In "You're So Money," 20-something financial reporter Farnoosh Torabi tells readers they can satisfy their sophisticated tastes and achieve financial bliss. The key, she writes, is prioritizing your expenses according to what you want the most — splurging when you can and saving on other things. Here's an excerpt:
Introduction
Perfect people can be so annoying. Like that zero-percent-body-fat girl who always beats you to yoga on Sunday mornings, wearing her perfect little Lululemon outfit. Once you saw her exit Starbucks carrying her usual $4 soy latte in one hand, a green leather Prada wallet in the other. You nearly cried (and by you, I mean me).
Perfect also works two cubicles away from you at the sausage mill, er work. He’s the boyishly handsome recent hire who drives a new Audi and, rumor has it, plays golf with the boss. Lunch is usually fresh sushi. And his first-generation iPhone scores him “babes.” Who are these alien people, I ask, people whose lives seem so together that it physically pains us to acknowledge them? Two words, I suppose: trust and fund. Or, maybe it’s Beverly and Hills? Gold and digger?
But, as my old Penn State roommate Amy Miller has taught me (and as I hope to illustrate in this book), having it all doesn’t mean being super rich or even rich. It mostly means knowing what you want and what you absolutely can’t live without, and then going for it.
A closer look at Amy: By day, she powers ten to twelve hours at a top Philadelphia law firm as a paralegal. By night, it’s another three hours learning about tortes and intellectual property at Drexel law school. She envisions her life in ten years making well into six figures as a high-powered attorney with the occasional Court TV guest appearance. She’ll summer by the lake in Maine and her Philadelphia penthouse will boast river views. It will also have one of those silent washing machines. She hasn’t decided on the marriage thing.
Currently Amy’s modest $42,000 a year salary is keeping her dreams at bay, but in the meantime, she’s still managing to live it up. Even on her relatively small salary, she’s able to stash away some money for retirement and to dabble in the stock market with stakes in Google and Toyota. She makes monthly payments toward her Stafford loan and always pays her $725 rent on the fifteenth. She also owns two pairs of Jimmy Choos and bought a very generous dinette set for her cousin who got married on a hilltop in Israel. Amy flew there first class.
Amy eats, too. Her favorite restaurant is Buddakan. And she’s a Whole Foods fiend.
Hate her, right? But we really can’t because Amy (and arguably Yoga Jenny and Sushi Sam) is doing all of this independently, sans mommy, daddy, or sugar daddy. My awesome friend is, instead, single-handedly experiencing “financial freedom” (gasp!), and believe you me it is by no means measured by the size of her paycheck or the $10,000 credit limit on her Visa.
After taxes, Social Security, health care, and employee-sponsored retirement savings (we’ll get to this later), Amy physically takes home a more modest $26,000 a year, or $500 a week. Translation: barely enough. Meantime, I’m happy to report, her credit cards are used responsibly and paid off in good time.
And somehow, Amy’s discovered ways to afford Italian-made shoes, organic carrots, and a stock trading at more than $600 a share.
But when you meet Amy at happy hour, go shopping with her, or work next to her cube, you get it. For one, when it comes to money, Amy’s got moxie. Bravada. Or, as her Israeli father would say, chutzpah. She’s fierce. (Incidentally, I don’t suggest debating a woman’s right to choose or the athletic prowess of the Penn State football team with Amy, especially when she’s on her second Ketel One and tonic.)
Second, Amy has a healthy relationship with money. She values it just like her close friendships, her career path, her law-school grades, and, most of all, her integrity. Amy is also, very importantly, in control of her needs and knows what she wants in hierarchical order to achieve her crafted version of the so-called good life. She’s not anal. She’s decisive.
And here’s the best part — Amy is just like you and me. I swear! It may not seem so, what with her fancy footwear and first-class flights. (Fellas, you can change her name to Andrew and replace her pumps with a sweet flat screen and her Ketel One with that mouthwatering $45 case of beer from the microbrewery in town.) The point is that Amy is no stranger to our legion of young, self-made professionals. We, too, are savvy, opinionated, and oh-so fierce. She, like us, lives in the Information Age and is excellent at making educated choices (big thanks to Google and episodes of Oprah). And all that has and will continue to serve as fuel for Amy’s financial freedom — more so than her $500-a-week paycheck.
Why are so few of the rest of us able to apply our righteous attitudes to our wallets? It’s the question every personal finance book for the young and moneyless has attempted to answer. It usually goes like this, “Slaves to debt, living paycheck to paycheck, credit card to credit card, a tragic and growing number of single twenty-and thirty-somethings have little if any financial cushion.” What seems more serious is the apparent lack of empowerment essential to change, to dig ourselves out of financial misery. My own money “issues” have been and sometimes continue to be the following (raise your hand if this is you): an inability to delay gratification, a mad desire for all things Hollywood prescribes (and by Hollywood, I mean Jennifer Aniston), and a false feeling of protection when pulling out the plastic (credit cards, not condoms).
And, as I’ve heard from successful, hardworking baby boomers (i.e., our parents and bosses), we have a ridiculous sense of entitlement that justifies a pair of $400 Oliver Peoples shades. But c’mon, they are amazing! Plus, they make me look thinner, so there.
Finance empress Suze Orman and company would say this is just one of the endless examples of our financial incompetence. Suze may have the know-how, and millions of Americans subscribe to her get-real, no-fuss advice. But for me and probably many of you, it doesn’t resonate.
I want to enjoy spending money and not be reprimanded for it. According to the personal finance shelf at Barnes and Noble, we’re doomed because (1) we’re weak and vulnerable, (2) creditors will take advantage of our naïveté and our lack of financial education, and (3) we’re selfish and gluttonous. The advice is ridden with tsk-tsks and tends to make us feel miserable for buying things we’re not “worthy” of. The general financial advice is also, from what I’ve gathered, too cold-turkey, at least for me. I don’t know about you, but I just can’t cut up my Visa. And who can feasibly eat canned tuna for a year? A week? Maybe.
Instead, I, Farnoosh, because I’m right there with you, know you salivate for that video iPod and you’re going to buy it no matter what — preferably in limited-edition red. So why not help you get it for less, while, at the same time, describe how else to better manage your money and, as it may be, piles (and piles) of debt? Although we may not have been born as financially savvy as Amy, we can certainly learn to be. I did. Now for you, it might not have to be the hard way.
And all right, yes, for the record, I do agree with Suze on a few points. Our generation gorges on material stuff and buys way too much on credit. I have made some pretty dumb financial moves, too — big and small, starting right during college when I’d use my ATM receipt as a trusted financial adviser. “Well, it says I have a hundred and twenty dollars left in my checking account. Chocolate cake shots for everyone!” I bounced checks, paid bills late, and bought cashmere sweaters I couldn’t technically afford. I see many of my friends — superbright, impressively independent, former valedictorians, career leaders, determined, ambitious — in thousands and thousands of dollars of credit-card debt.
We overspend when we don’t have to and we neglect to invest in our future. Our day-to-day financial obstacles (e.g., rent, gas, food) often hinder our ability to think and act big and beyond (e.g., retirement, investing, buying a home, erasing debt).
But here’s where my approach is different. I say we can change and we don’t have to get rid of our wants. How about applying our smarts, ambitions, and good looks to getting more for less? That’s right, I said good looks — you know you’re hot. So here’s my promise: In this book, you can learn how to save and how to have enough money for your double-shot latte. You can learn how to spend and splurge smart. And oh yeah, you can learn how to shed your debt in good time. You’ll even get the hang of what those talking heads on CNBC and Fox Business are gabbing about. Jim Cramer breaks it down in his part on investing.
And all this, without a lecture, without making you feel guilty or unworthy or desperate. You’re going to get to live your life, maintain your desire for life’s luxuries, be fiscally responsible, and learn ways to live beyond your means but spend within them.
It’s true — money may not buy happiness, but having no money isn’t exactly paradise, either. Having some cash but managing it poorly is nearly as bad. Then you’re missing out on your money’s potential to ameliorate the quality of your life. How we deal with our hard-earned money, how we spend it, save it, earn and burn it inevitably affects our lives and our futures. So we better learn to develop a healthy relationship now, when we’re young and tough, when we’ve the energy and sharp motor skills to defend our money and our livelihoods.
When push comes to shove and that annoying salesman at Circuit City won’t stop asking you to sign up for a store credit card (but you’ll get 10 percent off your purchase, sir!), tell him who’s in charge. Tell him and every other force tugging at your platinum Gucci money clip that you’re better than that. You’re smarter than that. You, my friend, are so money.
Excerpted from "You're So Money," by Farnoosh Torabi. Copyright 2008 Farnoosh Torabi. Reprinted with permission from Random House. All rights reserved.