Money, get away...
Last Saturday I opened a BankOne checking account. On Wednesday I put a (rather large) check in the mail to open a savings account at ShoreBank. [Note: these events occured in early/mid July. Can you tell how long it's been since I first started writing this?] I’m starting to get my financial accounts in order. And it’s really, really tough.
I’ve always had really strong feelings about money, and how people with more money than they need should act. And now, suddenly, it’s all very concrete instead of theoretical. And I don’t know what to do. I’ve gone in a few months from a college kid with a few dollars on hand thanks to a part-time work study job, getting help from my parents to pay my rent, to an economically privileged American.
I mean, I’m not super-wealthy, or anything. I crunched some of the numbers; I make a little more than the average 18 to 24 year-old with a bachelor’s degree working full-time, but less than the average 25 to 29 year-old with a bachelor’s. More than the average 24 to 29 year old (of any education) working full time, less than the average 30 to 34 year old. Less than the average American household (although the average American household has to support 2.6 people) and the average Illinois household.
But I don’t have to pay for my health insurance. I don’t have to raise any kids. I’m not in significant debt, other than my student loans, which I just consolidated at a ridiculously low rate. And so, after I pay what absolutely has to be paid (including my student loan payments) and my taxes, I’ve still got enough left over to keep a family of four above the
poverty line. That’s a pretty large chunk of change. That’s my disposable income. That's money I don't need. That’s the amount that, in the society I wish we lived in, I would be able and more than willing to give up.
But I've got it. And so now I have to figure out what to do with it. And there are about seven million hard questions that I have to answer. I have a savings account at ShoreBank now, but should I have my checking account there or is it okay to have it at a huge corporate bank that actually has ATMs and branches that are convenient to me? Okay, I made a decision on that one already, but that doesn't mean I don't still feel vaguely guilty.
Next: is it okay to save for retirement? If so, how much? Is it okay to start putting money into long-term savings for, say, a down-payment on a house? If so, how much?
I certainly have enough money to tuck plenty away into savings. I keep telling myself it's an investment in my future activism-- that if I have money saved in the future, I will have much more freedom to take jobs that pay very little or possibly nothing in order to do the work I want to be doing in the world. Is that a cop-out, though? If there are jobs I feel passionately about that don't pay enough for me to live on, I'd probably still do them regardless of how much I've saved away already, and find ways to make ends meet somehow. Do I need the money I'm saving for myself more than other people do? That answer's clearly no; the only justification is that, well, I'm me, and other people aren't, and so my money belongs to me first. Which I don't really like.
(Of course, the other problem is that I am forever a bargain-hunter, cheap, and trying to figure out the good deals. And it's undeniably true that if one starts saving for retirement at 22 and lets the interest compound for 40 years, one gets a good deal more bang for one's buck than waiting longer. Every year you wait costs you. And the piece of me that's relentlessly practical is chomping at the bit to open an IRA as soon as is humanly possible. And also reminding me that buying a home is much better than burning money on rent every month-- that's kind of a progressive principle, right?)
Okay, so out of that whole mess, I say I'll put 10% of my income into retirement savings and 10% into long-term/house savings-- not because of any real principles, but because I've got to decide something, and I don't know what to do. For the long-term savings, I'd be looking to use it in something like 5 years, and I don't want to risk losing it, so sticking it in ShoreBank CDs or another community development institution with interest rates that should keep me neck-and-neck with inflation should work out. But retirement, that brings up a new question:
Where should I put my retirement savings?
Obviously I'm not going to put them into just any old mutual fund. But after extensive research on socially responsible funds, I can't help but conclude that they're not really that great, either. They've got some screens on, and keep out the worst offenders, but they want to at least stay competitive with other funds, so they've all got a fair number of lousy companies in them. And it's not like the companies really care whether the funds invest in them, either. And even with good companies-- this is the stock market, which sucks out the money that should go to workers or to lowering prices for consumers, and gives it to people sitting on their butts, folks like me. I fundamentally oppose that whole idea. Do I want to be a part of that in the first place? Maybe I should just put all my savings into community investments, where I can pull enough interest to break even with inflation; why should I get the benefit of profiting from sticking my money into some fund and pulling in interest without earning it? That's a really tempting argument.
But I shake it off anyway, of course. And try to tell myself that the most promising part of SRI is shareholder advocacy, anyway. Tell myself that putting thousands of dollars into the stock market via SRI funds means I'm helping grow a process that lets the management of these funds sit down at the table with companies to negotiate, introduce shareholder resolutions with the clout of millions of dollars worth of stock; that it's essentially the process of uniting with other concerned individuals to have a say in the governance of corporations, it's just that the only way we can get them to listen is to be investors.
That's a reasonable argument, too. It makes me feel a little better. And most stock trades are only speculation and don't have anything to do with the actual corporation itself in the first place-- so my profits come from ripping off other traders, not exploiting workers and consumers, right? Eh. It's all dirty, but after all the internal debate I'm going to end up doing it anyway, so I might as well get it over with and move on to more important questions.
Like, what do I do with the rest of my income? 28% to living expenses, 22% to taxes, 2% to union dues, 10% for retirement, 10% for long-term savings. That leaves 28% left, which is a sizable chunk. If I ever do end up having to drive on a regular basis for work, and either have to rent a car or actually purchase one, that'll plummet. But for now, it's a lot.
So... what? How much can I spend on fun? A lot of really enjoyable things cost at least some money, and they start adding up. I like to treat friends to things, and it makes me feel somewhat philanthropic, but of course being generous with my friends is hardly as important as putting my money in meaningful places. And then there's my parents. They're $60,000 in debt because of my education (not to mention the amounts they actually paid while I was there). So I definitely need to be chipping in on their payments. But how much? On one hand, they're better off than 75% of the families in this country; on the other, they're my parents, who've sacrificed so much for me over the years in so many ways. If their move to Maryland so that my dad could finally follow his dreams of working in politics means they're financially stressed enough that it's hard for my mom to go back to school and for my parents to take care of their retirement-- isn't it time for me to give back, and give generously? Shouldn't their retirement money be more important than mine? But then-- is that really an argument for me to give them more of my "extra" money, or does it mean I should put less into my own retirement and more into other places? Helping them out more with the payments should mean cutting back on what I spend on myself, not others. So what does that mean? How much for who?
And if that isn't enough-- I haven't even gotten to the real questions! Once I finally narrow it down to "X sum of money is what I'm going to put into 'philanthropy'," there's an endless array of options. How much goes to social change groups, and which? Should I do some "traditional" giving-- soup kitchens, medical research, domestic violence shelters? How about foreign aid? Should I put money into supporting Peace Project groups? What about (electoral) politics? There are so many options. Picking the places and the amount of money for each seems so arbitrary and, yes, overwhelming.
This all makes my head hurt. Part of me-- a big part, sometimes-- just wants to say that because I don't feel like money should be important in life, I should stop worrying about what I do with my money and just figure out what I'll do with my time and energy. But I think that's just a cop-out. I have a fucking responsibility to society; I'm where I am not only because of the parents I lucked out to get, but also because of the public education I received, the tax breaks on my parents' mortgage that helped them afford to send me to Northwestern, the GI Bill that helped my grandparents go to college and buy homes. All my life I've had more than 1/2 to 3/4 of the country does, not to mention the rest of the world, and I probably still have more disposable income than most of the country. Now it's my turn to start giving back, and there's no reason or excuse to give up just because it's hard to know the right way to do that. I just have to remember-- and I will-- that no matter what I do with my money, it's no excuse for not doing the footwork of actual activism and giving.
Advice, though, is always welcome.
I’ve always had really strong feelings about money, and how people with more money than they need should act. And now, suddenly, it’s all very concrete instead of theoretical. And I don’t know what to do. I’ve gone in a few months from a college kid with a few dollars on hand thanks to a part-time work study job, getting help from my parents to pay my rent, to an economically privileged American.
I mean, I’m not super-wealthy, or anything. I crunched some of the numbers; I make a little more than the average 18 to 24 year-old with a bachelor’s degree working full-time, but less than the average 25 to 29 year-old with a bachelor’s. More than the average 24 to 29 year old (of any education) working full time, less than the average 30 to 34 year old. Less than the average American household (although the average American household has to support 2.6 people) and the average Illinois household.
But I don’t have to pay for my health insurance. I don’t have to raise any kids. I’m not in significant debt, other than my student loans, which I just consolidated at a ridiculously low rate. And so, after I pay what absolutely has to be paid (including my student loan payments) and my taxes, I’ve still got enough left over to keep a family of four above the
poverty line. That’s a pretty large chunk of change. That’s my disposable income. That's money I don't need. That’s the amount that, in the society I wish we lived in, I would be able and more than willing to give up.
But I've got it. And so now I have to figure out what to do with it. And there are about seven million hard questions that I have to answer. I have a savings account at ShoreBank now, but should I have my checking account there or is it okay to have it at a huge corporate bank that actually has ATMs and branches that are convenient to me? Okay, I made a decision on that one already, but that doesn't mean I don't still feel vaguely guilty.
Next: is it okay to save for retirement? If so, how much? Is it okay to start putting money into long-term savings for, say, a down-payment on a house? If so, how much?
I certainly have enough money to tuck plenty away into savings. I keep telling myself it's an investment in my future activism-- that if I have money saved in the future, I will have much more freedom to take jobs that pay very little or possibly nothing in order to do the work I want to be doing in the world. Is that a cop-out, though? If there are jobs I feel passionately about that don't pay enough for me to live on, I'd probably still do them regardless of how much I've saved away already, and find ways to make ends meet somehow. Do I need the money I'm saving for myself more than other people do? That answer's clearly no; the only justification is that, well, I'm me, and other people aren't, and so my money belongs to me first. Which I don't really like.
(Of course, the other problem is that I am forever a bargain-hunter, cheap, and trying to figure out the good deals. And it's undeniably true that if one starts saving for retirement at 22 and lets the interest compound for 40 years, one gets a good deal more bang for one's buck than waiting longer. Every year you wait costs you. And the piece of me that's relentlessly practical is chomping at the bit to open an IRA as soon as is humanly possible. And also reminding me that buying a home is much better than burning money on rent every month-- that's kind of a progressive principle, right?)
Okay, so out of that whole mess, I say I'll put 10% of my income into retirement savings and 10% into long-term/house savings-- not because of any real principles, but because I've got to decide something, and I don't know what to do. For the long-term savings, I'd be looking to use it in something like 5 years, and I don't want to risk losing it, so sticking it in ShoreBank CDs or another community development institution with interest rates that should keep me neck-and-neck with inflation should work out. But retirement, that brings up a new question:
Where should I put my retirement savings?
Obviously I'm not going to put them into just any old mutual fund. But after extensive research on socially responsible funds, I can't help but conclude that they're not really that great, either. They've got some screens on, and keep out the worst offenders, but they want to at least stay competitive with other funds, so they've all got a fair number of lousy companies in them. And it's not like the companies really care whether the funds invest in them, either. And even with good companies-- this is the stock market, which sucks out the money that should go to workers or to lowering prices for consumers, and gives it to people sitting on their butts, folks like me. I fundamentally oppose that whole idea. Do I want to be a part of that in the first place? Maybe I should just put all my savings into community investments, where I can pull enough interest to break even with inflation; why should I get the benefit of profiting from sticking my money into some fund and pulling in interest without earning it? That's a really tempting argument.
But I shake it off anyway, of course. And try to tell myself that the most promising part of SRI is shareholder advocacy, anyway. Tell myself that putting thousands of dollars into the stock market via SRI funds means I'm helping grow a process that lets the management of these funds sit down at the table with companies to negotiate, introduce shareholder resolutions with the clout of millions of dollars worth of stock; that it's essentially the process of uniting with other concerned individuals to have a say in the governance of corporations, it's just that the only way we can get them to listen is to be investors.
That's a reasonable argument, too. It makes me feel a little better. And most stock trades are only speculation and don't have anything to do with the actual corporation itself in the first place-- so my profits come from ripping off other traders, not exploiting workers and consumers, right? Eh. It's all dirty, but after all the internal debate I'm going to end up doing it anyway, so I might as well get it over with and move on to more important questions.
Like, what do I do with the rest of my income? 28% to living expenses, 22% to taxes, 2% to union dues, 10% for retirement, 10% for long-term savings. That leaves 28% left, which is a sizable chunk. If I ever do end up having to drive on a regular basis for work, and either have to rent a car or actually purchase one, that'll plummet. But for now, it's a lot.
So... what? How much can I spend on fun? A lot of really enjoyable things cost at least some money, and they start adding up. I like to treat friends to things, and it makes me feel somewhat philanthropic, but of course being generous with my friends is hardly as important as putting my money in meaningful places. And then there's my parents. They're $60,000 in debt because of my education (not to mention the amounts they actually paid while I was there). So I definitely need to be chipping in on their payments. But how much? On one hand, they're better off than 75% of the families in this country; on the other, they're my parents, who've sacrificed so much for me over the years in so many ways. If their move to Maryland so that my dad could finally follow his dreams of working in politics means they're financially stressed enough that it's hard for my mom to go back to school and for my parents to take care of their retirement-- isn't it time for me to give back, and give generously? Shouldn't their retirement money be more important than mine? But then-- is that really an argument for me to give them more of my "extra" money, or does it mean I should put less into my own retirement and more into other places? Helping them out more with the payments should mean cutting back on what I spend on myself, not others. So what does that mean? How much for who?
And if that isn't enough-- I haven't even gotten to the real questions! Once I finally narrow it down to "X sum of money is what I'm going to put into 'philanthropy'," there's an endless array of options. How much goes to social change groups, and which? Should I do some "traditional" giving-- soup kitchens, medical research, domestic violence shelters? How about foreign aid? Should I put money into supporting Peace Project groups? What about (electoral) politics? There are so many options. Picking the places and the amount of money for each seems so arbitrary and, yes, overwhelming.
This all makes my head hurt. Part of me-- a big part, sometimes-- just wants to say that because I don't feel like money should be important in life, I should stop worrying about what I do with my money and just figure out what I'll do with my time and energy. But I think that's just a cop-out. I have a fucking responsibility to society; I'm where I am not only because of the parents I lucked out to get, but also because of the public education I received, the tax breaks on my parents' mortgage that helped them afford to send me to Northwestern, the GI Bill that helped my grandparents go to college and buy homes. All my life I've had more than 1/2 to 3/4 of the country does, not to mention the rest of the world, and I probably still have more disposable income than most of the country. Now it's my turn to start giving back, and there's no reason or excuse to give up just because it's hard to know the right way to do that. I just have to remember-- and I will-- that no matter what I do with my money, it's no excuse for not doing the footwork of actual activism and giving.
Advice, though, is always welcome.
posted by Britt @ 9:39 PM
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