Dr. North and Dr. South – A Case Study on Wealth

Dr. North and Dr. South – A Case Study on Wealth

As many observers have noted, Americans tend to confuse income with wealth. If you have a high income, that makes you wealthy, right?

Let’s ask this another way: if you earn $500,000 a year, you’re rich, right?

Not necessarily, no. Even with such a high salary, if you spend $500,000 or more per year, you’re not rich. You’re broke.

Enter the story of Dr. North and Dr. South.

Bittersweet Symphony

 
On the way home from work yesterday, The Verve’s “Bittersweet Symphony” blasted out over my car speakers. I forgot I had added it to my playlist.

In case you’re not familiar, the song has a very melancholy feel. It’s quite catchy, but the lyrics and vocal delivery are both melancholy…wistful…basically, it’s like it was written and sung by somebody who’s weary with the drudgery of everyday life.

The first line begins, “Cause it’s a bittersweet symphony, this life / Trying to make ends meet, you’re a slave to money then you die.”

Like I said, melancholy.

But relevant, given that this is a personal finance blog.

Do Doctors Earn Enough?

Do Doctors Earn Enough to Make Ends Meet?

Or, The Very Definition of Lifestyle Inflation

We all know that physicians must go through many years of expensive schooling, as well as grueling residencies and tough exams, before being certified to practice medicine. And, once they finish this long ordeal, doctors finally begin to make generous salaries upwards of $200,000 or more every year.

But, considering the onerous burden of student loans and the relatively short careers (thus impairing their lifetime earning power), are these salaries actually enough for doctors to make ends meet?

Links Jan 2015

As always, I want to bring you great content. However, between my classwork, research (this is critically important to make degree progress!), and preparing and refining lessons for the class I'm teaching, work on posts for the blog have been slow. But never fear--several projects are simmering on the burner, just waiting for me to crank up the heat!

I may be neck-deep in schoolwork, but there are many writers out there, and they bring plenty of important information! Here are a few articles that caught my attention recently:

• A hidden advantage of reaching financial independence:
  http://www.madfientist.com/power-quitting/
  
  We've all dreamed of sticking it to our employer when things aren't going well! It's very empowering to be in a position that your employer needs you more than you need them...

• Don't worry about going broke if you try early retirement; Mr. Money Mustache makes the case that it's not really that risky:
  http://www.financialsamurai.com/early-retirement-its-not-as-risky-as-you-might-think/ 
  
  Some say Mr. Money Mustache isn't really "retired" since he's still doing stuff that earns money. I think the point is that he could lie in bed for the next three decades without lifting a finger, and he'd still be in good financial shape. The concept of "retirement" being where old people sit around nursing homes and wait for death is...frankly, it's not worth working for. So if he's happy being busy, good for him! And if his carpentry and/or blogging makes him money...well, that kind of hustle is why the Mustachian family is in the financial position they're in!

• Paradoxically, some high earners are broke! A high income doesn't guarantee that you'll be wealthy or happy; I've noted before that there is no level of income that you can't outspend! The dangers of lifestyle inflation are real, folks: http://www.financialsamurai.com/scraping-by-on-500000-a-year-high-income-earners-struggling/

• Just because your parents are advising you to do something (or not to do it) doesn't mean it's sound advice:
  http://centsai.com/are-your-parents-advising-you-on-finance/

• A primer on retirement:
  http://www.learnvest.com/knowledge-center/retirement-101-everything-you-need-to-know/
• Your money lessons shouldn't begin after you graduate:
  http://www.consumerfinance.gov/blog/the-teenage-years-are-for-practicing-money-decisions-in-a-safe-space/
  
  Also see this: http://www.consumerfinance.gov/blog/when-your-child-learns-self-control-it-helps-their-financial-future-too/

25,000 'Thank-you's!

Thanks to all my readers! This site has gotten 25,000 pageviews since the beginning of May--that's five and a half months! Let's keep spreading the knowledge, and create a more financially literate population!

In the meantime, enjoy these symbols of prosperity:

Headphones for less

Since the recent acquisition of Beats Audio by Apple (a perfect marriage of too-expensive, overhyped consumer products!), Beats is once again in the public consciousness.

A great Lifehacker article (link at the bottom) suggests some bass-heavy alternatives to the expensive (and not-so-great-quality) Beats headphones that many young people seem to own these days. However, even these alternatives are pretty expensive; there are better-value alternatives that I've listed here.

Helpful links, 6/5/14

I've included a roundup of good articles relating to money management for young people, obviously with a focus on college students--in line with the purpose of this blog.

"How to live on $20,000 per year."
This is a great illustration of living below your means, as I advocate in The Millionaire Mindset, but it doesn't necessarily apply to current college students.
https://thecollegeinvestor.com/12961/live-20000-per-year/?utm_campaign=coschedule&utm_source=twitter&utm_medium=CollegeInvestin&utm_content=How%20to%20Live%20on%20$20,000%20Per%20Year

"Before I Knew, I Bought It New."
A great post on the virtues of buying used.
http://cashcowcouple.com/life-lessons/bought-it-new/

"Financial Independence and the College Lifestyle"
This is a post on how difficult it can be to establish yourself as an independent (in the government's eyes, for financial aid purposes). Very apropos for a lot of college students wondering how to make ends meet.
http://www.modestmoney.com/financial-independence-college-lifestyle/

"What Americans Don't Know About Student Loans: A Lot"
An article describing what people don't know about student loan debt. What you don't know CAN hurt you! Be informed!
http://www.businessweek.com/articles/2014-06-05/what-americans-dont-know-about-student-loans-a-lot#r=read

"Top 3 Ways to Make Your Money Work for You"
This post describes how rich people approach money. Once you have money, it can be leveraged into various types of investments that earn you more money--so think of money (if and when you have some) as a tool.
http://moneyfor20s.about.com/od/makethemostofyourmoney/tp/3-Ways-to-Manage-Your-Money.htm?utm_source=facebook_sp&utm_medium=sm&utm_campaign=shareurlbuttons

"Life After Graduation--Advice to My Past Self 5 Years Later"
A brief, thoughtful look at what the writer thought she should have done differently after graduating college.
http://momoneymohouses.com/life-after-graduation-advice-past-self-5-years-later/

Any other suggestions? Let me know in the comments below, and it'll make my next "Helpful links" post!

How 'saving money' really works

Along the same lines as my post on the Millionaire Mindset, I want to make the notion of saving quite clear. What a lot of people do to save money is actually doing the opposite! Despite what retailers will tell you, buying a product at a discount does not mean you are saving money!

The Wal-Mart Trap

Bargain hunters beware!

Though Wal-Mart has great prices on certain items, they're not always the cheapest option around. They built a very successful business based on advertising their low prices, and then having such a wide selection that people don't bother to go anywhere else for their other goods.

How to $ave big on your phone bill

*For an up-to-date list of my smartphone recommendations, please see this link.*

As promised in my earlier post on The Millionaire Mindset (http://froogalstoodent.blogspot.com/2014/05/the-millionaire-mindset.html), here's a tip for those of you who are paying too much for your cell phone bill (pretty much everyone!): get a prepaid monthly plan.

More great sources of information

I found two links that have great information, and I found them to be very helpful, so I figured I'd pass them along.

They're both written by Kraig Mathias of Create My Independence. He's promoting the same lifestyle I am in my post on The Millionaire Mindset.

The links are here:

The Millionaire Mindset

The Millionaire Mindset

I want to get this idea out there now: your mindset is far more important than your income level. Many people think a large income leads to financial security...and they're dead wrong. I'll show you why. 

Moviegoing

Image from imgur

I just found this meme, and I thought it was both funny and applicable to this blog :)

I think this serves as an example to illustrate a larger point about planning ahead, and having the self-control to say 'no' to products or services that you see as a poor value. With all the stuff that's available in this world, all the different manufacturers offering products, companies offering services, charities, and other organizations each trying to get some of your money, it's up to you to be a smart and discriminating shopper. 

A way to make (a little) ca$h on the side

Just ran across this article, which advances a new idea for making a little money: http://www.thepennyhoarder.com/make-money-venting-your-frustrations/#.  I didn't know this was even possible, but it holds a lot of promise! Just a thought for those of you with experiences to share.

But be aware that it will probably require good writing skills. So if your teachers have told you that you have trouble communicating an idea clearly and concisely, or if you hate English or writing composition classes with a burning passion, this may not be a good money-making method for you.

How to listen to the music you want, for free

I found the following web page thought-provoking:  http://www.bargaineering.com/articles/buying-vs-streaming-music.html

This is an interesting analysis, but is a false dichotomy (i.e. that you have to pay to stream vs. pay to buy a song). There are other options, as mentioned by a few people in the comments. For example, Pandora, Grooveshark, Spotify, and Last.fm are well-known free music streaming services. Lesser-known ones are listed on Lifehacker, along with strengths of each: http://lifehacker.com/the-best-streaming-music-services-you-arent-using-but-476372723

YouTube is also an overlooked option: it offers auto-playlists based on certain songs or bands that you like, or you can create your own playlists and add songs to them. You'll have to put up with ads on some of the videos, but it does allow customization and a high degree of user control--all for free!

Tips for college students

Despite what books, TV ads, financial planners, and others would have you believe, there is no big 'secret' to being financially successful. There are, of course, lots of tax loopholes, complicated investment methods, and other such tricks to making money.

Unless you are a CPA, tax lawyer, investment banker or otherwise want to be involved in studying the myriad financial laws of this country (and possibly others, as well), a simpler approach probably sounds good to you.

Welcome!

Hello world, and welcome to the new Froogal Stoodent blog! The purpose of this blog (in case you couldn't tell from the title!) is to provide tips and advice on saving money. This is aimed directly at college students and graduate students, though the advice could be useful to anyone.

I will largely draw ideas from my own experience and expertise, but input is encouraged! This site will work best as a forum for people to discuss ways of saving money and living frugally. Learning how to live below your means is certainly an ongoing process, but it's up to you to make the commitment to do so. As with most things in life, the results you get will reflect the effort you put in.

So if you want to learn how to lead a frugal lifestyle that will yield benefits for many years after you graduate, you've come to the right place! After all, who doesn't want to save money?!

As difficult as it can be sometimes to sit at home while your friends go to concerts, parties, and dates to the movie theater or posh restaurants, consider how those same friends will feel when they graduate with $30,000 or $60,000 or $100,000 of debt--or even more! If that thought isn't enough motivation to seek alternative ways to have fun, go on dates, and eat well, I don't know what is!

Before we get into the heavy stuff, allow me to introduce myself. My name is Zach, I'm 25 years old, and I'm pretty easygoing. I'm a graduate student in Cognitive Psychology at a university in Ohio, but I'm originally from central Pennsylvania. My father has worked in a warehouse for about 30 years, and my mother retired from her work helping people navigate their medical insurance benefits (a minefield, to be sure!) when I was born in 1989. She has not worked since.

So, it probably goes without saying that I've never been particularly well-off. Because of this, I'm fortunate enough to have been taught the value of living below your means, so my meager pay as a grad student is actually more than enough to meet my needs--but only because I do without some things that a lot of people take for granted.

Since so many people talk about having money issues, I figured a blog such as this one would be a good way to share my knowledge and provide a forum for other people to do the same. While a grad student like myself can't increase his income, he CAN decrease his expenses--and that goes for just about everyone who doesn't make more money than he knows what to do with!

My own tips and ideas will be coming along in future posts. But for now, here's a link to a site that I found: http://www.hackcollege.com/blog/2013/10/07/20-money-saving-tips-for-frugal-students.html  It's got some good ideas that you may have thought of, or you may not have. In any case, there's always more to learn. So, let the savings begin!