Thursday, November 13, 2008

Thrifty In the CIty

Just about every blog that I stalk read has been posting on ways to save money. And let's face it, with the state of the economy, it's a good idea. Here's my two cents...

One of the greatest gifts my parents gave me was instilling me with a strong work ethic, emphasizing that money doesn't grow on trees (at least not in our backyard). I received an allowance, but only when I did chores. My parents had this " Three Can System." I got $15.00 a week, but I had to divide it three ways (spending, savings, special). At the end of every month I had to put the "savings" into my bank account and was given a choice about the "special." Some months I chose to add it to my spending money, but other months I put it in the bank to earn the interest and get "free money" (i.e. interest). I was so used to this savings method, that when I got my first job, I didn't bat an eye at putting my pay checks in the bank. I made great tip money, so I used that as my spending and gas money (back in the day when gas was $0.99/gallon) ::sigh::

Flash forward to college. Not going to lie, I went to college with kids who came from money. I swear, some of them had mobiles of dollar bills hanging over their cribs as babies. I'll never forget the day I was shopping in Rittenhouse Square and one of my friends whipped out mommy and daddy's AMEX to pay her $200 charge at J.Crew. I mean, yes, I too had one of my parents credit cards but it was for things like groceries, plane tickets home, etc. I came from a modest background. My parents both worked and my sister and I never wanted for anything, but we didn't live beyond our means. My parents didn't bat an eye at footing my tuition bill (all $200,000) of it, but they weren't about to pay for frivolous, spur of the moment shopping sprees. I worked on campus in student services and babysat all though college to earn my spending money. Yes, it sucked when I saw my bank account getting down to single digits by the end of school year, but I had a summer of work to replenish my account. It was a good system that I had worked out. In college, in addition to my parents credit card for necessities, I got my own credit card to build credit. I didn't charge much to it, but I always paid it off in full at the end of every month. I got countless offers in the mail from companies each trying to offer the biggest and best rewards with 0% interest on balance transfers, but I politely shredded each and every one of them.

Then I graduated from college. Suddenly, I was a grown up and found myself moving to one of the most expensive cities...New York City! When I got my job offer, I was tickled pink with my starting salary. Trust me, it was WAY more than most of my friends would be making with the exception of a few investment bankers. My enthusiasm started to dwindle when I realized that I'd be spending upwards of $22,000 a year on rent. Add to that food, travel, and fun oh yeah and all of this AFTER taxes! Suddenly felt more like a popper than a princess.

Even though all this overwhelmed me, my childhood habit of saving persevered. I set up both a savings account and an IRA, and after my 3rd month of work I started putting money into both accounts. Our hospital doesn't have a 401k, we have a 403b which they don't match, because they invest into their own plan for each employee, so that’s why I choose the individual IRA. I set up a budget and tried my best to stick to it. It took a while to figure out how much was reasonable to budget, but all my time and efforts paid off. I made lists of the foods that I ate frequently and went around to all of the little markets in my neighborhood to compare prices. I made an excel spreadsheet (yes, I'm that anal) and figured out where I could get what for the cheapest price. Thankfully, anything and everything that I could possibly ever need is within walking distance or only a few subway stops away. I cannot express how thankful I am not have to fret over gas prices. My price comparison experiment proved interesting. I found out that it's cheaper to buy fresh organic produce at the local farmers market than it was to buy regular produce from the mass chain grocery stores. I also quickly realized that buying coffee on the run, as metropolitan as it may seem, is completely UNeconomical.

There were a few issues that still bothered me though. #1-the cost of toilet paper, laundry detergent, cleaning supplies, etc; #2-the inability to buy in bulk due to location; #3-the inability to by in bulk due to space/storage limitation; #4-a lack of coupons.

Although strange, I am a 24 year old who cuts coupons-usually for things like laundry detergent, toilet paper, personal products, etc. Theoretically, it's a good way to save money; however, coupons only come out in the Sunday newspaper. The Sunday new paper costs $4.00. Most weeks the savings I'd accrue would only be about $3-$4, thus it doesn't really make sense to pay for my coupons, especially because I wouldn't otherwise buy the paper. I read it online in my continued effort to be more "green."

Okay, so what about buying in bulk? I can say this, with certainty, because I did the research. For items that I use on a daily basis- toilet paper, paper towels, soy milk, peanut butter, rice cakes, tea bags, coffee, shampoo/conditioner, the bulk cost is about 50% less than buying the individual items, at least at city prices. But did I mention that there isn't a Costo/BJ's/Sam's Club in a reasonable distance from here? Oh yeah, there isn't even a T@rget close by. Grrrrrr. Thus I have to rely on visits from my parents to bring me these essentials. Which brings me to the issue of storage. What to do? Buddy up! My friend N and I split the bulk items. So we get the savings of buying in bulk, without having to fret over the storage!

Now some of you may be aghast that I list paper towels as a necessity, but the nurse in me must object. Hand towels are DIRTY, nasty breeding grounds for germs. Don't believe me? Read this Okay, so what if I changed the towels every day. Well by the end of the week, I'd have 7 towels from the kitchen and 7 towels from the bathroom- that's a load of laundry. The cost of laundry is $2.00 to wash ad $2.00 to dry. Paper towels, at $1.07 per roll x2 rolls per week, is by far a cheaper and cleaner option for a household of two.

Finally, I still have the same one credit card from college. Every week I a lot myself $50.00 for "free spending" (this includes meal out and cabs/transportation) and I take this money out in cash. All other spending (i.e. groceries, gym membership) I put on my credit card to track exactly where, when, and what I'm spending money on. I pay off my bill in full at the end of every month. My credit card has great reward options. In fact, I was able to get my roundtrip ticket to Seattle for free, plus still have more than 1/3 of my rewards left over.

This post has been all over the place. But I hope that it has given you some perspective on how I live thriftily in the city.

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