are even ways to do this automatically (more on those in future posts)!

Being a saver is a mindset. Some people are raised or wired that way while others constantly battle the impulse to splurge. But if you don’t want to end up like Monica then live within your means, start saving and don’t be this guy (watch until minute 3:09).

the routine(Do yourself a favor and watch the routine.)

*Previously the title read: The Importance of Scrimping when Saving. People apparently don’t find that as catchy.

Stayed tuned for future posts about how this millennial deals with budgets and savings. During the interim, follow the journey on Twitter @BrokeMillennial or subscribe for emails about new posts. Feel free to email feedback or topic requests to brokemillennials@gmail.com.

The Accidental Environmentalist

One of the many financial shocks to millennials entering the housing market are the delightful hidden expenses known as utilities. Okay, maybe they aren’t exactly hidden, but when you live in New York and spend upwards of thousand dollars for a shoebox, it’s tough to see those first few utility bills. After the first couple bills the shock begins to wane, a similar experience to no longer being startled awake by ambulance sirens and gun shots. Just kidding, I never hear the ambulance sirens.

Some landlords are kind enough to include gas and hot water with rent but electricity is the true financial burden. The first time my roommate and I got a bill from Con-Ed (NYC’s delightful electric company) it read $1,000. Now, I didn’t know much about how electric meters worked, but a grand seemed a little steep. Luckily, the meter was broken and we didn’t owe even a tenth of the original bill, but the mild cardiac arrest I suffered had lasting effects.

For starters, I’m still a little scared to open our electric bill. The fact that the amount due fluctuates monthly really messes with my budgeting style. Even worse, the entire billing system is shrouded in mystery. Each month feels like a chess game, Broke Millennial vs. the geniuses at Con-Ed.

In order to out maneuver Con-Ed, I came up with some pretty sneaky tactics to lower our electric bill. I became something of an accidental environmentalist in the process.

** I realize how extreme some of my methods may seem, but I really, REALLY like saving money. My first year in New York I was also really, REALLY broke.**

My roommate and I moved into our apartment in July of 2011. If you’ve never experienced summer time in New York City, you’re lucky. It doesn’t have the blazing heat of Texas, but what we lack in temperature, we make up for in the stench of hot garbage and lack of central air conditioning.

Most apartments in New York do not come equipped with air conditioners so plenty of city dwellers stick portable ACs in their windows and pray the unit doesn’t fall out on an unsuspecting passer-by. The first summer, air conditioners represented one thing to me, wasted money. The cooling breeze offered me no relief. Instead, each blast of cold air represented the hours on my feet at Starbucks or changing dirty diapers while babysitting. I decided to forgo an AC and embrace the heat.

The fan in my room made the journey from college to the Big Apple. The best part about that old fan was the timer setting. Each night as I drifted off to sleep I set the timer for one hour. I would be lulled to sleep with the tickle of a cooling breeze which would promptly shut off during my slumber. Sure, some nights I’d wake up drenched in sweat, but that sweat represented all my saved dollars. It was worth it!

HPIM8439(I highly recommend investing in fans with a timer setting. And perhaps occasionally dusting them.)

I also got in the habit of freezing bottles of water and putting them next to me in bed. Don’t worry, I wasn’t buying bottled water! They supplied us with bottled water at work and I always brought my bottle home. See, accidental environmentalist.

HPIM8434(Mr. Bunny displays the effectiveness of the frozen water bottle plan.)

In addition to rejecting ACs and only using the fan a few hours a day, I became neurotic about unplugging anything that wasn’t in use. Lamps, toasters, microwaves, computers, hair dryers, if it had a plug (and wasn’t the fridge) it got yanked out of the socket after serving its purpose. Later I read that environmentalists have started pushing for people to conserve energy by doing the same thing, I guess I’ve just always been a trend starter.

In addition to obsessive unplugging, lights were turned off as soon as we left a room, even if we planned on coming back only a few minutes later. Not only did it save on the electricity bill but the practice extended the life of our light bulbs.

I’m proud to say that our electric bill has never been over $54. In the summertime it’s typically around $35 total, not each, because we use natural light all day, only turn on the lights after the sun sets and keep our fan usage to a minimum. To compare, friends of mine that each use an AC in their rooms during the summer see electricity bills of $100+. They’ll argue that the extra $70 is worth being in the cool air. I respect that, but just don’t agree. I’ll strut around in my bathing suit carrying my frozen water bottle to save seventy bucks.

HPIM8440(The anxiety inducing Con-Ed bill.)

As a side note, our water bill is covered by our landlord. Otherwise there would be a two song policy for showering. No epic rock anthems like Hotel California, we’re talking awful modern pop tunes like Party in the USA to make rush through the shower just to shut it down.

For daily bits of wit and financial advice follow the journey on Twitter @BrokeMillennial or subscribe for once-a-week email updates about new posts!

Dealing with the B-word

Per special request a series of posts will deal with practical budgeting. I’m not claiming my way is the right way, or the best way, for you to deal with your money. I’m simply offering the #BrokeMillennial budgeting system.

Other children of the 90s might remember the glorious time when clogs were fashionable for everyone, not just Dutch milkmaids, and before crocs existed. In 1996 clogs were quite the trend at St. Michael’s Catholic school in Gastonia, North Carolina. Every time I would see all the trendy 8th graders (aka the oldest girls in school) wearing those comfortable clogs my saddle shoes would feel so restrictive. My second grade self became determined to own a pair of clogs.

saddle shoes(Yeah, I was rocking those before Cole Hann made them trendy. This version is available at Payless!)

My mother, an always practical woman, knew that I would outgrow those clogs or the fashion would end within minutes of buying them for me. Instead of giving into my incessant pleading she made a one-sided deal with me. I could have the clogs, if I bought them with my own money.  Luckily, I was still sitting pretty on some money from my Krispy Kreme donut sales and had recently started to branch out into the cat-sitting business.

Armed with $15, I headed to the local Payless and made the first big purchase of my life.  I loved my $13.85 navy clogs with cork bottoms and I wore them proudly, every day for two weeks. Then St. Michaels banned clogs because they somehow clashed with our school uniform. Regardless, it remains a pivotal financial and budgeting milestone for me.

Denim-Cloth-Clogs_1776712B(My $15 did actually buy a full pair.)

***
Few things seem to bother people more than dealing with a budget. Who enjoys them you ask? Let’s call them accountants, accountants and me.

If it weren’t for my intense aversion to non-financial math and the horror stories about tax season, accounting probably would have been my calling. More than once my first roommate would walk into the apartment and find me gleeful pounding away on a TI-83 calculator and furiously writing numbers in my money notebook. The number crunching always proved, yes, I was still quite poor. Even so, I enjoyed knowing just how much money I did, or more realistically didn’t, have to spend.

A plethora of systems exist to help people deal with their money. Previously, I’ve discussed the envelope system of budgeting and explained where I made budget cuts when I first moved to New York (spoiler alert: it was food). Today, I don’t particularly endorse either but they fit at the time.

My goal of budgeting is simple: spend less than I make. For the sake of this post, I claim to earn $2,300 a month after taxes (this is a fictional number).

For those readers who remember my financial origin story it should come as no surprise that my budget focuses on saving. Future posts will discuss the importance of saving at least a little bit every paycheck, putting money aside for retirement and dealing with student loans and other forms of debt.

Before you can start saving, or paying off debt, you have to be able to survive your day-to-day expenses. As a 23-year-old living in New York City with no dependents, my expenses will vary drastically from people with children, joint-incomes, still living at home and various other factors. Please keep that in mind when reading my outline.

There are two types of budgets I focus on, weekly and monthly. I’m not neurotic enough to crunch numbers daily, but I have an idea each week how much I’ll need. If I’m traveling, going out for a friend’s birthday, entertaining visitors or a myriad of other situations, I mentally prepare to scale back expenses the week prior or after.

My weekly budget mostly deals with how much I can afford to spend on food and entertainment. Each month I budget $300 for food, because it only costs about $50 each week for my groceries and I add extra for dinners or drinks with friends.

My set monthly expenses are:

  • Transportation (NYCpublic transit) – $112 monthly pass
  • Laundry – $21
  • Toiletries (shampoo, conditioner, soap, toilet paper, etc) – around $10
  • Utilities (heat and electricity) – ranges from $30-$55 because my roommate and I      don’t use AC in the summer and we only have lights on in rooms we’re using.
  • Hulu Plus – $7.99 (We cut cable and went with a Roku box instead.)
  • Phone bill – $70
  • Food – $300
  •  Rent – $950

For a grand total of $1455.99, more than 50% of my monthly earnings.

roku(I highly recommend cutting cable and switching to a Roku device to save a few bucks.)

Working under the assumption that I earn $2,300 a month I then have $844.01 each month to allocate towards other expenses and savings. Realistically, each month brings a new hidden expense that aren’t factored into the monthly budget. For example, needing items dry cleaned, buying birthday or holiday presents, taking trips to visit friends or entertaining guests.

For those of you interested in starting to budget your money I encourage you to take the first step by writing down all your monthly expenses and subtracting it from your monthly earned income (after taxes). Once you have an understanding just how much money you actually have after expenses it becomes easier to know where to allocate your funds be it savings, paying off debt or a shopping spree.

Stayed tuned for future posts about how this millennial deals with budgets. During the interim, follow the journey on Twitter @BrokeMillennial or subscribe for emails about new posts. Feel free to email feedback or topic requests to brokemillennials@gmail.com.