How I save money—In-Between Student Phase–Essay 2

When I graduated from my masters degree, it is the cusp of internet bubble, I got a job 40-minute drive from campus.  It meant I must buy a car despite that I had yet learned to drive. With help from school friends, I bought a seven-year old Nissan Altima. A few weeks later, I obtained my very 1st driver license. Again I had yet to drive on highways. With help from Chinese Thai couple (whom I mentioned in Essay 1), I safely arrived at my first apartment–located at Cuyahoga Falls. I chose a smaller one without a deck. Monthly rent was about $500.  My expense went up dramatically because of the rent. As a working professional, it was relatively hard to find a roommate.

Do not be too Frugal on Mattress

My frugal habit from student period kept its momentum. I was in need of a mattress (with box), a desk, and a chair.   I checked retail stores for furniture. My first impression was that nearly all furniture looked terribly out-dated, like those abandoned after their owner died in my childhood village.  The same went with clothing—-few makes my heart sing–even though in the so-called designer brands.

Back to furniture.  Since buying new and out-dated furniture from department stores will not bring delight, I started to pay attention to for-sale ads in the apartment complex, soon I found a couple was getting rid of their mattress and box.  Then, I got a coffee table, a desk and bookcase from Walmart, my life started.  However, I quickly regretted my decision to buy used mattress—-it was smelly. Its first owners are smokers.   

Lesson learned: no matter how frugal you are, buy new mattress only.  You spend one third of your life on it, it pays to have good mattress. Money is well spend if it improves your sleep.

My salary was decent at $55K a year in 2000. However, to my astonishment, what I received after all kinds of deduction was only 3K ish.  HR specialists explained benefits such as 401K, health benefits (deductible etc). I understood every single word, but just didn’t get the meaning. Thus, I put zero dollar into retirements, nor did I open any retirement account.

My money habit at this phase stayed the same as when i was a student. Living in the 640 square feet one-bedroom apartment all by myself seemed a big step-up compared with a one bedroom in a three-bedroom apartment in the old Little Italy neighborhood near Case Western Reserve University.   However, I was not happier.  I knew no body other than few colleagues in the group. It is true that although we cannot live without money, money can buy things and spaces, but it cannot bring happiness unless we learn to use it wisely.

Learn about personal finance and tax

To kill  time,  I started to borrow books from public libraries on personal finance and investment. Occasionally, I would drive up north back to Case to visit school friends for recreation. It was in this period that I taught myself about retirement investment and tax rules in the US, especially about index mutual funds investing. And I opened my first personal investment account with Vanguard that is still active till this day.

Tax is the biggest expense if you do not have any dependents. If you do not manage it wisely, the marginal of all other savings-buying used etc. will have very marginal effect.  

In this phase, I also accumulated some basic maintanenace knowledge about car. Car wouldn’t start if battery goes bad or drained if you leave lights on.  A second biggest increases in expense other than housing  came from car maintenance—wiper didn’t work (caused me a couple of hundreds), and car insurance.   

In this period, I enjoyed very much colleagiality at work. Boss helped booking hoteling and flights for the first time corporate training, and I ventured out on my own on highways on weekend night to learn how to drive on highways (a big mistake) so I can drive to the airport for business travel.  I took a class with a professor at Case in the evening only after leaving Case for about a semester.

Being Laid Off After Working about Eight Months

Around Spring 2001, internet bubble bursted. FedEx, my employer had been talking about restructuring etc.. to which unexperienced me paid no attention, because back in my home country, employment for someone with an advanced degree is secured and guaranteed for life. I never dreamed that I would be restructured out of employment.

One day I was busy working on a consulting project at desk. I received a phone call from a fellow Chinese colleague who worked at the accounting department, saying she was being laid off and forced to pack and leave the cubicle. I didn’t know what to say to help her.  only 10 minutes later, a HR specialist stood in my cubicle, telling me to pack and leave! Oh, my god, only about 2 weeks ago, my boss handed me H1B working visa—which required a long process and expensive fees to get it.

I was dumfounded, as if hit by a thunder out of blue, sobbing and collecting my personal belongs into a box and leaving the building.  According to immigration law, I must find another employment within 15/30 days for the H1B to continue to be legal, or I would need to get packed and leave the country.

I cried myself to sleep and torn among a few plans: looking for a job, back to school (a 3-semester master in financial engineering,  4 to 5-year PhD program back to Case), or back to China. My American dream seemed to be nulled when it just popped out of soil.   Luckily, my colleague who worked at the accounting department happened to live in the same apartment building, we cried together to alleviate the pain and shame caused by being laid off. 

Soon after,  my colleague, Donna, got a job offer in North Carolina. As the clock was ticking, I gave up the hope of finding another employment and considered seriously going back to school—Master in financial engineering or PhD back at Case. The obstacle for the first option is money. I had only about 20K saved at my best, far from the required 60-80K tuition and living expenses. A School friend from Case, Jenjun ( about 5-year older) suggested me opt for the second option—it was far more secure since PhD is supported financially at least for 4 years.

So I took his advice and applied for PHD back to Case. I was accepted initially without stipend, later granted with it.  Being laid off from work made me turned back to school–pursuing a Phd and later an academic career.

Back to School Again and What I learned From School of Life in the USA

At that time, I was about 30, an age my peers back home were all married and became a mother.  I had crushes but not yet fallen into love with any guy. I guess I was aware of the norm  at certain age–finding love and forming a family–but not quite seriously putting into any action to realize them. I guess I gave studying and getting a well-respected and paid job to improve my financial status a much higher priority. Naturally, I obtained much fun and joy from reading a thought-provoking book and listening to music. Perhaps I am destined to be in  school for life because of this.

In this about 8-month employment in FedEx, I learned several facts about a capitalism society that transformed my old beliefs formed in my native country:

• Job is not secured in a capitalist country–a nearly complete free market system.
• Tax is the biggest expense if you do not have dependents.
• You will need to learn how to manage personal finances, especially tax other than just being frugal: tax-deferred investment accounts (IRA, Roth IRA); homeownership.
• An easy way to invest for the majority is index fund and do not time the market.

Other points you may not agree if you were born in the US:

•  USA is not a country known for its newest fashion—furniture, clothing. Many USA products focus on functionality and reliability. If you want style and aesthetics, you will look for products originated/designed by other countries. 
• On necessary goods, you will need to be selectively frugal. Money is a mean, not an end.  You want to save money to improve your life and your wellbeing, not only seeing your saving account to grow. 
   
  Stuff you use a lot and spend lots of time on, spend good money on them. Examples include mattress, bed frame, desk and chair (if you read and write a lot) and a good lamp, car (reliable and safety).  I tossed that mattress to a dumpster when I moved and went back to school. It felt so good tossing it out.   I should have treated myself better by buying a new set of mattress in the first place. After all, we all only get several decades to live. For me, a Chinese who eats rice daily,  a great electric and programmable rice cooker is also a must-have, and I had one back then.

• Another important area is to cultivate friendship no matter where you are.  It does not come naturally for me to make friends as an immigrant once I am out of school because it requires me to break through racial barrier in regions where Whites are the majority.