AskDong

This meme has been incredibly popular. It’s blazed through the personal finance community like wildfire, and I’ve been tagged by goldnsilver (well at least I think I have).

1. I slept through a college final, and a midterm
2. I don’t like mushrooms, but like cream of mushroom soup.
3. I still have my wisdom teeth - hence all the wisdom on this blog
4. I have hard time watching awkward scenes in sitcoms and movies where everyone is in the know about something except for one poor guy
5. I’ve owned an Apple Mac of one form or another since 1989, and a Apple Computer since 1986
6. I developed a fondness for SPAM when I was Boy Scout before it became hip
7. I have had my current Netflix disc for 3 months
8. I brought my first pair of boxers for a coed slumber party sophomore year in high school, and haven’t looked back since

Boy, I sound like a pretty big geek, but that’s ok.

I don’t think I’m the tagging type, but given this is my first tag, I really should tag someone else. FinancialZen, you’re it.

As we’ve crossed mid-year, I like many other bloggers, am assessing where I stand. I won’t belabor the details of where I am financially as it’s really not that interesting. I turn my thoughts more to what am I planning for the rest of the year. When it comes to personal finances, the most important thing is to have goals, and then a plan to reach those goals. It’s easy to make up X amount to save, but the point of being cognizant of personal finances is not to acquire riches (well at least not as a goal in itself). Personal finance is really about facillitating the life one wants to live. For instance I want to save 15k more by the end of the year in my savings account. However my goal in actuality is to have enough money for a down payment by some point in the middle of next year. Adding 15k is quantitative measure of a conceptual goal. It’s too easy to get caught up in a numbers instead of clearly thinking through what we want. Beyond just knowing what we want, we should also understand better why. So as you’ll see my goals are not as quantitative as they could be.

So what are my goals for the rest of the year? (more…)

In part one, I talked about the nature of choice abstractly. Here I’m going to talk about the actual decision that probably has the greatest financial impact on our life next to the choice of how we get paid (i.e. our job), the choice of where we live. For many people the choice of careers and where to live go hand in hand. There are many careers that can only be pursued or advanced in particular cities. For example if were to stay in my current line of work, and wanted to switch companies, the only real options for me would be in Houston or New York City. If I wanted to work in television, I would probably have to move to either LA or New York. Some careers limit the possibilities just because you are almost forced to take what you can get. The best example of such a career is that of a University Professor. My old roommate is now Professor, and even though he is one of the smartest people I know, his options were limited at graduation. They were limited not because he wasn’t qualified, but because there are only so many openings at any given time in what he does across the nation.

For some people it’s there career that determines where they live and for others it’s where they live that determines the career. Ideally those mesh, and you do what you love in a place that you love. If you’re lucky enough that your career doesn’t force your hand, then think very hard about where you want to be. Having the freedom to decide where you live is one of the single most critical decision you can make your life. That decision affects the relationships you already have with family and friends, and changes the course of relationships with people you may have down the road. The life in a big city is very different from the life in small town, and a town in Southern Mississippi is going to be very different from small town in Southern California. Besides appealing to different people, different place also widely differ in cost, and wages. It’s important to consider not only the cost of the city but also the potential difference is salary. Here’s a quick survey from the folks at InformationWeek. Salary differences will vary widely depending on the occupation, so it’s always to good to do specific research. In general though expensive cities do not make up the difference in cost by pay on average (or by median). People in New York City in general are not getting paid better to compensate for their much higher cost of living. I personally don’t believe that cost of living is or should be the deciding factor for most people on choosing a place to live, but it certainly needs to be part of the thought process especially for someone who doesn’t care that much about where he or she lives.

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Over at Simple Dollar last week there was a lively debate on the cost and the choice of living in the “The City.” Some people get quite feisty about the topic. However if you delve deeper into to the topic there are really two issues at hand beyond just the actual cost of living in the city. The first one is why make the choice to live in NYC if it’s so expensive? The 2nd issue is the nature of choice itself. A few of the responses basically have this sentiment, “You’re choosing to live in the city, and that’s what you get. You made you’re bed and have fun lying in it :P” Those who defend the choice to live in the city often take this tack, “You know nothing about me, and my situation, I can’t choose to do anything but live in $2000 apartment by myself.” Obviously, I’ve painted both camps in negative in light, but in reality I’m sympathetic to both. In the sequel to this post, I’ll discuss the choices we make about where we live and why we make them in more concrete terms. Today, I just want to talk about the nature of what we think is choice, and the role of personal finance in those choices.

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I was reading the new issue of Kiplingers and one of the box blurbs caught my eye. It was a short article on ETNs, Exchange Traded Notes. I had never heard of a ETN before this. Conceptually I had always thought they should exist, but had never come across them. So those of you who don’t read Kiplinger’s may be asking, “So what is an ETN exactly?” ETNs are Exchange Traded Notes. They are technically debt notes issued by Barclays (Barclays purveyor of the ubitiquous iShare ETFs are the currently the only financial institution that isssue ETNs). Like ETFs they track different indexes, but unlike ETFs they do not actually own the underlying the commodities/shares that make up that index. Barclays iPaths (it’s family name for it’s ETNs) were originally offered as another way of tracking different commodity indexes, Oil (OIL), Goldman Sachs Commodity (GSP), and Dow Jones Commodity (DJP) indexes. Barclays has subsequently expanded the iPath family to include: MSCI India Index (INP), GBP/USD (GBB), JPY/USD (JYN), EUR/USD (ERO) Foreign Exchange Indexes, and most interestingly a Buy Write S&P 500 Index (BWV).

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