There are some things in life that you can’t control. Like who you fall in love with, and when. Or the line at Trader Joe’s that sometimes begins in the produce department. Also traffic, weather patterns and flight delays. And how your face turns red whenever someone brings up the Spring Break “incident.”
On the other hand, there are things in life that you do have control over. Like wearing eye shadow to the gym–not really necessary, right? Or whether to accompany the 6 ounce petit filet with a baked potato instead of potatoes “three-ways” (you know what I’m talking about and it involves bacon bits). You also have control over not ordering that fourth margarita.
Similarly, some of the best ways to wrestle with your finances so that you have the upper hand and not the other way around –is to set specific goals and design your financial lifestyle. Once you have a handle on what you want in life, what you won’t compromise on and what you will, you can make better decisions for budgeting, saving and investing.
A Shot-Caller with Design: Tea M
Tea M, a NYC-based architect and design consultant for financial systems, shared with me her inspiring story about the windy road from her homeland of Croatia to an eight year pit-stop in Italy, to the US where she’s lived for the past 13 years. All along she has designed her financial future by focusing on what is most important to her, setting goals and following the path she set for herself.
It wasn’t easy. During the 1990’s when war broke out in her native Yugoslavia, Tea fled to Italy to find work. She was lucky to find a job in her field as an architect, but because her boss was responsible for filing paperwork and paying taxes on her as a non-native employee, he decided to file her under “housekeeper.” This would reduce his tax payment, but made life difficult for Tea.
At that time, there were many people fleeing to Italy from neighboring Eastern Europe and Africa. As a result, there was a sense of widespread discrimination and suspicion of the foreigners coming to Italy and “taking” jobs. Her fellow co-workers got wind of her “official” title, and she felt humiliated and was treated differently. Because she was an immigrant, though, she was afraid to speak up, so for eight years Tea toughed it out. She worked hard, saved her money, and when she had an opportunity to come to the US, she took it. Within the first seven years after coming to the US, Tea had her green card, a master’s degree and had paid off all her student loans!
From NY to Mt. Kilimanjaro to Machu Picchu…And Back…
Tea hit the jackpot when she moved to Manhattan and found a rent-stabilized apartment, paying below-market rent on her place. In a city with sky-high rents where someone can easily spend thousands of dollars to live in a dark shoebox-sized studio overlooking a shaftway filled with trash, Tea was thrilled to have found an affordable, cozy, sunny apartment. Most important to Tea was that she could live her life without having the burden of an outrageous rent every month.
Since she worked for a company with global clients and projects, Tea traveled the world. Traveling helped satiate Tea’s taste for adventure, culture and change, but more important, she got to collect points and miles on her credit cards and favorite airlines! As an avid hiker and mountaineer, Tea used these points to travel to the furthermost regions of the world to pursue her hobbies. She has climbed to the Mt. Everest base camp, Mt. Kilimanjaro and Machu Picchu, among others, and has traveled to countries all over the world.
This lifestyle served Tea well for a while, but as the years rolled by, she began to feel a pang in her gut. While she enjoyed her work, friends and traveling adventures, she wanted more out of life–like her own home and a family– and in NYC, it’s easy to let years roll by before finally realizing you’re ready to grow up!
At around the same time, Tea’s neighborhood was changing. A building with a 24-hour gym had been erected across from Tea’s building, blocking her view of the park. What’s worse was that during all hours of the day or night, Tea could look out the window and watch people working out on treadmills and lifting weights. While this might have caused some people to immediately cancel cable and invest in an expensive tripod and telescope, for Tea this gym situation put a big cramp in her style. In addition, the building itself was so high that it blocked any remaining sunlight she used to get in the apartment. As “cabin-fever” set in, Tea began to spend more time way from her apartment, and when she was home, she would keep the curtains drawn so she wouldn’t be subjected to the gym rats.
Change is Good..But Scary!
Finally, she realized a change was in order. While she didn’t set out as a serious buyer, she started attending open-houses to check out the Manhattan real estate market, mainly as a new hobby; at that time, it was fall/early winter– too cold to hike and too early to ski. Plus, going to open-houses was a great way to meet men!
The more she looked around, the more specific she got about what she wanted. In the years that Tea had lived in NYC, she dreamt of owning her own place, and more importantly, as an architect and design freak, Tea knew exactly how she wanted to furnish and design her home down to the fixtures and the faucets. “You know how little girls know how they want their wedding dress to look since they were twelve?” Tea laughs. “That’s how long I’ve known how my house should look.”
She had a substantial savings account from years of working and socking away money, but wanted to make sure she wouldn’t ever be tied to a particular job just because of a mortgage obligation. She considered apartments at different price points, determining how much she would have to work to meet the mortgage payment and how much time off she could take during the year to pursue her hobbies. She knew that becoming a home owner in NYC would require a huge financial responsibility, but she wanted to make sure that she still had control over her life, including having the freedom to travel.
She finally found the apartment. It had everything she wanted, including an oversized bedroom, comfortable kitchen and dining area, and a south-facing city view and balcony. From that point on, things began to fall into place, as she soon discovered that her friend was the seller’s broker.
Months after the purchase, Tea is eager to begin designing and furnishing her home exactly the way she dreamed, and has been doing research on possible renovations, furniture, fixtures and cabinets. But since she now has to pay a NYC-priced mortgage, she is nervous. “It was different before when I went to the bank and saw my savings and had security, ” she says. With the majority of her savings invested in her apartment, she says,”Now I’m an adult!” She knows that the first year of homeownership is an adjustment, and she is ready for this next phase of her life.
Survival Tips for Homeowners and Wannabe Homeowners
Here are some tips Tea used to help her save for her apartment and budgeting strategies that will help her get through the first year:
– Tea always makes sure to pack her breakfast and lunch for work. This allows her to save at least $10-20 everyday.
– While in the past, she would allow herself a couple nights out a week with friends for dinner and drinks, she has curbed her outings since becoming a homeowner. Now, she is perfectly content to go home after work and enjoy the view from her balcony, or have friends over. This saves her at least $75-100 per week.
– Because her job required frequent travel, Tea became a pro at signing up for rewards, collecting miles and using them to her advantage. She opened a credit card that awarded her 100,000 reward points for signing up. While the annual fee was $95 a year, it was worth it since she was able to cash in those reward miles and go home to Croatia twice a year. In fact, Tea has used her miles and bonuses to ski, hike and travel the world, and that has saved her thousands of dollars.
– Tea keeps track of expenses by charging most things on one credit card. She keeps a specific amount of “street money” on hand for unexpected expenses. Lately, though Tea has found that the “street money” that used to last her a week is being stretched and now lasts her almost 2 weeks, as she continues to set strict budgeting parameters for herself.
– One way of keeping costs down since her apartment purchase is to cut down on unnecessary expenses. Tea now holds off on manicures, pedicures and haircuts until absolutely necessary and keeps frivolous expenses to a minimum.
Whether you’re saving to buy a home, budgeting for your dream vacation or a wedding, or trying to get out of debt, the key is to take control and set goals you can meet. For Tea, cutting corners, staying in her small below-market apartment a few extra years, and being savvy about points and credit cards helped her to reach her goals. But while she has compromised on certain expenses and luxuries to stay within her budget, she’s got limits. Bottomline: she’s not giving up those ski trips.