Archive for the ‘Uncategorized’ Category

Cameras and Cars, Supply and Demand

February 22, 2007

I’ve been in the US for almost five years now, and usually the differences between here and my home country fade into the background. Sometimes, though, they’re thrown into stark relief. Our recent experiences with cars and cameras have reminded me of one difference that’s particularly relevant to this blog: attitudes toward supply and demand.

Here in the US, it’s rare to hear the word “sold out” – especially when it comes to services such as rental cars and hotel rooms. Sure, you may not get your first choice hotel or car company – but at the very least you’ll be able to get a car of some description, or a room in a Motel 6.

In my home country, on the other hand, there’s about enough capacity in the rental car and accommodation sectors to deal with a slightly-above-average amount of demand.   Over the Christmas holiday period, you better have booked that car or you’ll probably be out of luck!  When we were back recently, we called every car company in the phone book, and they were all completely sold out.  We ended up ‘relaying’ a car back north (which had the added advantage of being free), but otherwise we would’ve had to take the bus.
Part of this is a difference of scale.  My country only has 4 million people in an area the size of the UK.  Our capital city has a population of 400,000.  The market is smaller, no two ways about it.

But I do think part of it is a different attitude toward what is ‘enough’ on the supply side.  In many industries here, ‘enough’ is being able to meet almost any level of demand – only a new product launch or aparticularly enormous sale might lead to “sold out” signs hanging in shop windows.   Huge, central warehouses are built and complicated retail software systems are developed to make sure no store shelf is ever empty and more than enough cars pack the rental yard.

At home, though, “enough” is being able to meet an average level of demand.  At high-volume times, such as the Christmas holidays for accomodation and transportation or the beginning of the school year for computers and school supplies – well, you’ll just have to wait.  My brother waited two weeks over christmas for the new laptop he wanted, and didn’t think that was unusual or overly long.

This disparity crept into our lives again recently while we were shopping for a new camera.  We’d decided what model we wanted, and now the question was where to buy it from.  For me, it was important to use a locally owned camera store – both to get a great price via a good value trade-in for my old film SLR, and to support local business and keep my dollars in our community.

So we headed to the camera store and got a better-than-expected trade in value – but the specific package we wanted wasn’t in stock.  The components of the package, sold separately, would have cost $90 more.  They thought the package would come in in one to two weeks. Fine with me!

A week passed by and then another, and we still hadn’t got the call.  I didn’t mind, but H1Worker was on edge.  “This is America!”, he said.  “Why do we have to wait for something?”

Eventually, we cut a deal with the store – they’d sell us the components separately for an additional $50.  Not my ideal choice, but it was still the best deal available thanks to the trade in, still within our budget and helped soothe H1Worker’s anxieties.  In the constant balancing act between dollars and feelings, this was a good middle ground.

So now we are the proud owners of a Nikon D80 – bought with a credit card that’s payable in full every month, so we could dispute the charge if necessary.  And it sure is worth the wait!

Walking the Line

February 17, 2007

H1Worker and I had an interesting discussion about money recently – at our apartment complex’s monthly wine and cheese event, of all places.  (You can’t beat drinks, nibbles and low-key socializing for a free Friday night activity!)

H1Worker’s brother is coming to visit.  He’s in college, so we’ll be buying his ticket, and spending some money to entertain him too.  I was pushing H1Worker to set a budget for the visit, as we tend to overspend when we have guests – it’s an ingrained behaviour for both of us.

We do have money allocated to cover irregular expenses, but i know we have several things to pay for out of that money in the next months, and i want to give it a chance to build up a bit so we’re not running it to the ground every pay period.

This month is the first implementation of our reworked budget. In this version, we each have $200 ‘fun money’ per fortnight, which is ours to do what we want with.  This is a new thing for us – we are one of those irritating couples who debates every purchase, down to the last book and DVD and cup of coffee.  It works for us 95% of the time, but sometimes our expenditure tilts in favor of one person or another, creating friction. Buying gifts for one another – especially surprise gifts – is challenging, too.

So, we decided to allocate $100 fun money each and $100 from the irregular expense fund for his brother’s plane ticket, and then $50 each and $100 from the irregular expense fund for the two paychecks after that.  I’m only partially happy with that solution, even though it was my suggestion.  I feel like we’re violating the principle of fun money before we even start by allocating it to something, but i think it’s okay while our irregular expense fund is beginning to build up.  Hopefully by his brother’s next visit we can comfortably cover it from that fund!

We arrived at that decision happily, but H1Worker expressed a little chagrin that his plan for clothing purchases and other fun money allocations would be thrown off.  So I suggested that he try reducing other line items in order to increase what’s available for fun money.  He said ‘so if i can reduce expenses, I can keep that money?’ I said ‘Well, in all fairness leftover money should be divided in half… and really we should add leftover money to our savings, if we can.’

We pondered this for awhile, until i suggested ‘I’ll tell you what.  You can keep half of whatever you can help save, and we’ll put the other half into savings’.  He thought this was a great idea, and I do too.  For one, some of our budget category assignments are at the low end of his comfort zone, though well in the middle of mine.  I think it will be a good reminder for him of how much a food budget can stretch, and I know he’s also motivated by a good challenge!

I’m hoping to save a portion of my fun money anyway, so i’m more than happy to see any additional dollars I’m allocated go into our savings accounts.  Each of us is motivated by things we desire, and each of us will reap rewards from making an effort to save.  It’s a win-win situation.

Of course, we’ll have to revisit the agreement if H1Worker suddenly ends up with 3 times as much fun money as me or something – but we’ll cross that bridge when we come to it!

Feels like Home

February 11, 2007

I spent $15 of my already-depleted “fun money” on two small bags of tea this weekend. At the rate we’re brewing it up, a cup for both of us every night, it’ll barely last the week. And it’s totally worth it.

After I return from a holiday – in this case, our visit to my parents’ over the holidays – my readjustment process seems to follow a predictable pattern. There are one or two ‘sink or swim’ weeks, where I’m just trying to keep my head above water and fold myself back into the ‘dailiness of life’. There’s that awful third week, in which I’m distraught by all the places I’m not, and even my newly-organized vacation pictures seem to tease me with their blue water and bright smiles.

And then the fourth week comes, and the dailiness is no longer overwhelming. Now it’s warm and comfortable, and I remember what it’s like to be at home.

I’ve lived in 5 different places in the past three years. I’ve had my evening drink at the desk chair in my dorm room, and balanced on the single cushion that was the sum total of H1Worker’s living room furniture when i met him, and curled up on our beloved leather sofa. I’ve stared absently at dingy corkboard walls, and golden wood panelled walls, and textured plaster walls. And I’ve breathed in the aroma of crisp white tea, and milky chai, and bitter overbrewed squeeze-every-last-drop-of-caffeine-out-of-it black tea, and our new, transcendent blend of rooibos and mate.

It’s not the place that makes those cups of tea so special, so homey. It’s the ritual – sitting with the silence for a few minutes, belonging in the place that you are. For a while, i’m not coveting that perfect house that’s on the market in our dream neighborhood, or even wishing I was sitting down to dinner with my parents and brother as I was a few weeks ago. I’m just here, belonging.

That $15 tea helped me come back home. For that, it’s worth every penny. The fact that it’s sublimely delicious is just gravy.

How did we get here? Part 2, Our Individual Financial Lives

February 2, 2007

In Part 1 of our financial journey, I talked about our family histories and attitudes to money and finance. In this post, I’m going to describe our financial decisions since we moved out of home. We both moved internationally, away from our families, at age 17, so that’s where I’ll start this portion of the story.

In 1998, I was lucky to receive a scholarship to spend 2 years at an international high school in a big Asian city. At the time my father was unemployed and money was tight at home. Luckily, the scholarship was a generous one, covering airfares as well as tuition and housing. My parents funded my living expenses at $30US every 2 weeks, which was enough to cover the cost of transportation around the city and the occasional meal out – our school had plenty of activities that kept me very busy. I did teach english for a while, but didn’t really need extra money, so I wasn’t extra motivated to pursue it. I funded my vacations by selling meat pies at a high-profile sports event – those two to three days’ work would bring in more than $US500, which was plenty for a few weeks’ travel in the region.

Our school’s student body ranged from children of Middle Eastern princes to people whose home address was a refugee camp, so while i had less than some, i also had more than many.

After my two years there, I was again incredibly fortunate – I was offered a scholarship to study in the US, majoring in a humanities subject at a liberal arts college in the Midwest. That scholarship, a work-study award, and a contribution of around $2000 a year from my parents (in addition to the continuing $30/fortnight allowance), covered all of my expenses during the school year. I stayed here most summers, funding my stay with various (legal!) work arrangements.

So, I was able to cover my expenses by living relatively frugally and budgeting my work-study funds, which meant i could graduate without student loans. But I didn’t save anything while at college either.

H1Worker also left home at 17 – he came to the US, to attend school on the East Coast. He started out in a humanities discipline, but after a year of study he decided that post-BA employment prospects and financial security were more important to him than his interest in the discipline. He transferred to a different school, where he majored in computer engineering. During his first semester, he was supported by his uncle and assisted with his business in return. Later, he supported himself through on-campus work (relatively well-paid at his college) and spent one summer on a paid internship at a large company in his field. He also pursued various investment activities with groups of friends, with a varying degree of success.

H1Worker recieved a partial tuition scholarship. The remainder of his college expenses were covered by his parents, who raised the money by starting a new business venture!

Upon graduation, H1Worker was recruited by an IT company in the Midwest, at a starting salary of about $60,000. Within a year, he had paid his parents back for their contribution to his education – a total of almost $25,000. Even though his parents hadn’t taken out loans to fund his education, he felt it was important to pay them back.

This was how things stood when, one fine autumn day in 2004, the two of us met on a Midwestern city corner. One thing led to another, as these things tend to do… and 8 months later, we moved in together, adopted a dog, and got engaged, all in the same month! And a new financial partnership was born.

In Part 3, I’ll talk about merging finances, and our financial decisions between when we first moved in together 18 months ago and today.

Priced off the Beach

January 23, 2007

Canadianbusiness.com has an article up about a group of mobile home owners in Florida who are considering selling their collectively-held land to developers. Most owners stand to make at least $1 million in profit… but would lose their beachfront property, and in many cases, their primary residence. The residents interviewed for the article were understandably torn between a cash windfall – for some, the first of their life – and a lifestyle they love.

In my country of origin, many people are faced with similar decisions. As recently as 20 years ago, it was common for a middle class family to be able to afford a piece of land near a beach or lake. Most started out by building a one or two room hut with a longdrop toilet ‘out the back’, and gradually expanded their ‘bach’ over the years to host kids and extended family gatherings. And the growth of beachfront communities to include shops, doctors and hospitals, along with an increasingly healthy retired population, have seen many people renovate their properties so they can move in permanently.

However, changes in market conditions – including ease of transportation to the coast, and extensive foreign interest in my home country – have sent property prices skyrocketing. A local newspaper recently profiled this humble beachfront property. The buildings are worth jus $25,000, yet it’s on sale for 1.6 million dollars, up from $160,000 in 1994. Another article gives an overview of bach prices within driving distance of our largest city, finding few listed for less than half a million dollars.

These prices might not seem unreasonable to those accustomed to property prices in the US, but it’s important to remember that the wage distribution in my home country is a lot flatter than it is here. I’ve poked around a bit looking for statistics, but it’s hard to find equivalent ones (that is, statistics that are measuring the same thing in both places). I did find that the median household income in the US was US$54,857 in 2001; in the same year, my home country’s median household income was $34,700 in local currency. But even those statistics are calculated by quite different methods. I’ll come back and update this post when i find better information, but until then, you’ll have to take my word for it!  Also, our dollar is less powerful than the US dollar, adding to overseas interest.

What’s interesting to me, as a person coming at this whole money thing from a human behaviour perspective, is the decisions people are faced with as a result of such dramatic growth. Retired folks suddenly find themselves living in houses worth several million dollars, but have a pension of only a few hundred dollars a week to live on. Families who have owned property together for 3 or 4 generations find themselves fighting over whether to sell a property and make use of the equity, or keep it and trade money for memories. And then there’s folks like these 7 families, who are stubbornly holding onto their own little caravan park as high-rise condominums go up all around them.

What choices would you make, if the value of your property increased 500% in 10 years? 5 years? 1 year? What if it was your primary residence? What if it was property that had been in your family for generations? What if it was the difference between having a comfortable retirement in a city, or a frugal retirement in your dream home?

If you were a shareholder in that Florida community, would you sell?

So, where are we financially?

January 23, 2007

So, now that you know a little about who we are, where are we financially?

H1Worker’s situation is relatively easy to summarize. As I said, he’s a consultant in the IT industry, making a little under 90k before taxes, with good benefits and a relatively good vacation package by US standards. He has a rather gruelling work schedule which includes a lot of travel, but usually enjoys it a lot.

My situation is a little harder to describe. I’m only working for this one year before going back to school, using the period of ‘optional practical training’ students on F-1 visas are eligible for. I work for an organization in my field that I interned with while in college. I accepted a full time position with them for the summer, which took me to the East Coast. They had hoped to get grant funding to continue that position through the year, but were unsuccessful. However, they were eager to hire me as a consultant, to continue developing the organization’s programming in my area of expertise. They were only able to fund a part time position – which i accepted on the condition that I could telecommute from H1Worker’s home in the South.

So here I am, working between 1 and 4 days a week for pay and using the rest of my time to pursue side projects and apply for grad school. We rely on my flexibility to offset H1Worker’s travel and long hours, especially when it comes to things like dog care.

As my income is unpredictable, and likely to be only about $15,000 for the year anyway, all of our budgeting is done on the basis of H1Worker’s income. My income covers my expenses – when I was living on the East Coast it covered a sublet, food and transportation; now, it covers private health insurance and the costs associated with grad school applications. The rest is channelled into savings, or funding larger purchases.

Our assets include $3000 of ESPP stock from H1Worker’s previous job – we plan to diversify these soon. It also includes our car, worth $13500 in private sale value, and about $3500 in savings.

Offsetting those assets is around $1300 of consumer debt at 0% interest, and our car loan, on which we owe about $11,500 at 10.99%. Those two debts are our only debts of any kind.

So currently, we have a net worth of around $8,000. We are 25 (H1Worker) and 23 (me) years old.

In my next post, I’ll begin a series detailing our financial background and influences – starting with a little about our families’ financial histories.

Welcome!

January 21, 2007

Welcome to the American Dreaming blog – a place to discuss personal finance for non-citizens living and/or working in the US.

On this site, it’s my goal to explore personal finance from the point of view of non-citizens – especially those holding F (student) or H (skilled worker) visas. The laws governing our stay in the US mean that the conventional wisdom may not apply. For example:

How can you increase income to accelerate debt payments, when you can’t legally hold an additional job?

Is it okay to invest when you hold a work visa? What about a student visa?

How should a work visa holder plan for retirement?

I’ll also be discussing more general personal finance topics, and plan to participate in the personal finance blogging community.

A couple of notes:This blog is not intended to criticize US immigration policy. We are very grateful for the opportunity to come to the US to work, study, live and travel. My intention is simply to help non-citizens navigate the quirks and complications of the laws governing our stay here, and help us plan for the future.

I am not a lawyer, and nothing in this blog is intended as legal advice. I will provide sources for my information whenever possible, but it is your responsibility to ensure the information you have is correct. If in doubt, please consult a lawyer or other expert.

About Us

January 21, 2007

Now, a little introduction:

I’m ‘F1 Student’. I studied at a 4 year college here in the US, and graduated in May 2006 with a degree in a humanities field. I’m currently in a period of optional practical training (working in my area of specialization) following my degree. I intend to start graduate school here in the US beginning in September 2007, as my area of specialization isn’t available in my home country.

My partner, ‘H1 Worker’, also attended college in the US. He graduated in 2003 and was sponsored for an H1 visa by a contracting firm. He’s since changed companies and now works as a consultant in the field of IT. He still holds H1 status.

My partner and I live together in a large city in the South. We own a car (or part of a car, anyway – the bank owns most of it) and rent an apartment together. Currently, we’re focusing on increasing our savings rate, paying off our debt, building an emergency fund and setting aside a downpayment for a future home.  When we’re not writing about money (which is most of the time) we enjoy cooking, coffee, running and hiking, and hanging out with our two fantastic dogs. More on all of these things later!