Budget Discussion -- Part 1

As the title indicates, this will be the first of many (not idea how many) blog posts discussing issues related to personal budget. I think this will be very useful for any readers since it is a reflection of where I currently stand as a young professional. Since I have little idea of how long this series will last for, I think future posts will reflect on any changes in my budget and thus generally encompass a wide-range of issues.

Perhaps the most important part of any personal budget is spending, which can categorized into different areas and set with a numerical target. To give you a glimpse of my spending habits right now, here is the current breakdown on a per month basis:

Food (including groceries and eating out)-- $250 to $300

Transportation (including gas, and public metros) -- $100

Worship offering -- $200

Housing (including all utilities) -- $450

Miscellaneous -- $400 to $500

Total -- $1400 to $1550 per month

Right off the bat, I honestly believe that my monthly spending is (much) lower than the average young professional living in the Arlington VA area. For one, the housing around here can be mindbogglingly expensive -- e.g. a 1 bedroom apartment costs upwards of $1500 a month. I live in a shared apartment about 2 miles away from a metro center, which reduces costs considerably. In addition, my food budget is probably much lower than most individuals. This is partly because I am often indifferent about food (company is always the reason I would go out to eat) and possess a fantastic amount of pride in my own cooking skills. I also do not drink. I am not a great cook by any means, but the self-winning argument I always make is: if I can make just about anything ordered out, why would I need to eat out?

The other items on my budget also deserve clarifications.

• Transportation is capped at $100 since I own a car and currently commute into the city to take evening classes twice a week. The commuting is achieved through the wonderful (I jest) metro system, which costs about $4 each time and thus totals to around $30 per month. Gas is increasingly becoming expensive but, fortunately, I drive a very fuel-efficient Honda Civic -- which means I gas at most twice a month (1o gallons each time = $70 to $80).
• As a devout Christian, I make a point to make an offering on Sundays through my church. Personally this is a symbol/token of thankfulness to God for everything in my life. I donate $50 each time, which adds up to around $200 per month.
• Miscellaneous is the most interesting category and probably the most confusing one. This is pretty much where I dump anything that cannot the categorized in the other ones. For example, spending on new clothes or glasses get placed into this. I also put things like some grocery shopping if they are irregular. My records reveal about $400 per month in this.

Now, let's be clear that I will not be revealing my monthly salary (but you can infer from my budget that it is greater than $1550 a month). I find the most difficult category to remain under the capped amount is food expenses. Although I sometimes bring cooked meals from home (as much as I think I am a good cook, my mother is infinitely better...), eating out with friends often wrecks havoc on this. Eating out with friends may only happen on weekends but it costs about $10 per meal, which can easily add to account for 1/3 of the food tab.

More broadly speaking, it comes easy and natural for me to stay under my planned monthly budget. Maybe this is just unique in my case as I consider myself to be a simple, low-upkeep individual who enjoys reading and playing sports much more than "bar hopping". I am also largely not materialistic -- I may blog about gadgets to buy but am also very loyal to the possessions I have (e.g. if it doesn't break and works great, I feel kind of a traitor to buy something to replace it).

The two biggest "suckers" of any budget are bound to be housing and food expenses, as these are "essential" commodities. We are need nourishment and shelter to live comfortably. However, I think the main problem that often arises is what we consider to be "essential". Eating out is not "essential" unless it is to take a client out, nor is living in a luxury apartment complex. It's very important to understand the differences between a common good and a luxury good in economic terms. I will make the case that cutting out luxuries actually improves one's quality of life, because it allows a refocus into the things that really matter. The inverse is a constant preoccupation with material possessions and not on relationships with those around us.

All in all, remaining debt free is not difficult at all if you keep yourself grounded (aka "keeping it real"). Most of it is refusing to succumb to peer pressure to pursue happiness through your wallet, or become enamored with things that do not last. From a Christian perspective, everything we have are blessings given by the Almighty God and thus we should live in thankful for everything. It's often the little things that we overlook, like our health and relationships, that truly bring meaning and joy to our lives. There is no secret staying financially solvent -- if I can do it in an expensive place like Arlington VA, anyone can!

Tech gadgetry in consideration..

If not revealed by now, I am admittedly a big geek who is always fascinated by the latest gadgets. Even of Apple goods --though I would never buy them. So this blog entry will be a verbalization of my current consideration for future gadget purchases. Haven't bought anything alike for a while, so this may get long and mushy...

1. Cell Phone.

First up is the cell phone. Currently I have a Nokia E71x, arguably the best smartphone with a physical keyboard on the market. It's thin, fast, reliable, and with a long-lasting battery (I charge once every 4 days!). The bonus is the built-in wifi, which allows me to connect to internet anywhere wifi is available. But alas there are also downsides: the non-working GPS, the slow browser, and the general lack of applications for the Symbian platform. What I am looking for is something as reliable and quick, but with a touchscreen and running an operating system not yet confined to the dungeons of DOA (dead-on-arrival).

Naturally I am been keeping with the new developments. The top choices right now are: Nokia N8, Nokia E8, Motorola Atrix, and the to-be-released Samsung Galaxy II. The first two are being considered due to the company that makes them: Nokia. Nokia has proven they make terrific products with long-lasting batteries. I like the Atrix due to its dual-core processor, innovative ability to transform into a computer, and the 4-inch screen. However, this was before I found out about the Samsung Galaxy II -- which is clearly superior to the Atrix. The main question surrounding the latter is the release date.

Based on my needs, the main criteria is going to be price. I will be pushing for a phone without a data plan commitment (a rarity these days). Technically my current E71x is required to have one, but I won the argument with AT&T over it. The two Nokias will also likely be unlocked and contract-free, which means the price will be north of $300. The N8 currently retails for $350 but I hesitate due to the death of the Symbian platform -- but its hardware is immensely impressive (e.g. 12 megapixel camera). My willingness to pay for the Atrix is probably at most $100 with a contract extension, since this is the price I paid for my current Nokia. Samsung Galaxy II would be higher at $200 but both would need a continuation of my lack of data plan commitment. Even so, this propensity to say might be affected by...

2. Tablet

No, not an iPad 2. I need something with a proper operating system. Over the past two weeks, I was very interested in getting the Asus "Transformer" (released this past Tuesday). But it sold out quickly and now I am reconsidering. The main draw was the price of $400, along with the office application and Android 3.0 OS. The biggest reason I would consider a tablet is the size and weight -- especially now that I bike about 6 miles a day to work, I need something like to carry around with me. My work laptop is great but a bit too heavy. The other reason is something to show off to my mom so that I can get her one to view photographs on.

The other choice besides the Transformer is the to-be-released Samsung Tabs, both the 8.9 inch and the 10.1 inch editions. I haven't read too much but know that the 8.9 will be cheaper and come better equipped. Again, these are Android 3.0 devices (super!). The only question marks about these are the price and release dates. But these are the problem with new technologies: they typically become obsolete within a year of release. I'd say my propensity to pay for a tablet is anything south of $450 -- as south as possible especially considering...

3. Laptop

I sold my 4-month old Dell laptop soon after I was issued a Lenovo for my work. The Lenovo is not only better equipped, but pretty much came free since I carry it around all the time and it's exclusively mine to use. It's very well equipped for now (Intel i5 processor and a SSD hard drive) so I don't expect to need a change for a year or so. But as any good geek, I look ahead.

Windows 8 (did you really think I would get a Mac?) is scheduled to be released in 2012, if not by the end of this calendar year. I do not know any details about it, other than it should run on ARM chips (aka what smartphones today use). I genuinely like Windows, not because I dislike Macs, but because I am familiar with it. I was an early adopter of the much-criticized Windows Vista, and never had any issues with it. If anything, I liked the new interface that came with Vista. All in all, I would probably purchase a new laptop only after Windows 8 is released. Price range? I have no idea, but probably less than $1000.

How Aging is Good

A common sentiment in today's society is the emphasis on the richness of youth against the decay of aging. We see and hear about this everywhere, from television commercials on anti-aging solutions to billboards of young people playing sports and looking happy. The universal message appears to be: youth is good, and old age is terrible. But I think there is something both wrong and very dangerous about this attitude.

For one, all this epitomizing of youth only emphasizes the upsides and thus avoids the downsides of being young. There are many downsides and arguably only a single upside. Ignorance, immaturity, and naiveness are all downsides. When you are eighteen or even into the twenties, you have very little understand of life and can easily succumb to social pressures. I think we have all read stories (or even personally experienced) feelings of inadequacy, and misery to the point of harboring suicidal thoughts. Arguably there is only one upside to being young-- a healthier body with which we can better compete in sports, dance, and travel around. But even this is not completely true. Just think about all the examples of those labeled "old" in their active endeavors: Dana Torres, the 41-year old Olympic swimmer; Michael Jordan in his last comeback tour with the Washington Wizards; and Dick Hoyt, the father who competes in the Iron Man Challenge while carrying his son Rick.

Perhaps what creates this emphasis on youth is not about the joys of being young at all. Instead, it is a reflection of unsatisfied/unfulfilled lives. Lives that have not found meaning or purpose. Because if one has, then one would not want to go back to the way things were. One would want to always moving forward, desiring more -- to do more, see more. It's like this: why would you want to go back to the dark when you have seen the light? Furthermore, the desire to being young again ignores the "enlightenment" that comes from the wisdom derived from life experiences. Returning to when we were eighteen would mean losing out on all the friendships, life events, and knowledge (aka experience) accumulated since that period of our lives. I'd consider that to be a very unequal trade...for the worse.

One book I read that profoundly discussed this preoccupation with aging is "Tuesdays with Morrie", by Mitch Albom. The book is a recount of the lessons passed down to Mitch by his professor (named Morrie) in psychology at Brandeis University. Morrie discussed a wide-spectrum of issues that confound today's society and singled out this worry about aging in one chapter. In particular, he states that: "It's impossible for the old not to envy the young. But the issue is to accept who you are and revel in that. This is your time in your thirties. I had my time to be in my thirties, and now is my time to be seventy-eight".

His point, which I wholeheartedly agree with, is that aging will happen regardless of whether you like/want it or not --instead, the focus should be on the present and making the most of every opportunities you have. Sometimes it's about taking a chance and leap into the unknown. Because the worse that can absolutely happen is gaining experience.

An Amazing Easter Weekend

This past Easter weekend (two days ago) was perhaps one of the best weekends I recently have had. While these euphemisms (eupherism?) are often thrown around left and right, I sincerely believe mine was. The reasons are simple:

1. It rained heavily on Good Friday, throughout most of Saturday, became very sunny for most of Sunday and into Monday. The weather and the religious significance of the weekend were markedly in sync.
2. I felt it was very productive -- I did my homework, cleaned the house, and spent quality time with good friends. Even won a Settlers of Catan board game.
3. After Easter service, I went out for a good lunch with friends from church and afterward for some ice cream. A perfect meal in my book.
4. Extending into Monday, I worked remotely as my parents and brother did not return from their trip until late Sunday night. My brother did not have school on Monday and I took the opportunity to treat him to lunch. Afterward I opted to remain at home (thereby skipping class) for a family dinner. Work was pretty much finished in the morning.

One thing I do want to remember is the Sunday's message given at my church's Easter service. The focal point was on the resurrection power of Christ, who was raised back to life from a death for our sins. This brought to mind the passage in Romans (?) about how there is nothing at all that can separate us from the love of Christ, as we are more conquerors of anything that stands in our path. At times it can be difficult when unpleasant life events come our way, but it is important to remember the power granted to us through the resurrection. It is a power of healing, confidence and, most importantly, to love others.

Amongst the issues brought up by the speaker(s) was the resurrection power to heal broken relationships. Naturally I thought of Mandy and how our relationships has, truthfully, become very much fragmented, strained, and awkward. I often fluctuate between the sudden desire to speak with her and the fear of embarrassment -- or worse, causing a scene or an awkward moment for her. Therefore I have taken to avoiding her mostly, to which I think she acts very similarly. But this is no way to live. For one, we are not apart and interactions will come whether by our choice or not; for another, I still very much like her. I hope to take an opportunity in the near future to just communicate to her the sincere desire, devoid of personal sentiments (however hard that may be), to just "patch things up" so we may at very least be friends.

Limerence

According to Wikipedia, the untainted and unbiased source of all knowledge (satire alert), limerence is a psychological condition in which a person has uncontrollable attraction to another. This attraction is unique in that the individual also has an obsessive need to have his o her feelings reciprocated (http://en.wikipedia.org/wiki/Limerence).

Why am I discussing about this? Why because of Mandy of course. Over the past few weeks, I was delighted to discover that a very good friend of mine is interested in a roommate of Mandy's. We have since talked much about the current state of our relationships, in addition to the possibility of a double date. It's been very interesting actually...

At first it was apparent that my friend and I stood on different levels in our attraction/interest in our special other. For me, I liked Mandy for a few (3?) years now and I have long regarded her as the one who would make everything complete. For my friend, his interest is blossoming but it has only been a few months. We are similar in that we have both been turned down (I previously wrote in detail about my rejection). Nonetheless, it has been fun to speculate and strategize about future possibilities -- you could say there is a strong feeling of empathy for one another.

Now this has changed. We chatted yesterday morning, a long conversation in which he recounted how his affinity to his girl has developed into something more. I don't think the term "love" is yet appropriate but I got a sense that it definitely elevated to a higher level. There probably still remains a difference, but perhaps only by one degree whereas before it was two or three.

That being said, I think it is time to reevaluate where I stand currently with Mandy. In short, the honest answer is "not good" or "the same". We have not spoken to each other since she left for winter break and, despite seeing one another (I am sure she's seen me), we have not talked or anything. At times I think she purposely avoids me --and other times, I definitely try to avoid her. I think it's incredibly awkward...

...which comes back to the term I introduced in the beginning of this blog entry. Yesterday I was being "emo" (as my friend put it) and was searching around for the relevant music. Strangely, I came across Wikipedia entries on music by Bruno Mars and I chanced upon reading the term "Unrequited love" (for the song "Grenade"). I was immediately struck by this term, and thus proceeded to read about it. At first it seemed like a fitting description for my sentiments toward Mandy -- how the mere thought of her is often capable of conjuring a smile on my face-- but, as I consulted my dear friend, it seemed almost too serious. Now, I honestly love Mandy (or at very least am in love) with her, yet the term made me shudder. It seems both too serious and too deprecating. Therefore I continued my search and came across "limerence".

To be frank, limerence doesn't deviate much from what is described for "unrequited love". Limerence is more than just a crush: not only it is longer lasting, sometimes for many years, but the thinking is intrusive because it can paralyze thought processes through unending fantasy. It is also characterized by sudden mood swings between euphoria and despair, which depend on one's reflection about the chances of success. Finally, the affected individual often exhibits symptoms of addiction.

After reading these definitions and reflecting (I even re-read Mandy's "rejection email"), it dawned on me that in spite of stated plans to move on, my attempts have thus been half-hearted at best. Most of the time I still cling to the hope that she will one day do a 360, call me, and then everything will become a happily ever after. However, this is only fantasy kool-aid, one that I have drunk too much of already. I refuse to say never to the possibility, but I think the reality of those odds are closer to 1% than the 50% I have long ascribed to.

To help myself, I looked up a number of tips to help overcome the limerence for Mandy:

1. Accept that she doesn't feel the same for me.

2. Get my mind off her. Think about other things; refuse to fantasize (don't feed the monster).

3. Stay positive. Maybe express interest in another individual.

4. Laugh a lot and socialize with friends.

5. Avoid seeing her.

6. (And perhaps the most tricky one...) Do not resent her nor harbor any ill-feelings toward her.

Passage from Memoirs of Geisha

During a week filled with homework and work assignment, I made the foolish mistake of beginning to read the "Memoirs of Geisha" by Arthur Golden. I say foolish because I underestimated how good the book was -- last time I was so absorbed by a book was arguably Harry Potter (though I have a feeling I read something as addicting since...). I liked the cultural dimension that the book introduced, in addition to its very captivating plot. In many ways, it brought to mind reading the "Sound of Waves" back in high school. But this book was much more mature in content.

In particular, I want to discuss a passage I read that I thought quite descriptive. Or perhaps it is a passage I can identify with. It begins in chapter 9, as the narrator Chiyo (as a child) recounts the change of her attitude and outlook about her future. The character referenced, Mr. Tanaka, is responsible for selling her, along with her sister, to become geisha and prostitute respectively.

"I'm sure you'll recall my saying that the afternoon wen I first met Mr. Tanaka was the very best afternoon in my life, and also the very worst. Probably I don't need to explain why it was the worst; but you may be wondering how I could possibly imagine that anything good ever came of it. It's true that up until this time in my life Mr. Tanaka had brought me nothing but suffering; but he also changed my horizons forever. We lead our lives like water flowing down a hill, going more or less in one direction until we splash into something that forces us to find a course. If I'd never met Mr. Tanaka, my life would have been a simple stream flowing from our tipsy house to the ocean. Mr. Tanaka changed all that when he sent me out into the world. But being sent out into the world isn't necessarily the same as leaving your home behind you. I'd been in Gion more than six months by the time I received Mr. Tanaka's letter, and yet during that time, I'd never for a moment given up the belief that I would one day find a better life elsewhere, with at least part of my family I'd always known. I was living only half in Gion; the other half of me lived in my dreams of going home. This is why dreams can be such dangerous things: they smolder on like a fire does, and sometimes consume us completely."

The last line (which I bold-ed above) is the focus of my discussion: I think it is very true. Sometimes dreams are dangerous dreams as we become increasingly enamored by them, until eventually choosing to living/believing a dream rather than the reality. I know I am certainly guilty of commitment such a mistake -- Mandy remains incredibly amazing to me. What's interesting is the same line underpins the plot behind the movie "Inception". In one particular scene, the audience is shown an underground den full of people sleeping and dreaming. The host frankly states that these individuals have blurred reality and dream to such an extent that their dream have become their reality.

Government Budget (Woes)

It's been a few weeks since I wrote a blog entry. Once again, the reasons can mostly be attributed to a laziness impacted by work and schoolwork. Doesn't make much sense...but that's my story and I am sticking to it.

Anyway, I wanted to take this time to write about the current debates involving the national budget for the current fiscal year as well as for the future. Last week's potential government shutdown was avoided by the passing of a spending bill that seemed to satisfy the Republicans' demands for spending cuts -- approximately $40 billion for the rest of the fiscal year. This seems like a staggering amount but, on closer look, the cuts are probably less than $350 million. The reason you may ask? Most of the cuts from the budget are for non-existing programs, aka programs that are supposed to be instated in the future but now never will. But of course, most people do not understand this concept and thus only see the $40 billion number.

A couple of hours ago, it was announced that the U.S. House of Representatives (currently with a Republican majority) that seeks to $4.4 trillion from the budget for the next decade. Democrats are obviously in uproar over the fact that most cuts will come from social programs like Medicare and Medicaid. Republicans are probably grinning to themselves as they just cast a lighted bomb into the President's court. President Obama has only two choices: (1) defuse the bomb through his veto power, or (2) try to work a compromise with the Republicans. This logic is assuming the implausible scenario that the budget gets approved by the U.S. Senate.

I just wanted to express a few thoughts on two topics -- the first is about how these spending cuts are quantified, a very deceptive process. The second is about the nature of government and its role in society. As someone much influenced by neoclassical economics, I believe in a smaller government and allowing the people to determine their own lives.

First about how spending is quantified:

• As in all cases, the figure thrown out seems fantastic: $4.4 trillion compares to the annual $14 trillion of U.S. GDP. However, this figure is always an accumulated figure over a period of time. In this case, the time horizon is 10 years, which means that we are looking about an average of $440 billion per year. Now this still a very high figure but...
• ...this figure is the best-case-scenario, which means $440 billion is the most one can expect to cut from the spending. The real cuts will be significantly less. Furthermore, the time horizon of 10 years masks the fact that spending cuts is an exponential function if graphed: most cuts will occur at the end of the 10-year period, rather than the beginning. This brings up another important point...
• ...the fiscal budget for the federal government must be passed from year-to-year. This means that each administration and Congress can propose new budgets for the next year, and so forth. What are the odds the future governments will stick with this current budget? Answer is: zero, nada, not even if Republicans held both the executive and legislative branches for the next 10 years.
• In sum, the real spending cuts are very much insignificant given the above points. I'd be surprised if even $50 billion is cut from next year's budget (out of the supposed $440 billion proposed cuts).

Now about the role of government in society and how this relates to the budget:

• It doesn't take a rocket scientist to see where the bulk of the cuts is coming from: social safety programs like Medicare, Medicaid, and Social Security to a lesser extent (I haven't seen the details so the last one is largely an assumption). Democrats are in uproar as well as senior citizens, since either their party platform or their livelihood is being targeted. After all, it was FDR, one of the greatest Democratic leaders, who lay the foundation for these programs.
• Democrats are also in uproar over the budget's proposal to streamline the current tax code and reduce taxes across the board. They (of course) push for the elimination of tax breaks for the wealthy. The general populace agree with them, as American corporations are making record profits and the annual list of millionaires/billionaires keeps growing.
• My opinion over the role of government is biased as a I studied economics back in college, and heavily influenced by libertarian ideas as in the writings of Milton Friedman. But I do think that social programs are not the best means to help the needy -- something I supported with a 100-page senior thesis. Social programs serve the good-intention of providing a safety net for individuals, but its mandatory nature is wrong and reduces in prodigious waste. In addition, they create a very negative disincentive for individuals to work and strive for better livelihoods. If it was a clear cut between social programs or no social programs, then I'd argue for the latter.
• But it is political suicide for any politician to push for a complete elimination of social programs, once they have been introduced. The only recourse is to reduce their scope and their impact on the country's finances -- which is actually the optimal (Pareto efficient) solution. In other words, we should have only a few social programs that are truly beneficial.
• For example, I do not understand the difference between Medicare and Medicaid (okay, I do but it seems redundant). I am all for helping out the poor and underprivileged, but creating a wholly different system to cater to their needs is not the answer. For one, it is not fair for the taxpayers who fund these systems; and for another, it creates a perverse incentive against "self-help".
• As someone who studied the negative income tax, I really believe it is the best means to resolve the social woes -- in addition to eliminating the requirement to contribute to social programs. Thus in an ideal world, I would see citizens as having the option to contribute or not to social programs (the latter of which means they would be excluded) and for government to pay out fixed income instead of an amalgam of different programs. Much like the tax code, if we create conditions, then the end-result would be many loops that people ultimately exploit.

I want to end by pointing out a monstrous thing about the budget: defense spending accounts for a good 1/3 of the government spending year-in and year-out. This is absolutely ridiculous!