Logan Sachon: Let’s talk about your money. Do you use credit cards? Heidi N. Moore: I do not. I actually don’t have a credit card, I only have a debit card. The last time I had a credit card was in college, and I ran it up really fast. It was a pitifully tragic credit limit, like $600 dollars — it was one of those Capital One cards they send you in the dorms. I maxed it out so fast, on nothing, just stuff that offered momentary comfort. I was just buying stuff. And most everything you buy is a depreciating asset. As soon as you take it home, it loses value. I’ve gone to The Strand with stacks of books and gotten nothing for them. Clothes are useless, you can try to resell them but really you just end up giving them to charity. The only thing that I think is a really good use of money is experiences — travel or a really great dinner with friends.
So after I saw just how easy it was to do that, and how hard it was to control, I swore off credit cards. So ever since I was 20, I haven’t had a credit card. I just spend what I have.
LS: But how do you know how much you have to spend? HM: It’s really hard to get very specific about these things in your own life. I found it really helpful to actually see where all of your money is going — to see it on a spreadsheet or a list. I’ve started to use Mint, and I used to keep a list of what I spent. You leave the house in New York and you’re out $20, and you haven’t even bought anything: a coffee, a bagel, a newspaper, a MetroCard. $20 bucks a day — that’s $7,300 a year. You could go to Europe for that. So you have to pay attention.
LS: Do you have a budget set for yourself? HM: So there are my expenses, the list of things I absolutely have to pay, and then the rest I’m kind of flexible with. I do keep my expenses very low. My only fixed expenses are housing, gym, MetroCard, and my goddamned metastasizing Verizon bill, which is the bane of my existence.
And if you keep your expenses low, basically you would be shocked how much money you have. Which is what I try to do, although I am not above splurges.I just prefer intentional splurges, rather than impulsive ones. For instance, I held out on buying an iPad for three years because I wasn’t sure it would justify the expense of the device plus the data plan. Same for the iPhone. Now I have both and I love them. But I made Apple work for that money.
Really, though, I misjudge too. Often! Very often. I just try to be right more often than I’m wrong. And I realized that the way you manage money doesn’t change all that much with income. I have a friend who makes very little — she works at a nonprofit — but saves very well and watches discount airline fares and thus always has money to go to Guatemala, Thailand, or wherever.
I’m not a fan of micromanaging. I’m a fan of setting your principles. When I go into a store, for clothes or books or whatever, I ask: How important is this? I’ll often take a picture with my iPhone, and if three days later I’m still thinking about it, I’ll go back and buy it. In the store, it’s in front of you and it’s so cute and so tempting and it’s in just the right light — it’s hard to resist. Or if it’s a book, you read it in a day and then it’s on your bookshelf for ten years.
It all becomes much easier if you start to believe that almost everything around you should represent you. The things you own should be something that you truly love, and most the things we buy aren’t. If you can avoid those things, you can control your expenses. It’s about exercising that judgment. Money is a state of mind issue. You work from principles: What is important to me, what do I want in the future — start from there and work backwards. If I want to be comfortable no matter what happens, I have to do that for myself.
LS: Is this something you developed on your own, or did your parents teach you? HM: I grew up in a house that didn’t talk about money, and I had to figure it out on my own. My mom is excellent with money, just really magnificent with it, but she didn’t talk about it. My parents wouldn’t let me have a job in high school at all — studying was the most important thing. But when I was 17, I decided I that didn’t want to ask anyone for money ever again. I wanted to be independent. So in college I got a job, sometimes two jobs or three jobs, to keep up the lifestyle I wanted. But my parents paid my tuition, so that was a possibility for me. And it’s not like I was immediately Jean Chatzky.
In terms of spending money, if you set yourself a financial goal that is necessary in your life, you’re likely to meet it. I have tremendous sympathy and understanding for people right now who can’t do that. This is a crappy economy, and it’s not easy to get jobs that will pay you enough to meet all the obligations you have to meet, even just as a single person living in NY. So if you get to the point where you’re like, “Okay, my parents can be my fallback, but I can’t use them to sustain me,” I think that’s a good goal.
LS: So what do you spend your money on? Vacations? HM: I went years without vacations because I’m such a workaholic, and that sucked. I did not enjoy that. The mental health value and general perspective change of a vacation is something I really enjoy, so now that is a priority for me, and I save for them.
LS: How do you save?
HM: The first time I looked at my 401(k) statement, I was like, “Holy moly how did that money get in there!?” I never would have done that on my own. So that taught me the value of making the the money invisible. I have a Chase checking account and three savings accounts. So my first savings account is savings I need to live for the next three months or whatever. The second one is for if I want to buy house, so future things. And then the third is for vacations. So a portion of paycheck immediately goes into each of those savings accounts each month. If it goes into your checking first, it seems like it’s your allowance and your job is to get it to zero.
LS: I don’t even have one savings account. HM: Of course if you’re young and paying New York rent, it’s going to be hard to put much away. If you’re living in New York, you have this understand that living expenses are going to be 50% of your spending. But even if you’re just saving 10%, that’s 10% more than you had the month before. This is just my solution — there are a lot of other solutions. I think the most important thing is to keep your mind on future goals. It’s fine to charge a trip on your credit card if it’s once in a lifetime experience, but you need to have a plan to pay that off.
The only reason you should care about money is options. If you don’t have money, you don’t have options — you don’t get to exercise free will, and if you don’t have free will, you’re a slave. A lot of young people freelance and have low-paid jobs, so a lot of this isn’t realistic. Like if you’re making $17,000 a year as a fact checker, this isn’t realistic right now. But there are also things you have to invest in for your life. If you’re a radio reporter you need equipment, if you’re a photographer, you need cameras. Having that judgment about what is frivolous or what is necessary is a lifelong process.
One of the books that woke me up — I must have read it in college, but I don’t know why I read it — was calledPrince Charming Isn’t Coming: How Women Get Smart About Money. I don’t remember any of the specific advice, but it had a lot of stories about women who just had magical thinking when it came to money. That it was all going to work out, if not in a form of a man, than in the form of a windfall. There were all these stories of women who had real complications in their lives, and they had to start from scratch and it was a huge reality check for them.
LS: Banking on a windfall. That sounds very familiar… HM: Reading that when I was young impressed upon me the idea that if you have you save for yourself. And beyond that, if you spend your money well, if you don’t just spend it all on stuff, you have some to give to charity or to spend on other people. You can help do good in this world. And you can’t do that if you don’t have disposable income. I do believe the more you give away the more comes to you. I don’t like the selfish view of money. I think it’s important to support causes. There are cosmic values to this.
I am by no means an expert in money management. It’s important not to look at other people — that’s not your life. Your life is your life. You don’t know what compromises other people are making. We’re all just cobbling it together.
LS: You mentioned you have a 401(k). Is saving for retirement a priority? HM: Right now, retirement is not a tremendously top goal for me. I want to save money for other things, like a house. So I do make 401(k) contributions, but I don’t pay attention to it.
LS: Do you invest? HM: Nope. I can’t do it, because I cover Wall Street, so I can’t have stocks and bonds.
LS: Has covering Wall Street influenced how you manage your own money? HM: I generally keep work and myself separate. The money I write about is like Monopoly money — we’re talking about billions and trillions of dollars. But it’s good to know how a company’s balance sheet works, and that’s applicable. Really high finance has very little to do with personal finance. The things that companies do, we would all get arrested if we tried. So it’s not tremendously useful. But this isn’t the kind of thing where more knowledge will solve all your problems. We all know that to lose weight you need to exercise and eat less, but you have to get to a point where you apply that. I don’t think everyone just wakes up one day and figures it out. You have to relearn it everyday.
The idea of living within your means is something that our society has been missing for decades and decades. It should be a comfort to young and middle-aged people that people die never figuring this stuff out. It’s hard. But to know you need to figure things out is an awesome place to start, and that’s a form of wisdom that it takes people years to get to. I think it’s valuable to hit bottom. It teaches you that it really sucks to be in that position — it’s like aversion therapy.