The Global Debt Clock

Here is an interesting link on the global debt clock. I've been checking this one for the past few days and the rising debt has been definitely concerning, if not downright scary!! 

Spent!

I came across an interesting game called Spent. It captures the daily struggles that most poor people face in the world. Though it is geared towards American economy, it applies to poor people in India and most other places. Do try it out - it is a good eye opener with regards to your priorities in life. It definitely was for me!

Is middle class going into a crisis?

I strongly believe that to improve something, the first step is to analyze it. And what is the easier than analyzing numbers, through finance and economics? It might have come from my mom, a Commerce prof herself. But I think numbers tell a magic story, for those that are ready to hear it. I don't claim to hear all of what numbers say, but sometimes try to listen to swatches of it every now and then. The following video does a comparison of middle class in US, then and now. And the facts are quite scary! Not that we can do much about it but we can try to do our best - for if not for that, what else is life?

P.S.: I'd love to see some similar studies on classes in India. Do we have any?

Balancing act for CA

Do you think you have an answer for California's budget deficit? Here is a way to play with the numbers and find out for yourself.
Lets start the year with a balancing act!

A note to Newyorkers

As you know, NYC is one of my favorite cities in the world. That city lives and breathes energy into anyone that comes in contact with it. This link would be of interest to Newyorkers where it displays the income level of people living in a particular area. I'm curious to see such maps for other cities, especially aamchi Mumbai or singara Chennai. It would throw light on the lives of people in a far more zoomed in manner. Now, that would be interesting!

PS: Been away finishing up stuff... now I'm safely back from the thin ice world. Hope everyone had a good Diwali and Karthigai and Thanksgiving!

Spending habits: Some revelations

Spending habits of a person can easily tell loads about them. An account statement is about as intimate as you can get to a person's mind and the ideas churning there. We can easily segregate people into different classes based on their spending habits (loves travel, food connoisseur, movie buff, sports fan, art enthusiast, book lover, etc). Everyone has got their vices and pleasures. And that is what makes the world fun to be in.

I'm usually conscious about my spending but don't really get into a budget overdrive (I've done it maybe two months!). However, as I was reviewing my accounts after a long time (yeah, so much so that I don't know what happened to some of the stuff I had and had to start afresh with some left to "Gandhi kanakku"), I found interesting patterns to emerge.

When I moved Neverland, I was given some money(some big money - compared to my grad student state) to cushion the move. I assumed that it would last me the whole of the card's life term. But, yesterday, I found that I had blown some four-fifths of that money within four months. Woah! Wait a minute! Where did it all go? True! Some of it went for travel (ok! I'm nuts about travel and the experiences it'll give - I'd rather give $100 for an experience than for something I can take home - one that would finally become junk) that I'm doing in the coming months and for the recent trips I did with friends and cousins (not to mention my move). And some of it went for the new place (of course! THE bed of mine). And some of it went for shopping (yup! I've spent more than $200 in Bath and Body works alone) for stuff. The rest? Agreed, I paid my bills (atleast most of them) with this card. Shave off some $60 per month for that. That still takes away only $250 for four months.

One thing that jumps out of the statements is my long standing relationship with Airtel. I'm this compulsive home-caller whose mom is a skype-hater. A perfect situation where Airtel-customer love can grow like crazy. I need to call my mom every single night before I go to sleep. And my mom is this person who just hates talking over skype. I've charged this card of mine exactly 38 times(all in dimensions of $25) to airtel. No wonder I keep getting calls from airtel's customer center saying that I'm eligible for this promotion and that. At this rate, I'd be eligible for all the promotions they've got. Ok! I hear your *&#$&*@ words. But I guess that I pay more for the convenience of calling my mom and talking to her for hours whenever I feel like it rather than the actual talking that we do. So, this is still a worthy spend but guess I'll share my love between airtel and reliance from now on. Just so, flying under the radar :P

Another trend was that all my saving bursts were followed by spending bursts(if you can call not spending as saving) on this card. Or rather, spending bursts were followed by guilt laden saving bursts. Its all in the way you look at it, you see! But knowing me, I'd be more satisfied with the spending bursts and would let the experience sink in totally before I search for the next one. The gap would have been my saving burst. It was not intentional for sure! Wonder what will happen if I go on a spending high for too long. Would I crave the saving phase just for the change of it? Or would I need to spend more and more to be satisfied?

Looking back, I'm glad I spent the money on travel (tickets, car rentals, experiences, etc - though most of the fun came from being with friends and that's priceless!), treats (again this was money well spent), gifts (I'll do it again without batting an eyelid) and of course, shopping (despite all the bills, I feel that I have chosen well - saving where it is needed and spending where needed). One of the few regrets I had was spending on my bed. I wasn't thinking straight that evening and wanted a bed THEN for I had had a bad sleep before. But that didn't happen (the bed got delivered only the next morning - by which time, I was kicking myself and hard!). Though I love my bed now, I know that it is not the best of decisions I took. It could've been a bigger purchase and worse mistake. That incident made me understand the power of instant gratification. I thought I had worked it out of me but nope! I still need that. But now, I know the limits. The rest got covered in groceries (small things DO add up), dinners with friends (still can't forget the yummy Thai Kitchen :) and the small perks from time to time.

On hindsight, I also found that I hadn't planned well for it. I was working in the dark and the good spends I did were a result of sheer luck and lack of temptations before me. I had frankly not thought to use Airtel a whole lot. My usage in grad school was ridiculous (around $100 a month) but this is outrageous (2.5x times it!). Frankly, I had forgotten what it is to start a house from scratch (one of the ills of non-frequent moving - you forget what it is to move and start anew). So, alpine, time to plan things better.

Another thing that popped up was the change in my lifestyle from being a student to an employee. Some things that were reserved as treats have now become 'yet-another-thing'. Like heat-and-eat dinners! They were a treat when in grad school now I do it more out of habit or boredom to cook than for the experience of it. I'm getting less happiness at the same value. I'm not sure if this is the right way to think about it but yeah, I love this experiment. Lets see where it takes me! Btw, I'm seriously considering making some more changes to my lifestyle at Neverland, just to test the limits of what luxury means to me :) What is life if not change?

How are your spending habits? Do you see changes in your lifestyle after big transitions like graduation, wedding, divorce, loss, etc?

A deal watch now?

As we see more and more companies laying off, the difference between companies that are doing good and the companies that are doing bad is becoming starkly clear. The ones that are doing OK would have to choose sides soon. And, in the end, the ones that are doing better tend to buy the ones that are doing bad(not unlike the jungle where the strong animals eat up the weaker ones, no wonder we are living in a corporate jungle!). The most recent talks are about IBM buying Sun. As the recession becomes worse, more and more deals and acquisitions are in the horizon. Do I have to start a deal watch now?

And, another question is, the strong companies are strong now. But, once the weaker companies are bought, would their position still be strong enough to wear out the recession? Or would that make them a weak company too, ready to be another victim?

Further, if this recession leaves us with just one or two players in each field, would it be good for the consumer? Would we have as many choices as we have now? And, worse, what if there was only one company per field? or worst, what if there was only one company that dominated many fields? I can see some companies emerging better in their fields and wielding considerable clout in others. Is it good for us as consumers? Wouldn't it be giving too much power into too few hands? Every time that has happened, it has led to tyranny and revolution in history. Would we see a corporate war in future?

What do you think? Is this deal the first of the recession or is it a one-off? And are these deals good for the economy and the future?

Disclaimer: All these views above are mine and mine only. They are spoken from the point of an ordinary consumer with data available to everyone in the world.

A trillion dollar bill?

Can you imagine a one dollar bill? 

Sure, you can get small stuff with it. 

Can you imagine a five dollar bill?

Sure, you can even have a decent meal at Burger King with it.

Can you imagine a ten dollar bill?

Sure, you can have a good sit-down lunch at a decent restaurant with it.

Can you imagine a fifty dollar bill?

Sure, you can use it to get stuff for a weekend party... the money would be best used for lot of stuff.

Can you imagine a hundred dollar bill?

Sure, it would be a good chunk of my rent.

Can you imagine a thousand dollar bill?

Sure, it would be in terms of my paycheck.

Can you imagine a ten thousand dollar bill?

Sure, it would be what I pay for my semester fees to my school.

Can you imagine a million dollar bill?

Uh! Now its getting harder. How about the economy of some companies or even small countries? Or maybe the life savings of an average American? I'm sure it would be a hard-to-imagine money for an average world-citizen(all the people in the world).

Can you imagine a billion dollar bill?

Wait! its a thousand million dollar bills right? So, is it the economy of thousand companies or countries? I can surely say that every Indian can get one dollar of it and still be fine. Or maybe the American stimulus bills can simplify it in my brain? 

Can you imagine a trillion dollar bill?

Whoa! that is a thousand billion dollar bills. And that means, its a thousand thousand million dollars. Are there even that many people in this world? Combining all the people in this world, I'd think the figures would be around 50 or 100 billion? Lets do a google search! Wikipedia says that there are only 6.76 billion as of March 2009. What??? Less than 0.7% of a trillion??? And here, the Iraq War alone costs more than a trillion dollars? And, you need more than a trillion dollars to revv up the economy? And, people aren't sure that it would help? Ok, based on thisinspiration, lets say the US Government decides to get all the cash to make a trillion dollar stack. Heck! The total circulation of currency bills is itself not a trillion dollars. Ha! Ha! Now its becoming funny! Other than war and pumping money to an economy, what else can a trillion dollars do? But surely, we are talking more of it. No wonder, the trillion is the new billion.What isa thousand trillion, anyone? For, with the way the economy is going, we might need to talk in terms of that soon.

What are your thoughts on this one?

Budget making - the hows

Recently, I had written a post as to why someone needs a budget and how useful it is in the long run. Here is the follow up on it. How do you make a budget? Mind you, I had no clue as to what a budget is and how it would help in using the resources I had. So, I did a Google search for making and using budgets and then tried some stuff on my own to hit on a sweet spot where it is not much work any more but gives all the info I need at a glance.

Some thoughts on the budget mechanism I use:
1) I didn't want to spend money on budget tools like Quicken, YNAB, etc. for I wasn't yet convinced of the positives of a budget. So, I didn't want to spend anything on it. Further, I wasn't sure if my enthusiasm would remain after a few budget sessions to justify buying the tool.
2) I didn't want to put up my finance data online. All said and done, I'm freaky about keeping my personal info offline(at least, as much of personal info as I can). So, that threw away services like Wesabe, Mint, etc from the pool.

3) I didn't want to keep moving from one format to another.

4) I wanted to be able to tweak things as I wanted them to. Basically, I wanted something that would grow and change with my learning of finances. 

At the end, I was left with either plain old pen and paper option or excel spreadsheet option. Knowing that it is hard for me to keep up with paper, I chose the spreadsheet option. I use Excel spreadsheet for entering all the info.

Here goes the mechanism I followed for making a budget.

1) Start keeping tabs on what you spend money on
Open a spreadsheet and enter columns like date, item(what you spent on - groceries, dinner, cab, printing, etc), credit(money coming to you - salary, tax refund, etc), debit(money going out - all expenses). All you have to do is to enter all the transactions in it and sum it up. The difference between credit and debit is what you have in savings. In order to know how much you spend per category, just add columns labeled groceries, utilities, etc and enter those transactions in it. Summing them up would give you an idea as you how much you have spent on each category. You can have as many categories as you want. One of my friends has about 40 categories while another has only five. But, both of them use the budget well. So, depending on your level of need for micromanagement, the number of categories would vary.  

I used to spend a lot of money on eating out(in our university dining centers and in downtown) with friends. The second vice was shopping. Not that I brought lots of stuff, it was more passive shopping. Intrigued? I usually go for shopping with my friends and help them choose stuff. In the process, I would end up buying a shirt or a perfume or a book or a ... hope you get the drift. Also, half of my eating outs happened when I went on these shopping trips - a smoothie at 11 am, lunch at 2 pm, a snack at 5 pm and finally ending the day with dinner at a restaurant cost us way more than expected. I had no clue I was spending so much on these two categories.

2) Take a hard look at each of the categories
Take a look at each transaction and see if there is something that you can drop without changing your comfort level too much. Mark each of it and make a note of the amount you can save in each category. For example, if you get a total of $300 for eating out every month but feel that you can reduce it to $150, make a note of saving $150 in that category. This would give you a feel of your budget.

For me, eating out was a result of me not having time to cook at home. By scheduling time to cook at home(at least on weekdays), it became easier to plan my groceries, get them and finally cook and eat at home. Bonus point was eating healthier stuff at home.

3) A budget draft
With the newly created cap for spending on each category, you are now ready with a budget draft. Try to consciously reduce spending in each category for the next month. Check to see if each transaction is worth it. For example, the blender that you get at Walmart might be worth the cost for it may help you cook faster whereas the cute teddy that you see in Toys R Us might not make the cut.

For me, I brought some microwave bowls(about ten or eleven) that cost me a lot more initially. But they help me store food and I don't have to cook every day. Whereas, shopping didn't make it. So, I stopped going out for shopping 'just like that' to avoid getting unnecessary stuff.

4) Making changes
Repeat steps 1 and 2 again and compare it with your expectations. Sometimes, your expectations might be satisfied(you expected to save $150 and saved $150 - keep it up). Sometimes, you might have done better than you expected(you expected to save $150 but saved $200 - keep up the good work and change your budget accordingly). Sometimes, you might have done worse(you expected to save $150 but saved only $100 - change your budget to reflect that).

For me, I had thought I would save a lot on eating out(which I did) but went over budget on groceries(expected but I hadn't thought of it). So I changed my budget to reflect the change.

5) A final word
Keep repeating the above steps and you would see that as the months go by, you have a fair idea as to what you do with your money. A budget is a living document and changes with changes in our life. Especially, for students, its hard to say that you get a set amount of money every month. Some months, you get to work more while in some others, you have so many deadlines that you just can't work part time. So, based on your situation, the budget can expand or contract. For, it is you who is being accountable to yourself.  Do what works for you!

Further, you can decide how to have fun and do it well. For example, if traveling is your kind of fun, you can save money for it and have fabulous vacations. It really doesn't make sense to spend money on movies and eating out when you could use that money towards your vacation. In all, its all about your priorities and a budget helps you chart a way towards those priorities.

For me, I try to keep all my spending on necessary expenses to 70% of whatever I earn, 20% on irregular expenses and 5% for fun spending and 5% for saving. Though this is not a hard and fast rule(I order to-go more often on days when I have a deadline looming ahead, my 'eating out' category shoots up while my groceries category goes down a bit), I try to stick to it as much as possible.  

Happy budgeting!

What type of a budget works for you? Do you use any software to track your expenses? Any comments?

Satisfied Mind

Recently heard "Satisfied Mind" by Jeff Buckley. The following lines stuck out:

Money can’t buy back all your youth when you’re old
A friend when you’re lonely, or peace for your soul
The wealthiest person is a pauper at times
Compared to the man with a satisfied mind

What's your credit age?

One of my friends sent me this interesting link after she saw my nerd score up. She is a finance major and that figures! Check out this link for your credit age. Its interesting to do but not really relevant to me at this point in life. Maybe, after 10 years....
But I'm happy to 'know' that I'm credit capable. Takes a load off my mind in this credit crisis(pun intended!) What's your credit age?

I am 38
in credit years!

Credit Age Quiz by SpendOnLife.com

PS: The same rule as nerd test. I don't want to litter the side panel of my blog with these labels. So making it a post.

Budget Making - the whys

I'm a grad student. That amounts to someone who does not have enough money to satisfy their every whim and fancy. Oh wait! That amounts to someone who does not have enough money to satisfy a bit more than their whims and fancies. Though I'm covered for food, shelter, clothing and of course studies, I can't really go out for a night and buy things off my mind. Or even if I charge it to my credit card, I can't pay it back in full and would start a horrible debt cycle. So, the only recourse to that is to make sure that the dollars I have stretch to their best and give me enough cushion to do that one-day-shopping-bling-thing.

To tell the truth, I was brought up in a family where I can have any amount of money in my hand provided I gave the right reason for it. Being a kid(and an obedient kid at that ;)), I didn't have much necessity for money to spend on my own. Further, in India, you didn't have that many opportunities to spend too(esp when I was in school). In college, though, I could spend the money I had and could just ask my mom for more. But, I was overloaded with courses and projects and organizations that I didn't have much time for other things. So, all this left me with little or no experience with handling cash within a set limit.

When I went to do my internship, I got a good amount of money but the days were very set and we didn't get many opportunities to really spend a lot. And, I always hung around with friends and we made sure that the things we did were inside everyone's budget. Funny, but that was the first time I really thought about budgets. However, since my scale of comparison was my friends and since one of my friends' budget was inside mine, I really didn't have to do a budget for myself. I just went along with what she said and that worked well for me(didn't have to rack my brains - she did the number crunching) and my wallet(I didn't see any big dents here). So, there too, I didn't have to do anything with a budget.

Fast forward to my grad days. The first year and my second internship period was a repeat of my first internship period. So I really didn't have to care about it. But my second year was different in that I changed jobs inside campus(went from a relatively high paying one to a low paying one) and changed my apartment. And a few friends graduated. Some went for internships, all of us left back here started becoming serious about finishing our degrees. Slowly, that led to changes in my lifestyle as well. I had to look for different ways of having fun. Its not something fancy but I had a goal as to not ask my family or others for money. And it was not a hard thing to do. Rather, it was fun. I learned a lot out of the process too.

Now I have a simple budget that works for me and helps me live a satisfied and fun filled grad life(yeah, with that one-day-shopping-bling-thing). But I know that a number of my friends and readers don't do it often. So, here is a short series of posts about budgets. This would also help me revise mine and see if there are any changes I can make into mine.

Five simple reasons to have a budget:
1) It tells you where exactly your money goes. Whether you a Wall street banker or a sweeper, you earn money in exchange for your time. Time that can never be earned again. So, it makes sense to know what you do with the money you got.

2) It tells you how close you are to your goals. You can be a poor grad student(like me!) and dream of going on a world tour before you turn 50. Or you can dream of getting that penthouse with an awesome view on top of a 50-storey building in NY without any strings attached(mortgage, for example) before you turn 35. Or, you can even dream to have your honeymoon trip to space. For all that, it is important to know what exactly do you have now to get to where you want to go.

3) It reminds you of the resources that you have and consciously tries to make you spend within it. For example, if you have an income of $1000 and an expense of $800, then you live a way better life even with lesser stuff than with an expense of $1200 and more stuff. (yeah, you can charge it to your credit card but that brings my next point!)

4) It tells you the amount of debt you still have. Debt is like shackles and chain, it comes with you wherever you go. So, the higher the debt, the more constrained you are from living life as you want to. The lesser the debt you have, the more risks you can actively take in your life and gain more returns. Suppose if I get into my head to go to Bahamas tomorrow, I can do so if I don't have any debt and wouldn't be setting any legal action against me. But if I had $10000 as debt with me, then I'd have to settle that first before making my move to Bahamas. So I can't live life as I wish it to.

Charging things to your credit card is easy to do at first but then, you pay more than the price you see. For example, say you see a cute valentine's gift for $500. You decide to charge it to your credit card with 10% interest(there are very less cards with this rate now). And you decide to pay it in terms of $100. At the end, you would have paid close to $730 - An increase of $230 over the price. Naturally, the actual price of the gift goes up by $230. For that, you could've paid cash for $730 and bought a better gift. Or, used cash to pay for $500 and kept that $230 for some other purpose. If you decide to pay $200 each month, that comes to a little over $600. So, you get to pay only $100 more. So, try not to carry a balance in your credit card/debt. Or if you do, try to maximize your payments to it so that you have to pay only a slightly higher amount.

5) It shows you how much more your resources(income, savings, etc) should increase to make your life more satisfactory. Suppose you decide that you want to blow away $100 a weekend. So, that comes to $400 a month. And, assume you are already spending the money you get and don't have money to spend for your weekend flings. You can look to raise your income by $400 a month so that you can spend them without any worries of getting into debt.

I had read about budgets earlier. But then, I had thought that budgets were a bore and kept you inside a particular boundary. You can't do as you wish. However, I found that it wasn't true. Rather, budgets liberated you from boundaries like credit card debt and helped you achieve whatever was your dream. My goal is to finish grad school without any debt. I went close to getting into debt and my budget was the tool that pulled me out of it. So, I'm relying on it to keep my goal going till this May(hopefully I don't have to stay another semester at school).

Do you see any other reasons for doing a budget? Or do you see any reasons for not doing the budget? What are your experiences with the B-word?

Stock markets - good music!

Are you worried about the recent recession that's hitting the US, Europe, India and the world in general? Worry not! The stocks that caused misery to you are now providing entertainment as well. Check this link!

A "personal finance" dish

Writing the previous post, I started thinking more and more about personal finance. Is it the need of the hour, what with more and more people losing jobs and the ones that hold them not yet sure as to how long the entire recession would last? Oh! personal finance has been around ever since man started commerce and brought in the concept of individual wealth management. But it has gained more and more spotlight in present times.

It may be due to the course I'm taking or due to the recession that is unfolding right before my eyes, but I've started taking some interest in finance finally. There are a number of finance guides and people who are great with finance that help people in trouble. Also, there is more openness about finances than before(or may be there were earlier and I am aware of them only now).

Recession in some far away city puts you in a cocoon and you don't really care much about it. But recession in your neighborhood is a different game altogether. So, to improve the health of the US economy and the people of the world, I'll show you how to make a dish out of personal finance. Yeah! Eating(doing) this will surely nurse your finances back to robust health. Some of the ingredients are:

1) Spend less than you earn - In a nutshell, don't spend what you don't have. And, keep some saved for the rainy day! Absence of this ingredient led to the mortgage bubble burst and it shows what has happened to us right now. This ingredient is the base of the dish. If this is absent, then any ingredient or tool used would be useless.

2) Earn more than you spend - In a nutshell, try to earn what you want to spend. And, don't touch your rainy day savings. This ingredient might sound eeriely similar to the above one. But it is not so. Say you have $10. Say you spend $5 and save the rest. Now your savings is $5. Say you increase your earning to $20. Then you can increase the spending to $10 and still save $10(an increase of $5). Or if you decide to stick to old spending ways, then you save $15(an increase of $10). That is the difference between both concepts. This is yet another important ingredient without which your dish size would never grow. It is like yeast is to bread and cake risers to cakes. However, you can add as much of this ingredient as you want to the dish(unlike yeast or cake risers). The more of this ingredient, the better is the dish.

Now add generous mixtures of the above two ingredients and add a good amount of patience, confidence and determination. Let the dish sit for some time. Do not add ingredients like debt, new credit cards, loans, etc. These ingredients will make the dish go bad! As you stir the mixture and start eating(using) it, there would come out of it, vapors called "more money" that would chase away the debt ghosts(like how real food chases away the hunger ghosts). These vapors can be seen using special tools like budgets, spending plans, etc. Further, the dish can further spiced up by tools like high interest rate accounts, couponing, deal watching, thrift store shopping, etc.

To magically increase the quality and quantity of the dish, you can use the investing tool to stir the dish from time to time. However, if overused, this tool can even spoil the dish. So care should be taken when using this tool. The author recommends that this tool should be used only by advanced cooks or by beginners under the guidance of an advanced cook. If a beginner wants to try it, he/she should use it only sparingly and can slowly increase the duration and speed as time goes by.

Voila! You finally have a magical dish that can not only chase away debt ghosts and keep them far, far away but also give you benefits of financial health like good credit score, enough money to achieve your dreams(isn't this what all of us aim for?) and most of all, a peaceful sleep at night without worrying about paying bills on time(what else is needed in life?). Eating(doing) this all through your life gives you a long lived robust financial life as long as you live and makes things infinitely easier for your kids and others. Now, don't you want to make your own magic dish from this recipe?? :) Let me know if you find this dish yummy and useful. I'm sure you'll soon send me a postcard from Hawaii thanking me for your robust financial health and hence remarkable mental and physical health.

Note: Longer the exposure to this dish, better becomes your health. So, use it more and use it often!

Personal Finance: some observations

Recently, I was thumbing through a personal finance magazine while waiting to meet someone. I was amazed at a number of things:

1) Usually, when I visit someone's office, all I see would be general magazines or news magazines. Nowadays, more and more personal finance magazines are seen everywhere(I saw THREE magazines in just one week! And I live in a university town!). Goes to show how deeply recession has affected the US common people, aka "Joe the plumber".

2) One of the coffee shops where I drink coffee regularly is run by a smart and pleasant woman. She manages the entire shop with help from her sons. I've been in awe of her workmanship, the quickness with she serves the orders and her pleasant manner. We got to chatting the other day and she said that lesser people were buying coffee or other drinks. Most people have started asking for water with their sandwiches and meals. Even those that order drinks are switching to smaller cups and less fancy fare. Usually, if 100 grandes were sold, only 50 or less grandes are sold now. And, people are asking for regular coffee in place of the fancy and costlier lattes. She was worried about the recession. As more and more people tighten their belts and start cost cutting, one of the first things to go are drinks like coke, coffee, etc. So, what is going to happen to the coffee shop I so love?

3) I got the chance to read an article about credit card debt and what can be done to reduce/remove them. That got me thinking. Not many friends of mine have huge credit card debts. Most people I know make full payments every month and do not let the credit card debt in any one month go over 50% of their credit card limit. But this could also be due to the fact that most people I knew were Indians. Even among my non-Indian friends, not many had huge credit card debts. But they tend to make minimum payments to the card balances rather than the full amount. There were a few who did the math and knew that letting balances grow would lead to them paying more than they expected. They paid the balances in full but most didn't.

4) Most students had student loan debt. Indian friends usually came here with a loan from banks and plan to repay it once they get a job. Non-Indian friends have a similar structure. I know of American friends who were paying down their student loans even when in college because they knew that letting the balances sit would definitely harm them later on. But most Indian friends I know wait till they get a full time job to start paying their student loans.

5) Most Indians do not feel comfortable discussing finances but most Americans are happy to discuss them and show where they are exactly with their goals. This might be due to the fact that most Indian families do not discuss finance with the children when they are growing up. I did know much about money and how it is handled as long as I stayed with my parents. But I know, from my friends in US, that a growing number of American families are very open and honest about the finances with the kids. It makes such a difference when you get to understand these things when you are young. The kids are more confident because they learn how a key part of the adult world works.

One of the jokes I heard at a party went like this:
If you give $10 to a Japanese guy, he'll save $9 and spend $1
If you give $10 to a Chinese guy, he'll save $7 and spend $3
If you give $10 to an Indian guy, he'll save $5 and spend $5
If you give $10 to a European, he'll spend $10
If you give $10 to an American, he'll borrow $5 and spend $15.

Are these differences in spending structure and loan repayment due to differences in their culture? These are just my observations based on the people I see around me. I'm sure there are all kinds of people all over the world and I personally know of Americans who are very good at managing their finances and a Japanese guy who is neck-deep in credit card debt. This post is not for or against any country. I'm just comparing two cultures I know and trying to make sense of it all. Have you seen any such differences in spending and saving habits of people because of their culture, region, upbringing, etc? I'd love to hear your views.

Finance, my new interest!!

There are a few things that, when you do, seems interesting in the beginning but bore off at the end (how about watching shows? I've seen some TV shows that start well but drag in the end.. And I, the ever faithful viewer, still stuck doggedly to its end! An apt example is Kaadhalika Neramillai from Vijay TV. That show deserves a post of its own! There were very, very few movies or TV shows that have held my interest from beginning to end).

There are some other things that seem boring at first but becoming quite interesting as the days go by (for example, VLSI. Believe me, I used to hate VLSI when I was in my junior year. Simply because, all I saw was a chip and the big hulla bulla about it. But going to Cisco changed those opinions and I fell in love with it, prompting me to add it to the already-full list of masters studies. Now, my particular masters topic is so broad that I can work anywhere and yet so specialized that there is no particular job that suits it to the glove! And I'm loving both sides of it!!).

But there are a rare few things that you do, at first, because it is interesting to dip your toes into and captivate you with their beauty that you seem to do them all said and done(like writing, for instance. However tired I am, I write a bit every day! And I found that I cannot stop from writing - my September and October trials would show it).

Now I have found another such interest - finance. There are two basic reasons for this interest in it. First, I was always eager to know how something worked and that includes a corporation, a government and our own lives. I used to have all these questions as why one should work (come on! Don't tell me everyone in this world works because they love their work), till when should one work, what will one do if they don't have the necessity to work, etc. Lets suffice it to say that I was asking questions such that I can understand the adult world much better and safely leap into it from my adolescent and secure life. I tried to learn something about commerce from my mom but it turned out that it never happened! Guess there is something impossible about trying to teach your daughter commerce when she is always dreaming about the latest and coolest stuff. So, here was my wish, simmering under all the normal stuff I did.

Second, I enrolled in a course this semester that taught the basics of finance. When I say basics, I mean "real basics". The professor started off with what is finance, why we need it, what is credit, etc, etc. Also, the US recession(yeah! its officially declared now!) was unfolding right in front of my eyes. What better chance to learn about finance, its myriad facets and all the consequences? I also started reading on some light stuff about finance and how it applies to normal people, you and me! That showed me that man had a powerful tool, that if used, would create such wealth for everyone. And men have been using it ever since the first cave man traded one spear for another with his kinsman. Various forms and complexities, yes but the underlying principle is the same.

Earlier, I never used to bother about it all. My mom was my money-giving tree and I could ask for however much I wanted but had to have a good explanation for it. Further, my family encouraged kids to save whenever possible. My parents were no exception. And my parents were never big on entertainment(Maybe that is why I think working on sundays is not something hard or wrong? I know, from experience, that one of my friends' dad always had a clear demarcation between office work and personal life and never worked on weekends. She was amazed when I said that my dad worked and couldn't really understand why anyone would do so. Not that my dad had to, but wanted to was what made all the difference.Thanks pa for teaching me that trait! I so take after you :)). According to them, a movie per six months was standard fare. I grew up the same and continued through college(Yeah! I know, I know!!)

Now, I get to handle my finances and am able to appreciate the nuances of it all. Man's ingenuity surpasses it all when it comes to handling the wealth of the world. It is all the more interesting how the basic system never changed and though there were new methods all the time, there was some time in history when it was already done. For example, we speak so much about Travelers Checks and consider them the best ones to use when you go from one country to another. Did you know that a similar system was used by the Templars in the 12th century? And they had complex security systems to protect it all and ensure that no cheating is possible.

So, long story short, I'm in love with finance for now and I'm sure this interest would continue for some more time! Till then, my dear readers, I invite you to join me in this fabulous journey to get glimpses of clear minds, ruthless actions, deep seated passions like greed and fear and the beauty with which the world balances it all out over the centuries.

For all the grad students out there, good luck with toughing it out the last few weeks of this semester before we break up for winter.