the Guppie Life

I’m in the middle of an awkward situation.

Normally, I don’t write about my friends and family on this blog. Writing about my own life with my adoring masses is my own prerogative, but writing about their lives isn’t.

But I need to share this on the blog, so I’ll be vague.

A few months ago, I loaned an older relative some money. At the time I didn’t even think of it as a loan. It was just convenience thing. She had an entirely legitimate bill due, and because of the particulars of the situation, it was just a lot easier for me to foot the bill and have her pay me back.

Honestly, I didn’t think twice about it. It’s just the sort of thing we do in my family. For instance, sometimes a family member will use a professional discount to buy an item for another family member. This transaction was along those lines.

The amount I covered didn’t break the bank, but at more than $1,000 it wasn’t an insignificant expense for me either.

A few weeks went by before I thought to say anything about getting reimbursed. I didn’t want to seem cheap or needy, but I do have very aggressive savings goals, and every bit counts.

I just brought it up casually: “Hey [relative], don’t forget about that check.”

“Oh, don’t worry! I haven’t forgotten!”

Good, I thought. That takes care of that.

A few more weeks passed.

“I was just wondering if you had a chance to send that check?” I asked. “I was hoping to buy a new computer pretty soon, and I’d like to have that money back in my account first.” (Not that I should have to explain myself for wanting to be paid back, right?)

Then she brokedown. She confessed she has been living paycheck-to-paycheck for months. She doesn’t have the cash flow right now to pay me back.

I was stunned. This relative has had a stable career. She’s in her mid-50’s and appears to be comfortably middle class.

The relative went on to explain that she has had a few unexpected expenses lately to the tune of several hundred dollars per month. The expenses caught her off guard, she said.

At first I was flabbergasted. I felt horrible and greedy for demanding to be paid back. But mostly I was confused and saddened.

The extra expenses, though significant, should not be catastrophic to someone who has had that much time to save.

Then I got upset. She drives a late-model large SUV, one that is known to guzzle gas. And she goes out socially to the local pubs (she’s single) three or four times a week. (That’s about ten times more often than me, and I’m half her age!) How could my adult relative spend her money so irresponsibly? And why wasn’t she forthright with me? How is it okay to use your younger relative as a stopgap bank loan?

The relative said she would talk to her accountant and have him cash out some stock she inherited in order to pay me back. I could tell she was mortified.

I felt awkward, too. Incredibly awkward. I didn’t know what to say, so I didn’t say anything. I want her to get through this difficult financial time and I love her, but she has lost my trust.

On the other hand, it’s not as if I needed that money back right away… And where do I get off criticizing her lifestyle?

In the end, I decided it was probably less embarrassing for my relative to pay me back and put the whole matter behind us. The check is supposed to arrive via overnight delivery tomorrow morning.

I feel guilty. What would you have done?

It seems that every blogger worth his salt has a debt reduction plan, a budget, or a savings goal.

I’m extremely fortunate that I’m debt free at a stage of my life where many of my cohorts are burdened with student debt. (Thanks mom and dad!)

But that doesn’t mean I don’t watch my cash flow like a hawk. In fact, since graduating college I’ve become hyper-vigilant about my personal finances. It’s not because I’m now working without a parental safety-net— I’ve been in charge of my own money since I was a teenager.

No, no, the reason I have become obsessed with tracking my financial progress is that early on I set my sights on some lofty savings goals.

Max Out My Roth IRA

I’ve already maxed out my 2007 Roth IRA (and it was really easy to set up!), but 2008 is a third of the way over, and I haven’t contributed yet. Gotta get on that.

Deadline: April 15, 2009
Amount: $5,000

Max Out My 401k Match

I become eligible for my company’s 401k plan in June 2008. My employer matches contributions up to a certain point, but I must be vested for three years in order to keep all of the matched money. While I’m really happy with the new job so far, who knows what will happen in the next three years. Under this plan, I can choose a pre-tax traditional 401k or a post-tax Roth 401k.

Deadline: December 31, 2008
Amount: $2,000

Emergency Fund

I began building an emergency fund before I even moved to the D.C. suburbs for my first job. Right now I’ve got a pretty healthy amount sitting in an online savings account. I could use this money to fully fund my 2008 Roth IRA contribution and still have some padding left over, but for now I want to keep things liquid.

Deadline: Flexible
Amount: An additional $3,000

Hybrid Car Fund

My senior year of high school I paid cash for my current car, a 2000 VW Jetta. (Stick shift and turbo! Woot!) Before that I had a clunker that was a gift from my parents.

I’ve never gone into debt for a car before, and I don’t want to now. The Jetta has <60,000 miles on it because I barely drove in college, so I’m hoping it can last me another year, but it’s beginning to show its age. In the past two years I’ve spent approximately $3,000 in repairs.

For my next car, I’d like to get a used Toyota Prius or Honda Civic Hybrid. I’m not so concerned with the cost of fuel— I just want to make an environmentally conscious decision. Also, both cars have good ratings with Consumer Reports.

I will also consider cheaper (but fuel sipping) compact cars.

Deadline: Before my current car dies
Amount: Ideally $17,000, but realistically I’ll save as much as possible in order to reduce the amount of the loan

New Computer Fund

My livelihood is made in the internet industry, and then I blog on my own personal website in my spare time. So yeah, I’m kind of a computer nut.

I’ve been an Apple fan-boy since I bought my PowerBook G4 laptop in October 2005, and I use a Mac Pro at work. I apple-solutely wouldn’t consider anything but another Mac, but the problem is that Apple products are more expensive than comparable PC’s.

As much as I love my PowerBook, it’s showing its age.

I could save money by opting for an iMac desktop instead of a MacBook Pro laptop, but I love the portability of a laptop. (Of course, I could get the desktop and keep my current fossil laptop for when I need the mobility…. decisions, decisions…)

Also, I will consider buying a refurbished machine.

Deadline: Flexible
Amount: $1,400 - $2,200

Plastic Surgery Fund

Upon reading this saving goal, many of you will scoff and promise never to visit this blog again. “How can he say that he’s trying to be frugal when he’s planning one of the most superficial indulgences money can buy? Is he really that shallow?”

I’m not going to make any apologies for wanting plastic surgery. For years I have been thoroughly unsatisfied with a particular part of my face, and I’m not the kind of person who can sit around and ignore problems that have actionable solutions. I’m doing the best I can with my body by going to the gym, but surgery is the only option for my face.

Who knows? Plastic surgery might even be good for my career.

In college, I told myself that I’d get the procedure as soon as I had the money. My mother said she’d pay for septoplasty— an operation to correct a deviated septum— but not cosmetic work. Still, her offer means I don’t have to choose between a legitimate health issue and my self-esteem.

Deadline: At the earliest, six months from now, after I’ve accumulated a sufficient amount of paid vacation
Amount: $5,000 - $15,000 (depending on the surgeon, severity of the issue, etc)

Total: $33,000 - $44,200

Crap, that’s a lot of money.

It’s official. I’m one step closer to becoming a real gay: Today I signed up for my first gym membership.

It has been a long time coming. I’ve been living in Northern Virginia for over six months and have wanted a gym membership since day one. But I’m a planner, always one to be methodical and analytical before committing to any large expenses. So naturally, I did my research.

Why Join a Gym?

First, I had to justify to myself whether or not a gym membership is worth the expense. One popular argument that many personal finance gurus make is that you can easily get an effective workout at home for nearly free.

Believe me, I’ve tried to work out from home. For some reason I just can’t force myself to exercise reliably outside of the gym atmosphere. I even have great jogging trails behind my townhouse, but I’m not such a fan of weather, jogging, or being outrun by yuppie housewives. I prefer the arc trainer, staring at the ass of the hottie in front of me, thankyouverymuch.

The other reason for signing up is guilt. When I’m paying for something I feel that I need to get my money’s worth, which is also why I’m not allowed to go to all-you-can-eat buffets anymore.

Finally, the biggest problem with gym memberships is that people are overwhelmingly over-optimistic about how often they’ll go to the gym. I’d like to think I’m prepared for this, because I went about 3 times a week on average in college. Back then, I had way more activities and organizations consuming my free time. These days I just have work and my blog.

What to Look For

The number one factor for me was location. As they say in real estate, “Location, location, location!” I needed a gym close enough not to be a hassle. I wanted a gym convenient to both my home and my work, so I do not have an excuse not to go any particular day of the week.

There are three gym franchises with branches in both my town and the town where I work.

One of them, Gold’s, is a national chain, but is not especially close to either work or my home. Both locations were in strip malls I never frequent. I actually didn’t even tour either branch, but they were the only gym on my list that doesn’t require a 1-year contract.

The next was called Sport&Health. It’s a local chain, with a branch not too far from work or home.

I toured one of the locations. It had very nice touches, such as a granite countertops and a juice bar, but I was kept waiting 45 minutes for my tour. When I did take the tour, my guide was very sales-y, though the facilities were nice. If I remember correctly (it’s been a few months), the basic package was $39 per month with a required one-year iron-clad contract. Personal training can be purchased as an add-on feature, as can a towel service. I believe there is also an additional fee for the ability to use multiple branches.

What I Got

The last gym I toured (and the one where I signed up) is called Fitness First. It’s another local chain.

A few months ago, I toured the branch in my town, and today I toured the branch near my work. Both times the tour-guides were salesmen, but not over-the-top.

However, this gym’s main selling point is that it’s very close to my office, less than a block away, which I hope will mean I’m more likely to use it.

The rates were the best I researched. Again, a one-year contract is required, but the per-month membership costs $33. And of course the obligatory “activation fee,” which is an evil rip-off, but it’s also practically unavoidable. Mine was $69. I’m also allowed to use the facilities at any location, and I’m allowed to cancel my membership (with caveats) if I move more than 15 miles away from a branch. The towel service is complimentary.

What I’m most excited about is the included personal training. During my first month, I receive 4 one-hour private sessions with a trainer, and then two sessions per month after that. While I probably won’t get a super hot gay personal trainer, I’m still excited to have someone to teach me and hold me accountable for my progress.

What do you think? Have you seen similar deals in your area? What criteria do you use when selecting a gym?

One of the hallmarks of personal finance blogs is the blogger’s journey towards debt reduction. The causes of debt vary, but usually it’s some combination of naiveté and poor impulse control. Sometimes it’s responsible debt, as is the case with my friend Melissa and her hefty student loans. Or maybe a mortgage.

But mostly it’s stupid things like fancy cars and electronics.

The story usually goes like this: Boy meet credit card. Boy foolishly spends money. Boy has personal finance revelation. Boy starts personal finance blog.

Frankly, I’m a bit bored of these blogs. They seem to re-circulate the same few ideas over and over.

How many of these themes have you seen repeatedly in the p.f. blogosphere? (I’ll admit I’m guilty of a few myself.)

• “Start saving for retirement”
• “Compound interest rocks!”
• “Pro vs. Con: Why I Choose to Have Taxes Withheld from My Paycheck”
• “Go Green to Save Money”
• “Invest in Yourself - Exercise, Eat Healthy, Etc”
• “How to Increase Your Earning Power”

… blah blah credit cards, blah blah interest rates.

Part of the reason for my ennui is that I have been reading some of these blogs for more than a year. It figures that eventually I’d hit a plateau in my personal finance education.

But the other part of the reason is that I can’t identify with these people. I can’t relate whatsoever because I rarely spend money foolishly. I don’t have a shameful, debt-ridden past to repent.

In fact, I’m a debt virgin. I’ve never been in debt. Ever. I’ve owed friends $20 to cover dinner, but I have never had real debt.

I paid for my car in cash with money from my summer job when I was a senior in high school. Back then I paid for a lot of things: gas, clothes, movie tickets, and car insurance. I didn’t have buckets of money, but I worked all through high school and I never had a problem saving money. It just was not that hard for me.

When I turned 18, I got my first credit card. Now I have three, and I’ve always been able to comfortably pay in full at the end of the month. I use a credit card for all of my day-to-day purchases because it awards me points and is more convenient than cash. But I don’t need to.

These days I rent (with two roommates) in a modest townhouse in a decent neighborhood. I usually bring my lunch to work and (besides salads from Chipotle) I barely eat out. My furniture is exclusively IKEA, my PowerBook laptop is two years old, and I shop at outlets.

But I’m comfortable. I was able to max out my Roth IRA in 2007, and I plan to do the same in 2008. Soon I’ll be eligible to start contributing to my new employer’s 401(k), too.

There’s nothing I really need to be happy that I don’t already have.

Admittedly, I was also very fortunate. While I did earn a few thousand dollars in merit scholarships, my parents covered the rest of tuition, and my school wasn’t cheap. We had a partly deserved reputation for being good ol’ boys and rich bitches. (I say bitch, by the dubs, in a non-misogynistic, “full of love and respect for powerful womyn” kind of way.)

I graduated without a single penny in debt. So did most of my advantaged friends. (But unlike many of them, I held a part time job all four years of college. Please don’t hate me.)

I can’t help but wonder if I’m missing out on some life-shaping experience. Would I be better person today if I had conquered wasteful spending habits in my past? Would I be smarter if I had to learn about credit cards the hard way? Might debt have made me into a super-frugal person instead of merely a frugal one?

But there’s another fear gnawing at the back of my mind. Just because I’ve avoided debt so far doesn’t mean I’m immune forever. My ‘00 Jetta can’t last too much longer, and I doubt I’ll be able to pay cash for its replacement. (I want a two year old Prius, if possible.) And don’t even talk to me about a mortgage. The mention of the word sends a shiver down my spine.

Actually… I think I’m scared of losing my debt v-card.

Tell me, worldly readers: Is it going to hurt the first time? Will it get better as I have more debt experiences?

Do you think I should give up my debt virginity? Or should I keep holding out?

By now, I hope all my guppie readers know the basic benefits of a Roth IRA and why you should have one. If not, go read this primer on the benefits of the Roth by my power-lesbian crush Suze Orman. (But note that the 2008 contribution limits for Roth IRAs have changed.)

For my fellow homo-gay-sexuals, the gist of the Roth is this:

1. You put after-tax money in the Roth. (You can contribute up to $4,000 by April 15 for fiscal year 2007, and up to $5,000 in 2008.)
2. Wait until you get old and wrinkly (59.5 years old), or maybe just old if you’ve had some work done
3. Withdraw bunches of money tax-free, then move to Florida to live in a McMansion with your much younger lover

I opened my own Roth IRA only last week. Admittedly, the markets are pretty crazy right now, but I’m investing for the long haul, so I needn’t worry about a possible recession in 2008.

The entire process of opening the Roth was easier than those two weeks in college I spent folding clothes at Abercrombie & Fitch, which is to say, pretty damn easy.

In fact, from start to finish I only needed 15 minutes, and I’m sure it could be done even faster.

Here’s how you can start your own Roth with a minimum commitment of time and energy:

(Please note that I’m in no way, shape, or form a qualified financial advisor, so please don’t get snippy with me in the unlikely event that you lose all your money. Investing involves risk.)

1. Choose a home for your Roth

   I chose Vanguard, because they don’t charge sales commission and offer a wide variety of low-cost mutual funds. Fidelity is another good choice. Honestly, there’s not a whole lot of difference between the two for an average investor.

2. Open an account

   First you enter some basic personal information, including Social Security number. You’ll also need bank account information to fund your first transaction.

3. Decide how to invest

   The easiest, most brainless, hands-free method is to pick a target-date retirement fund. You just pick the fund with a target close to your expected retirement date, but not too early, because you can’t withdraw earnings until the year you turn 59.5 years old. As you approach retirement, the fund automatically shifts its allocation away from risk (i.e. stocks) towards safer investments (i.e. bonds).

   I chose the Vanguard Target Retirement 2045 fund. It requires a $3,000 minimum investment, but if you don’t have that you could start out with the Vanguard STAR fund, which is basically a mutual fund made up of other mutual funds. It has a $1,000 minimum.

   The STAR fund isn’t as good of a choice for young investors as the target retirement funds, because it’s less aggressive, but it’s a hell of a lot better to invest in the STAR fund than nothing at all.

   Fidelity has a system similar to Vanguard, but in many cases Fidelity will demand a lower initial investment if you sign up for automatic recurring contributions.

4. Sit back and relax!

   You’re all done. Just check your account in a few days to make sure everything was set up correctly.

   And keep pouring money into that Roth! Your future self will thank you.