Budget Discussion -- Part 3 "Smart Housing"

It's been sometime since I last blogged on the topic of personal finance, namely how to budget your income accordingly. Following a general overview and on food consumption, I thought it would be helpful to review another significance drain on our wallets: housing. The term "housing" will be restricted to the rentals, since most young professionals are not financially there yet. This is a personal topic for me, as I've had troubles with this before, and the Washington D.C. housing market is one of the most expensive in the country.

When it comes to renting property, it is extremely important to analyze your own income first and foremost. I say this because we can be easily infatuated by desirable properties that are really outside of our ability. For example, we tend to forget about our needs when presented with luxuries such as roof-top swimming pool or a posh club room in some apartment complex. It's about not confusing "need" with "want": we need safety and quiet, but oftentimes want much more than that. Unfortunately, it is the "wants" that allow property owners to charge more -- and property seekers to pay more.

After the appropriate budget for housing is determined, it's time to start looking. Now things get interesting, because there is truly an amalgam of factors to keep in mind. All these factors can drastically impact the housing price paid:

1. Roommates -- unless you absolutely must live alone, you should consider seeking roommates to try to find a place together. The obvious reason is that the difference between a 1 bedroom apartment and a 2 bedroom apartment is often marginal. For example, you can either pay $1000 for a 1 bedroom or split a $1300 2 bedroom apartment with someone else. The benefit? Saving $350 per month in rent. Having roommates is also beneficial for pooling resources, meeting new people, and enhancing safety. More to be discussed on this later.
2. House or apartment -- this is a matter of personal preference. Although houses are generally associated with family life, they can be very cost-effective and yield other benefits. Houses are generally more flexible to add roommates, contain on-site laundry facilities, private parking on a driveway, less noise, and often come with a backyard for barbecue for the occasional shindig. That being said, apartments are normally better situated than houses, in addition to more community amenities (e.g. roof-top pool).
3. Distance to work/school -- one should always consider this factor, since it can contain considerable unexpected costs. For example, living outside of walking distance means you'd have to drive or bike to work. Driving in particular could be troublesome if parking is difficult to find, or not free. You should also consider the commute time to get where you need to be. What's the point of living in a posh apartment if you are spending 2 hours each day commuting?
4. Availability of public transportation -- going off the previous point, public transportation may not be used but should nonetheless be considered. Especially if something happens to your go-to mode of transportation. However, this comes with a downside: a positive correlation between some types of transportation available and price of housing. Case in point is metro rail.
5. Utility costs -- in this day and age, one cannot do without internet service. Most properties do not include internet service in the rent, nor normal utilities like electricity and gas. This cost will depend on the energy efficiency of the property. A common cost for this category is $100 per month.

From a personal perspective, I feel that rent should be kept below 1/3 or even 1/4 of one's monthly income. Anything more feels excessive, to the point of being dangerous. Having a high rent can be dangerous in case your monthly income is reduced by whatever means (e.g. laid off). Housing is, generally speaking, one of the most inelastic/inflexible parts of your personal budget. One can chose to eat or drink less at will, but it is much harder to be "housed less". Just as one should never underestimate the importance of good sleep (read more here), one should not try to cut too many corners when it comes to housing.

Returning to the subject of roommates, the roommates you have can make or break a housing deal. It is that important. I remember that during freshman year in college, my roommate (randomly assigned) was an erratic sleeper due to his gaming addiction. As a result, I suffered countless sleep-deprived days because we shared a room together. But if you can find friends or a good random roommate --someone who will respect your privacy, need for quiet hours, and willing to clean and share certain items-- then that could make for a terrific living arrangement. Not only would you save on rent, but also have an on-hand person in case anything unexpected arises. From a personal perspective, I find that full-time students generally do not make good roommates --due to their erratic school hours and tendency to party on weekends (sometimes even on weeknights). But we ought not stereotype too much. Some students can be very good!

Economics of Five Guys' Success

I often joke with others that I am indifferent between a gourmet burger and a McDouble. Burgers are burgers, right? All it takes is a bun, a meat patty, a slice of cheese, lettuce, tomatoes, some sauce and...voila! From that perspective, it is ridiculous to pay five times more for a burger at a gourmet place like Five Guys Burgers and Fries than a McDonald. But the kidding aside, I do recognize that there are significant differences between the two, and that one pays for a higher quality good in the gourmet burger.

What's surprised me is how successful some of these gourmet burger franchises have become, especially in the current (dismal) economy. One prime example is Five Guys which, as this article points out, has an almost "cult following" for its burgers. Business seems to be booming: customers are returning and bringing their friends, franchises are sprouting up all over the country, and sales revenue rocketing upward (all these 3 reasons are interdependent). Maybe we should start referring to Five Guys as the "Apple of the Burger Industry"?

The success of gourmet burger joints is clearly an reflection of people's preference for quality. This isn't necessarily a fight of quantity vs quality given news of McDonald's increasing sales, but does come as a surprise. Costs for gourmet (alternatively referred to as "built-to-order") burgers is significantly higher than a standard McDonald's burger -- joints like Five Guys boast of their patties never being frozen, using fresh vegetables, freshly baked buns, and quality pickles. It explains why the price of a gourmet burger would be much higher.

Yet, for the average consumer, gourmet burger joints are much rarer than the McDonald's and Burger Kings of the world. New franchises may be sprouting up, but likely in places where competition is implanted. In addition, the current recession certainly should indicate a movement away from gourmet burgers as they are considered luxury goods. This paradox can be explained by looking at two items: (1) the size of the market, and (2) the demographic of the customers.

For the first one, we must not assume that the market for burgers is a zero-sum game. That is, when there is a winner, there must be a loser. The CEO of Five Guys, Jerry Murrell, explains very well: he "loves" In-N-Out burgers. (In-N-Out is a competitor to Fiv Guys, similar to how Ford competes with Toyota in automobiles). Rather than In-N-Out taking away customers who would otherwise have gone to Five Guys, In-N-Out has instead expanded the market by attracting the curious and food junkies. Those food junkies, after tasting a few In-N-Outs, would likely sample other gourmet burger joints. The end result is more business for everybody. In economic terms, the market piece has become larger -- allowing everyone to reap greater profits, even in the case of direct competitors. Not to mention the welcoming of competition is a great attitude for a CEO to have.

The second explanation has already been touched on by the article. Frequent customers at these gourmet burger joints are often not young families, but baby boomers or the so-called Generation Y (aka young professionals like myself). This demographic not only have more money to spend, but also constantly interact and persuade their friends to tag along. For the baby boomers, it could be a nostalgic stroll through their childhoods, when burgers joints dotted all across the country. Restaurants like Five Guys try to emulate not only the simplicity of food itself, but also the atmosphere also (think of those free, complimentary peanuts). As for people like me, we were the generation that grew up on the McDonald's and Burger Kings -- and therefore having missed out on the gourmet establishments. Fast-food tastes good, but sooner or later we begin to become bored of them. This comeback of sorts for these types of businesses allow us to try something that our parents or grand-parents considered to be a norm. And it looks like we're hooked.

Fundamentally speaking, gourmet burger joints are successful because they specialize and focus only on select products. This allows them to become better and better at their business (referred to as the economic "learning curve"). Specialization also makes it easier for the customer to be decisive in their food selection -- if they want a burger, they know that Five Guys has good burgers. We may like choices, but oftentimes prefer to have our options narrowed. The simple, no-nonsense approach to serving food seems to be preferred by many individuals. I also suspect the preoccupation with modern food-producing techniques as well as quality -- exemplfied by the documentary "Supersize ME"-- has something to do with the rise of gourmet burger joints.

Music Liners -- "Christ is Risen" by Matt Maher

Aside from music by Hillsong United and a few other songs, my favorite Christian song in recent memory has to be "Christ is Risen" by Matt Maher. It is an incredibly powerful song due in part to the simplicity of its message -- that Christ is alive and has overcome death! In a time where some contemporary Christian music has strayed from central themes from the bible, Maher's song speaks the unadulterated, unchanged truth.

The first time I heard this song was during my church's Easter Sunday worship/celebration. (Methinks "celebration" is the more appropriate term, since that is the significance of the resurrection anyway.) I remember when first singing the chorus...amazing.

As noted above, I really really like the chorus of this song. In particular, it is the lyrics in the form of rhetorical questions that capture my liking for this song. Maher poses two rhetorical questions revolving around the resurrection:

1. "Oh Death, where is your sting?"
2. "Oh Hell, where is your victory?"

These two questions are special because they mock (arguably) the two things we fear the most in our lives, death and evil. I especially like the fact that Maher belittles these two fears, by contrasting them with what Christ has done on the cross. In other words, Christ had overcome death and opened the doors for us to be reunited with our God -- therefore we should no longer fear neither death nor hell. It reminds us of the resurrection power and what it implies for our lives.

The song also calls all believers to "come awake, come awake, come rise up from the grave." The "grave" described is not a burial ground, but serves as a metaphor for the slumber we are prone to fall into. We drift from our responsibilities as Christians -- to the extent of calling ourselves Christians but having nothing to show for it. Maher reminds us that as we are alive in Christ, we should act like it. We should not be slumbering like the young man who falls from the window during Apostle Paul's sermon (Acts 20:7-12).

Finally, along the same lines of the previous paragraph, the last part of the chorus is a reminder for all the churches out there to "come and stand in the light". What is implied (at least from my perspective) is for churches everywhere to shake off any rust and preach the message of the cross once more. Churches, like individuals, can drift off due a number of factors.

Psalm 27

Once again, I will be discussing a favorite biblical passage of mine – but this time from the Old Testament. It comes from the Psalm 27, a passage in which the psalmist (assumed to be King David) cries out to God for help and mercy. The passage is relatively long, but every word is heartfelt.

1 The LORD is my light and my salvation—

whom shall I fear?

The LORD is the stronghold of my life—

of whom shall I be afraid?

2 When the wicked advance against me

to devour[a] me,

it is my enemies and my foes

who will stumble and fall.

3 Though an army besiege me,

my heart will not fear;

though war break out against me,

even then I will be confident.

4 One thing I ask from the LORD,

this only do I seek:

that I may dwell in the house of the LORD

all the days of my life,

to gaze on the beauty of the LORD

and to seek him in his temple.

5 For in the day of trouble

he will keep me safe in his dwelling;

he will hide me in the shelter of his tabernacle

and set me high upon a rock.

6 Then my head will be exalted

above the enemies who surround me;

at his tabernacle I will sacrifice with shouts of joy;

I will sing and make music to the LORD.

7 Hear my voice when I call, LORD;

be merciful to me and answer me.

8 My heart says of you, “Seek his face!”

Your face, LORD, I will seek.

9 Do not hide your face from me,

do not turn your servant away in anger;

you have been my helper.

Do not reject me or forsake me,

God my Savior.

10 Though my father and mother forsake me,

the LORD will receive me.

11 Teach me your way, LORD;

lead me in a straight path

because of my oppressors.

12 Do not turn me over to the desire of my foes,

for false witnesses rise up against me,

spouting malicious accusations.

13 I remain confident of this:

I will see the goodness of the LORD

in the land of the living.

14 Wait for the LORD;

be strong and take heart

and wait for the LORD.

I first came across this passage during one of my job interview treks (aka 3-4 job interviews in one day). Perhaps I’ve read this psalm before, but I remember it now for the encouragement I received amidst one interview trek. For this particular occasion, I recall waiting for my next interview at a nearby Barnes and Nobles bookstore – feeling very weary and quite unhappy at my own situation. “Taking self-pity” would not be an inaccurate description. But I somehow opened to this psalm while sitting there and it struck me powerfully in its message. The central message is, as the first couple of lines indicate, trusting in the Lord.

The first part of this psalm is akin to posing a rhetorical question: if God is on our side, of whom should we be afraid? The psalmist rightfully declares that the “Lord is my life and my salvation”, and therefore we are to be afraid of nothing. Our confidence is in the Lord, the Creator of all things. To put this psalm in context, King David likely composed it while he was fleeing from the former King Saul of Israel. We can imagine that David could have felt loneliness and very afraid, as Saul commanded the entire army to hunt down and kill him. Yet even in this dire predicament, David remember to pray to God and ask for His help.

I particularly like verse 4, in which the psalmist declares that his only desire is to “dwell in the house of the Lord”. It creates both a beautiful and inspiring imagery: that even amidst the unrest and uncertainty, we can look to God and seek after Him. Because in God’s dwelling, we are kept safe and forever in the presence of our maker. In present-day society, this “house of the Lord” refers to the churches formed for the express purpose for worshippers to congregate and fellowship together. Because one of the best ways to glorify God is to love and care for one another.

Using Children for Political Ends = Crossing the Line

I first got wind of this news from Yahoo! main page, in a video about a congressman's daughter writing a letter in support of a position he did not. It seemed funny at first. Can you imagine if you are a Republican and your children grow up to become Democrats? Some serious rebelliousness issues there. But then I read a little more thoroughly and...was appalled.

As the DailyMail reports, the congressman, state representative Mike Stone, received a batch of letters from third-grade students compelling him to raise the state budget. Among those students writing was his own 8-year old daughter. In particular, the daughter wrote "please raise the budget" and to help keep two teaching assistants. What makes this appalling is that the teacher intentionally organized the students to write on this issue, voicing such a position, for the explicit purpose of sending off to congressmen of influence. In this case, there was direct knowledge that this young girl's father was Mike Stone. Furthermore, it seems like these actions were initiated by the entire public school system.

Representative Stone declared that "as I read through this [letter], anger completely shot through me" -- a sentiment he has every reason to express. Not only is his daughter supporting a political action he objects to, she is too young to understand the issue itself. An eight-year-old girl has much better things to be concerned with than politics, like unicorns and barbies (I kid slightly). It is pretty obvious that she was just being used as a political tool by the teacher/school system for a certain end. How does this come together? The budget issue is about the current clash between the state Republicans and the Democrat governor Beverly Perdue. And as anyone knows, Democrats have the express support of the public school systems and vice versa.

There are methods to influence your representatives, but using their children to do is not one of them. Think about this for a second: do children have the right to vote? The answer is "no", which means they should not be directly contacting their government representatives either. That is the responsibility and right of their parents. Ultimately, children are children -- and not political instruments.

(One thing I just thought of is this: why would the daughter be writing to help the two TAs keep their jobs? Teacher assistants are not needed for most part, unless there are special needs. Teachers should be able to manage their own classes, without further help. If they can't, then maybe they shouldn't be teachers. TAs are largely there to reduce the workload for teacher -- akin to a student taking an exam but having outside help in doing so.)

Apple WWDC 2011 Recap: iOS 5, OSX Lion, and iCloud

The title to this post is a bit misleading. Although I own no Apple products (as noted here), I consider it a responsibility to follow all tech-related news. Therefore I cannot in good faith consciously exclude Apple announcement. To such effect, I had to follow Apple's WWDC 2011. (I am a couple days behind, I know...)

Although Apple introduced a host of new products/changes like the iOS5 and OSX Lion, I think the picture reflects on the most important announcement of this conference. As expected, Apple revealed its competing service to the Pandora, Amazon's Cloud Player, and Google's Music (Beta). Nothing new needs to be said, other than just greater detail than what was predicted before. Music labels will be much happier with Apple's approach than the other two behemoths (Pandora is technically a "music recommendation" service). I foresee some nasty lawsuits in the future.

The other two major announcements (iOS 5 and OSX Lion), pardon my lack of enthusiasm, were very underwhelming. Nothing significant was really introduced -- simply a myriad of implications to improve user experiences. Fanboys left and right are either bashing or commending Apple for its approach. I am indifferent about both. The reason? My answer: why fix something that is not broken? In addition, the competition is not that strong anyway. For example, Android OS is more powerful but lacks the proper interface to make it popular; Windows Phone 7 is more intuitive but lacks the brand power and hardware support. On the OSX Lion front, everyone knows that OSX will always be a distant second to Microsoft's Windows OS. Even Apple knows this very well.

What's more interesting is how Apple is consolidating its gains in the marketplace. Namely, they are streamlining their entire ecosystem so that consumers are likelier to keep buying their products. This is very sound strategy. For example, once you have an iPhone, you'd likely buy a MacBook to synchronize with your new phone. Not only would this lessen the chance your customers will sample other products, it also breeds fanaticism. Power of Apple indeed.

Apple's New Spaceship Campus

I haven' been posting as frequently as I should -- "my bad". It's been a busy week looking for housing, especially now that I definitely have to move out by the end of this month. Apparently the person I was subleasing is not allowed to sublease to others and, as a result, he is getting evicted. This means we are also.

Personal quips aside, I just came across a fascinating report about Apple's upcoming plans for its new campus. Yahoo News reports that Steve Jobs himself made a pilgrimage to the City Council meeting in Cupertino (California) and revealed plans for a brand-new, state-of-the-art company headquarters. This is something to be expected. After all, Apple's sales revenue is growing by leaps and bounds -- along with its profitability.

BUT, what was not expected was the design of the this new headquarters building. As evident from below's image, it looks like....an ALIEN SPACESHIP!

The proposed building will apparently be four stories high and house 12,000 employees. It is important to note that given Apple's current employee headcount of 2,800, they are expecting even more incredible growth for the foreseeable future. The actual location will be on the current Hewlett-Packard campus, near "Pruneridge Avenue and Wolfe Road" (whatever that is). It'll span 150 acres.

Putting aside the awesomeness (not to mention audacity) of the design, it's interesting to note that the middle of this disc-shaped building will be a courtyard. This complements Steve Job's alleged affinity for mother nature and zen-ish themes. The proposed plan will obviously be approved -- especially when Steve Jobs himself is making an appearance. Let's see how Microsoft and Google compete with that!