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Frugality Plays Role in Bringing Tech to New York City

This article was written by in Frugality. 6 comments.

Michael Bloomberg, the king-slash-mayor of New York City (will he increase term limits again to stay in his position?), has announced that Cornell University and Technion-Israel Institute of Technology will be transforming 11 acres on the southern tip of Roosevelt Island into a graduate school for technology. Classes will begin as early as next year and the first phase of construction on 300,000 square feet will be completed by 2017 and construction on 2 million square feet will be completed twenty years later.

Developing the land into a world-class graduate school will displace a hospital and some other facilities, but will generate $23 billion in economic activity and 20,000 construction, 8,000 continual operational jobs, and 30,000 jobs as a result of graduates’ activities according to Bloomberg.

A $150 million venture capital fund will provide resources to new start-ups affiliates with Cornell that promise to stay within New York City for at least three years.

With a world-class high-tech graduate program, New York City will become a tech start-up incubator, on par with Stanford University, who lost the bid for building a campus in New York City, and Silicon Valley.

Cornell’s bid for the land and the opportunity to transform New York City was assisted by a $350 million gift, anonymously given but later revealed to come from Charles F. “Chuck” Feeney. Feeney is a former Cornell student who co-founded Duty Free Shoppers Group and turned his wealth into a foundation, the Atlantic Philanthropies. With the foundation incorporated in Bermuda, its activities are not generally public knowledge, but its grants are on par with the Ford Foundation and the Bill and Melinda Gates Foundation.

Roosevelt IslandChuck Feeney has accumulated significant wealth over his lifetime, but you wouldn’t know it from watching him. When in New York, he walks and rides the subway, though he’s not the only New York billionaire to mingle with the people. He rents rather than owns a house, having parted with seven houses in a divorce settlement, but renting in New York is not necessarily an indicator of frugality by itself. He doesn’t own a car and flies coach. Feeney reportedly wears a $15 watch. Not wanting money to consumer his life, even his ownership in the business he founded was transferred to a charitable organization. Perhaps having given away most of his fortune away, Feeney has no choice but to be frugal, but his approach to money seems to be similar to Steve Jobs, the quiet billionaire next door.

Assisted by the gift from the Atlantic Philanthropies, a pledge from Bloomberg for $100 million in infrastructure improvements to the Roosevelt Island land on which the university will build the campus. Cornell will also partner with the State University of New York and the City University of New York in some capacity.

This could be an exciting time for New York City. Residents of Roosevelt Island won’t be displaced by the new construction, but patients and employees of the hospital that currently exists on the property will be. Having a University’s high-tech graduate program will change the character of the island, which was formerly known as “Welfare Island” and was a depository for prisoners.

Photo: shinya
New York Times, New York Times, Atlantic Philanthropies, Cornell University

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Mint Data: More Than You Care to Know About Other People’s Spending Habits

This article was written by in Personal Finance. 5 comments.

The trend of financial over-sharing continues, and I’m glad to have been on the leading edge. I’ve been sharing the details of my finances, including spending habits, since I created Consumerism Commentary in 2003. The idea of social net worth continued with sites like NetWorthIQ, which allowed the public to post family net worth and compare numbers with others.

Mint has since become the most popular way for tracking finances online, and this website has been collecting spending data for some time, analyzing and categorizing each transaction.

Once Mint crossed the million user mark, the data was collected in aggregate to get a better look at the country’s economic condition. Now, with a user base expanded even further, Mint has opened its data vaults to the public with the ability to drill down to the city level. You can now see, for example, the most popular restaurants in New York City (based on number of transactions) or the most expensive clothing shops in San Francisco (based on average purchase price).

The city-based data is interesting for drawing conclusions (or making assumptions) about the most populous areas of the country. Unfortunately, there is only enough data to compare three cities in my state. In New Jersey, the only cities available are Jersey City, Newark, and Trenton. Don’t expect to find data for suburbs like Ewing or Princeton within the Trenton data; it appears to include the city proper only, defined presumably either by zip code of merchant or zip code of Mint user.

Mint Data fulfills a certain financial voyeuristic intention. There is some value in determining whether the amount you spend at McDonald’s every month is more or less than the average New Yorker, but these type of comparisons are generally unsatisfying past the surface. The type of comparison that is more worthwhile is a look at the change over time for an individual or a location, and Mint Data offers this option.

The services produces attractive charts that can be embedded in websites. Here is how spending at Bubba Gump New York, a restaurant apparently inspired by Forrest Gump, has changed over the past few months and how it compares with overall spending on restaurants in the city.

The key to improving your finances is to forget about these comparisons. What does it mean if you spend $200 a month in clothing stores while the average spending in your city is $100? It doesn’t necessarily mean anything other than that. Different people have different financial situations and different needs. None of this is apparent in aggregate comparisons. Without drilling down on the demographics to a very fine level of detail, the only relevant analysis is a comparison with the earlier you.

Check out Mint Data or sign up to track your finances on Mint for free.

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What You Need to Know Before Moving Out

This article was written by in Real Estate and Home. 7 comments.

This is a guest post from MD of Studenomics, a blog for twenty-somethings who want to make more money, have more fun, and get the most out of their savings. Don’t by shy, stop by and consider subscribing.

You graduated from college a little while ago, finally found that first lucrative job, and now it’s time to get out of your parent’s house. Congratulations! Before you pack up your clothes, books, and collection of DVDs, and wave goodbye to your parents and their additional cleaning, cooking, and laundry services, consider the following.

Your credit score

Have you checked your credit score lately?

Your credit score determines whether you’ll be a trustworthy tenant. Pretty much every landlord these days will run a credit check on you to see where your credit score stands. A low credit score can interfere in you getting that basement apartment just outside of the city. Don’t let past decisions dictate where you’ll live in the future.

Your credit score also dictates whether you can qualify for a home mortgage. The lower your credit score, the higher of a risk you become to the bank. If the bank thinks you’re a risky customer, they may charge you a high interest rate, ask for a large mortgage down-payment, or not even give you the mortgage at all. After the credit crunch, this is more likely than ever.

Check where your credit score stands before you decide you to move out.

Your money in savings

How much money do you really have saved up? Will you have to dig into your retirement savings or emergency fund to cover moving costs? If you plan on renting a place to live, do you have enough money to cover a few months of rent if anything were to happen? If you plan on buying a house, do you have more money saved beyond the “down-payment” money?

Where do you want to live?

Your location will dictate how much money you need to have available. If you decide that a condo downtown is the best fit for your lifestyle, then decide to save a lot of money. Moving out in general is costly, but where you decide to live will determine how much money you will need for the day you decide to take the big leap.

The reason behind the decision

Are you moving out because you’re getting married? Are you moving out for a new job? Or are you simply moving out to improve your social life? One of those reasons may not be worth the cost.

Classic view on renting

Let’s challenge the idea that paying rent is throwing money away. You’re not throwing away money by renting! You’re paying for shelter, a roof over your head, a place to sleep, and a place to bathe. If you feel that paying money for a place to live in is “paying the mortgage for someone” then you should stay at home for as long as you can.

I’m not trying to say that renting is better than owning. The decision to rent or own a home should be a conclusion you come to on your own after extensive research and considering all of the factors. Just please shift away from the “throwing money” away mindset and look at all of the costs involved.

How stable is your income?

Sure, you could be earning a decent income today, but how stable is this income? Will you have this job in one year from now? Will you want to switch jobs in the near future? A friend of mine almost purchased a condo downtown a few months ago. He had everything taken care of except for one thing: his job could send him anywhere in the world. It’s a good thing he didn’t purchase the condo because he will be leaving town next year.

The costs involved in owning a home

Are you aware of all of the real estate fees you’ll have to deal with when you own your own home? The costs of home ownership go far past a down payment. Are you ready to pay for homeowners insurance, land transfer fees, moving costs, closing costs and lawyer fees, and the supplies and resources needed to maintain a decent home?

Many of my older friends who purchased a home immediately after graduating college tell me they absolutely regret it. They say home ownership reduces their flexibility and their finances were always tight due to the never-ending home ownership expenses.

If you think buying a home is better than renting, you must ask yourself this: Am I buying the home for the right reasons? I find that most people want to be “home owners” because of information that has been indoctrinated in us since we were little kids. It’s 2010 now. Certain “conventional wisdom” is no longer relevant and the home ownership debate has drastically changed.

Living on your own may be a solitary endeavor, but there’s lots of help available on the internet. Do your research before you make what is one of the biggest decisions of your twenties.

Photo: Seton Hall University

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Let’s Stop Envying Millionaires

This article was written by in Wealth and Affluence. 22 comments.

It is a shame that people are still fascinated with the idea of being a millionaire. According to an online etymology dictionary, the word “millionaire” was first seen in print in 1826, a year when having a net worth of one million dollars was an amazing accomplishment. An inflation calculator puts this into perspective; $1,000,000 in 1826 has the same buying power as $19,359,086.05 in 2009. There is nothing wrong about aspiring to become a millionaire as long as you realize that over time, the cachet of this status decreases and the number of millionaires increases.

Financial authors still look to millionaires as examples for the rest of us. Books like The Millionaire Next Door by Thomas Stanley and William Danko point out that most millionaires have self-made wealth, are business owners, and have a mostly frugal attitude towards spending.

A net worth of one million dollars in 2009, even if this does not include money tied up in the value of a primary home, will not provide financial independence for most people in United States. Assuming the one million dollars is invested in the stock market, and assuming financial planners’ recommendation of a safe withdrawal rate of 4% for maintaining value, a retiree or retired couple would be living on $40,000 each year. Considering families in this economy may be wary of investing their total nest eggs in the stock market, 1% or 2% may be a safer withdrawal rate.

One million dollars is not going to provide enough income each year for full retirement unless investment income is augmented by income from working, which defeats the purpose of traditional retirement, drastically reducing expenses to the point where retirees might need to redefine their planned retirement adventures, or moving to a country with a lower cost of living. For these reasons, my Number is well north of the one million figure. Note that I don’t call any certain number a goal, a real goal is not a number but the purpose behind acquiring wealth.

Warren Buffett's House

Rather than looking at the habits of millionaires, many of which are helpful but commonplace, I’d like to see more books focusing on the habits of those who have amassed wealth in the eight or nine digits. A quick look at the list of the world’s top billionaires (see Wikipedia) shows that like millionaires, the richest people in the world built their wealth by being atop the world’s largest corporations, and in Warren Buffet’s case, great investment prowess.

I prefer to focus on those who have achieved my Number, somewhere above “millionaire status” but below the stratospheric net worth enjoyed by the richest in the world.

Photo credit: TEDizen

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The Cost of Buying a Home, Low Cost of Living, and Fed Cover-Up

by Flexo

Has anyone been watching the HBO miniseries, John Adams? Although colonial America is not my favorite period of history, I’ve been enjoying the first episodes that have aired. However, during the slower sections of the program, you may want to take the time reading articles from Consumerism Commentary’s history. From the first half of March ... Continue reading this article…

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Still Believe Real Estate Values Never Go Down?

by Flexo

For some reason, I will never get out of my mind someone once told me shortly he purchased a house he couldn’t afford (and knew he couldn’t afford) with a risky mortgage. He said, “I’m not worrying. Real estate prices never go down.” I wasn’t about to get into an argument; he was a former ... Continue reading this article…

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Where Did You Come From, Where Did You Go (December 2007)

by Flexo

Each month, I take a look at the source of visitors to Consumerism Commentary. While an increasing number of readers use RSS (subscription options) to stay up-to-date and I can’t always see where everyone is coming from, I can thank other blogs or websites that have sent visitors our way. Not including search engines, RSS ... Continue reading this article…

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This Month in the Archives: Second Life, Credit Cards at Fault, and Inexpensive Flights

by Flexo

Here are some more articles from Octobers past at Consumerism Commentary. Articles here have changed over the past few years, so you may notice some stylistic differences as you go back in time. Here are some selections from the second half of October, 2006: * The Virtual Reality Economy of Second Life * Wall Street ... Continue reading this article…

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