Personal Finance

Consider this page to be perpetually incomplete. Perhaps there is just an outline here waiting to be fleshed out. There’s always more to add, but it was lasted updated on: [8/7/2020]

For my purposes, personal finance means knowing what you spend and what you earn. The point of this knowledge is to arrange your spending and saving to live as freely and happily as you can manage.

Some thoughts:

  • Financial illiteracy abounds.
  • A budget is an accounting of income and expenditure. It is not just a list of expenses.
  • The point of money is to let you live as you please. Budgets and financial literacy allow you to understand money.
  • New York City isn’t expensive the way most people say it is. Bad money and lifestyle habits just make it more expensive than it needs to be.
  • Expense is relative to personal preference. Generally speaking, there is no such thing as an absolutely “cheap city” or an “expensive” city. If you prize living space above all else, NYC will be expensive. If you prize social spheres, public spaces, and certain job markets, it is not.
  • The price of debt is not merely a monthly payment, but the opportunity cost of that payment.
  • One’s absolute amount of money isn’t the thing. One’s approach to money in general is the thing.
  • Linda Tirado’s book Hand to Mouth: Living in Bootstrap America is a great examination of what it’s like to be very poor in America, and, indeed, what being “not poor” truly means.

A story:

I was once on a date with a man; it was generally nice. We went for a run and then took a long walk to a coffee shop.

During our walk he told me that he had tens of thousands of dollars in students loans. It was like $40,000. Absent other context, this isn’t that big of a deal, even though it’s not great. I graduated with $20,000 in debt from college. Not ideal, but I paid it off in about four years; and those four years included some pretty lean times.

But then he told me that he lives alone in a Manhattan apartment.

And then he told me about a new phone he was going to buy, despite the perfectly fine phone he’d been texting me with.

And then, when we got to the coffee shop, he offered to buy my drink along with his. They were like $6 each.

There is no way that his job paid him enough to sustain the lifestyle he’d adopted. No way. He was living above his means, and sacrificing his independence and optionality in order to do so. And to what end? To appear successful enough? To live without roommates (even though living with other people is a good, regular thing to do)?

Final notes for now

Your economic station doesn’t dictate your moral standing. Poor doesn’t mean bad, rich doesn’t mean good.

In general, it seems like financial illiteracy is everywhere. Those with varying degrees of money are just shielded from their mistakes.